Category: News

Thomas Piketty on Communism: Implications for Theory and Practice

“I’m not trying to [tear down the Western economic system and replace it with socialist redistribution of wealth]. You know, I turned 18 when the Berlin wall fell, so I have never had any temptation with communism, I am just trying to see how we can ensure that everyone benefits from globalization.” –Thomas Piketty on The Colbert Report

Despite the various theoretical problems with Piketty’s work (see Harvey’s critique for example), we still have to discuss the significant practical issues, associated with the tactics and strategies of our struggle. Piketty’s overall solution to our problems is nothing but the contemporary social democratic response of trying to better manage capitalism; to humanize capitalism, as the picture bellow illustrates:

Regulated Capitalism Monster Comic

For a more detailed discussion on the contemporary debates regarding tactics and strategies between anarchists, revolutionary socialists, and social democrats, see this article; but it is useful to briefly go over something economist Paul Sweezy has been arguing since 1942, which basically foresaw the failure of what was to become the social democratic project.

Sweezy argued in his Theory of Capitalist Development (1942: 349), “the state in capitalist society has always been first and foremost the guarantor of capitalist property relations” and has unmistakably been “the instrument of capitalist class rule.” Sweezy concludes that for it to be possible to use the state to manage capitalism, and/or impose higher, more substantial taxes on capital, as Piketty suggests, a certain combination of requirements must be met. The political actor must be a mass party that 1) is strictly free of capitalist interest, 2) has acquired state power and eliminated capitalists and their representatives from key positions, and 3) establishes a firm position so it would be overwhelmingly plain that any resistance by capitalists would be futile. If experience shows that these are the necessary conditions for such a project to work, “it also indicates no less clearly the impossibility of their fulfillment” (350-1). While it is conceivable in the abstract, in reality “capital holds the strategic positions.” “Money, social prestige, the bureaucracy and the armed forces of the state, the channels of public communications,” are all controlled by capital and “will continue to be used to the utmost to maintain the position of capital.” Sweezy concludes it is a law of capitalist politics that the outcome of these strategies will merely be the bankruptcy of reform (351-2).

In fact, Sweezy (351) also argues that this liberal reform, due to these requirements, is no less a task than a gradual transition into socialism. Thus, we may ask ourselves, if we ever actually have sufficient political power to truly manage capitalism, why not transcend it? If we ever have the political will and power to impose Piketty’s global tax on capital, we will most likely have the will and power to engage on a transition into a new economic system, superior in every way. We will most likely have the means to build a new system, where a return to our current predicament is not as simple as eliminating Piketty’s tax and re-allowing capital free reign.

If/when we finally have the means to slay the beast, why put a smiley face on it?

 

 

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David Harvey Reviews Piketty’s Capital in the 21st Century

Afterthoughts on Piketty’s Capital

By David Harvey

Retrieved 05/17/14 from http://davidharvey.org/2014/05/afterthoughts-pikettys-capital/

Thomas Piketty has written a book called Capital that has caused quite a stir. He advocates progressive taxation and a global wealth tax as the only way to counter the trend towards the creation of a “patrimonial” form of capitalism marked by what he dubs “terrifying” inequalities of wealth and income. He also documents in excruciating and hard to rebut detail how social inequality of both wealth and income has evolved over the last two centuries, with particular emphasis on the role of wealth. He demolishes the widely-held view that free market capitalism spreads the wealth around and that it is the great bulwark for the defense of individual liberties and freedoms. Free-market capitalism, in the absence of any major redistributive interventions on the part of the state, Piketty shows, produces anti-democratic oligarchies. This demonstration has given sustenance to liberal outrage as it drives the Wall Street Journal apoplectic.

The book has often been presented as a twenty-first century substitute for Karl Marx’s nineteenth century work of the same title. Piketty actually denies this was his intention, which is just as well since his is not a book about capital at all. It does not tell us why the crash of 2008 occurred and why it is taking so long for so many people to get out from under the dual burdens of prolonged unemployment and millions of houses lost to foreclosure. It does not help us understand why growth is currently so sluggish in the US as opposed to China and why Europe is locked down in a politics of austerity and an economy of stagnation. What Piketty does show statistically (and we should be indebted to him and his colleagues for this) is that capital has tended throughout its history to produce ever-greater levels of inequality. This is, for many of us, hardly news. It was, moreover, exactly Marx’s theoretical conclusion in Volume One of his version of Capital. Piketty fails to note this, which is not surprising since he has since claimed, in the face of accusations in the right wing press that he is a Marxist in disguise, not to have read Marx’s Capital.

Piketty assembles a lot of data to support his arguments. His account of the differences between income and wealth is persuasive and helpful. And he gives a thoughtful defense of inheritance taxes, progressive taxation and a global wealth tax as possible (though almost certainly not politically viable) antidotes to the further concentration of wealth and power.

But why does this trend towards greater inequality over time occur? From his data (spiced up with some neat literary allusions to Jane Austen and Balzac) he derives a mathematical law to explain what happens: the ever-increasing accumulation of wealth on the part of the famous one percent (a term popularized thanks of course to the “Occupy” movement) is due to the simple fact that the rate of return on capital (r) always exceeds the rate of growth of income (g). This, says Piketty, is and always has been “the central contradiction” of capital.

But a statistical regularity of this sort hardly constitutes an adequate explanation let alone a law. So what forces produce and sustain such a contradiction? Piketty does not say. The law is the law and that is that. Marx would obviously have attributed the existence of such a law to the imbalance of power between capital and labor. And that explanation still holds water. The steady decline in labor’s share of national income since the 1970s derived from the declining political and economic power of labor as capital mobilized technologies, unemployment, off-shoring and anti-labor politics (such as those of Margaret Thatcher and Ronald Reagan) to crush all opposition. As Alan Budd, an economic advisor to Margaret Thatcher confessed in an unguarded moment, anti-inflation policies of the 1980s turned out to be “a very good way to raise unemployment, and raising unemployment was an extremely desirable way of reducing the strength of the working classes…what was engineered there in Marxist terms was a crisis of capitalism which recreated a reserve army of labour and has allowed capitalists to make high profits ever since.” The disparity in remuneration between average workers and CEO’s stood at around thirty to one in 1970. It now is well above three hundred to one and in the case of MacDonalds about 1200 to one.

But in Volume 2 of Marx’s Capital (which Piketty also has not read even as he cheerfully dismisses it) Marx pointed out that capital’s penchant for driving wages down would at some point restrict the capacity of the market to absorb capital’s product. Henry Ford recognized this dilemma long ago when he mandated the $5 eight-hour day for his workers in order, he said, to boost consumer demand. Many thought that lack of effective demand underpinned the Great Depression of the 1930s. This inspired Keynesian expansionary policies after World War Two and resulted in some reductions in inequalities of incomes (though not so much of wealth) in the midst of strong demand led growth. But this solution rested on the relative empowerment of labor and the construction of the “social state” (Piketty’s term) funded by progressive taxation. “All told,” he writes, “over the period 1932-1980, nearly half a century, the top federal income tax in the United States averaged 81 percent.” And this did not in any way dampen growth (another piece of Piketty’s evidence that rebuts right wing beliefs).

By the end of the 1960s it became clear to many capitalists that they needed to do something about the excessive power of labor. Hence the demotion of Keynes from the pantheon of respectable economists, the switch to the supply side thinking of Milton Friedman, the crusade to stabilize if not reduce taxation, to deconstruct the social state and to discipline the forces of labor. After 1980 top tax rates came down and capital gains – a major source of income for the ultra-wealthy – were taxed at a much lower rate in the US, hugely boosting the flow of wealth to the top one percent. But the impact on growth, Piketty shows, was negligible. So “trickle down” of benefits from the rich to the rest (another right wing favorite belief) does not work. None of this was dictated by any mathematical law. It was all about politics.

But then the wheel turned full circle and the more pressing question became: where is the demand? Piketty systematically ignores this question. The 1990s fudged the answer by a vast expansion of credit, including the extension of mortgage finance into sub-prime markets. But the resultant asset bubble was bound to go pop as it did in 2007-8 bringing down Lehman Brothers and the credit system with it. However, profit rates and the further concentration of private wealth recovered very quickly after 2009 while everything and everyone else did badly. Profit rates of businesses are now as high as they have ever been in the US. Businesses are sitting on oodles of cash and refuse to spend it because market conditions are not robust.

Piketty’s formulation of the mathematical law disguises more than it reveals about the class politics involved. As Warren Buffett has noted, “sure there is class war, and it is my class, the rich, who are making it and we are winning.” One key measure of their victory is the growing disparities in wealth and income of the top one percent relative to everyone else.

There is, however, a central difficulty with Piketty’s argument. It rests on a mistaken definition of capital. Capital is a process not a thing. It is a process of circulation in which money is used to make more money often, but not exclusively through the exploitation of labor power. Piketty defines capital as the stock of all assets held by private individuals, corporations and governments that can be traded in the market no matter whether these assets are being used or not. This includes land, real estate and intellectual property rights as well as my art and jewelry collection. How to determine the value of all of these things is a difficult technical problem that has no agreed upon solution. In order to calculate a meaningful rate of return, r, we have to have some way of valuing the initial capital. Unfortunately there is no way to value it independently of the value of the goods and services it is used to produce or how much it can be sold for in the market. The whole of neo-classical economic thought (which is the basis of Piketty’s thinking) is founded on a tautology. The rate of return on capital depends crucially on the rate of growth because capital is valued by way of that which it produces and not by what went into its production. Its value is heavily influenced by speculative conditions and can be seriously warped by the famous “irrational exuberance” that Greenspan spotted as characteristic of stock and housing markets. If we subtract housing and real estate – to say nothing of the value of the art collections of the hedge funders – from the definition of capital (and the rationale for their inclusion is rather weak) then Piketty’s explanation for increasing disparities in wealth and income would fall flat on its face, though his descriptions of the state of past and present inequalities would still stand.

Money, land, real estate and plant and equipment that are not being used productively are not capital. If the rate of return on the capital that is being used is high then this is because a part of capital is withdrawn from circulation and in effect goes on strike. Restricting the supply of capital to new investment (a phenomena we are now witnessing) ensures a high rate of return on that capital which is in circulation. The creation of such artificial scarcity is not only what the oil companies do to ensure their high rate of return: it is what all capital does when given the chance. This is what underpins the tendency for the rate of return on capital (no matter how it is defined and measured) to always exceed the rate of growth of income. This is how capital ensures its own reproduction, no matter how uncomfortable the consequences are for the rest of us. And this is how the capitalist class lives.

There is much that is valuable in Piketty’s data sets. But his explanation as to why the inequalities and oligarchic tendencies arise is seriously flawed. His proposals as to the remedies for the inequalities are naïve if not utopian. And he has certainly not produced a working model for capital of the twenty-first century. For that we still need Marx or his modern-day equivalent.


David Harvey is a Distinguished Professor at the Graduate Center of the City University of New York. His most recent book is Seventeen Contradictions and the End of Capitalism, published by Profile Press in London and Oxford University Press in New York.

Imposed Beauty and Capitalism: Images of Protests Against Miss Venezuela 2013

Retrieved from venezuelanalysis.com

Days before this year’s Miss Venezuela competition, the collectives Faldas en Revolución (Skirts in Revolution) and the Movimiento Revolucionario de Ciclismo Urbano (Revolutionary Urban Cycling Movement, MRCU) issued public statements calling for a boycott of the pageant, criticising it for promoting “capitalism”, “patriarchy” and “consumerism”.

Earlier this week, Maria Eugenia from the MRCU told Venezuelan media that the country needs to rethink how it views beauty.

“[Miss Venezuela contestants] are slaves of beauty standards that thousands of girls want to fit into year after year,” Eugenia stated.

In Venezuela, beauty and capitalism go hand in hand. Venezuela has won more major international beauty competitions than any other country, and Venezuelans spend millions of dollars each year on beauty products. On average, Venezuelan women spend around 20% of their salaries on beauty products, making the country’s beauty industry among the most profitable per capita.

Venezuela’s obsession with beauty has a long history, and remains strong today. However, opposition to events like Miss Venezuela is growing.

The placard reads "don't exchange your dignity for the crown". (Pacha Catalina)

The placard reads “don’t exchange your dignity for the crown”. (Pacha Catalina)

"Miss Plastic Surgery" (Pacha Catalina)

“Miss Plastic Surgery” (Pacha Catalina)

"Imposed beauty is a weapon that only serves self mutilation." (Pacha Catalina)

“Imposed beauty is a weapon that only serves self mutilation.” (Pacha Catalina)

(Pacha Catalina)

(Pacha Catalina)

"Free and fighting woman without a sash and crown"(Pacha Catalina)

“Free and fighting woman without a sash and crown”(Pacha Catalina)

"A woman who respects herself doesn't need approval for her actions."(Pacha Catalina)

“A woman who respects herself doesn’t need approval for her actions.”(Pacha Catalina)

[Could also be translated as “A woman who respects herself doesn’t need approval of her measurements” -thepointistochangeit]

(Pacha Catalina)

“Enough of the construction of bodies submitted to Capital” (translation by thepointistochangeit)

ORIGINALLY PUBLISHED ON OCT 11TH 2013 AT 5.24PM IN VENEZUELANALYSIS.COM

Poll Shows Most Venezuelans Feel Revolution isn’t Over without Chavez

By TAMARA PEARSON

Merida, April 2nd 2013 (Venezuelanalysis.com) – The latest GISXXI poll shows that most Venezuelans want to “continue Hugo Chavez’s project”, and that 55.3% of Venezuelans will likely vote for Nicolas Maduro in the upcoming elections.

The poll, by the Venezuelan public company, was conducted between 18 and 23 March, and surveyed 1500 people on the public’s response to Chavez’s death, and their attitudes towards the candidates for the presidential elections to be held on 14 April.

Support for Maduro and Capriles

If the elections were held during the dates the survey was conducted, Nicolas Maduro would receive 55.3% of the vote, and Henrique Capriles 44.7% of the vote. However, 66% of poll respondents believe that Maduro will win the elections, compared to 17% who believe Capriles will.

52% of respondents felt Henrique Capriles’s behaviour following the news of Chavez’s passing was very bad or bad, 30% thought it was very good or good, and 13% thought it was regular. In terms of Nicolas Maduro’s behaviour after the news, 60% thought it was very good or good, 25% thought it was very bad or bad, and 12% thought it was regular.

When asked to indicate whether Capriles or Maduro would respond better to certain issues, the spread was roughly 25% believing Capriles would handle them better, and 55% believing Maduro would. Maduro got the highest results for the issue of housing (62%), then roads and transport (58.6%), while Capriles’ highest result was 26.6% believing he would handle cost of living/inflation, and the issue of food scarcity better.

In terms of Maduro’s and Capriles’ personal traits, respondents were asked to agree or disagree that each of them are nice, sincere, honest, represent change, can unify Venezuelans, are competent, have the necessary authority to govern, are capable of making difficult decisions, are brave, and are energetic.

Of those, Capriles’ least represented trait was sincerity (30% believing he is)  followed by honesty (32%), and most represented one was energetic (49%).  Maduro’s least represented trait was nice (49%), followed by sincere (53%), and most represented was also energetic (68%).

60% of respondents believe a victory by Maduro would be in the country’s interest, compared to 26% for Capriles. 74% of all respondents are following the information about the elections with a lot of interest, compared to 20% with little interest, and 6% with none.

78% also believe that the 14 April elections are more important than the presidential elections held on 7 October.

Response to Chavez’s death

When asked if they were surprised by President Chavez’s death, 56% of respondents said yes, and 42% said they did expect the news.

In terms of their immediate response to the news, 26% of respondents said they made a phone call, 25% said they cried, and 20% did “nothing in particular”. 12% told their friends or family the news, and 5% turned on the television or radio. Only 1% responded by buying things from the supermarket.

On hearing the news, 39% of respondents felt sadness or love, 16% felt worry or fear, 14% were surprised or confusion, 11% “nothing in particular”, and only 1% felt relief, tranquillity, or hope.

In response to the question “Is the opinion you have now of Chavez different to the one you held prior to his passing?”, 48% said their opinion was the same, 43% that it was higher, and 6% that it was lower.

Responding to certain phrases, 75% agreed that “Chavez will enter history as one of its greatest liberators”, 71% agreed that “now the most important thing is to continue President Chavez’s project”, 40% agreed that “without Chavez there’s noChavismo” and 20% agreed that “with the loss of President Chavez the end of the revolution has arrived”.

On whether Chavez’s passing was an important event for the country, on a scale of 1 to 10, 100% of respondents answered with a 10.

Analysis of the results

The director of GIS XXI, Jesse Chacon, analysed the results. He said, “There’s no scenario where the opposition candidate Henrique Capriles could win. In the best of cases he could get 46% of the vote, if he managed to disassociate Maduro from Chavez, demobilise Chavismo and increase opposition participation”.

“On the other hand, if Maduro manages to deepen his connection with Chavez, his politics, and the transition to socialism, he could reach 57% support and leave Capriles with 42%,” Chacon said. However, he added that it is “very difficult” to reverse tendencies in just two weeks.

Chacon also predicted slightly less participation in these elections compared to the October presidential elections, at 74-78% compared to 81% in October. He said it was likely there would be greater abstention by those supporting the opposition.

“It would be difficult for there to be a migration of votes by those who support Capriles towards Maduro, and vice versa. Abstention is more significant,” he said.

Chavismo has focused its strategy on showing that Maduro is the person who will continue the legacy of Chavez, and the opposition has tried to disconnect him [from Chavez] and bring about confrontations, in order to change the current electoral psychology which favours the candidate of the Bolivarian revolution,” Chacon said.

Further, he argued that the opposition “understands that Chavismo is the dominant political identity, and is hegemonic in Venezuela, that’s why they try to compete within the values of Chavismo in order to penetrate its social achievements, its heroes, and its symbols”.

PUBLISHED ON VENEZUELANALYSIS.COM APR 2ND 2013 AT 2.30PM

Ecuador’s Correa wins third presidential term

Leftist leader Rafael Correa, a critic of US foreign policy, defeats nearest rival by more than 30 percentage points.

Retrieved from http://www.aljazeera.com

Ecuadorean President Rafael Correa has been re-elected to a third term in office allowing him to deepen his socialist revolution even as he seeks to woo foreign investment in the resource-wealthy Andean nation.

“We will be present wherever we can be useful, wherever we can best serve our fellow citizens and our Latin American brothers,” Correa told supporters who gathered in front of the presidential palace in Quito on Monday.

The 49-year-old economist defeated his nearest rival by more than 30 percentage points, according to results ratified by the National Electoral Council.

Correa’s resounding victory could set him up to become Latin America’s most outspoken critic of Washington, as Venezuelan President Hugo Chavez is locked in a battle with cancer and may be unable to stay in power.

Correa’s closest challenger, former banker Guillermo Lasso has conceded defeat, congratulating Correa for “a victory deserving respect”.

The Leftist leaders’s social and economic programmes have made him a popular leader, with an approval rating of nearly 85 percent.

Earlier, Correa told reporters his goal is to now further reduce poverty, which the United Nations says dropped from 37 percent to 32 percent since he first took office in 2007, as he deepens what he terms his “citizens’ revolution”.

Correa has brought political stability to the oil-exporting nation of 14.6 million people that cycled through seven presidents in the decade before he first took office.

He won re-election in April 2009 after voters approved a constitutional rewrite that mandated a new ballot, and he would be legally barred from running again following a victory.

Foreign investment

The opposition’s inability to unite behind a single candidate in Sunday’s vote helped give Correa a comfortable lead. Former President Lucio Gutierrez won 5.9 percent. The rest of the vote was divided among five other candidates.

A self-declared foe of neo-liberal economics, Correa has taken on big business and media groups, imposing new contracts on oil companies and renegotiating the country’s debt.

Foreign investment will be key to boosting oil output that has been stagnant for five years and to expanding a mining industry that has barely begun to tap the country’s gold and copper reserves.

“We can’t be beggars sitting on a sack of gold,” is a catch phrase Correa has used in recent months to argue that Ecuador needs to better exploit its natural resources despite opposition from rural communities to some projects.

In that vein, Correa appears to be cautiously willing to cut deals and soften his image as an anti-capitalist crusader.

“The advantages of our country for foreign investment are political stability, a strong macroeconomic performance…and important stimulus to new private investment,” he said last week while hosting the emir of gas-rich Qatar.

Foreign direct investment has generally been less than $1bn a year since Correa took office in 2007. By comparison,
neighboring Peru and Colombia last year received $7.7bn and $13bn, respectively.

Correa’s government is also in talks with China to secure funding for the $12.5bn Pacifico refinery, which would
allow Ecuador to save up to $5b a year in fuel imports.

 

Click for James Petras’ analysis and critique of Correa’s government 

Ecuador: Left-Center Political Regimes Versus Radical Social Movements (by James Petras)

By James Petras

Retrieved from http://www.eurasiareview.com/

On February 17, 2013, national elections will take place in Ecuador in which incumbent left-center President, Rafael Correa, is likely to win with an absolute majority against opposition candidates covering the political spectrum from Right to Left. [Update: Rafael Correa won the elections, defeating his nearest rival by more than 30 percentage points.]

Since he was first elected in 2006, Correa has won a string of elections, including presidential elections (2009), a constitutional referendum, a constituent assembly and a ballot on constitutional amendments. Correa’s electoral successes occur despite the opposition from the main Indian organizations, CONAIE (Confederation of Indigenous Nationalities of Ecuador) and CONFENIAE, the principle public sector teachers unions, environmental NGOs and numerous radical intellectual, academics and trade union activists. He also has routed the traditional pro-US right-wing and liberal parties, successfully defeated and prosecuted the subversive intent of the mass media moguls and survived an aborted police-military coup in 2010. Unquestionably Correa has demonstrated his capacity to win repeated elections and even increase his margin of victory.

The electoral successes of Correa raise fundamental issues which transcend the immediate context of Ecuadorean politics and reflect a general pattern throughout Latin America. These issues include: (1) the relation between mass social movements and left of center electoral parties and politicians. (2) The relation between pro-active extractive capitalist development strategies (mining, oil, agro-business), inclusionary social policies and anti-imperialist regional foreign policies. (3) The inverse relation between the growth and consolidation of a left-center regime and the decline and weakening of radical social movements. (4) The problem of the initial convergence and divergence between radical social movements and left-center political leaders; as they move from ‘opposition’ to political power. (5) The shifts in power between movements and electoral politicians, with the former exercising greater capacity to mobilize during the period of opposition to the Right and the latter dominating and dictating the political agenda subsequent to securing electoral office.

The Politics of Post Neo-Liberalism

Correa’s “citizen based” electoral movement, operates from positions in government and eschews any ‘class framework’. In fact in its broadest terms, it appeals to and directs government programs to both the urban poor and the big foreign petroleum multi-nationals; the small and medium size business people and the Guayaquil business elite; workers in the informal sector and the public sector professionals and employees, the returning immigrants from Europe (especially Spain) and the construction, real estate and communication elite.

In foreign policy Correa has supported and has the backing of the Cuban and Venezuelan governments and is a member of ALBA; it has received large scale low interest loans from China (in exchange for oil investment and trade agreements) and retains commercial ties with the US and EU. Correa has backed greater Latin American integration and signed off on major public-private petrol contracts with US and European oil companies. He claims to be a socialist but condemns the Marxist FARC and praises the Colombian regimes’ ‘neo-liberalism’; questioned the illegal foreign debt (lowering it by 60%) and at the same time retains the dollar as Ecuador’s currency and opens indigenous territories to foreign capital exploitation.

In a word Correa’s “post neo-liberal policies” combine ‘nationalist populist’ and neo-liberal policies more than a program for the 21st century socialism that he proclaims.

Perspectives on President Correa’s Government

The national-populist extractive policies and development strategy of the Correa regime has polarized opinion across the hemisphere and within Ecuador. On the extreme right Washington and its mass media acolytes view Ecuador as a radical ‘socialist regime’. They take at face value Correa’s embrace of “21st century socialism”, in large part because of his ties to Venezuela, membership in ALBA, renegotiation of the foreign debt and Ecuador’s giving political asylum (in its British embassy) to Julian Assange, the Wilkileak’s leader.

Echoing Washington’s ‘radical leftist’ label are the traditional and newly minted rightist parties (Sociedad Patriotica) who have been marginalized by Correa’s electoral successes. Their critique of Correa’s early nationalist policies, renegotiating the debt and prevailing oil contracts, is now tempered by his recent large scale, long term investment agreement with several foreign multinational petroleum companies. The Ecuadorean oligarchy while publically condemning Correa are privately busy negotiating public-private procurement agreements especially in communications, infrastructure and banking.

The Indian movement, CONAIE, peasants, the teachers union, the ecology-NGOs and some smaller leftist parties oppose Correa for his “sellout” to the big oil companies, his authoritarian centralized power, the expansion of exploitation in the Amazon region and territorial encroachment and threats to Indian lands, water and health.

In contrast to internal opposition from the social movements, the vast majority of leftist parties and center-leftist regimes in Latin America, led by Cuba and Venezuela, are staunch supporters and allies of the Correa regime based primarily on his anti-imperialist policies, support for regional integration and opposition to US interventionist and destabilization policies in the region.

Internationally Correa has widespread support among progressives in the US and Europe especially for his early policies questioning the legality of the foreign debt, his rhetorical proposal to conserve the Amazon in exchange for cash transfers from the EU/US, his renegotiations of the oil contracts and his anti-imperialist pronouncements. Most important, Correa has secured long term large scale financial aid from China in exchange for exploitation of its oil resources.

Buttressed by allies in Latin America and Asia, Correa has effectively resisted pressures from the outside from the US. Internally, Correa has built a formidable bloc of social and political forces which has effectively countered opposition from the oligarchical right as well as from the once powerful radical social movements. The sustained popular majorities backing Correa from 2006 to the present 2013 are based essentially on several factors – substantial increases in social expenditures benefiting popular constituencies and nationalist policies increasing state revenues. The entire Correa paradigm, however, is based on one singular factor – the high price for oil and the boom in commodity prices which finances his strategy of extractive capital led growth and expenditures for social inclusion.

The Social Bases of Correa’s Popularity

Correa’s electoral victories are directly related to his populist social policies financed by the substantial oil revenues resulting from the high prices and huge increase from the renegotiation of the oil contracts with the multi-nationals – an increase from a 20% to an 85% tax. Correa increased the health budget from $561 million in 2006 to $774 million in 2012, about 6.8% of the national budget. Clinics have multiplied, the price of medications has been reduced as a result of a joint venture with the Cuban firm Enfarm, and access to medical care has vastly improved. Educational spending has increased from 2.5% of GDP in 2006 to 6% in 2013, including a free lunch program for children. The regime has increased state subsidies for social housing, especially for low income classes as well as returning immigrants. To lower unemployment, Correa has allocated $140 million in micro credits to finance self-employment, a measure especially popular among workers in the “informal sector”. By effectively reducing the debt to foreign creditors by two-thirds (debt service runs to 2.24% of GDP), Correa has increased the minimum wage and pensions for low income retirees thus expanding the social security system.

Anti-poverty subsidies, payments of $35 monthly (increased to $50 two weeks before the Elections) to poor families and the disabled and low interest loans have allowed Correa to gain influence and divide the opposition movements in the countryside. Business elites especially in Guayaquil and the middle and upper echelon of the public sector especially in the petrol sector, have become important contributors and backers of Correa’s electoral machine.

As a result of State subsidies, contracts and the backing of business and banking sectors and the weakening of the opposition media elites, Correa has built a broad electoral base that transverses the class spectrum. The entire ‘popular alliance’ is, however, highly dependent on Correa’s pact with extractive multi-nationals. His electoral success is a result of a strategy based on the revenue from a narrowly based export sector. And the export sector is highly dependent on the expansion of oil exploitation in the Amazon region which adversely affects the livelihood and health of the indigenous communities, who in turn are highly organized and in a permanent ‘resistance mode”.

The Contradictions of Extractive Capitalism and Populist Politics: The Threats and Challenges to Social Movements

The oil sector accounts for over 50 percent of Ecuador’s export earnings and over one-third of all tax revenues. Production has oscillated around 500,000 barrels a day, with increasing shares sold to China and a decreasing percentage to the US. In February 2013 Ecuador signed contracts for $1.7 billion in investments to boost output in the Amazon fields with Canadian, US, Spanish and Argentine multi-nationals in association with the Ecuadorean state company Petroecuador.

The biggest oil investments in the history of Ecuador promise to increase the levels of oil spills, contamination of Indian communities and intensification of the conflicts between CONAIE and its ecological and movement allies and the Correa regime. In other words as Correa sustains and consolidates his majoritarian electoral support outside of the Amazon and adjoining regions with increased social expenditures based on rising oil revenues, he will further dispossess and alienate the movements of the interior.

Social inclusion of the urban masses and promotion of an independent foreign policy are based on an alliance with foreign extractive multi-nationals which undermine the habitation and economy of small producers and Indian communities.

The history of petroleum exploitation contamination up to the present day provides little evidence to support President Correa’s claims of environmental safeguards. Texaco/Chevron oil exploitation in the Amazon contaminated millions of acres, dispossessed scores of Indian communities and sickened thousands of inhabitants resulting in a judiciary award of $8 billion dollars in favor of the 30,000 indigenous people adversely affected.

Recently Correa’s proposed oil contracts with multi-nationals to exploit 13 blocks in the pristine Amazon region covering millions of acres and inhabited by seven Indian nationalities, without consulting the indigenous communities thus contravening his own newly written constitution. Powerful mobilizations, led by CONAIE and CONFEIAE (the Ecuadorean Confederation of Amazonian Indian Nationalities) on the 28th of November 2012 in Quito and in the regions targeted for exploitation, has caused several oil majors to delay drilling. In the face of determined Indian resistance, Correa has shown the authoritarian side of his regime: threatening to dispatch the military to occupy and forcibly impose a kind of ‘martial law’, raising the prospects of prolonged political warfare.

While Correa can and does win national elections and routs his electoral opposition in the big cities, he faces a resolute organized majority in the Amazon and adjoining regions. Correa’s dilemma is that unless he diversifies the economy and reaches a compromise via consultation with CONAIE, his dependence on new oil ventures drives him toward de facto alliance with the traditional export elites and greater dependence on the military and police.

The Latin American Context

Correa’s bet on an export strategy based on primary goods has created a potentially dynamic mega cycle of growth but it is increasingly dependent on high world prices for oil. Any significant decline in price would immediately lead to a precipitous fall in social expenditures, erode his social coalition and strengthen the opposition from the right and the radical social movements. Correa’s repeated electoral successes and his widespread support across the progressive and anti-imperialist political spectrum, has seriously weakened the radical social movements a pattern that has been repeated throughout Latin America.

In the previous decade, roughly the period of the 1990’s to the early years of the 21st century, the radical social movements took center stage in toppling rightwing, US backed neo-liberal regimes. Ecuador was no exception: CONAIE and its urban allies ousted the incumbent neo-liberal President Mahuad in January 21, 2000, and joined with Correa in driving the Lucio Gutierrez regime from power in April 2005. Similar mass struggles and social mobilizations ousted neo-liberals in Argentina and Bolivia, while movement backed center left politicians took power in Uruguay, Brazil, Paraguay and Peru.

Once ensconced in power the center-left regimes adopted a commodity led export strategy, embraced partnerships with the MNC and built broad electoral conditions which marginalized the radical social movements; with the aid of increased revenues they substituted populist transfer payments for structural transformations.

Nationalist foreign policies were combined with alliances with big commodity based MNC. To the extent that class struggles emerged, the populist leaders condemned them and even accused their leaders of “conspiring with the Right” – thus questioning the legitimacy of their demands and struggles.

The post neo-liberal center-left regimes in Latin America, with their populist politics of ‘inclusion’ have been far more effective in reducing the appeal and influence of the radical mass social movements than the previous US backed repressive neo-liberal regimes.

Those social movements which opted to support and join the center-left regimes (or were co-opted) became transmission belts for extractive policies. Confined to administrating the regime’s anti-poverty programs and defending the extractive capitalist model, the co-opted leaders argued for higher tax revenues and social expenditures, and, occasionally, called for greater environmental controls. But ultimately the “insider strategy”, adopted by some social leaders, has led to bureaucratic subordination and the loss of any specific class loyalties.

Conclusion

National-populism is and will be challenged from within by its ‘allies’ among the MNC who will increasingly influence their ‘public sector partners’ and, from the ‘outside’, by the pressures from the world market. In the meantime as long as commodity prices hold and the nationalist-populist leaders continue their ‘inclusive’ social programs, Latin American politics will remain relative stable and the economy will continue to grow, but it will continue to face resistance from the alliance of eco-social and indigenous movements.

What lessons can be drawn from the past two decades of social movement – populist electoral party alliances? The message is both clear and ambiguous. Clearly movements which do not have an independent political perspective will lose out to their electoral allies. However, there is no question that because of movement action, the populist electoral class has legislated significant social expenditures benefiting the popular classes and pursued a relative independent foreign policy – an ambiguous legacy or unfinished history?

Chavez Returns to Venezuela

By EWAN ROBERTSON

Retrieved 2/18/13 from venezuelanalysis.com

 

Mérida, 18th February 2013 (Venezuelanalysis.com) – Venezuelan president Hugo Chavez returned to Venezuela in the early hours of this morning after over two months in Cuba recovering from cancer surgery.

“We’ve arrived once again to the Venezuelan Homeland. Thank you God! Thank you beloved people! We’ll continue treatment here,” announced Chavez on Twitter when he arrived in Caracas airport at 2.30am this Monday morning.

The Venezuelan head of state had been in Cuba recovering from an operation in the pelvic region undergone on 11 December, in what was his fourth cancer surgery in 18 months.

In another tweet Chavez also thanked the Castro brothers, Cuban president Raul and former president Fidel for their support, as well as his medical team, declaring, “We will live and we will overcome!”

Fidel Castro also wrote a letter to Chavez before his departure from Havana, in which he referred to the stage reached in the Venezuelan president’s recovery.

“A long and agonising wait, as well as your astonishing capacity for physical resistance and the total dedication of a team of doctors…were necessary to achieve this objective,” he wrote.

Upon arrival Chavez was taken to the Dr. Carlos Arvelo military hospital in Caracas, where he will continue treatment as part of his recovery.

On Friday the first images of Chavez since his operation were released, which showed the Venezuelan president smiling and reading, while an official statementconfirmed that he temporarily had difficulty speaking due to having a tracheal tube in place for respiratory insufficiency.

This morning, Venezuelan communication minister Ernesto Villegas argued that the official information given on Chavez’s recovery had been vindicated as accurate against voices in international and Venezuelan private media which had sought to speculate on the president’s health.

“He’s back, he’s back, he’s back,” said Villegas in an interview on public channel VTV, continuing, “the ominous voices- those who were calling into question the information emitted by the national government with respect to Chavez’s health, are defeated”.

Villegas added that “intense mechanisms were activated to delegitimise, to call into question all of the information that was being given, including by echoing the most atrocious versions [of Chavez’s state of health]”.

The minister also said that Chavez “ordered at all times that the country was informed on the progress of his treatment,” and that the government had given 30 official updates on the president’s clinical progress during his stay in Cuba.

Venezuelan vice president Nicolas Maduro called on people to gather around the country to celebrate Chavez’s return.

By dawn a crowd had already gathered outside the Dr. Carlos Arvelo military hospital in Caracas to show their support for Chavez. By midday there were large gatherings in most of the country’s main plazas.

Maduro also confirmed that the leadership of Chavez’s party, the United Socialist Party of Venezuela (PSUV), would be meeting today to discuss the party’s political strategy in the new circumstances.

PUBLISHED ON FEB 18TH 2013 AT 11.10AM

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