A Crisis With No Capitalist Way Out (book review)

The world is in crisis.  Capitalism, currently the only economic system in existence, is the cause of this crisis.  It is a crisis that impoverishes millions more every year while enhancing the wealth of the rarefied few who conspire with politicians to make it so.  It is a crisis that manifests itself in endless and meaningless wars.  It is a crisis that dismantles schools, hospitals, roads, and other infrastructure in the name of private profit.  Most ominously, it is a crisis which diminishes the health of the earth’s ecosystem, undoing an already fragile environment in order to squeeze meaningless dollars from that which gives all earthly species life.

This is the premise of John Smith’s newly-published work, titled Imperialism in the Twenty-First Century.  It is an important, even crucial, work.  Moving beyond and adding to classic Marxist understandings of imperialism, Smith destroys mainstream economic analyses that attempt to explain away the nature of the neoliberal capitalist crisis we exist in.  By revitalizing the essential element of Marxist economics–the surplus value created by labor and its essential role in creating profit–Smith patiently examines the nature of the worldwide system of capitalism and its systemic and systematic exploitation of those who labor for its bosses. In doing so, he redefines how outsourcing actually works in the global neoliberal economy and, in the process, convincingly argues that the “developing” world should no longer be considered the periphery of the global economy, but the essential element of its continued ability to make profits and accumulate wealth.

This truth is grounded in the fact of the superexploitation that occurs in the nations that make up the “developing” world; a world located primarily in the southern hemisphere, but also in primarily non-white regions of the northern hemisphere, as well—in sweatshops and the euphemistically labeled Enterprise Zones of China, Mexico and other large manufacturing nations. Complementary, and almost as fundamental, to the new imperialism explicated in Smith’s explanation are his discussions of how international loan and aid agencies like the World Bank and the International Monetary Fund (IMF) utilize economic theories that are not only beneficial to their overall strategy to keep wealth in the banks of the northern capitalist nations, but are also part of the growing problem of indebtedness and financial crisis. This is partially due to their outmoded understanding of outsourcing—an understanding that refuses to acknowledge that even though more and more of the world’s production of goods and services is taking place in the developing world, the profits from this production are overwhelmingly going into the financial houses of the super capitalist nations in the north, specifically mostly to those in the United States and a couple nations in Europe.

In the process described by Smith regarding the new forms of outsourcing and its associated forms of labor exploitation, he discusses the nature of the outsourcing of the information industry, the destruction of local health care provision via IMF demands, and how so-called nonproductive workers can be exploited. Since I cannot explain this latter phenomenon more concisely than the author, let me just quote from the text:

So long as workers are obliged to work for longer than the labor-time needed to produce their basket of consumption goods, they are exploited. This is independent of the specific way their labor is employed and of whether they are employed in production, circulation, or administration. For present purposes, we can assume that all these workers endure the (nationally prevailing) rate of exploitation in common with production labor. (63)

In the mid-1980s I lived and worked in a small town on the Olympic Peninsula in Washington State. The town had been founded by logging interests in the early part of the twentieth century and, after some battles between industry and the workers, had thrived for several decades prior to the 1980s. Workers made good wages for hard work, the corporation made big profits and the town had a decent school, a fair housing stock, and supported a reasonably robust small-town economy. By 1985, this small town scenario had changed drastically. The recession that began in 1973 that was only exacerbated by the advent of neoliberal capitalism and the austerity politics of Jimmy Carter and Ronald Reagan ravaged that town. Most of the harvested timber was being towed offshore to an oceangoing non-union mill operation that cut the logs into boards. Meanwhile, the mill in town had gone from three plants running three shifts down to one plant that made pressed wood products and running two shifts. Over half of the mill workers had lost their jobs while the loggers—who were mostly independents—saw their prices drop and their stock decrease as clear-cutting took over the industry.

When I arrived, the only jobs in town were in the tourist industry (fishing, hunting and hiking), food service, the illicit marijuana cultivation trade, and one small plant on the edge of town that subsisted by getting outsourced work from the relatively new computer industry taking over the suburbs west of Seattle under the aegis of Bill Gates and Microsoft. This is where I got a job. The pay was abysmal at $2.85 an hour, the work was tedious, and the layoffs came about every three months. When there was work, we would often work sixty hours a week. Most of my co-workers were the wives of mill workers who had been permanently laid off. The wives took the jobs to supplement their laid-off partner’s unemployment benefits. During the weeks I was laid off from the electronics plant, some friends paid me to take care of their marijuana plants. The only thing certain about the job security at the plant was its uncertainty. No matter what, though, the rent was still due and the kid had to be fed. So one did what one had to.

I mention this part of my biography to make a point about what I consider very human and important elements of the nature of contemporary imperialism described by Smith. The first is in regards to what is euphemistically termed flexibility in employment. As Smith describes it, this term is used to define several modern forms of labor, including but not limited to, subcontracting work like that of Uber drivers, temporary and/or part-time employment either directly through a firm or through an agency, and the cycle of work-then-layoff-then work ad infinitum I describe above. The intern and purpose of this type of employment sold to the modern worker as flexibility is to remove the negative effects of the increasingly volatile financial market from the industry and force the workers to bear the brunt of its ups and downs (mostly the downs.) In essence, this manipulation of labor has given the employers more leeway in their hiring by creating a surplus labor population that is global in nature, while also ensuring that market downturns are less likely to destroy the employers’ capital.

In the later chapters of Imperialism in the Twenty-First Century, Smith discusses the crash of 2007-2008. In doing so, he reverses the commonly held (and the one pushed by mainstream economists) understanding of that episode. It was overproduction brought on by the super-exploitation of labor in the pursuit of greater wealth accumulation that caused the crash, writes Smith, not a shrinkage of credit which caused the financial industry to shrink, thereby lowering demand for goods and services (which resulted in overproduction after the fact.) In an explanation many will consider heresy, Smith tells the reader that the popular analysis of the crisis blames the symptoms of the crisis for the crisis, revealing not only a rather superficial understanding of how neoliberal capitalism works, but a rather foolhardy inability (or refusal) to acknowledge that the source of the apparent irrationality evidenced by the crash is built into the system of capitalism itself.

The book concludes by discussing the ongoing crisis and the system’s eventual collapse. The stopgap measures that have kept capitalism going for as long as it has are ultimately unsustainable. This why we see crashes and peaks happening more frequently; it is also why we see more people living in shelters and their cars, not to mention the streets. It is why wars seem to never end and the ecological situation only worsens. It is the latter, writes Smith that will kill us all. He ends his text with a quote from Cuban revolutionary leader Raúl Valdés Vivó, who wrote “(this) is “un crisis sin salida del capitalismo,” a crisis with no capitalist way out. The only way forward for humanity is to “begin the transition to a communist mode of production. . . . Either the peoples will destroy the imperialist power and establish their own or the end of history. It is not ‘socialism or barbarism,’ as Rosa Luxemburg said in 1918, but socialism or nothing.”