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After Neoliberalism: Empire, Social Democracy, or Socialism?
Since the early 1980s, the leading capitalist states in North America and Western Europe have pursued neoliberal policies and institutional changes. Since the early 1980s, the leading capitalist states in North America and Western Europe have pursued neoliberal policies and institutional changes. The peripheral and semiperipheral states in Latin America, Africa, Asia, and Eastern Europe, under the pressure of the leading capitalist states (primarily the United States) and international monetary institutions (IMF and the World Bank), have adopted ''structural adjustments,'' ''shock therapies,'' or ''economic reforms,'' to restructure their economies in accordance with the requirements of neoliberal economics. A neoliberal regime typically includes monetarist policies to lower inflation and maintain fiscal balance (often achieved by reducing public expenditures and raising the interest rate), ''flexible'' labor markets (meaning removing labor market regulations and cutting social welfare), trade and financial liberalization, and privatization. These policies are an attack by the global ruling elites (primarily finance capital of the leading capitalist states) on the working people of the world. Under neoliberal capitalism, decades of social progress and developmental efforts have been reversed. Global inequality in income and wealth has reached unprecedented levels. In much of the world, working people have suffered pauperization. Entire countries have been reduced to misery. According to United Nations Human Development Report, the world s richest 1 percent receive as much income as the poorest 57 percent. The income gap between the richest 20 percent and the poorest 20 percent in the world rose from 30:1 in 1960, to 60:1 in 1990, and to 74:1 in 1999, and is projected to reach 100:1 in 2015. In 1999 2000, 2.8 billion people lived on less than $2 a day, 840 million were undernourished, 2.4 billion did not have access to any form of improved sanitation services, and one in every six children in the world of primary school age were not in school. About 50 percent of the global nonagricultural labor force is estimated to be either unemployed or underemployed.1 In many countries, working people have suffered an absolute decline in living standards. In the United States, the real weekly earnings of production and nonsupervisory workers (in 1992 dollars) fell from $315 in 1973 to $264 in 1989. After a decade of economic expansion, it reached $271 in 1999, which remained lower than the average real wage in 1962. In Latin America, a continent that has suffered from neoliberal restructuring since the 1970s, about 200 million people, or 46 percent of the population, live in poverty. Between 1980 and the early 1990s (1991 1994), real wages fell by 14 percent in Argentina, 21 percent in Uruguay, 53 percent in Venezuela, 68 percent in Ecuador, and 73 percent in Bolivia.2 The advocates of neoliberalism promised that the neoliberal ''reforms'' or ''structural adjustments'' would usher in an era of unprecedented economic growth, technological progress, rising living standards, and material prosperity. In fact, the world economy has slowed towards stagnation in the neoliberal era. The average annual growth rate of world GDP declined from 4.9 percent between 1950 and 1973, to 3.0 percent between 1973 and 1992, and to 2.7 percent between 1990 and 2001. Between 1980 and 1998, half of all the ''developing countries''
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the economy. The social and economic disasters brought about by neoliberalism have already led to pervasive and growing popular resistance.7 Neoliberalism. The nineteenth century Marxists regarded the contradiction between socialized production and the capitalist system of private appropriation as the basic contradiction of capitalism. One may argue that the increasing socialization of production has found its expressions in the rising importance of fixed capital and the increasingly complex and interrelated financial structures. 2. in effect paying a risk premium to global finance capital. The process is unsustainable. Between 1995 and 2002. To prevent capitalist economies from falling into deep recessions or depressions. Private investment in the face of global overcapacity stagnates. by pursuing financial liberalization and attacking the public sector. The growing complexity of financial structures has greatly increased the chance that sudden movements in investors confidence and psychological conditions may lead to drastic and substantial fluctuations of investment and through investment.html 2/8 . As a result of financial liberalization. raising the danger of capital flight and financial crisis. 0. the U. All neoliberal regimes seek to limit government expenditure. governments (especially the governments of peripheral and semiperipheral countries) are under strong pressures to maintain fiscal balance by cutting expenditures. economy. the interwar depression years and the neoliberal era.S. governments that run fiscal deficits are likely to be ''punished'' by private investors who may respond with capital flight and attacks on the currency.40 between 1919 and 1939.34 between 1985 and 1997. first of all intellectually. With liberalized financial markets. The average ratio of real interest rate to GDP growth rate in the seven leading capitalist economies was 0.47 between 1972 and 1984. The further deterioration of global economic conditions might well push hundreds of millions of people beyond the threshold of tolerance.3 The global economy has been kept afloat by the debt-financed U.uruguaypiensa. As the editors of Monthly Review put it: ''Globalization under neoliberal regimes has meant in many ways the globalization of stagnation tendencies and financial crisis. The capitalist global economy is therefore left exposed to increasingly frequent and violent financial crises. and 2. global private investment. Those who consider themselves to be on the left.S. 0. If the United States cannot continue to generate ever-rising current account deficits and none of the other large economies are capable of functioning effectively as the autonomous driving force. restraining public spending.org. has significantly undermined and in some cases totally dismantled its stabilizing functions. 0. cross-border speculative capital flows have greatly increased.97 between 1881 and 1913. It is worth noting that the real interest rate has been higher than the economic growth rate only in two periods. Therefore. A ratio greater than one implies an inversion of the roles of productive and speculative investment. progressives or revolutionaries. A global rebellion against neoliberalism and capitalism cannot be ruled out. Since Keynes. some central banks are forced to maintain high interest rates. economy accounted for 96 percent of the cumulative growth in world GDP. The enormous imbalances have to be corrected one way or the other. all three components of global effective demand are subject to strong downward pressures and have tended to either contract or stagnate. The neoliberal era has seen increasingly frequent www. the neoliberal global economy will be under powerful downward pressures and exposed to the threat of increasingly frequent and violent financial crises. should be ready.MVD CMS (including the so-called ''transition economies'') suffered from falling real per capita GDP. Against such dangers. for such a development. and is a signal of systemic crisis.''5 Global effective demand is the sum of global private consumption. many economists have understood that investment in fixed capital is subject to fundamental uncertainty and is often beyond the reach of rational calculation.S. It follows that the purchasing power of the great majority of the world population has fallen or grown more slowly than world output. in the neoliberal era. Under neoliberalism. To summarize. and private capital turns to speculation in financial instruments. it is necessary to have a ''big government'' that can function effectively as the macroeconomic stabilizer.6 Under neoliberalism. Neoliberalism undermines and dismantles the institutions set up to stabilize the capitalist economy and alleviate capitalist social contradictions. Neoliberalism and Global Stagnation Neoliberalism is not able to provide an institutional framework for sustained global capital accumulation.10/01/14 Versión para impresión . governments have mostly pursued tight fiscal and monetary policies. global inequality has reached unprecedented levels and working people in many parts of the world have suffered from absolute pauperization. raising the private sector debts to historically unprecedented levels. and running large and ever-rising current account deficits. and global government expenditures.36 between 1946 and 1958. expansion has been financed by reducing domestic savings.4 The U.55 between 1959 and 1971.uy/imprimir_284_1.

Household sector debt expansion has been sustained. and 12 percent of US equities. Treasury and by U. corporate sector spending slowed significantly (particularly in ''high tech'').S..S. than the current growth rate of the U. the exercise of political and military power might affect the components of the growth in the current account deficit in a manner favorable for the United States.S. The role of the global macroeconomic stabilizer has been played throughout by the U. growth in the rest of the world at a www.S.S.org. Measured by indicators such as Tobin s ''Q'' (the ratio of market value of assets to replacement cost of capital) or by reference to price-earning ratios. points out: Currently. Third.S.S. and the U. current account deficits to continue.8 When the stock market bubble burst. general government fiscal balance has moved from a surplus of 1. economic boom was led by debt-financed private sector consumption and by a burst of corporate investment in ''high tech.S.S Financial Bubble and Imbalances Without a large economy capable of generating some autonomous demand. 35 percent of US corporate debt.uruguaypiensa. The U.S. the U.S. Despite the dramatic loosening of fiscal and monetary policy.S. Britain ran current account surpluses close to 4 percent of GDP. the U.25 percent. the Russian and the Brazilian crises in 1998. the explosive growth in the current account deficit may be corrected through adjustments in ''relative prices'' i. largely the result of a steadily increasing deficit in its international trade in goods and services. indeed far more rapidly. allowing U.S. net foreign liability would reach more than 60 percent of GDP and the current account deficits could reach 8. By contrast. There is no prospect in the next several years of the first possibility. At the same time. Stephen Roach. the U.9 Projections of current account deficits at current rates need not go far into the future to become ''tenuous. or a swing of 6 percent of GDP.MVD CMS and violent financial crises. All of these ratios are at or near record highs.4 percent of GDP to a deficit of 4. economy. domestic demand. exports to grow more rapidly to close the gap with the imports. The U. there will be increased demand for U. exports. Finally. economic history. current account deficit could be corrected by contracting U. The U.uy/imprimir_284_1. To avoid a deep recession. and supposing the U. the rest of the world must be willing to hold an increasingly bigger proportion of their financial reserves in dollar-denominated assets.5 percent by the third quarter of 2000. goods and services. under plausible assumptions. imports of goods and services increasingly in excess of U.10/01/14 Versión para impresión . current account deficit. current account deficit to be reversed.html 3/8 .5 9. can this continue? The U. and the Argentine crisis in 2001.S.S. the U.6 percent of GDP between 2000 and 2003.S. The problem is that the math gets exceedingly tenuous if it is projected into the future. devaluation of the U. dollar. reached 5 percent of GDP in late 2002.S. For the capitalist world s hegemonic power to run a current account deficit on such a large scale is without historical precedent.e. economic boom in the second half of the 1990s and its large and growing trade deficit have functioned as counteracting forces against the generally contractionary tendencies of neoliberalism. reaching negative 5. The U. For the everrising U.S.5 percent of GDP before 2010. about 75 percent of the world s total foreign exchange reserves are held in the form of dollardenominated assets more than twice America s 32 percent share of world GDP (at market exchange rates). the stock market bubble has not been fully deflated. the global economy might have already entered into a downward spiral. Alternative Scenarios of Global Economic Crisis There are four possible ways for the unsustainable growth in the U. U. The Mexican crisis in 1995 was followed by the Asian Crisis in 1997. if the rest of the world grows more rapidly. growth has been sluggish and employment stagnant.. on the eve of the First World War.S.S. stock market bubble that reached its greatest expansion in 2000 is the most extreme in U.'' The private sector financial balance (incomes less expenditures) moved from the historically normal range of 3 4 percent of GDP to unprecedented negative territory. Second.'' According to one study by the Levy Economics Institute. current account deficits are matched by reciprocal capital inflows from the rest of the world. i.S. foreign investors hold about 45 percent of the outstanding volume of US Treasury indebtedness. the chief economist of Morgan Stanley. and a housing market bubble is in turn approaching its peak.S. Never before has the world put more stock in America both as an engine of growth and as a store of financial value.e. economy to grow at a rate sufficient to lower the unemployment rate. These policies have in effect helped to sustain the bubble.5 percent to 1. Federal Reserve has lowered the short-term interest rate from 6. Household and corporate sector debts as a percentage of GDP were at historical peaks. Households were willing and able to borrow at such a rate because of the great asset price bubble.S. First.

economically.S. Treasury. ''Structural reforms'' will supposedly unleash productivity growth that ''in the long run. The Asian economies (Japan. Such a decline would be politically.S.10/01/14 Versión para impresión . and already being put into effect.S. This option therefore supposes an extended period of depression.S. From the point of view of financial capitalists.S. Indeed this would be the ''orthodox'' IMF medicine administered to any other state on the planet were it to find itself in anything like the U. flooding the world with their own currencies (euros. this course is not politically possible.S.'' bringing labor and product market policies to U.S.html 4/8 . while achievable. For the capitalists to be confident. it is not at all clear that the European capitalist class can decisively defeat the resistance of the working class. But the United States is not like any other state on the planet. pose immense risks.'' will create conditions for vigorous demand expansion. why cannot the United States run an ever-larger current account deficit for an indefinite period of time? It cannot go on indefinitely because the rising U.S.S. goods cheaper and foreign goods more expensive for U. for reasons inherent in monopoly capital that are even stronger today. First. But the practical limit will be reached long before the theoretical limit. the dollar may need to fall by 30 50 percent.org. demand for foreign goods and exports deflationary pressures to the rest of the world. The depreciation of the dollar makes U. At this moment. and psychologically unacceptable.S. www. The remaining option is dollar devaluation. The burden shall fall on the second and third options which. Further. and it is clear that a gradual and controlled devaluation is the policy preferred by the U. at least at this stage of the electoral cycle. as debt is devalued the conditions for a new cycle of capitalist accumulation on an even higher level gradually come to exist. households and corporations. Absent a surge in domestic growth. current account deficits absorb a growing proportion of the global saving. is in recession and such signs of growth as exist elsewhere are weak. A theoretical limit will be reached when the entire world s saving is exhausted to finance the U. In theory. Dollar depreciation therefore is particularly threatening for the European economies. their negative effects on domestic demand (through further attacks on working people s living standards) may very well overwhelm whatever ''positive'' effects they may have on the ''long run'' accumulation.S. current account difficulties.S. the Euro-area governments are constrained by the so-called ''Stability and Growth Pact'' which requires fiscal deficits no greater than 3 percent of GDP. Europe s largest economy. The European economy has not been able to generate any expansion in domestic demand. China. However. and Southeast Asia) together run current account surpluses of $230 240 billion a year. by raising domestic interest rates is certainly within the theoretical ability of U.S. With the European economy stagnating. And for the U.S. current account deficit. policy makers. But if the so-called ''structural reforms'' are indeed carried out.S.S. if not forever. consumer and mortgage debt. growth. a global depression and widespread household and corporate bankruptcies may destroy much of the private debts. which would itself aggravate the current account difficulty. This course would raise U. the German economy. standards. and the Chinese renminbi) to prevent dollar depreciation. No institution exists to force such medicine upon it.uy/imprimir_284_1.uruguaypiensa. dollar or have intervened heavily to prevent currency appreciation. dollar depreciation reduces U. A correction that depends entirely on dollar depreciation would require a catastrophic decline in the dollar s value. or nearly half of the U.S. But the Asian economies have either pegged their currencies to the U. and therefore imports and the trade deficit. Financial circles have urged the European governments to pursue ''structural reforms. it is inconceivable that it can absorb enough U.MVD CMS significantly faster pace than current growth in the United States. But in the last such global depression such spontaneous recovery was inadequate. current account deficit. and Japanese government debt to astronomical levels. This is the historical solution that has obtained in all prior systemic crises of capitalism. it is the hegemon. current account deficits. It helps to stimulate exports and dampen imports. Whatever the outcome on this hypothesis one thing is certain. exports to correct the U. rising interest rates risk a wave of personal bankruptcies of Great Depression proportions. Japanese yens. and its growth has relied exclusively on exports. By some estimates. for vigorous accumulation to take place there has to be a dramatic improvement in profitability and capitalist confidence. dollar is not going to depreciate against any other currency. neoliberalism would be dead for a very long time. ''structural reforms'' have to take place to break the resistance of the working class.S. These gigantic government debts would exist along with enormous household and corporate debts in the United States and Europe.11 How can these debts be financed? There are two possibilities. But of even greater concern are the dangers posed by the vast unprecedented accumulation of U. ruling elite.10 If the U. Limiting domestic U. This leaves the burden of adjustment almost entirely on Europe. why does the current account deficit have to be corrected? If the rest of the world s central banks keep intervening.

Here some military force works wonders in enforcing neoliberal immiseration. songs and movies. pharmaceuticals. only the prospect of monopoly prices for ''intellectual property'' offers hope.S.uruguaypiensa.13 Assuming these ''benefits'' are fully realized. Other substantial imports.S. unable to control the roads and borders. is a matter purely of political power based on military strength. two are in Afghanistan.S. Here costs can be contained by the relentless imposition of a ''race to the bottom'' the continual transfer of production to ever poorer and more desperate countries. such as clothing and footwear. Towards Social Democracy? What will the post-neoliberal world look like? One possibility is a return to social democratic capitalism. genetically modified seeds.S.S.S. that is. Not because of internal limits in the working of capitalism alone. oppressive framework? The U. establish unprecedented political and military dominance over the world. and one is in Kosovo. Here too the imposition of monopoly prices for the licenses. and the electricity supply. Between www. But U. that is only a fraction of the U. current account deficits. dollars through a revaluation of the yen and the renminbi. Given the magnitude of the enormous debts to be inflated away. the inflation strategy may send the global economy into vicious cycles of hyperinflation and skyrocketing interest rates. According to the latest survey of the Pew Global Attitudes Project (based in Washington).'' Months after the so-called ''major combat operations'' ended and despite the fact that the United States has committed half of its entire regular army in Iraq. intervention in Nicaragua and Africa. imperialism continues to control the world s most powerful. But how can this imperialist project be financed? The costs of U. control of the physical resources. Out of the U. cannot be reduced in quantity since U.S.S. There are only four brigades left to relieve the sixteen brigades in Iraq. manufacturing base in terminal decline. economic crisis. But faced with the increasingly pervasive popular resistance in Iraq.S. global political power sought through military strength.org. ruling elite use its forces to build an exploitative empire. The crisis of neoliberalism shall follow.''14 The project of a U.S. Yet with the U.S.S. This is one aspect of the economic benefits of U.S. In effect.''12 Could the U.uy/imprimir_284_1. Stephen Roach of Morgan Stanley asks the question: ''Can a saving-short US economy continue to finance an ever-widening expansion of its military superiority?'' His answer is: ''The confluence of history.S.S. military expansion are likely to aggravate rather than alleviate the U.S. and economics leaves me more convinced than ever that a US-centric world is on an unsustainable path. If there is any one option ruled out by all of the various global ruling classes. Whatever the economic ''costs'' or ''benefits. Of the twelve brigades in the United States. and two are going to relieve the troops in Afghanistan.'' U. imperialism is losing the political and ideological battle. and given the role it plays in the world economy much depends upon it. Army s thirty-three combat brigades. imports need to be reduced. the United States is losing its grip on Iraq. the United States has exhausted its entire regular army just to occupy such totally impoverished third world countries as Afghanistan and Iraq.S. it is this. current account deficit. economy is in deep crisis. current U.S. ''America s image around the world has taken a sharp turn for the worse.html 5/8 . exports. One way is to reduce such key imports as motor vehicles and electronic goods by increasing their cost in U. But the key import is mineral fuels. Can the U. military expansion be financed by the expansion itself? Andy Xie of Morgan Stanley estimated that the direct and indirect effects of the U. Towards an Imperial Solution? Is there a solution to the crisis within the existing exploitative. To contain the explosion in the U. and here the long-term cost can only be contained by U. global neoliberal empire based on force has already failed. and it is being applied. the United States has not yet been able to realize any of these projected ''benefits. three are in modernization training. two are in South Korea. The other aspect of any strategy to contain the unsustainable growth in the current account deficit needs to be an expansion of U. This can only be achieved by political pressure. financed by printing money. occupation of Iraq could save the United States $40 billion a year in expenditures on oil imports. and in the process manage its economic crisis? In fact. the enormous private and public sector debts could be inflated away.S. geopolitics. consider the results of U.S. but because the attempt to avoid the economic crisis that neoliberal policies produce through global military dominance has already come up against its limits in popular resistance in Iraq. the water. sixteen are now in Iraq. The hand on the spigot that regulates production (and therefore price) must be controlled by the United States.MVD CMS Secondly. unchallenged military forces. policy is an attempt to do just that. producers no longer exist to supply the amount needed.10/01/14 Versión para impresión . three are in reserve for possible war in Korea.

the social democratic institutions helped to alleviate the class conflicts and maintain a relatively high level of aggregate demand. labor and financial markets are reregulated. these institutions were consistent with high and stable profit rates and facilitated rapid capital accumulation. the competition between different capitalist states will prevent them from taking full account of environmental costs. and social stability. with social democratic institutions such as big government. But if that turns out to be the case. Can social democratic capitalism provide the necessary institutional framework for dealing with the global environmental crisis? Environmental investment and regulations increase the overall costs of capitalist production (this is not to be confused with the fact that environmental businesses may create profit opportunities for some individual capitalists). But more likely. social democratic capitalism will simply be an ''alternative'' way towards global ecological catastrophe. it has decisively failed to meet the basic physical and emotional needs of the great majority of human beings that live in the periphery and the semiperiphery. the remaining profits would be sufficient to induce an adequate level of accumulation. income and wealth are significantly redistributed in egalitarian ways. what is to prevent the inherent contradictions of capitalism from developing? What is to prevent the ''new'' social democratic capitalism from entering into a new accumulation crisis? The establishment of social democratic capitalism could not take place without at least a partial political victory of the working classes. Suppose the current crisis is to be resolved on a social democratic basis.html 6/8 . Peripheral and semiperipheral states were able to make some progress in national development through ''import-substitution'' or ''socialist'' industrialization. the state socialist societies were believed to have failed because they were not able to match capitalism in terms of efficiency and technical innovation. Capitalism has clearly succeeded in the development of the forces of production.uruguaypiensa. Reevaluating Socialism Marx said that the historical justification of capitalism was to develop the forces of production. the leading capitalist countries enjoyed rapid economic growth.MVD CMS 1950 and 1973. National regulations of trade and capital flows are reintroduced. How can these new social reforms be financed? If they have to be financed by additional taxes on capitalist profits.org. There are other problems that a revived social democratic capitalism would not be able to address. Within certain limits. and the public sector is again to play a significant role in the economy. no social democratic capitalism is possible.'' For a quarter of a century. Eastern Europe. Under neoliberalism. The changing balance of power between capital and labor. the working classes in different parts of the world will demand not only restoring their historical social and economic rights and consolidating their existing rights. they tended to create new conditions that increasingly undermined worldwide accumulation. Absent such growth rates. The past quarter of a century was another dark age in human history. Could a return to social democracy bring about a return of the great golden age? The inherent contradictions of capitalism did not stop developing under social democratic capitalism. many have www. and Cuba was generally considered to be a great failure.15 It was exactly in response to the crisis of social democratic capitalism that the global ruling elites started to pursue neoliberalism as the ''solution'' to the crisis.uy/imprimir_284_1. Keynesianism. In that case. In fact. oppression. Will these changes be sufficient to bring about a new golden age? Without changing the fundamental institutions of capitalism. in a capitalist world economy with nation states. rising living standards. However. class compromise. it is necessary to reevaluate the historical experience of socialism. and between the core and the periphery resulted in the worldwide decline of profitability and contributed to the accumulation crisis in the 1960s and the 1970s. but also greatly expanding these rights. human beings twice went through the horrific catastrophes of imperialist wars that arose out of the fundamental contradictions of capitalism. can the revival of social democracy survive the revival of the working classes bargaining power? The growth rates of the post-Second World War golden age were an exception to the stagnation that characterizes global capitalism in its monopoly phase. It has also succeeded in bringing about material prosperity for the top 15 20 percent of the world population. In the light of the enormous social and economic disasters brought about by neoliberalism. under capitalism humanity is rapidly approaching a global ecological catastrophe. as these institutions existed and operated. There is the question whether after taking full account of environmental costs.10/01/14 Versión para impresión . Under certain historical conditions. Immanuel Wallerstein questioned whether there has been any improvement of quality of life for the poorer majority of the world population since the beginning of the capitalist world economy. and exploitation have reached new extremes. Ten to fifteen years ago. For a while. In the meantime. China. inequality. and regulation of capital. However. world capitalism experienced the great ''golden age. the experience of state socialism in the former Soviet Union.16 During the twentieth century. low unemployment. In addition to their undemocratic features. redistribution of income and wealth.

Ultimately. Eastern European.uruguaypiensa. generating ''trade surpluses'' to serve debt payments and finance capital flight. whose basic needs have never been met under capitalism. The national economy needs to be restructured so that resources are redirected towards production for basic needs rather than organizing the national economy around exports to the core countries. and China the corrupt capitalist privatization processes are extremely unpopular. Kotz suggests that for a future socialism to be viable. so that in many respects (health care. In this respect. Even in China.MVD CMS attempted to design new. was of enormous importance. Soviet.uy/imprimir_284_1. job security. Can the next round of socialist revolutions do better than the twentieth century revolutions? In what way can socialism prove itself to be better than capitalism? Summarizing the historical lessons of Soviet socialism. At some point. Given the historical record of state socialism. Many of these models intend to be as efficient as capitalism by incorporating such capitalist features as markets. and pensions) and improving women s conditions than capitalist countries with similar levels of economic development. one can expect the renationalization of all the illegally privatized assets to be among the top popular demands. one can have great confidence that an economic system based on primarily public ownership of the means of production and democratic planning (democratic control over the allocation of the social surplus) will have a great chance to succeed in meeting the basic needs of all members of society. and Cuban socialism had succeeded in meeting virtually all basic social needs. and private incentives. Eastern Europe. in purely economic terms. competition. Should new social revolutions take place.10/01/14 Versión para impresión . David Kotz argues that. It is well known that state socialist countries had been more successful in meeting people s basic needs (nutrition. What will be the relevance of socialism for today s struggle against neoliberalism? As the crisis of neoliberalism deepens. capitalist reforms since the early 1990s have substantially reduced the living standards of the peasants and the urban working class. in many peripheral and semiperipheral states (such as in Latin America). The revival of socialism in the periphery and the semiperiphery may set in motion a new wave of world socialist revolutions. a significant portion of the Chinese working people now have lower living standards than during the Maoist era. The Soviet system disintegrated because a procapitalist political alliance (including the majority of the bureaucratic elite) arose and gained power. www.org. men and women. In the former Soviet Union. health care. and workplace conditions). ''viable'' models of socialism. education. But the record needs to be understood in its historical context. the situation has developed to the point that without a complete break with international finance capital. the record of state socialism was not favorable. The accomplishment of full employment and job security (freedom from the fear of unemployment) for all capable adults. socialism will bring about a better material life for the poorest 60 70 percent of the population in the world. the imperialist states. In addition to the bureaucratic. centrally planned state socialism was a viable system. The renationalized assets then would form the basis of a new socialist economy. an achievement that most of the advanced capitalist countries cannot claim. the future socialist economy has to be organized in such a way that it is capable of addressing the historical contradictions to which capitalism has failed to provide a solution. The historical achievements of state socialism should not be under-estimated. and the international institutions that represent their interests. how will a future socialist economy be organized and structured? In addition to many existing theoretical contributions on the subject. it must have a democratic state and other institutions that prevent the development of a privileged and dominant elite. But these arrangements will inevitably have conflicts with the interests of the big financial and industrial capitalists. Socialism offers the best hope for humanity to avoid global ecological catastrophe and to build harmonious relationships between human beings and our environment. where the economy has been the most dynamic in the world.html 7/8 . In this situation. education. then at the very least. Now few would doubt that the majority of the Soviet and Eastern European people lived much better lives under state socialism than under the present ''free'' and ''democratic'' capitalism. new practices in actual historical struggles. there are simply no resources left (after paying a significant portion of the national output each year to international finance capital) for even simple reproduction of the society. If this can be achieved. not to say to address grave social problems. nationalization of the major means of production and the development of a comprehensive economic plan will have to be pursued for the economic and social transformation to be sustained. under conditions of unequal exchange. future socialist movements will certainly be able to develop a great variety of new institutions. in order to import luxury consumer goods for the privileged elites and the means of production that are used to reproduce the existing pattern of the international division of labor. the only sensible solution that is in the interest of the majority of the people is to make a complete break with the existing international capitalist order.17 Provided that a future socialist society will be based on political democracy. housing.

Human Development Report (Oxford University Press. Real World Macro (18th edition. and will be reflected in the planning. 2003).morganstanley.. will be understood by the general public. 2001). MAS INFORMACION EN: http://www.com/GEFdata/digests/latest-digest. Editors. state socialist societies were forced to engage in military and economic competition against hostile capitalist powers. generally benign external environments (if there is not going to be a world socialist government). Stephen Roach. Mass. www. ''The New Face. there will not be external pressures to force future socialism to develop the forces of production rapidly and in an unbalanced fashion.html 8/8 . 2. Glob alization Unmasked (London and New York: Zed Books. 1 14. The need to have a sustainable environment. Silent Revolution (London: Cassell. April 2002. p. James Petras and Henry Veltmeyer. 91 and Appendix A. In that case. Given the context.html. Appendix 3. 2003. 1. p. how much surplus they would like to generate as well as determine how the surplus should be allocated.The State of Food Insecurity in the World. Cambridge. 2. through democratic processes.10/01/14 Versión para impresión . January 2004 Notes 1.org.aspx?284. FOA. Given the arrangements of political democracy and socialist planning. they were forced to sacrifice everything in order to ''develop the forces of production. including the desire for material comfort. 6. 5.'' Morgan Stanley Global Economic Forum. 5. 2003 (Rome. then it seems that sustaining the environment in which human beings live would certainly become one of the paramount objectives of future socialist planning. Monthly Review.org. Monthly Review. ''Global: Do Imbalances Matter?.uy/hnnoticiaj1. 4. 2001). Food and Agricultural Organization of the United Nations. Monthly Review. ''The New Face of Capitalism. Editors. September 2. Unless one believes that people will always be capitalist minded. 4.uruguaypiensa. 24.. 3. 2000 and 2002).uy/imprimir_284_1.uruguaypiensa. based on their own preferences. 1995). Duncan Green. United Nations. balanced against other needs and desires.'' Monthly Review. always wanting more regardless of how that affects future generations.'' 6.: Dollars & Sense. 3. people in these societies will be able to debate and decide.'' The hope is that the future socialist society will have better.MVD CMS undemocratic nature of state socialist planning. See Dollars & Sense.106 www.