Economic Crisis in the Third World

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By fatima and Will

Just as in the US, where capitalists have been straining their eyes looking for green shoots in the stock market, while ignoring the deepening recession among ordinary people, economists consider the relatively stable GDPs of countries like China and India as a sign that people in those countries are not as affected by the economic crisis. They even go so far as to say that working people in the third world have “safety nets” to fall back on during hard times.

As the article below from New Left Review points out, the IMF and co. promote the informal sector as a way to be self reliant until the economy improves. If true, that would be nice, since these same people contributed to rolling back any job security and collective bargaining rights that workers had fought for. Or they say that returning to the rural farm that people had originally migrated from will serve as a temporary solution. The article asks the obvious question, “Why did they leave in the first place?”

The New Left Review article also mentions an important point about divisions over race and religion rather than class being the source of income security. The example of the city of Ahmedabad in India gets at this point. In the last ten years, Ahmedabad has seen violent communal conflict between Hindus and Muslims. Now all the Muslims have been run out of the city and live in camps outside of the city. Being this far from the middle and ruling classes makes it pretty hard to participate in the informal sector. Poor non-Muslims live on the east side of the Sabarmati River, middle class and wealthy non-Muslims on the west side. Its a very good example of how divisions in the working class can play out in the third world.

Another parallel with the US is the deindustrialization of Ahmedabad’s textile industry. Its hauntingly similar to the death of the auto industry in the Midwest. There was a time where one mill or factory worker could support their family and live with dignity and respect for themselves. Those jobs are gone now, in Ahmedabad and Detroit.

The after effects of Katrina is another example of parallels between the working classes of the US and the third world. Americans could not believe that a refugee problem could come to the US. All of these examples are a sign that the actual living conditions of the American working class are eroding and the US’ position as a first world country is slipping. If that is true, what does it mean for the national integrity of the US, what holds the country together?

And the question remains: when there are no jobs in the formal sector, racism pushes you out of the informal sector, and returning to a rural farm means starvation, what the hell do you do?


Jan Breman

New Left Review 59, September-October 09

Media reports on the economic meltdown have mainly concentrated on the impact of the crisis on the rich nations, with little concern for the mass of the population living in what used to be called the Third World. The current view seems to be that the setbacks in these ‘emerging economies’ may be less severe than expected. China’s and India’s high growth rates have slackened, but the predicted slump has not materialized. This line of thought, however, analyses only the effects of the crisis on countries as a whole, masking its differential impact across social classes. If one considers income distribution, and not just macro-calculations of GDP, the global downturn has taken a disproportionately higher toll on the most vulnerable sectors: the huge armies of the poorly paid, under-educated, resourceless workers that constitute the overcrowded lower depths of the world economy.

To the extent that these many hundreds of millions are incorporated into the production process it is as informal labour, characterized by casualized and fluctuating employment and piece-rates, whether working at home, in sweatshops, or on their own account in the open air; and in the absence of any contractual or labour rights, or collective organization. In a haphazard fashion, still little understood, work of this nature has come to predominate within the global labour force at large. The International Labour Organization estimates that informal workers comprise over half the workforce in Latin America, over 70 per cent in Sub-Saharan Africa and over 80 per cent in India; an Indian government report suggests a figure of more than 90 per cent.1 Cut loose from their original social moorings, the majority remain stuck in the vast shanty towns ringing city outskirts across the global South.

Recently, however, the life of street hawkers in Cairo, tortilla vendors in Mexico City, rickshaw drivers in Calcutta or scrap mongers in Jakarta has been cast in a much rosier light. The informal sector, according to the Wall Street Journal, is ‘one of the last safe havens in a darkening financial climate’ and ‘a critical safety net as the economic crisis spreads’.2 Thanks to these jobs, former IMF Chief Economist Simon Johnson is quoted as saying, ‘the situation in desperately poor countries isn’t as bad as you’d think’. On this view, an admirable spirit of self-reliance enables people to survive in the underground circuits of the economy, unencumbered by the tax and benefit systems of the ‘formal sector’. These streetwise operators are able to get by without expensive social provisions or unemployment benefit. World Bank economist W. F. Maloney assures the WSJ that the informal sector ‘will absorb a lot of people and offer them a source of income’ over the next year.

The WSJ draws its examples from Ahmedabad, the former mill city in Gujarat where I conducted fieldwork in the 1990s. Here, in the Manek Chowk market—‘a row of derelict stalls’, where ‘vendors peddle everything from beans to brass pots as monkeys scramble overhead’—Surajben ‘Babubhai’ Patni sells tomatoes, corn and nuts from a makeshift shelter: ‘She makes as much as 250 rupees a day, or about $5, but it’s enough to feed her household of nine, including her son, who recently lost his job as a diamond polisher.’ Enough: really? Five dollars for nine people is less than half the amount the World Bank sets as the benchmark above extreme poverty: one dollar per capita per day. Landless households in villages to the south of Ahmedabad have to make do with even less than that—on the days they manage to find work.3

Earlier this year I returned to the former mill districts of the city to see how the economic crisis was affecting people there. By 2000, these former working-class neighbourhoods had already degenerated into pauperized quarters. But the situation has deteriorated markedly even since then. Take the condition of the garbage pickers—all of them women, since this is not considered to be man’s work. They are now paid half what they used to get for the harvest of paper, rags and plastic gleaned from the waste dumps on their daily rounds. To make up the loss, they now begin their work at 3 am instead of at 5 am, bringing along their children to provide more hands. The Self-Employed Women’s Association, which organizes informal-sector workers in the city, reports that ‘incomes have declined, days of work decreased, prices have fallen and livelihoods disappeared’.4 Their recent newsletter presents the following table, testifying to the crash in prices for the ‘goods’ collected on the dumps.

SEWA activist based in Ahmedabad reports on the anguish she met when visiting local members. One of these, Ranjanben Ashokbhai Parmar, started to cry: ‘Who sent this recession! Why did they send it?’

I was speechless. Her situation is very bad, her husband is sick, she has 5 children, she stays in a rented house, she has to spend on the treatment of her husband and she is the sole earner in the family, how can she meet her ends? When she goes to collect scrap she takes along her little daughter, while her husband sits at home and makes wooden ice-cream spoons, from which he can earn not more than 10 rupees a day.

In the industrial city of Surat, 120 miles south of Ahmedabad, half the informal labour force of the diamond workshops was laid off overnight at the end of 2008, with the collapse of worldwide demand for jewels. Some 200,000 diamond cutters and polishers found themselves jobless, while the rest had to contend with drastic reductions in hours and piece-rates. A wave of suicides swept the dismissed workers, who—with a monthly income of little more than $140—were reputed to belong to the most skilled and highest paid ranks of the informal economy. These bitter experiences of the recession-struck informal economy in Gujarat can be repeated for region after region across India, Africa and much of Latin America. Confronted with such misery it is impossible to concur with the World Bank’s and Wall Street Journal’s optimism about the sector’s absorptive powers. As for their praise for the ‘self-reliance’ of those struggling to get by in these conditions: living in a state of constant emergency saps the energy to cope and erodes the strength to endure. To suggest that these workers constitute a ‘vibrant’ new class of self-employed entrepreneurs, ready to fight their way upward, is as misleading as portraying children from the chawls of Mumbai as slumdog millionaires.

Rural rope’s end

The second option currently being touted by the Western media as a ‘cushion for hard times’ is a return to the countryside. As an Asian Development Bank official in Thailand recently informed theInternational Herald Tribune, ‘returning to one’s traditional village in the countryside is a sort of “social safety net”’. The complacent assumption is that large numbers of rural migrants made redundant in the cities can retreat to their families’ farms and be absorbed in agricultural work, until they are recalled to their urban jobs by the next uptick of the economy. The IHT evokes a paradisial rural hinterland in northeast Thailand. Even in the dry season,

there are still plenty of year-round crops—gourds, beans, coconuts and bananas among them—that thrive with little rainwater. Farmers raise chickens and cows, and dig fish ponds behind their homes . . . Thailand’s king, Bhumibol Adulyadej, has long encouraged such self-sufficiency.5

Similar views were published at the time of the Asian financial crisis in 1997. Then, World Bank consultants assumed that agriculture could act as a catchment reservoir for labour made redundant in other sectors, based on the notion that the army of migrants moving back and forth between the country and urban-growth poles had never ceased their primary occupation. The myth persisted that Southeast Asian countries were still essentially peasant societies. These tillers of the land might go to the city to earn extra wages for cash expenditure, but if they lost their jobs they were expected to reintegrate into the peasant economy with no difficulty. This was far from the case, as I wrote then.6

Returning to the localities of my fieldwork in Java this summer, I listened to the latest stories of men and women who had come back to the village, having lost their informal-sector jobs elsewhere, and find no work here, either. Of course not: they were driven out of the village economy in the first place because of lack of land or other forms of capital. There is no family farm to fall back on. The departure of the landless and the land-poor was a flight, part of a coping strategy. Now that the members of this rural proletariat have become redundant in Jakarta or Bangkok, or as contract workers in Taiwan or Korea for that matter, they are back to square one, due to an acute and sustained lack of demand for their labour power in their place of origin. A comparable drama is taking place in China. Out of the 120 to 150 million migrants who made the trek from the rural interior to the rapidly growing coastal cities during the last twenty-five years, official sources report that about 10 to 15 million are now unemployed. For these victims of the new economy, there is no alternative but to go back ‘home’ to a deeply impoverished countryside.

The Asian village economy is not capable of accommodating all those who possess no means of production; nor has the urban informal sector the elasticity to absorb all those eager to drift into it. According to policymakers’ notions of cross-sectoral mobility, the informal economy should swallow up the labour surplus pushed out of higher-paid jobs, enabling the displaced workforce to stick it out through income-sharing arrangements until the economic tide turned again. I have never found any evidence that such a horizontal drift has taken place. Street vendors do not turn into becak drivers, domestic servants or construction workers overnight. The labour market of the informal sector is highly fragmented; those who are laid off in their branch of activity have no alternative but to go back ‘home’, because staying on in the city without earnings is next to impossible. But returning to their place of origin is not a straightforward option, given the lack of space in the rural economy. Nevertheless, my informants do not simply lay the blame for their predicament on the economic meltdown. From the perspective of the world’s underclasses, what looks like a conjunctural crisis is actually a structural one, the absence of regular and decent employment. The massive army of reserve labour at the bottom of the informal economy is entrapped in a permanent state of crisis which will not be lifted when the Dow Jones Index goes up again.

New economic order

The transformation that took place in nineteenth-century Western Europe, as land-poor and landless peasants migrated to the towns, is now being repeated on a truly global scale. But the restructuring that would create an industrial-urban order, of the sort which vastly improved the lot of the former peasants of the Northern hemisphere, has not materialized. The ex-peasants of the South have failed to find secure jobs and housing on their arrival in the cities. Struggling to gain a foothold there, they have become mired for successive generations in the deprivation of the shanties, a vast reserve army of informal labour.

In the 1960s and 70s, Western policymakers viewed the informal sector as a waiting room, or temporary transit zone: newcomers could find their feet there and learn the ways of the urban labour market. Once savvy to these, they would increasingly be able to qualify for higher wages and more respectable working conditions. In fact the trend went in the opposite direction, due in large part to the onslaught of market-driven policies, the retreat of the state in the domain of employment and the decisive weakening of organized labour. The small fraction that made their way to the formal sector was now accused of being a labour aristocracy, selfishly laying claim to privileges of protection and security. At the same time, the informal sector began to be heralded by the World Bank and other transnational agencies as a motor of economic growth. Flexibilization became the order of the day—in other words, dismantling of job security and a crackdown on collective bargaining. The process of informalization that has taken shape over the last twenty years saw, among other things, the end of the large-scale textile industry in South Asia. In Ahmedabad itself, more than 150,000 mill workers were laid off at a stroke. This did not mean the end of textile production in the city. Cloth is now produced in power-loom workshops by operators who work twelve-hour days, instead of eight, and at less than half the wages they received in the mill; garment manufacture has become home-based work, in which the whole family is engaged day and night. The textile workers’ union has all but disappeared. Sliding down the labour hierarchy has plunged these households into a permanent social and economic crisis.

It is not only that the cost of labour at the bottom of the world economy has been scaled down to the lowest possible level; fragmentation also keeps the under-employed masses internally compartmentalized. These people are competitors in a labour market in which the supply side is now structurally larger than the—constantly fluctuating—demand for labour power. They react to this disequilibrium by trying to strengthen their ties along lines of family, region, tribe, caste, religion, or other primordial identities which preclude collective bargaining on the basis of work status and occupation. Their vulnerability is exacerbated by their enforced rootlessness: they are pushed off the land, but then pushed back onto it again, roaming around in an endless search for work and shelter.

The emergence of the early welfare state in the Western hemisphere at the end of the nineteenth century has been attributed to the bourgeoisie’s fear that the policy of excluding the lower ranks of society could end in the collapse of the established order.7 The propertied part of mankind today does not seem to be frightened by the presence of a much more voluminous classe dangereuse. Their appropriation of ever-more wealth is the other side of the trend towards informalization, which has resulted in the growing imbalance between capital and labour. There are no signs of a change of direction in this economic course. Promises of poverty reduction by global leaders are mere lip service, or photo-opportunities. During his campaign, Obama would once in a while air his appreciation for Roosevelt’s New Deal. Since his election the idea of a broad-based social-welfare scheme has been shelved without further ado. The global crisis is being tackled by a massive transfer of wealth from poor to rich. The logic suggests a return to nineteenth-century beliefs in the principle and practice of natural inequality. On this view, it is not poverty that needs to be eradicated. The problem is the poor people themselves, who lack the ability to pull themselves up out of their misery. Handicapped by all kinds of defects, they constitute a useless residue and an unnecessary burden. How to get rid of this ballast?

1 ‘Decent Work and the Informal Economy’, International Labour Organization, Geneva 2002; Report on the Conditions of Work and Promotion of Livelihoods in the Unorganised Sector,National Commission for Enterprises in the Unorganised Sector, Government of India, New Delhi 2008.

2 Patrick Barta, ‘The Rise of the Underground’, Wall Street Journal, 14 March 2009.

3 Breman, The Poverty Regime in Village India, Delhi 2007.

4 Self-Employed Women’s Association newsletter, We the Self-Employed, no. 18, 15 May 2009. SEWA began organizing informal-sector workers in Ahmedabad in the 1970s, and has subsequently expanded its activities across India, and even beyond.

5 Thomas Fuller, ‘In Southeast Asia, Unemployed Abandon Cities for Their Villages’, IHT, 28 February 2009.

6 See Breman and Gunawan Wiradi, Good Times and Bad Times in Rural Java: Case Study of Socio-economic Dynamics in Two Villages towards the End of the Twentieth Century, Leiden 2002.

7 Abram de Swaan, In Care of the State: Health Care, Education and Welfare in Europe and the USA in the Modern Era, Cambridge 1988.

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6 thoughts on “Economic Crisis in the Third World”

  1. Yeah, you even see progressive NGO types buying into this IMF/ World Bank myth of the self-sufficient entrepreneurs in the informal sector. You see some liberal feminists suggesting that microcredit programs for individual women in the informal sector will give them more independence from patriarchy and more of an ability to survive in an economically precarious situation.

    Maria Meis has an excellent critique of this in her book Patriarchy and Accumulation on a World Scale. She points out how a lot of these programs actually end up setting up situations where the “capital” that women own ends up being controlled by male relatives. Of course, gaining access to loans and to capital is not necessarily a bad thing and could be part of a more serious transitional program for economic renewal – folks could demand worker -controlled reinvestment in deteriorating cities like Detroit or Ahmedabad. But this is very different from what the IMF/ WB are talking about. (Sushil, if you’re reading this I’d love to hear your thoughts on movements for community-controlled capital since I know you have some practical experience with this).

    Also, As Mike Davis pointed out in his book Planet of Slums, when the IMF/ WB celebrate the supposed entrepreneurial spirit of the informal sector they are ignoring class divisions among the urban poor. Some informal economic enterprises are started by folks who are unemployed civil servants or folks who were pushed out of the middle class and they use their skills to monopolize and dominate highly exploited networks of destitute workers.

    Something similar happens here in the US with the drug trade. We did a simulation of a factory in class to show the law of value (how workers produce a lot of money for the company but only get to take home a little bit of this in their paychecks). My students were angry about this and saw it as the bosses robbing them . When I asked them what they could do about this as workers they said “quit and sell drugs instead.” I emphasized that this process also happens in the drug trade. You can’t last forever in the game just buying small amounts of weed and reselling them. If you really want to make money it requires a larger scale operation. The people who run these operation are exploiting the labor of the corner boys who actually take the day to day risks involved in dealing.

    It’s certainly ironic that the IMF and World Bank would celebrate the informal economy in the 3rd world as a “social safety net” when officials and elites here in the US are constantly attacking our very own cities’ informal economies as an embarrassment and a social problem. You don’t see the IMF and World Bank going around to ghettoes in America and celebrating the entrepreneurial spirit of homeless folks who set up shantytowns under the bridge named after the mayor (like Nickelsville here in Seattle). You don’t see them celebrating the pull yourself up by the bootstraps mentality of drug dealers, pimps, unsigned hip hop artists selling their mix tapes outside of the supermarket, etc. In reality, as Fatima argues, the line between the 1st World and the 3rd World is not so solid.

    The New Left Review article argues that: “The transformation that took place in nineteenth-century Western Europe, as land-poor and landless peasants migrated to the towns, is now being repeated on a truly global scale. But the restructuring that would create an industrial-urban order, of the sort which vastly improved the lot of the former peasants of the Northern hemisphere, has not materialized.”

    This process is what Marx called primitive accumulation: peasant farmers get their land taken away (enclosed) by capitalist landowners and have to migrate to the cities to become the newest ranks of the proletariat (working class). Sylvia Federici has written a lot on how primitive accumulation is happening rapidly in the 3rd World today. She points out how this involves the emergence of new forms of patriarchy. In Europe, it lead to the witch trials, which were part of the emerging capitalist class’s attempt to gain control over women’s bodies and reproduction just like they were gaining control over common lands and other communal means of production and reproduction. Federici suggests that the kind of situations the New Left Review article is talking about are leading to new witch trials in parts of the 3rd World today. This may be helpful in understanding why there has been such an explosion of highly patriarchal forms of pentecostalist Christianity in many 3rd World cities.

    Mike Davis points out that the path of primitive accumulation was uneven during the rise of capitalism in Europe. Entire cities like Dublin were left out the industrialization process. Places like the Irish countryside were enclosed and peasants were forced to migrate but there was no accompanying growth of jobs in cities for them to work. (I imagine this has something to do with the presence of imperialism and Anglo supremacy in Ireland). So cities like Dublin became massive slums where the primary economy was the informal sector. The same thing is happening today on a global scale, organized by US Imperialism . The peasantry in the 3rd world is being destroyed but the rapidly growing global working class cannot find consistent employment. While some 3rd World cities (east coast China, parts of Brazil, etc) suck in workers at a massive scale to staff expanding factory systems, other cities (like much of urban sub-Saharan Africa) are becoming a “Planet of slums.” It seems that the economic crisis is only expanding this process.

    Like Fatima suggested, this process does not adhere to national borders. Any country could include industrial powerhouse cities right next to slum cities. This is even happening in North America. While parts of the US South and the US – Mexico border industrialize, large parts of Mexico and the US midwest are deindustrializing. The border is sucking workers from both sides toward it like a vortex but everyone who can’t make it to the “promised land” of high tech sweatshop employment there end up stranded in massive urban slums dotting the continent, from Detroit to Mexico City.

    The key question is what will the relationship be between a) the expanding working class in these industrial powerhouses, b) peasants struggling against enclosures, for example the Zapatistas in Mexico and c) the urban unemployed who have access neither to jobs nor to peasant/ village communes (unless you consider picking through a garbage heap an example of the commons). What new forms of labor organizing can be built not only to defend jobs for the currently employed but also to expand jobs for those who are excluded from the workforce? What kinds of new commons can be built to sustain folks economically until they can find a job or in case they have to go on strike?

    Finally, how can we resist the racist, patriarchal, and communalist/ chauvinist divisions which are constantly being formed and reformed to divide who has work from who doesn’t? Fatima talks about how this process played out between Hindus and Muslims in Ahmedabad. It happens between men and women as both are stripped from access to the commons but men are more likely to find formal employment in the new capitalist workplaces (or, women are employed in global sweatshops but are paid less because their bosses assume that they can rely more on the peasant commune or their husband’s wage to survive). These processes show that to tackle even the most basic problems of local labor or unemployed organizing today requires serious internationalist- minded organization.

  2. Thanks, Mamos, for your comment. You brought a lot of points to the discussion that make it so much more complex and nuanced.

    In regards to your point about uneven development among urban centers, i think New Orleans is a prime example. The city’s unemployment rate is lower than the national average, which city and state politicians would love to applaud as a testament to their reconstruction efforts. The reality, though, is much different. Notwithstanding the fact that official figures for unemployment are always much lower than the reality because they dont take into consideration people who are underemployed or have given up looking for work, I wonder if New Orleans’ lower unemployment rate can be attributed to the fact that much of the working class there was forced out by the after effects of Katrina and they have not been able to return. And what galls me about unemployment rates most of all is that even if you working as many hours as you possibly can, you are still likely to be making shit wages, and being exploited in a multitude of ways on the job. ibn jubayr’s recent post on workplace organizing points to how this happens in the “formal” sector.

    And it leads to the question of the process of industrialization in the South that is happening. Its not something to hail as a great achievement, as most of these new jobs are the result of capitalists migrating to mostly “right to work” states in the South which do not have the rich history of labor organizing that the Midwest, East Coast, and West Coast have. In response to Mamos’ question about how we can resist the racist and patriarchal divisions of the working class, Justin Akers Chacon and Mike Davis’ book “No One is Illegal” points to the need for workers who are losing jobs to other workers who can be more easily exploited (whether it is due to nationality, race or gender) to organize in solidarity with each other. Racist or patriarchal sentiments within the working class are not easily set aside, but in the process of organizing in solidarity with the understanding that 1) the bosses are the enemy, not other workers and 2) that no one’ wages will go up if there is another group of people willing to work for lower wages, these divisions in the working class can be worked out. The point that Ignatiev makes in Black Worker, White Worker an STO workplace paper, is that this kind of organizing should not and if its going to be successful cannot follow along the lines of “black and white, unite and fight” but rather orienting to the demands of those who are most exploited in the workplace, whether it be workers in the 3rd world or people of color in the US, since these demands are necessarily going to be the most militant and hence serve every workers’ interest.

    But of course this kind of internationalist labor solidarity is going to require strong organizations that can support labor struggles in multiple workplaces in many different parts of the world. I think Mamos’ other questions about what kinds of organizations we need to build and how we can build them may began to answer this question as well.

  3. i’m posting this but the following was a comment by Don Hamerquist


    I think this is an important topic although the NLR article has an almost a-political tone that leaves any implications about whom and how to fight quite vague. By contrast I thought the Introduction and the initial discussion were a welcome break from conventional left analysis and do open up some crucial strategic issues. I want to comment on both. First the article:

     It stresses the “structural” character of the crisis.

    “From the perspective of the world’s underclasses, what looks like a conjunctural crisis is actually a structural one …”
    Indeed it should look that way from that perspective. However the question is not one of appearance and perspective but of the underlying reality. In my opinion, while there are certainly some possibilities of cyclical fluctuations and temporary upturns – even for the “world’s underclasses”, the structural (secular) elements of the crisis are of decisive importance. Further, I think that this perspective is shared by the global ruling class, notwithstanding official happy talk about recovery, and that this ruling class pessimism about the viability of capitalism underlies a good deal of current politics. Specifically, I question the assertion in the article that:

    “The propertied part of mankind today does not seem to be frightened by the presence of a much more voluminous classe dangereuse.    
    I would see exactly this fear underlying the global ruling class consensus on the pursuit of an otherwise inexplicable “war on terror”, and I think it is also evident in aspects of popular anti-immigrant sentiment. The class fear exists but it is focused on different dangers and is experimenting with new remedies.
    The article ends on a strange note that seems to indicate the author is not fully convinced by his own analysis.

    “On this view, it is not poverty that needs to be eradicated. The problem is the poor people themselves, who lack the ability to pull themselves up out of their misery. Handicapped by all kinds of defects, they constitute a useless residue and an unnecessary burden. How to get rid of this ballast?”

    Exactly. This is the current point of view of capital although not the one provided for public consumption. It also reflects the prognosis in the Grundrisse’s Seventh Notebook on Capital of a secular crisis in the law of value, a crisis characterized by an absurdity where human beings have become so productive that they are redundant, “…a useless residue and an unnecessary burden.” Raising the question… “How to get rid of this ballast?”

    There is a “…massive transfer of wealth from poor to rich” as the article says, but the crisis is more than that and because it is more it is not susceptible to some “broad-based social-welfare scheme” that Obama has currently shelved but could conceivably resurrect. What it is susceptible to is pestilence, famine, and war to cure the imbalances between the supply and the demand for living labor –  a descent, possibly slightly managed, into the barbarism which is always a possible end point for capital.

    The analysis of the main article follows fairly traditional left distinctions between metropolis and periphery; third world and first world; north and south. However, the intro and comments are more in touch with the need for new categories of thought to deal with new realities of power. The introduction raises the question of the emergence of third world issues in the center of the first world and asks, “what holds (will hold d.h.) the country together?”  An excellent question that raises further questions about how to respond to the assortment of national anarchist radicals that answer the question with ‘tribalism’ and ‘secession’.

    The discussion raises the fact that “…this process does not adhere to national borders…(showing) that to tackle even the most basic problems of local labor or unemployed organizing today requires serious internationalist-minded organization.” Again excellent points. I look forward to pursuing them. Nick Paretsky and I have had some exchanges on the Three Way Fight site that people may find relevant to these issues.

    Don H.

  4. Don, I agree with the importance you are putting on the “structural” nature of the crisis.

    If we agree with this then the question becomes how we interpret the current moment as a sharp expression of a deeper imbalance of world capitalism. In your discussions on the Three Way Fight blog you draw attention to a number of general features that are crucial to an interpretation:

    The growth of regional centers of capitalist accumulation; the interpenetration of “First World” and “Third World” conditions; the potential for right wing and even fascist movements that result as these broader trends explosively interact with national conditions and histories; and the need for an internationalist approach that represents in theory what is in actuality a globalized space where similar features exist across former national borders.

    With this in mind I wanted to jump in on a number of important points you raise.

    You write that the crisis “is not susceptible to some “broad-based social-welfare scheme” that Obama has currently shelved but could conceivably resurrect. What it is susceptible to is pestilence, famine, and war to cure the imbalances between the supply and the demand for living labor –  a descent, possibly slightly managed, into the barbarism which is always a possible end point for capital.”

    Absolutely, the immediate conditions don’t lend themselves to a return to the “social-welfare scheme”. This is a crucial point because there have been a lot of progressives out there for the last two years arguing that such a possibility is actually on the table. I think developments have proven the radical left correct on this point. Millions of people have learned from experience that Obama has not delivered this “change”–the outcome of which is not necessarily a victory for more radical politics, contributing to the urgency of our overall situation.

    But is the “social-welfare” solution possible under radically different conditions? You could argue that a dramatically altered international situation resulting from economic and political interests could produce a return to inter-imperialist war. We have already seen scrapes between the relations between the big political powers whose co-existence has been strained as, like big capital, they have scrambled to save themselves at the expense of others. The “social-welfare” solution under this scenario could be more liberal or more authoritarian, but the elements of a national chauvinist ideology, while out of state power, continue to exist among some sections of the capitalists, the progressive establishment, of course, strongly among the union bureaucracies.

    The other course, a political order reorganized to bring war (in various forms) against living labor to overcome systemic imbalances is, I agree, another distinct possibility. We have seen aspects of this continuing to permeate the U.S. ruling class and “official society” more broadly so that conditions of the former imperialist periphery (whether against external or internal “others”) come to mark the general conditions of the U.S. and around the world: a Blade Runner or Sleep Dealer situation: a world no longer of citizenship but of exploitation in which the political limits have moved far from where we are today–a Dubai for every corner of the globe.

    Looking at the systemic imbalances from the ideological and policy level of the capitalists adds the political dimensions here. For now aren’t the capitalists with the most transnational interests, those most organized at the moment to ideologically dominate the U.S. state and political class, highly contradictory on these matters? For example, they are desperate for China and Brazil to develop internal domestic markets for consumption for those goods being overproduced while at the same time they are locked into some investment strategies in part that contradict this desperate need. On the one hand, they need to encourage capital to take up some burden of social reproduction (healthcare, education etc.) to make it possible for this to happen. On the other hand, their desperation to open up China to “hot money” investment and their continued reliance with the export-led bourgeoisie in Brazil negates this happening.

    This all gets at what exactly the ruling class is “aware” of and what they aren’t. What is at stake here is exactly the kind of openings and dangers for liberation you have been trying to draw our attention to.

    While there is no doubt global powers have become more organized in the last 6 months to address their crisis, how transparent to themselves are these realities? You write there is “ruling class pessimism about the viability of capitalism [that] underlies a good deal of [their] current politics.” I would say there are contradictory expressions of their awareness of this, including the threat they face posed by what the article calls “a much more voluminous classe dangereuse”.

    On this Don writes, “I would see exactly this fear underlying the global ruling class consensus on the pursuit of an otherwise inexplicable “war on terror”, and I think it is also evident in aspects of popular anti-immigrant sentiment. The class fear exists but it is focused on different dangers and is experimenting with new remedies.”

    I think this is true to a point, but what exactly is the content of this “fear” from above and below? You could make the argument it is the undermining of the power of white supremacy to hold whites to the prerogatives of capital. The “war on terror” has its roots equally in the search to build domestic consensus against external “threats” (inside or outside the country) to paper over eroding standards of living at home. Of course, I’m not saying white supremacy is on the outs–in fact it’s growing, infecting now even sections of the Left. Popular anti-immigrant sentiment, then, has its roots in breaking with the political class who have “sold whites out” to the demands of transnational capital.

    Going back to the question of the self-awareness of a class threat…..For a whole generation, capitalists and official society have not known a serious threat from mass politics in the U.S., Europe and even China–the ideological source of the “end of history” talk. Their self-conceptions are predicated on the assumption of a passive and de-politicized populace, and they take for granted their growing disconnect from whatever “base” they have claimed historically.

    You can make the argument that those in power are aware of the threat given the character of their social ideology. Right wing ideas clearly predominate throughout most of the world’s governing orders. In the current crisis, what liberals hoped for as their big comeback hasn’t happened. Liberalism has lost most of its coherency. I read some of Paul Krugman’s column’s with the sense that he is just making it up as he goes along.

    But this doesn’t mean right wing social ideology doesn’t show a similar kind of decadence. Folks have mentioned the ridiculous micro-capitalist theories, “let a thousand capitalists bloom” nonsense for the “informal sector” and “surplus humanity” that has lined the pockets of think-tankers and academics for years. These right wing ideas are failing to build and reproduce political consensus. Instead, they only offer the military option. Thomas Barnett’s protecting the core and “integrating” the gap is in reality a new robust colonial policy, while “fourth generation warfare” and MOUT warfare has a long-term hold in the military policy establishment (as well as the fascists and white populists).

    Obviously this has been your whole point: some of the ruling class is consciously preparing for or (in addition) being pulled toward “new remedies”. But as the impasse of Israeli apartheid has shown this provides tremendous openings for new movements and new answers. The Israeli regime cannot solve its political crisis, only the Palestinians have a political solution.
    This is not to say we are not in a dangerous place and there has been a lot of complacency on some of the Left: especially since 2006 with a lot of talk about things “moving Left”.

    Finally, I wanted to jump in on one other burning issue: the need for “new categories of thought” and “The introduction raises the question of the emergence of third world issues in the center of the first world and asks, “what holds (will hold d.h.) the country together?”

    I think we really need to call attention to what you are pointing out here: This question of reconstructing the radical imagination is vital to address present realities. Leaving aside for now the question of how do we imagine the form of labor struggles for today, and just think about how we need to think about what new foundations are needed for a radical social imagination: we need to revisit the vision of Marti’s “Our America”; we need to think about what Loren Goldner has called our African-Indian-Anabaptist civilization; and we need to revisit the Third Worldist imagination–not the politics of the national bourgeoisie (radical or otherwise), but the masses who resisted and provided a potential alternative to capitalist Bandung modernization–the “third revolution”. We may be living in a similar moment of potential.


    This article gets at one feature of the current crisis being discussed. This specifically caught my eye “the disruption of parts production at Rico forced the temporary closure of two Ford plants, one in Canada and the other in the US, and a GM facility in the US, thereby undercutting the efforts of India’s corporate bosses and politicians to promote the country as a low-cost producer for the world auto industry.”

    It shows the structural realities of the crisis in its subjective form quiet profoundly. At the same time immense recognition has to be given that U.S. corporations still have 50% of their manufacturing inside the U.S. and a much higher number if Mexico and the border regions of Canada are included. The question of U.S., Mexico, Canada industrial complex is something which has to be explored as well, in terms of economy, but also for what it means for organizing potential but those are different posts in the making. At the same time there are subjective factors in the U.S which, technically, could favor the American working class which is the immense mass migrations which have taken place from places like South Asia to the United States. In the beginning of the 20th century, US socialists and anarchists used this to their advantage in learning and building solidarity. The fact that this has not bee done by the U.S. left is its own structural and subjective crisis…

    It certainly appears that the fundamental feature of this period is to drive down wages and increase the rate of exploitation in the United States. Imoprtantly this is tied to the continuing decline of the U.S. dollar which has a one, two, three punch on making the U.S. a possible net exporter instead of importer which is one of the keys to resolving the structural imbalance. However, the national bourgeoisies of the “third” world, I do not believe are going to accept this and watch jobs possibly revert back to the United States. And also, the U.S. ruling class will have to drive down wages to brutally low levels (something happening in GM and Ford) which begs the question of a class response. But even if this class response happens, the story of this strike demands a response that can break national boundaries. But for that to happen internationally, I have a hunch that racial questions will have to be dealt with as well in the U.S. and this is not just a question of fighting white-supremacy, but also questions inside people of color communities as well…

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