Industrial capitalism and its dialectics

Socialism is part of the culture of modernity and its discovery of the future, as open but different from the past and present. That is the culture of the European Enlightenment, and of the French Revolution, which changed the meaning of “revolution,” from “rolling back” or “rotation” to opening up, to a new society. The Revolution’s greatest philosopher, Rousseau had argued in The Social Contract of 1762 “no citizen shall ever be opulent enough to buy another, and none poor enough to be forced to sell himself.”Footnote ¹

The rise of industrial capitalism and its factory system defeated the artisanal radicalism of the left of the French Revolution foreboded by Rousseau. Instead of a post-feudal, post-aristocratic society of independent, propertied small producers came a class society of capitalist divide between property owners and factory workers toiling “in dark satanic mills,” as the 18th century English poet William Blake had put it The French economist Sismondi, discovered it between l803 when he published a Smithian liberal tract, La Richesse commerciale, and 1819 in his Nouveaux Principes de l’Économie politique. The German economist Lorenz von Stein followed the rise of industrial capitalism and the emergent socialist movement in France with fascination and a perspicacity rarely to be found among latterday liberal economists and economic historians.Footnote ²

Socialism as a social movement is the slightly younger brother of industrial capitalism, which was just emerging as a major socioeconomic and political force in early l9th century Britain and France. Capitalism and its main ideological arm liberalism were also modern and future-oriented, but their future, of free enterprise and free trade, had already started, The future was “progress,” of what was already sprouting up. Socialism, on the other hand, was a movement for a future of a fundamentally different kind of society. In its two-centuries long resilient belief that “another world is possible,” despite defeats and persecutions, socialists were this worldly cousins to the believers in salvationist religions, Judaism, Christianity, and Islam. Human emancipation and communism replaced resurrection and paradise. The later emptying of socialist and communist beliefs in a socialist (and communist) society distinctively different from existing capitalism has obvious parallels to the religious secularization processes, in which beliefs of second life paradise (and hell) are fading.

Marx and Marxism provided artisanal workers fearing for the capitalist factory system as well as the merging industrial workers with an understanding of their situation and a perspective of change into a better world, through class organization and class struggle. He correctly identified the basic vector and subject of socialist emancipation, and a possible path out of capitalism. Marxism gradually became the main world perspective of the working-class movement.

The Marxian dialectic of industrial capitalism involved two interconnected manifestations of how the very development of capitalism increased its vulnerability and strengthened its adversary. The increasingly “social” character of the productive forces, i.e., the means of productivity, was conflicting with the private relations of production, favoring collective, social ones. Second, the growth and extension of industrial production would simultaneously increase and strengthen the industrial working class.

These tendencies did unfold in the first two thirds of the 20th century, state involvement in economic development increased and became more important. The industrial working class grew in size, and the working-class movement strengthened in trade unions, political parties, with aligned other organizations, pushing for social protection, labor rights, and more socioeconomic equality. In the concrete light of incremental social changes of existing capitalism the horizon of a different, socialist society paled away in the mainstream social democratic current of the labor movement.

Working-class parties advanced among the electorate, but electorates hardly ever became dominated by the class conflicts of industrial capitalism. Only in Britain, in 1911, did industrial employment amount to more than half (52.2%) of the economically active population.Footnote ³ Before l965 labor parties had received a majority of all votes in free competitive elections of five countries only, all rather peripheral, in Asutralia, New Zeeland, Norway, and Sweden more than once, in Sweden since 1936, in Czechoslovakia in l946. By l982 this electoral achievement had been reached in six new countries: Austria (thrice), Finland, France, Greece, Portugal, Spain, as well as repeated in Norway (once), and Sweden (thrice) Labor strength stepped up social reforms, in particular of working-life conditions, social security, women’s rights, and income distribution.Footnote ⁴

At the zenith of the European labor movement, roughly between 1965 and 1980, there occurred a brief resurrection of the idea of socialism as a possible, different kind of society. It was a prominent vision in the Greek, Portuguese, and Spanish labor parties, coming out of Fascist dictatorships, and in the militant movements erupting in l968 and subsequent years.

The resurrection of a (very hazy, true) socialist horizon even appears in a l970s exchange of letters and conversations between the three most distinguished social democratic leaders of the period, Willy Brandt, Bruno Kreisky, and Olof Palme.Footnote ⁵ “Democratic socialism” is a frequent reference, and is seen as an “alternative to private capitalism” (Palme), while Kreisky introduces a distinction between “system-maintaining” and “system-changing” reforms.

More significantly, at its peak of strength, mainstream labor movements, produced two concrete proposals for a transcendence of capitalism, the Swedish “wages earners funds,” aka “the Meidner Plan” (after its main architect, the trade union economist Rudolf Meidner), and the “Common Program” of the French Socialist and Communist Parties. The proposals were driven by the trade union cadre in the Swedish case, who got it officially adopted by the trade union congress, and by the Communist party and the Left of the Socialist party in France who had it accepted as the electoral program of the Union of the Left.

In neither case did the proposal have the full support of the top labor leadership, and in the final maturation of the class dialectic of industrial capitalism, there were all over the labor movements of Europe both a new radicalism and a revived fear of radicalism, dividing the forces of labor. The historical timing was also unfortunate, both projects were launched at the tipping-point of industrial capitalism and of the industrial working class. A new capitalism was already underway with the world economy crisis of the mid-l970s, hitting the very viability of reformed industrial capitalism and signalling a new dependence on international finance and currenecy markets. Palme and Mitterand both backed down without a fight, and met no resistance from an exhausted, suddenly passive base. The Meidner Plan was emasculated before the l982 election, the Common Programme was abandoned in l984 (after the electoral victory of l981). In both cases, there followed a thorough neoliberalization of social democracy, under pressure from a surge of financial capitalism, and an accommodation by the French Communist party (PCF).

The dialectic of industrial capitalism did unfold in the direction predicted by Marx, but in a much more complex social and political context than envisaged. It did not lead up to an end of capitalism, and from around l980, predominant tendencies of postindustrial capitalism have gone in the opposite direction. History is not a linear process.

The second movement of socialism and its dialectical dynamics

However, the dream, the idea of, and the aspiration to socialism developed also along another path in the 20th century. Without it, socialism would have been little more than a working-class movement on the western peninsula of Eurasia. This was a socialism, not as a postcapitalist society rising out of the maturing contradictions of capitalism, but as a precapitalist vehicle to catch up with, and surpass, existing capitalisms. Through the (at least partial) confluence of the two currents, socialism became a global movement, the largest of modern history.

The crucial link were Lenin, the Bolsheviks, and the Russian Revolution. Among the early 20th century leaders of the European labor movement Lenin had a unique global vision, free of any sense of European superiority, as well as of Russian nationalism. In the wake of the Chinese Republican revolution in 1911 he wrote an article in Pravda in May 1913, under the blazing heading: “Backward Europe and advanced Asia,” where he argued: “Everywhere in Asia a mighty democratic movement is growing, spreading and gaining strength. … And ‘advanced’ Europe? It is plundering China, and helping the foes of democracy, the foes of liberty in China!”Footnote ⁶ The capitalist industrialization, with its huge concentration of workers in the capital city and other big cities, of Russia furnished the possibility of the Russian Revolution in the war conjuncture of military defeats, and the launch of the USSR. In an address of November 1919 during the ongoing civil war and foreign invasions, Lenin declared, “It i becoming quite clear that the socialist revolution … will not be merely the victory of the proletariat of each country over its bourgeoisie. … the imperialists will not allow this.” “Hence the socialist revolution will not be solely, or chiefly, a struggle of the revolutionary proletariat in each country … No, it will be a struggle of all the colonies and countries oppressed by imperialism, of all dependent countries against international imperialism.”Footnote ⁷

This was not just rhetoric. In the summer of 1920 the Executive Committee of the Communist International issued invitations to a Congress of the Peoples of the East, which took place in Baku in September, issuing a call for “Workers of the World and oppressed peoples unite!,” and inspiring the formation of Communist parties in Asia. The Chinese Communist party (CP)was founded a year later, with some assistance from the Soviet Communist party (CPSU)and the Comintern.Footnote ⁸

The contacts between the Soviet Union and the Comintern, on one hand, and militant Asian anti-imperialism, on the other, did not yield much for either part in the short run. Both, each on its scale, were too weak to be able to give significant help to the other. However, a foundation was laid, bonds were struck for what would a generation later become the strongest and most powerful socialist current.

This development was due to another, little noticed grand dialectic of the 20th century, the dialectic of capitalist colonialism.

From late 19th century, European colonialism changed character, from mainly slavery, extraction, and plunder, to dependent capitalist development, including building railroads and other infrastructure, extending administration, promoting economic investment, and selective education. The more capitalist and less predatory colonialism required the formation of a layer of educated, bilingual natives for subaltern positions in the growing colonial apparatus. Benedict Anderson (2016), in the last edition of his masterpiece on the rise of nationalism, Imaginary Communities has closely studied in Indonesia how this process created a colony-wide, proto-national revolutionary intelligentsia—educated but subaltern and discriminated,—who came to lead the independence struggle. Colonial education-cum-social-practice did in fact little to form what Thomas Maccaulay had called “a class of persons Indian in blood and colour, but English in tastes, in opinions, in morals and in intellect,” or what the French and the Portuguese in their master language called “évolués’ and “asimilados,” respectively.Footnote ⁹ Similarities with industrial working-class and labour movement formation are striking. The colonial colleges and the big factories both created a supra-local, supra-ethnic collective with a common identity formed in adversary interaction with a dominant boss. In this way, there developed a dialectic of capitalist colonialism similar to that of industrial capitalism.

The increasingly anti-colonialist intelligentsia of the colonized got their worldview and politics largely from the anti-capitalist working-class movement of the world. The active anti-colonialist commitment of the Bolsheviks and the Comintern brought articulated anti-capitalism and socialism to Asia, to China, to India, Indonesia, Vietnam, and other countries in the form of Communist and Socialist parties, trade unions and radical anti-imperialist movements. The Russian Revolution in itself was an inspiring sign that Western powers were not for ever, and the rapid economic growth of the USSR of the 5-year plans post-World War II growth of Communist Eastern Europe appeared for a time as a model to large parts of both independent Asia and Africa.

After WWII decolonization started in Asia. Where the anti-colonial/anti-imperialist movement succeeded, it was usually under a socialist banner, not only the Communist-led Chinese, Vietnamese and other “Indochina” revolutions. India proclaimed itself a “Sovereign, Socialist, Secular, Democratic Republic with a parliamentary government.” In Burma the governing anti-fascist People’s Freedom League declared its adherence to Buddhist socialism, in Indonesia, one of the new country’s guiding principles, maintained across regimes, Panchasila, is “social justice.” In the Arab world there came “Arab socialism” after independence in Syria and Egypt. When Africa manage to liberate itself, a major, if not alone, government ideology was “African socialism,” whether homespun as in Tanzania or “Marxist-Leninist” as in Angola and Mozambique, and some others. In Latin America victorious anti-imperialism became socialist revolutions, as in Cuba, or “socialism of the 21^st century,” as in early 21st century Venezuela, Ecuador, and Bolivia.

I am here not entering into any discussion of the authenticity or reality of these claims to socialism. I am pointing to two different currents of self-identified socialism, which together made socialism a global social and political movement, the largest in modern history. They were both competing with capitalism, and, after achievements of lasting historical significance they both lost.

The rise of the Soviet Union, the Chinese revolution, the post-World War II Communization of Eastern Europe, and the attraction of socialism to many postcolonial regimes opened up a field of systemic competition between capitalism and, oecumenically formulated, claims to socialism. Governing Western European social democracy seldom saw itself as part of such a competition, but was, de facto or potentially, and should therefore be included in an analysis.

By the end of the 20th century both the grand dialectics which had generated the world socialist movement were expiring. Industrial capitalism had given way to finance-dominated postindustrial capitalism, and decolonization had almost completed its mission. The two dialectics had carried two different conceptions of socialism, of socialism as a postcapitalist society, and of socialism as noncapitalist development. The former was now facing the challenges of postindustrial capitalism, the latter the increasing urgency of catching-up in a culturally globalized world.

The postcapitalist tradition of socialism was moulded by industrialism, its standardization, its concentrated collectivity, in which demands for and policies of universal rights and universal public services developed, as well as a socialist conception of public ownership and control of “the commanding heights of the economy..” Under postindustrial conditions this came up against an expanded middle class arrivisme demanding individual choice and status differentiation. After the Thatcher-Reagan neoliberal onslaught, mainstream social democracy rapidly accommodated, expressed in the “Third Way” laid out by Tony Blair’s ideologist Anthony Giddens. Giddens denounced the core of the mainstream social democratic tradition: “The welfare state … today creates almost as many problems as it resolves.” “It is essentially undemocratic economy.” “Social democrats should move away from … an obsession with inequality..”Footnote ¹⁰

Third Way social democracy was soon punctuated by the second big problem of postindustrial capitalism, a dramatic rise of economic inequality, which entailed a resentful sense of abandonment and a withdrawal of support among large part of social democracy’s traditional base. Soaring inequality also spawned a radical section of the young highly educated middle class, for a while sustaining a socialist left, soon crushed or re-marginalized by ferocious rightwing media and implacable hatred from rightwing social democracy, of the British Labour party in particular.

Postindustrial socialisms might develop, but at least for the time being, what remains of the industrial socialist tradition seems to be operating within the confines of capitalism. The radical new left of the early 21st century was politically disruptive and inventive, but typically modest programmatically, focusing on “democracy” and “mutual aid.”Footnote ¹¹

The elusive catch-up

So far, socialism has nowhere been able to construct a postcapitalist society. Its victories have all been as vehicles of precapitalist development. Its developmental achievements have been remarkable and of epochal importance.

After winning the devastating wars against the domestic counterrevolution and the invading foreign armies, the economic development of the USSR was a success of rapid growth, if we, for a moment, disregard the horrendous human costs of Stalinism. And Communist Eastern Europe for two decades after World War II developed their per capita income roughly as much as Western Europe, injected by Marshall aid.Footnote ¹² But the Eastern European, including Soviet, dynamic petered out around l970. Soviet-style socialism could launch a process of rapid industrial development, but does not seem to have been able to go further into some kind of postindustrial socialism.Footnote ¹³ Instead, it went into a long period of stagnation, not only economically but also socially, measured by a stagnation of life expectancy progress.Footnote ¹⁴

Postcolonial socialism ended a century or more of stagnation and economic decline in colonial India and semi-colonial China,Footnote ¹⁵ but nowhere did it bring about a jump in development as the USSR and postwar Eastern Europe did. African socialism was a clear failure, and no functioning industrialization ever came out of it. A major reasons was probably the effects of colonial disqualification, a large lack of qualified cadres, managers, and workers to run an effective developmental state and to build a socialist economy. In Asia, neither parliamentary reformist India, nor revolutionary China, nor the “guided democracy” of Indonesia had a postcolonial leadership capable of laying foundations of stable egalitarian institutions to underpin claims to socialism.Footnote ¹⁶

Socialism was the younger brother of capitalism, and instead of coming out the legitimate heir, as the 19th century evolutionism in Marx predicted, its fate was always having to “catch up” with its richer brother. This meant that for all its initial radical egalitarian changes,Footnote ¹⁷ after them developmentalism always had the upper hand in socialist countries, than humane, ecological, and equal societies. This became accentuated with cultural globalization of the l980s and a new salience of global status, at the same time as the socialist horizon of an alternative society was paling.

The changed context of developmental socialism was demonstrated very vividly in China in the late 1980s, after Mao. At the CPC congress in l987, the soon to (briefly) become party leader Zhao Ziyang declared: “Whatever is conducive to growth is in keeping with the interests of the people … whatever is detrimental to growth goes against scientific socialism..” The final leader of China’s economic turn-around, Deng Xiaoping, put it thus “Poverty is not socialism. We must support socialism … but … We must first rid ourselves of the socialism of poverty …. “Footnote ¹⁸ In India, “After the l960s stagnation debate discussion of the impact of income distribution all but disappears.”Footnote ¹⁹ From the l990s the Indian government starts a “Brand India” project to position the country as attractive to foreign investment.Footnote ²⁰ To catch up, you had to take the capitalist road, it seemed.

Outlook

The socialist horizon of the 19th and 20th centuries is unlikely to return, deeply rooted as it was in European revolutions, industrial capitalism, and colonialism. However, a postcapitalist vision and agenda are emerging out of the climate crisis. Ecology and the climate crisis beat the ideological trump card of capitalism, its claim to be a superior promotor of economic growth. Now, what is required for planetary survival and liveability is no longer maximum growth, but environmentally sustainable growth.

Out of the climate crisis and movement, a new postcapitalist horizon might be dawning.