Socialism or Neoliberalism?

Ernest Mandel

Revision History
• Winter 1993-1994	Newspaper: Funded by Syracuse University students.
The Alternative Orange: Vol. 3, No. 2 (pp. 34-37)
• September 24, 2000	Webpage: .
DocBook XML (DocBk XML V3.1.3) from original.

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Since the mid-seventies there has been a worldwide offensive of capital against labor and the toiling masses of the Third World. This offensive expresses the sharp deterioration of the relationship of forces at the expense of the workers on a world scale. It has objective and subjective roots.

The objective roots are essentially the sharp rise of unemployment in the imperialist countries from 10 million to at least 50 million, if not more. The official statistics are all government statistics and they’re all fake. In the Third World countries at lease 500 million are unemployed. For the first time since the end of World War II unemployment is rising massively in the bureaucratized post- capitalist societies, too.

The subjective roots lie essentially in the total failure of organized labor and mass movements to resist the capitalist offensive. In many countries these organizations have even spearheaded it: France, Italy, Spain, and Venezuela, just to name a few. There is a whole list of these countries. This has undoubtedly made resistance to the capitalist offensive more difficult.

But all this being said, one should not underestimate the concrete impact of pseudo- liberal—in reality neoconservative—economic policies on world developments. These policies, codified by the International Monetary Fund and the World Bank, and symbolized by the governments of Thatcher and Reagan and their many imitators in the Third World countries, have been an unmitigated disaster.

Under the pretext of giving priority to monetary stability, the fight against inflation, and balanced budgets, social expenditure and the expenditure for infrastructure has been ruthlessly cut. This has resulted in a world wide rise in social inequality, poverty, disease, and threats to the environment. From a macroeconomic point of view it is increasingly counterproductive and irrational. From a macrosocial point of view it is indefensible and odious. It has increasingly inhuman results which threaten the very physical survival of the human race.

I should point out the basic cynicism of the neoconservative ideological offensive which accompanies the conservative economic policies. The neoconservatives say that they want to reduce state expenditure drastically. In reality, state expenditure has never been as high as in the 1980s and the early 1990s under the neoconservatives. What really happened was a shift away from social and infrastructure expenditure to military expenditure, which for that period can be estimated at three trillion dollars, and to subsidies to business. The bailing out of bankrupt and near bankrupt financial institutions, like the savings and loan associations in the United States, as well as the huge interest payments on the steeply rising public debt, belongs in that category.

The neoconservatives say that they stand for universal human rights, but in reality, given the unavoidable mass reactions against these antisocial policies, neoconservative governments increasingly undermine and attack democratic liberties: trade union freedom, the right to abortion, freedom of the press, freedom to travel, and so on. They create the appropriate climate in which extreme right-wing tendencies—racism, xenophobia, outright neofascism—can arise.

Deepening Third-World Poverty

The worldwide growth of poverty is disastrous. In the Third World it has become a historical catastrophe. According to official United Nations statistics, more than 60 countries with a total of more than 800 million inhabitants have suffered an absolute decline of per capita domestic product between 1980 and 1990. In the poorest of these countries this decline is in the order of 30 to 50 percent. For the poorest layers of these countries’ populations the figure oscillates around 50 percent. Per capita domestic product in Latin America in 1950 was 45 percent of that of the imperialist countries. In 1988, it fell to 29.7 percent.

Decades of modest rise in public welfare were wiped out in the course of a few years. What this means concretely can be illustrated by the example of Peru. According to the New York Times, more than 60 percent of the population of Peru is undernourished, 79 percent live below the poverty level, which is quite arbitrarily fixed at $40 a month. Even college educated civil servants earn only $85 a month. That is not enough to pay for a month’s car parking in that country.

If one takes into consideration the social differentiation inside the Third World countries, the situation is even more disastrous. The poorest inhabitants of the poorest country have today a daily food intake which equals that of a Nazi concentration camp of the 1940s. A report of the United Nations World Health Organization prepared for a December 1992 conference estimated that half a billion people suffer from chronic hunger in addition to several hundreds of millions of people who suffer from seasonal malnutrition. Nearly 800 million people in the Third World alone suffer from hunger. If you add to that figure the number of hungry in the postcapitalist and imperialist countries, you arrive at practically one billion people in the world today suffering from hunger on this planet. And this is when there exists an overall situation of overproduction of food.

The results of this are disastrous not only from a social point of view. They now begin to have results on a biological level, too. In the north of Brazil, a new race of pygmies has arisen, with an average height of 35 centimeters less than the average inhabitant of Brazil. The way the bourgeois ruling class and its ideologues characterize these people is to call them rat people. This characterization is completely dehumanizing, reminiscent of the Nazis, and has sinister implications. You know what is done to rats.

There is widespread malnutrition involving insufficient consumption of vitamins, minerals, and animal proteins. Women and children especially have these deficiencies. As a result, children in the Third World run a risk of dying or catching grave diseases twenty times greater than that of children in the imperialist countries.

The fate of children symbolizes the rise of barbarism in the Third World. This is not a question of the future. There barbarism has already started on a huge scale. According to the statistics of UNICEF, every year 16 million children are dying from hunger or curable diseases in the Third World. This means that every four years there is an equal number of deaths of children as all the deaths of World War II, Auschwitz, Hiroshima, and the Bengal famine combined. Every four years a world war against children. There you have the world reality of imperialism and capitalism in a nutshell. In addition, in South Asia, 20 percent of baby girls die before the age of five; 25 percent die before the age of fifteen. Baby girl infanticide is growing from year to year, combined with massive use of child labor under conditions of semi-slavery.

Growing Inequality in “Advanced” Countries

The disastrous effects of neoconservative economic policies are in no way limited to Third World countries or to the living conditions of the mass of the inhabitants of post-capitalist societies. They have started to extend more slowly, but in a real way, to the imperialist countries too. In these countries, depending on what source you use, between 55 and 70 million people live below the poverty level. A dual society is developing, with a growing number of social groups less or not at all protected by the social security net: some of the constituent elements of that underclass include the unemployed, casual laborers, people living on welfare, mothers having to care for many children alone, and demoralized petty criminals.

Here is but one example which is very telling, very sad, and very revolting. In the heart of what has been historically revolutionary Paris, where five major revolutions have started, every day thousands of immigrants, workers and casual laborers, are standing around waiting to be employed. Sometimes they are, sometimes they aren’t. They are without any form of social protection, without permit of residence. They are competing among themselves to work for a pittance, because a pittance is still higher than what they can get in their own countries.

The situation in the United States ghettos is typical of that trend. Youth unemployment in the ghettos reaches 40 percent and most of these youths have no hope whatsoever of finding any job in the future. The same phenomenon has spread in a more limited way to several southern European countries and Great Britain. Privatization accentuates these trends.

While real wages actually declined in the U.S.A., the number of people having gross annual incomes of one million stable dollars has risen sixty fold. That of people getting between sixty thousand and one million dollars has risen from seventy eight thousand to two million, but there’s literally not a single worker among this new rich.

The Rich Get Richer

The perverse effects of neoconservative policies on the world economy are likewise evident. Both the growing poverty of the Third World and the growing Third Worldization of sectors of the population in the imperialist countries constitute one of the major brakes on any significant expansion of the world economy.

Third World debt has led to that perverse and scandalous development of a net flow of capital from the south to the north, with the poorest part of the poor countries subsidizing the richest part of the rich countries. One could say in a cynical way that that’s nothing new, that’s what capitalism is all about. Nevertheless, in this dimension and amplitude it’s at least a new phenomenon in the twentieth century.

The same thing is true for what you could call the adverse development of the terms of trade and the role of intermediaries on world price structure. It is very little known that the second largest contingent of Third World exports after oil is coffee, which we all drink. At this time for the Western consumers, coffee is relatively cheap. A pound of coffee costs around five dollars in the Western countries. The workers who produce that coffee get thirty to fifty cents a day. The rest is taken in by middle men.

New Epidemics

The greatest danger of the Third Worldization in the South, the East, and the West is the spread of typical poverty-related epidemics like cholera and tuberculosis which were assumed to have been wiped out. But the ominous threat of AIDS is likewise poverty related. The former director of the World Health Organizations’ anti-AIDS program predicts that at the end of this century, one hundred million people will be HIV infected, of whom 25 percent will fall ill and die; 85 percent of these deaths will occur in the Third World. This is not a result of some cultural or ethnic specificity, but of deficiencies in education, prevention, health care, and sanitation. At the same time, seven billion dollars have been spent in the struggle against AIDS since the beginning of the epidemic. Only 3 percent of this sum has been spent in the Third World, where 85 percent of HIV infected people live. It is obviously suicidal to believe, even for the capitalist class, that the spread of the epidemic will not reach the imperialist countries, too.

Under these circumstances, the Pope’s call to limit the struggle against AIDS to self- restraint and the chastity of individuals and to oppose the use of condoms and the contraceptive pill is totally irresponsible. In light of these facts the neoconservative policies of cutting health and education budgets everywhere likewise appears irresponsible and suicidal. The overall effects are as economically obnoxious as they are socially obnoxious.

Destructiveness of “Market Economy”

In all the university departments dealing with development policies, in all the countries in the world, it is considered to be a truism that the most productive investments are those for education, health care, and infrastructure. But if you cross the corridor into the subdepartment of economics called public finance, then you suddenly hear that a balanced budget is more important than investment in education, health care, and infrastructure, and that there have to be ruthless cuts in these budgets in order to stop inflation.

It should be stressed that pseudoliberal, neoconservative policies are being applied within the framework of a capitalist dominated world economy. Two important conclusions can be drawn from that basic fact of life. First, that much of the rantings about the alleged superiority of the so-called market economy are just eyewash. Market economy in the pure or near pure form does not exist and has never existed anywhere. Second, it can be concluded that any alternative economic policy applied within that same framework, like the neo-Keynesian policies now proposed by a growing number of international institutions and leading capitalists, will not result in any basic change in all these horrible realities which we have outlined.

To give you just one example: the tremendous technological backwardness imposed upon the Third World by imperialism means that while that part of the world consumes only 15 percent of the world’s total energy expenditure, it has to spend five to six times more energy per dollar’s worth of internal domestic product than the richest countries.

Hence the question arises, don’t we need a basic alternative not only to pseudo liberal neoconservative policies, but to the whole capitalist system in all its variants in order to get to a qualitatively better world than the present one? My answer is obviously yes. That’s why we need socialism, and that’s why I am and will remain a socialist.

Humankind is facing frightful threats to its physical survival: nuclear, chemical, and biological warfare, traditional massive wars which could become nuclear wars by the bombing of nuclear power stations with conventional weapons, growing risks of destruction of the environment necessary for human life typified by the greenhouse effect and the ozone gap, destruction of the tropical forests, desertification of large parts of Africa and Asia, and the cumulative effects of epidemic catastrophes.

Many people have raised the question, “Isn’t it already too late? Isn’t doomsday unavoidable? Will humankind be able to survive the coming fifty years?” We believe that human kind is not doomed. We believe survival can succeed. We believe that this is not wishful thinking or pure intuition. It is a belief based upon solid, scientific data and the ongoing dynamic of scientific research.

Just one example: there exists a concrete, serious approach to completely reverse the desertification of Africa; to irrigate the desert in order to make it again into a rich food producing region like it had been up until fifteen hundred years ago; to inspire its inhabitants to apply nature-conserving agricultural techniques to switch back from commercial crops to crops which enable them to feed Africans in a healthy manner. The effect of a green, wooded Sahara on the world climate would be really stunning.

The problem to be solved in order to beat doomsday in this case is not a technical, natural, or cultural one. It is a social one. In order for this solution to be applied, you need a social order in which greed, the desire to accumulate personal wealth regardless of overall social and economic costs, and short term pseudo rationality substituting for long term rationality do not determine social and economic behavior. We need power in the hands of social forces which can prevent individuals, classes, and major class fractions from imposing their will on society. Power needs to be in the hands of the overwhelming majority of the toilers willing to let solidarity, cooperation, and generosity prevail by democratic means over short-sighted egoism and irresponsibility.

I want to stress that it is not a question of awareness. The rich, the capitalists, the powers that be are not stupid—well, there are stupid ones among them, but many of them are perfectly aware of, for instance, the ecological dangers. They try to take them into consideration, include them in their economic planning and projection, but under the pressure of competition, under the pressure of a profit-motivated system, they are forced to act in such a way that the overall threat remains.

Some say that science and technology have developed an irresistible logic of their own, and that uncontrolled development of science and technology is bringing humankind to the brink of extinction and is threatening to blow up our planet, but this is not the correct way of seeing things. This is what you could call, in terms of Marxist philosophy, reified thinking. Science and technology are presented as forces divorced from the human beings who control them. But this is incorrect.

Struggle for Workers’ Democracy

Science and technology have no power independent of the social groups who invented them, apply them, and bend them to their interests as they see them. The key problem is to subject science and technology to conscious social control in the democratically established interests of the great majority of human beings. To free them from submission to special interests, which abuse them regardless of the long- term interests of the human race. For that purpose the organization and structure of society itself must be subjected to democratically determined conscious control.

What socialism is all about in the last analysis is the conquest of human freedom for the greatest possible number to decide their own fate in all key sectors of life. This is, in the first place, true for all wage earners, women and men, who are under the economic compulsion to sell their labor power and who represent today a mass of people bigger than they ever were in the past. There are now more than one billion wage earners. Those who plead for minority rule over and above that freedom—the freedom of these wage earners to decide in a democratic way for themselves which priorities to apply to production and how to produce and distribute at least the major chunks of it—those who state that this freedom should be subordinated to the rule of market laws, rule by the rich, to rule by the experts, rule by the churches, rule by the state or by the party, arrogantly assume the perfectness of their knowledge and their wisdom and underestimate the capacity of the masses to equal or overtake them. We reject these claims as empirically unfounded and morally repulsive, leading to increasingly inhuman consequences.

We share Marx’s warning that the educators in turn have to be educated. Only the democratically organized self-activity of the masses can achieve that. Socialism is a social order in which these masses decide their own fate in a free way.

In order to look at the world as it is today, we have to look at it in a way that is different from what you generally read in the newspapers or see on television. Reality is a bit more complex, and I would dare to say that the neoliberal offensive has gone over its climax. People are starting to fight back.

In the small Latin American country of Uruguay, the people have just rejected, in a referendum by a majority of 74 percent of the vote, a project of privatization of the telephone company. British miners, and especially Italian workers, have reacted to the austerity policies which their governments tried to put down their throats in a very big way. Both groups have been on strike against these austerity policies, the British miners in a somewhat more limited way than the Italian workers. In Germany we have witnessed, and this is most heartwarming, a radical reaction of the youth, including even high school students, against the rise of xenophobia, racism, and neofascism. We have seen this wonderful chain of light involving probably two million people.

This is completely different from what happened at the end of the 1920s and the beginning of the 1930s. At that time the Nazis conquered the high schools, the universities—the youth—much before they conquered political power. Today, it goes in exactly the opposite direction. The mass of the youth is moving against xenophobia, racism, and neofascism while political parties, political shifts are going to the right.

The most gratifying example is that of Brazil, where there is a fightback of the working class against a corrupt reactionary government. I’m rather pessimistic, I don’t think they will win, but a challenge to bourgeois power in this seventh largest country in the world, where there are now more industrial workers than in Germany in 1918, has at least been made possible.

There is, however, a sober side to the world picture, and that is that many of these fightback movements are generally single-issue movements and are discontinuous because of the lack of perspective of an alternative order.

The Credibility of Socialism

Over this whole world development hovers what we call in my movement the worldwide crisis of credibility of socialism. Workers have no confidence whatsoever in either Stalinism, post-Stalinism, Maoism, Eurocommunism, or in social democracy. Social democracy is heading for the biggest electoral defeat in its history in countries like France and Italy.

Under these circumstances, what we have today on a world scale is a situation in which neither of the two basic social classes, capital and labor, is capable in the short or medium term of imposing its historical solution to the world crisis. The capitalists can’t for objective reasons; because the working class is much too strong. It is much stronger than it was in the 1930s. But the working class cannot solve this world crisis either because it has no belief in an alternative social order.

So we are in for a protracted crisis, the outcome of which is at this stage unpredictable. We have to fight for an outcome in favor of the working class, in favor of socialism, in favor of the physical survival of mankind. Because that’s the real choice today. Not socialism or barbarism, but socialism or the physical extinction of the human race.

In this crisis, I see the key task of all of us socialists as being threefold.

In the first place to defend unconditionally all the demands of the masses everywhere in the world which correspond to their real needs as they see them, without subordinating this support to any priorities of a political nature in this or that sector of the world or of any specific power scheme. We have to go back to the example of what the labor movement did in its inception and during the period of its greatest growth from the end of the 1880s up until the eve of World War I.

Socialists had two key goals at that time: the eight-hour day and universal franchise, and they didn’t start from the question: How are we going to realize that, in what form of power, what form of government? No, they said these are objective needs of human emancipation and we will fight for them by all means possible and necessary and we will see what will come out.

In some countries the eight-hour day was conquered by general strikes, direct extraparliamentary mass action. In other countries it was realized through governments which one could consider workers’ governments. In other countries it was given by the bourgeois as a concession to a powerful workers movement, thereby trying to prevent it from making a revolution. But that’s neither here nor there. The real fact was that the eight-hour day was, as Marx and Engels pointed out, in the objective interest of the working class, and that is the reason why you shouldn’t subordinate the fight for such demands to any preestablished power scheme.

I have many times reminded the comrades of the famous formula of that great tactician Napoleon Bonaparte, whom Lenin quoted very approvingly, “First start the struggle, and then we’ll see.” The important thing is to start the struggle; what comes afterwards, well, that depends on the relationship of forces, but the struggle itself changes the relationship of forces.

The second task of socialists and communists in the world today is basic socialist education and propaganda. Humankind cannot be saved without substituting for this present society a fundamentally different society, what we call a socialist society. You can call it a society in transition toward communism, you can call it anything you want to, the label makes no difference, but its contents have to be specified, the contents of socialism as it will be accepted by the masses. When I speak about masses I speak about hundreds of millions of people throughout the world, not small groups.

After the disastrous experiences of social democracy, Stalinism, and post-Stalinism, the image of socialism can only be one of radical emancipation, having a dimension of radical feminism, radical defense of the environment radical antiwar pacifist consciousness, political pluralism, and total identification with human rights without exception. Socialism will only be accepted if it is considered radically emancipatory on a world scale without exception.

Now I come to the third condition for solving the terrible crisis of credibility of socialism on a world scale. This is the reunification of socialism and freedom. The bourgeoisie has made a terrible strategic mistake in raising the human rights issue against socialists the world over. This will become a boomerang hitting it again and again and again. But in order for that to happen, the reunification of socialism and human freedom has to be complete.

In the mid-20s, the traditional song of the Italian labor movement “Bandiera Rossa” contained these wonderful words, “Long live communism and freedom!”

One of the gravest crimes of Stalinism, post-Stalinism, and social democracy has been to provoke the historical divorce between these two values. We have to come back to that.

I’ll just mention in passing that here in the United States, in the mid-20s two anarchists, anticommunists—they had absolutely no sympathy for communism—Sacco and Vanzetti, were condemned to death by the reactionary bourgeois government. Their cause was taken up by the Communist Party of the United States and by the Communist International. The fact that they were anarchists, anticommunists, didn’t make any difference whatsoever. I say with pride that our comrade James P. Cannon played a significant role in organizing that worldwide campaign for these two anarchists. That’s the tradition we have to go back to without any restrictions.

Whoever commits crimes against human rights under whatever pretext in what ever country should be condemned by the socialists-communists of this world. That’s the precondition to restore confidence among the masses in our movement. Once that confidence is restored we get a moral power, a moral credit, a moral strength which has ten times more punch than all the weaponry which the capitalists control.

Revolutionary Internationalism

I hope it is no imposition on my friends at the Marxist School if I say a few words for my organization, the Fourth International, before the end of this lecture. I just want to make one point.

In today’s New York Times there is an article on the Uruguayan referendum which rejects privatization. Our press organ of the Fourth International, International Viewpoint, carried that information four weeks before the Times. Not because we are more clever journalists, that’s not the point at all, or more clever theoreticians, but because we have a real implantation in the mass movement in many countries. The comrades just notice what’s going on. You can’t fool them; they know the score through their practical activity.

A few weeks ago we had a meeting of our international leadership and we learned from the Polish comrades who were there something which had not been published in any bourgeois newspaper. Not because the journalists are involved in some conspiracy, but because they just don’t understand what’s going on. We learned from our Polish friends that after the reactionary parliament voted on a law declaring abortion illegal, in a couple of days time one million eight hundred thousand signatures were assembled by the people to call for a referendum to restore the right to abortion.

I don’t want to end my lecture on too positive a note! This integration of revolutionary Marxists with the real mass movements in many countries—not in all countries, it would be foolish to make that pretense—in and of itself does not solve the problem. It’s just another contribution. We have a long uphill struggle to restore the credibility of socialism-communism. Nobody can tell how long it will take: five, ten, fifteen, twenty years. It is not an easy struggle. It will take a long time and many efforts with many partial defeats and many setbacks. We are not promising easy victories. We have to make the utmost effort for the survival of the human race. But in the long run, the struggle will be a success.

In Defense of Marxism

Having said that, I want to tell my friends at the Marxist School that they are absolutely right to stand for Marxism and not to give in in the slightest way to the anti-Marxist pressures which are all around us. Some are open, some more diffuse, but they are all around us.

Marxism is the best thing that has happened to social thought and action in the last hundred and fifty years. Those who deny that, those who make Marxism responsible for Stalinist counterrevolution, for social-democratic support for colonial wars, are either ignorant or deliberate liars. Marxism has given humankind two basic conquests which we have to defend, but with the assurance, the self-confidence that we are defending a good cause.

Marxism is the science of society. It is the understanding in a coherent way of what has been going on for the last two hundred years, if not much more than that, on the basis of a tremendous wealth of empirical information and without any valuable, even partially valuable, alternative among the social sciences.

We make no prediction about the future. The only scientific form of Marxism is open Marxism. Marxism which, like Marx himself said, integrates constructive doubt. Everything remains open to reconsideration, but only on the basis of fact. Those who do this in an irresponsible way without taking facts into consideration, those who throw away this tremendous tool of understanding world reality in exchange for nothing but skepticism, irrationality, mystification, or mythology serve no positive purpose.

As important as Marxism is as a science, its second basic component is just as important, and that is its moral component. Marx himself formulated this in a very radical way. From his youth through to the end of his life he didn’t waver for one minute from the defamation of what he called the categorical imperative. That is, to fight against any condition in which human beings are despised, alienated, exploited, oppressed, or denied basic human dignity. Whatever the pretexts are for the justification of such denials, we have to oppose them unconditionally. Understand that you cannot be happier than if you know that you have dedicated your life to this defense of human rights everywhere in the world; the defense of the exploited, the oppressed, the downtrodden, the despised.

There is no better way to be a good human being in this world than to dedicate your life to this great cause. That’s why the future is with Marxism.

[Reprinted from Bulletin in Defense of Marxism, April 1993. 27 Union Square West, 2nd Floor, Room 208, New York, NY 10003.]