The transition to capitalism in Central and Eastern Europe – Part 2

by Ziad Ghanem

Since the imposition of a planned economy, Central and Eastern European economic evolution has been generally characterized by a growing re-integration into the world market, based on the contraction of large credits from the West and a shift in trade patterns toward the West. Thus, as with all debtor countries, negotiations with representatives of Western banks and the international financial institutions (IFIs)¹ became a regular feature of economic policy formulation throughout the 1980s.

It was therefore only natural that following the collapse of the communist regimes in 1989, the reintegration of the Central and Eastern European countries (CEECs)² into the world market would develop under the aegis of Western creditors. As with Third World countries, stabilization and liberalization measures were imposed by the IFIs to free up economic resources for debt servicing. However, another objective of Western creditors has also been access to the massive industrial base of the CEECs. Thus, through the imposition of more fundamental structural transformations, primarily the privatization of the formerly dominant state enterprises sector, Western capital is gaining ownership of the most profitable sectors while rapidly eliminating any potentially competitive sectors.

The collapse of CMEA trade

Within the Council for Mutual Economic Assistance (CMEA), trade was conducted through bilateral governmental agreements, with Central and Eastern European members shipping mainly manufactures in exchange for raw materials and energy from the Soviet Union. This trade was based on the systematic overvaluation of the value of manufactured goods relative to raw materials and standard intermediate products. Through this channel, the USSR had in effect been subsidizing its CMEA partners. Western estimates quantifying this subsidy have ranged from about $US 6 billion to $US 14 billion, based on 1989 trade flows and world prices.³

During the 1980s, CMEA trade suffered from serious disruptions as a result of the introduction of market mechanisms within the European member countries. Decentralization of economic decision-making began disrupting trade because it was no longer fully covered by annual trade protocols and state orders. In addition to these institutional changes, CMEA countries diverted planned deliveries of “hard” goods⁴ to the convertible currency area, further disrupting economic activities.

By 1987, policy makers considered the CMEA regime to be an obstacle to further economic reforms. The 1987 session of the Council of Ministers passed a resolution advocating that the CMEA shift from a “plan coordination” to a “market relations” framework. In 1990, CMEA members agreed to conduct trade on the basis of current world market prices with settlement in convertible currencies, in essence declaring the end of the CMEA.

As expected, the CEECs suffered very serious terms-of-trade losses – roughly a 30 percent deterioration with the USSR – as a consequence of the discontinuation of CMEA trade.⁵ The growth in convertible currency trade, however, was not enough to compensate for the collapse of the old CMEA markets, especially the Soviet Union. In 1991, it is estimated that the volume of East European exports to the Soviet Union declined by about 50-55 percent, and imports from the Soviet Union declined 35-40 percent.⁶

The balance of payments and debt servicing crises

Whether due to their large international debts or due to the collapse of CMEA trade, by the end of the 1980s, all the CEECs were facing a crisis in financing their debt servicing obligations and/or current account deficits. The total gross debt of the CEECs had increased from $US 4.2 billion in 1970 to $US 54.5 billion by 1980 and to $US 90.2 billion by 1990.

Throughout the 1980s, severe debt servicing problems had placed Hungary under IMF tutelage. And by 1990, both Poland and Bulgaria were no longer servicing their large international debts.

Czechoslovakia and Romania, although facing no debt problem were nonetheless confronted by a serious problem of financing their current account deficits. Romania, for example, started 1990 with no foreign debt and $1.5 billion in reserves. Yet according to the central bank’s present governor, Mugur Isarescu, due to the 1990 current account deficit of $US 2 billion, the country was “in danger of declaring a moratorium [on debt servicing payments] without having a foreign debt”.⁷

The rule of the IMF

In 1990, denied access to any additional loans from commercial banks or foreign governments, the CEECs were compelled to turn to the IMF. In return for balance of payments financing, the local governments had to comply with the implementation of the IMF’s prescribed stabilization programs. The core policy concerns of these programs were the restoration of market relations and the reintegration of the socialist countries into the world market.

One of the first comprehensive stabilization programs was introduced in Poland, at the beginning of 1990. This program called for a free price system, drastic cuts in consumer and producer subsidies, a free trade policy, convertibility of currency based on a devalued and fixed exchange rate, wage controls, a balanced budget, and a freeze on credit to state enterprises.⁸ By early 1991, all the CEECs were in the process of implementing similar IMF-sponsored stabilization programs; and all were in a deep economic recession with decreases in national product in the region as a whole reaching more than 25 percent between 1990 and 1992.⁹

Privatization

In the initial phase of the transition, the impact of the new market environment was to encourage management to break-up or liquidate state-owned enterprises (SOEs) as part of a privatization process based on management buy-outs (MBOs). For example, in the Czech Republic, in 1992, almost 90% of privatizations were the result of MBOs.¹⁰ Managers generally sought full financing for their acquisitions from the commercial banks, despite the fact that interest rates were very high. As a result, many MBOs carry such a high level of indebtedness that they face a constant threat of bankruptcy, or are unable to make any large investments.

The IFIs, however, were not content with the pace and character of these privatizations. Thus, IFI loan conditions included the imposition of mass privatization programs (MPPs) for which specific targets were set. For example, in 1995, the World Bank made the re-opening of credit lines to Romania conditional on the privatization of the 1500 largest enterprises by October 1, 1995. In essence, the Bank has been using the external financing difficulties of CEECs to engineer a massive giveaway of those states’ assets.

The Czech program set up the most extensive process of mass privatization by organizing the divestment of most large SOEs in two large waves over a two-year period. This included the privatization of almost half of Czech national assets through the distribution of vouchers to the population at large and the creation of investment funds as intermediaries. Typically of all the CEECs, the major banks formed the largest investment funds and have used the mass privatization programs (MPPs) and especially the voucher system to concentrate in their hands the ownership of most companies.

Another feature of mass privatization has been the development of secondary capital markets. The Czech MPP, for instance, also included the creation of the Prague Stock Exchange. Repeated experiences in CEECs have confirmed that at the close of a MPP, most small shareholders, faced with collapsing incomes, will sell their shares to finance their consumption, leading to a collapse in share prices and further concentration of ownership structures.

Overall, the massive privatization of state-owned assets has sharply increased the share of output produced by the private sector. In 1994, it is estimated that this share was in the range of 40 to 70 percent of GDP in the CEECs and was rising rapidly.

The banking sector

In all the transition economies, the economic recession has led to the rapid accumulation of bad loans in the commercial banks. Neo-liberal dogma held that the principal factor behind the sharp increase in bad debt was the continuing close relationships between state-owned banks and loss-making SOEs. Thus, the IFIs insisted on the introduction of strict bankruptcy legislation to severe this link. However, the real intent of the legislation, to shut down industrial production, became evident when the negative effects of the bankruptcies, turned out to be so serious and widespread that the loan portfolio of the banks deteriorated even further. Many banks became technically insolvent and their need to set aside more provisions resulted in even higher real interest rates as well as in a further decline in commercial credit to enterprises.¹¹

Recapitalization of the banks has usually been linked to the conversion of their operations to commercial criteria and to their privatization. The Czech and Slovak Federative Republic, CSFR, for example, recapitalized the commercial banks in 1991 with the equivalent of $US 5 billion paid for through cuts in public expenditure.¹² This cleared the way for the privatization of five major banks, representing 63 percent of the sector, as part of the 1992 MPP. The World Bank has also consistently promoted the swapping of debt for equity, providing another venue for increasing bank ownership of enterprises.

Local politicians initially claimed that all the financial institutions would be domestically formed groups. However, foreign banks are taking on a major role in the mass privatization process in the Czech and Slovak republics, reflecting a more generalized process of an increasing role for foreign banks. In Hungary, for example, the joint venture and foreign banks have taken a larger share of the market, rising from 5% to 40% of the market, a share which is generally expected to increase even further.

Thus, while the early period of market reforms can be characterized as the consolidation and extension of the power of managers over the real economy, the period of mass privatization corresponds to the increasing control of the banking sector, and especially of the foreign banks over the whole economy.

The economic collapse

One of the main effects of all these structural transformations on enterprises has been a dramatic decline in demand, leading to a generalized collapse in production. Furthermore, the persistence over many years of a harsh macroeconomic environment has also raised the weight of loss-making enterprises in the economy. In fact, all of the CEECs have been going through a process of deindustrialization. In the Czech Republic, generally considered the most successful transition economy, industrial output decreased by 40 percent in four years.¹³ In addition to these developments, the tight credit policies have led to a sharp fall in investment. Between 1989 and 1993, fixed investment in CEECs dropped by nearly 40 percent.¹⁴

The price of the transition to capitalism

From being virtually non-existent at the end of the 1980s, unemployment has already reached double-digit rates in all CEECs, with the exception of the Czech Republic. Overall, the unemployment outflows are very low, leading to the emergence of a large pool of long-term unemployed. Policies imposed by the IFIs have also resulted in an across the board decline in real wages in all of the CEECs.

Furthermore, the passion with which governments have cut consumer subsidies and liberalized prices left millions of people in the region exposed to poverty. In Bulgaria, for instance, over 70% of all households had incomes below the official social minimum by early 1991.¹⁵ Even in the Czech Republic, considered the showcase of the transition economies, the proportion of the population living in poverty increased from 4 percent in 1989 to 30 percent by 1991,¹⁶ a problem that was expected to increase as prices continued rising.

Finally, long-term growth has been undermined by decreasing investment and a shrinking labour force. In fact, the growing economic and financial dependence on Western imperialism is leading to the dismantling of the socialist welfare state, increasing poverty, and a loss of national sovereignty, presaging a headlong rush into the Third World.

Endnotes

1.IFIs refers primarily to the IMF and the World Bank.

2.By CEECs I am primarily referring to Bulgaria, Czechia, Hungary, Poland, Romania, and Slovakia.

3.IMF, The World Bank, OECD, and EBRD (1991), A Study of the Soviet Economy: Volume 2, Washington, D. C., p. 44.

4.Hard goods are goods that could be sold outside CMEA countries for convertible currency without a price discount.

5.Christensen, B. V. (1994), The Russian Federation in Transition: External Developments, IMF, Occasional Papers, Washington, D. C., p. 32.

6.Koves, A. and Oblath, G. (1995), “The regional role of the former Soviet Union and the CMEA: A net assessment”, in Hardt, J. P. and Kaufman, R. F. (Eds.) East-Central European Economies in Transition, Joint Economic Committee, Congress of the United States, M. E. Sharpe, Armonk, New York, p. 360.

7.Marsh, V. (1995), “’I have no illusions’: Profile: Mugur Isarescu, central bank governor”, Financial Times, May 25, p. 21.

8.Zajicek, E. K. and Heisler, J. B. (1995), “The economic transformation of Eastern Europe: The case of Poland – Comment”, The American Economist, vol. 39, no.1, pp. 84–88.

9.Bosworth, P. B. and Ofer, G. (1995), Reforming Planned Economies, The Brookings Institution, Washington, D. C., p. 121.

10.ECE (1994), Economic Survey of Europe in 1993-1994, United Nations, New York.

11.Bokros, L. (1994), “Privatization and the Banking System in Hungary”, in Akyuz, Y., Kotte, J. K., Koves, A., and Szamuley, L. (eds.) Privatization in the Transition Process: Recent Experiences in Eastern Europe, UNCTAD, Kopint–Datog, Budapest, pp. 305-320.

12.Borish, M. S., Long, M. F., and Noäl, M. (1995), Restructuring Banks and Enterprises: Recent Lessons from Transition Countries, World Bank Discussion Papers, no. 279, Washington, D. C., p. 16.

13.ECE, op cit., p. 167.

14.ECE (1994), Economic Bulletin for Europe, vol. 46, United Nations, New York and Geneva.

15.Beleva, I., Bobeva, D., Dilova, S, and Mitchovski, A. (1993), “Bulgaria: Labour market trends and policies”, in Standing, G. And Fischer, G. (Eds.) Structural Change in Eastern Europe: Labour Market and Social Policy Implications, Centre for Co-operation with Economies in Transition, OECD, Paris, p.51.

16.Nesporova, A. (1993), “The Czech and Slovak Federal Republic: Labour market trends and policies”, in Standing, G. And Fischer, G. (eds.) Structural Change in Central and Eastern Europe: Labour Market and Social Policy Implications, Centre for Co–operation with Economies in Transition, OECD, Paris.

Spark! #9, pg. 19-23

Socialism in the German Democratic Republic

by Robert Steigerwald*

Dear X,

I am writing on the day after the Berlin elections and you can imagine how I feel. In East Berlin, the old capital city of the GDR, the elections brought the PDS [Party of Democratic Socialism, successor to the East German Socialist Unity Party] 36 per cent of the vote, making it by far the strongest party in the city. The Social Democrats [SPD] suffered heavy losses. Citywide they have formed a coalition with the Christian Democratic Union, which had carried out a campaign against them in the style of Joseph Goebbels. The SPD and the Greens were right when they talked about a “poisoning of the well.” The Social Democrats are once more prisoners of their own anti-communism. The imitators of Goebbels gloat as the SPD again turns to them to form a coalition, the only proper move when one “must bear responsibility.”

But now let’s turn to matters that concern us.

I had promised to comment on your text and my concerns have to do with your conclusion that the GDR was not socialist, but rather had socialist elements.

I think that we have no disagreements in respect to questions concerning:

– the severe damage done to the fundamentals of socialist democracy,

– the lack of self criticism (a flaw that also applies to us because we [i.e., formerly West German Communists] would probably have acted little differently under similar circumstances!),

– the glossing over of real problems instead of naming them and thus following the pattern of Honecker’s dictum that any difficulties would be “overcome by moving forward”,

– the perversion of the performance principle,

– the practice of self-deceit in the face of knowledge about impending economic bankruptcy (meanwhile it’s been documented that they knew!),

– the disregard for achievements in many scientific areas (not only outside of the country, much was also achieved in the sciences within the GDR itself).

The list could be extended, we both know that.

Although they were extremely important, I have intentionally avoided talking about external factors here. It would be ridiculous to credit the enemy with having thrown sand in the socialist engine!

But when it comes to the central question of whether the GDR was socialist or not, I do not agree with you.

I have often wondered what the decisive, primary criterion would be to call a system socialist, and I have come to the conclusion that it is a question of whether the socially produced surplus product – in its mass – is socially appropriated and not transformed into capital. Grouped around this primary criterion are other ones relating to state power, democracy, the concrete form of the property question, and the performance principle. But, as we both know, historically concrete situations are possible (and have occurred), where the formation of such derived criteria in no way parallels our cherished notions. That such objectively forced limitations continued to exist even after their bases had ceased to do so or no longer existed in their old manner, is naturally a point of criticism that speaks to the question of the deformation of the system. The dialectic of the relation between the primary and derived criteria makes it possible for a system to lose its socialist character in the face of the most serious deformations. By way of example: if a leadership clique seriously endangers the largely social appropriation of the socially produced surplus product.

But was that the case in the GDR? To point to the economic and social privileges of the Nomenklatura would be inappropriate. Certainly there was much to condemn from the standpoint of communist morality, but we all know that the arguments of our opponents — to which some of us succumbed concerning huge accumulations of wealth, amount to nothing more than agitation. No manager of a medium-sized enterprise in the West would live in a Wandlitz house [Wandlitz is a small suburb to the north of Berlin where the members of the Politburo lived in single-family houses]. In general the issue here is one of revenue. Marx did not tie the problem of exploitation to revenue.

To push the question further would be to ask from where the GDR – which had an economy in difficult straits – was able to derive the considerable means for its social measures, which you mention as socialist elements.

That the most serious sins were committed in the sphere of infrastructure and urban construction measures was a question of establishing (correctly or incorrectly) priorities.

On other matters, such as the tremendous burden of armaments, the burdens of COMECON, certain aspects of Soviet treatment of the GDR, major contributions to international solidarity (e.g., Vietnam, Cuba and other countries afflicted by imperialism, especially that of the United States) we do not need to argue.

If the system that was basically constructed in the GDR only differentiated itself from local conditions through a couple of social Band-Aids, then for the whole real left, including the Communists, there was no real reason to regard this as a defeat.

I would like to advance one last argument that does not concern the GDR alone. Why did the whole imperialist system combine all its ideological, economical, political, and military power to sweep away a system that, if I take your judgment as a basis, in its essentials differed hardly at all from itself?

I know that you consistently point out that the democracy question may not be viewed as one derived from socio-economic relations. You also gleefully refer to the passage in the Communist Manifesto, “We aim for a social order in which the free development of each is the condition for the free development of all.” But I ask you to consider the following.

First, the quotation from the Manifesto is preceded by a passage containing its prerequisite. There the conditions are named that make such a free development possible, namely the sweeping away of the relations of production that make classes and class domination possible. If one leaves out these conditions, then all that is left is a future society that has no material social basis, like a human without a belly. In addition, the citation concerns communism and not socialism. And in that regard Marx’s Critique of the Gotha Program (1875) is also important. That work contains a beautiful description of communism and socialism, but also a sober explanation of how much water will first have to be poured in our future wine.

With respect to separating the socio-economic basis and democratic-social conditions, I also think that such a separation means abandoning the conception of a socio-economic formation and, furthermore, the materialist conception of history itself.

I am sure our discussion will continue, but we old fighting cocks have never shrunk back from an altercation,

In solidarity,

Robert

__________________

* - Robert Steigerwald is leading theoretician of the German Communist Party (DKP)

Spark! #9, pgs. 16-18

Canada or Capitalism! Theses on the Canadian Capitalist Class

by R. J. Reierson

1. Canada arose from white settler colonies to an imperialist state ruled by a binational Canadian capitalist class. The capitalists rule based on their ownership and control of the vast majority of the industrial, resource, and commercial wealth of Canada, which they have amassed through the exploitation and robbery of the working people and natural resources of Canada and of other countries.

2. Despite its immense and increasing wealth, the Canadian capitalist class is a small and historically diminishing element of society – less than 5 percent of the population. Indeed, capital has become so concentrated and centralized that the decisive power within the capitalist class rests in the hands of a financial oligarchy of a few thousand families whose transnational banking and industrial corporations dominate the general direction of both the Canadian economy and state.

3. While Canadian transnational corporations wield the paramount power in most key economic sectors as well as in the Canadian state, Canadian big business has a long history of collaboration with US, British, Japanese, and other foreign capitalists to sell out large portions of Canadian industry, resources, and culture, in flagrant disregard for the economic and political independence of Canada. Canada’s extremely high level of foreign ownership, international indebtedness, and technological dependence – by far the highest among the developed capitalist countries and many less developed countries – has added to the exploitation of Canadian working people and resources, and weakened Canadian economic and cultural development, and impaired Canada’s political sovereignty, especially in the face of US imperialism.

4. In Canada and internationally, transnational corporations have become the primary conduit of capitalist exploitation and imperialism. Transnationals, the highest form of monopoly capital, are the extreme of the concentration and centralization of capitalist wealth; some transnationals possess greater wealth and control more resources than entire governments. Transnationals are the leading capitalist force behind global impoverishment and war, the reproduction of sexism, racism, national chauvinism, and militarism, the degradation of nature, culture, and science, and the monopolistic control of technology and mass communications. The transnational corporations have stretched to the breaking point capitalism’s fundamental contradiction between private appropriation and social production.

5. Contrary to claims about “supra-national” capitalism and “globalized” capital, the ownership, control, and profit flows of transnational corporations remain concentrated in and tied to the capitalist classes of particular nations and regions. However, in recent decades the production, financial activities, and sales of these corporations have shifted significantly outside their restricted home markets. This occurred as a result of the rising scale of capitalist accumulation and export, the revolution in communications and transportation, and intensified international competition driven by the deepening crisis of capitalism.

6. Transnational corporations have not disengaged from or abandoned the use of states or state power. They require the capitalist state power of particular national and subnational governments to perform its core exploitative function: maintaining capitalist property and exploitation, particularly by controlling and suppressing whenever necessary labour movements and other democratic forces. However, the transnationals pursue the political direction of anti-democratic internationalization to reduce and eliminate the democratic sovereignty of existing national states such as Canada and to transfer state power to larger-scale capitalist blocs and international organizations further removed from democratic control.

7. In Canada, the dominance of Canadian transnationals and the trend of anti-democratic internationalization underlies a fundamental shift in the political direction of the Canadian state: the shift from National Policy protectionism and bourgeois national development strategy to continental ‘free trade,’ in particular, and neoliberalism, in general. Though driven by the transnationals, this historic shift was supported overwhelming by the non-transnational sectors of the Canadian capitalist class, who do not have a general class political direction independent of the transnationals. Only the working class and some groups of farmers, fishers, and other small proprietors were collectively opposed to free trade and neoliberalism.

8. The neoliberal “corporate agenda” of free trade, privatization, deregulation, and the destruction of universal, high-quality social programs is not simply a temporary or opportune “policy” but a new phase or central tendency in the expansion of modern imperialism. To reverse this trend, to reclaim and advance democracy, sovereignty, and social reform for the benefit of working people requires a fundamental realignment in class power to break the grip of transnational corporations, beginning with the Canadian transnationals. Such measures as strengthened international trade-union bargaining, and strengthened minimum labour and environmental standards in international trade agreements can moderate the worst symptoms of imperialist expansion; but taken alone they are incapable of reversing the general direction of neoliberalism and imperialist expansion. All transnationals must be publicly taken over, gradually divested of their foreign holdings, and reorganized on a smaller scale under social ownership and democratic national, regional, and local control appropriate to an efficient scale of production and to ecological conditions.

9. The struggle against neoliberalism and the ‘corporate agenda’ is a democratic and anti-imperialist struggle that depends first and foremost on the leadership and mass engagement of Canada’s multinational, multiracial, female-male working class, which today constitutes the vast majority of Canada’s population. A democratic, anti-transnational alliance of political forces based in and around the working class is necessary to take public control of the Canadian transnationals and, hence, the commanding heights of the Canadian economy, to begin a process of profound democratization of the Canadian economy and state, and to renegotiate and transform Canada’s international economic relations.

10. Key international goals of Canada’s new international economic relations would be: on the one hand, increased national and regional self-sufficiency in production, consumption, and resource use, and the gradual ending of foreign ownership and indebtedness, and; on the other, an expansion of equal and mutually beneficial international exchange and sharing at the level of culture, research, technology and, when desirable, mutually owned and controlled joint production. Canada would work actively towards establishing non-imperialist international economic institutions outside the imperialist frameworks of the IMF, World Bank, and World Trade Organization.

11. In taking control of the commanding heights of the Canadian economy and in initiating a process of the democratization of the state and economic power, the anti-transnational alliance would turn the general direction of the Canadian economy and state away from neoliberalism and imperialism towards socialism. This anti-transnational period would not be socialism, because medium and small-scale capitalist ownership and capitalistic commodity money relations would still exist widely as, for a time, would foreign transnational ownership and commerce. But neither would it be to return to an earlier form of national competitive capitalism, nor to establish, beyond the initial transitional period, a form of highly monopolized and centralized state capitalism. Rather it would be a transition period, not a stable condition or a final result, in which the political process itself, particularly the hostile, anti-democratic activities of capitalist interests, would clarify the necessity of the political leadership of the working class and its allies – and of socialism.

Spark! #9 – pgs. 3-5

Positioning for Advance

By William Stewart

The obstacle is imperialism and neo-conservatism, the shape of capitalism. It cannot be modified, downsized, democratized, or civilized. It must be displaced.

1. This is the challenge facing the working class and its allies the world over. Until we are able to face this reality, the future holds only ceaseless struggles, poverty, insecurity and wars.

2. Communist parties evolve to assist the working class in understanding and addressing this unrelenting truth. They are joined in this undertaking by other socialist and left forces. Other political parties who do not understand or support the need for fundamental social change for socialism, seek to obscure this social reality.

The scientific elaboration of Marx and Engels that the working class is the grave-digger of capitalism remains at the heart of revolutionary strategy. This is the aspect of Marxist-Leninist science that has been the target of the main fire of capitalist ideologues since 1850.

It was most illustrative that the betrayers of socialist power in the Soviet Union grouped around Mikhail Gorbachov hastened to heap ridicule on the concept of working class power as they scrambled for the spoils of their counter-revolutionary efforts. Nor was it incidental that one of Yeltsin’s first acts was to illegalize Communist organization in factories and enterprises.

No other social group in capitalist society can or will lead the way to socialism. The working class will undertake this task as consciousness of its role and its unity around this consciousness develops. This is a process.

It is a process which is honed in the day-to-day struggle for its own ends. This is a spontaneous struggle which tends to ebb and flow with the ups and downs of the system. The rising militancy of the working class and people’s movement in Canada testifies to the law of class struggle. For example, the strike movement headed by the showdown between the Canadian Auto Workers Union and General Motors; the angry upsurge in the Maritimes; and the nurses’ victory in Alberta. And of course the historic Toronto Queen’s Park Rally culminating the Days of Action of October 1996.

However, spontaneous class struggle is one thing. Class consciousness is another. Class consciousness implies a coming together of struggle (practice) with theory; and understanding of the laws of social development; the methodology of social change; recognition of the need for a political party based on working class principles.

Continuation and building on the Days of Action is by no means certain. The entrenched forces of outright capitalist ideology and “modern” social reformism (the same thing without a top hat) are still considerably stronger than the left-centre forces (perhaps not numerically, but through position and power.)

What experience, here and abroad can we draw on to help change this situation? In the era of neo–liberalism, a major debate is engaged in, in Communist and Workers Parties, in left and progressive circles around the world, centering on the practice of social democracy. Can it be regarded as an integral part of the labour movement, that is, a party of social change or has it become a conduit for capitalist ideology and neoliberal policies? Communist parties in Greece, Sweden, Denmark, Italy, Portugal and Germany, regard social democracy as the major obstacle to achieving a democratic alternative to neo-liberalism (the world term for neo-conservatism).

In France, Norway, Austria, Holland, Belgium, Spain, parties are not so categorical in their critique. The same is the case in Britain, Australia and New Zealand. In the United States, the party takes a fully negative attitude to the social democrats.

Communist parties in Greece, Portugal, France, Spain and Italy are mass parties with major influence in the unions as well as deputies in parliament, senates and the European Parliament. They also hold mayoralties and other elective positions in many municipalities. They have all witnessed many years of social democratic governments.

Aside from such differences in time, shape and place, there is a common concern crossing all lines. That is whether the struggle against capitalist politics in the working class and people’s movements can be effectively countered without a sharp critique and exposure of social democracy.

Recent events in Canada have brought this into open debate: the debacle of the Rae government in Ontario, where a seeming significant victory was turned into a disaster; the behind-the-scenes and open friction over preparations for the Days of Action; and the somewhat similar developments in B.C. where the NDP won the election on a firm anti-neoconservative campaign and has since caved in on too many matters to right-wing pressures.

Neither has the record of the Romanow government in Saskatchewan departed from the main line of the neo-conservative push.

It is useful to recall that social democracy emerged from the womb of the world revolutionary movement. In reacting to the pressures of capitalist ideology, it broke with revolutionary tradition entirely and invented a philosophy in which revolutionary change was replaced with step-by-step reform of capitalism until socialism would emerge. Envisaged was a form of peaceful co-existence between workers and capital.

In this contest, according to their outlook, government serves as mediator between capital and labour. If a government favours capital, workers suffer, but if government honestly acts in the interests of both capital and labour, both sides win. Therefore the election of social democratic governments is the total (obvious) answer.

Like in Britain? Sweden? Germany? Finland? Australia? New Zealand? Like in Spain? Chile? Grenada?

A glaring reality is denied by social democracy. There is a world of difference between government and the state. If you have a capitalist system with all its economic and political levers of power, you either have a capitalist government to administer it, which social democracy has tried unsuccessfully to do since its birth, or a government which challenges the dictates of capital – witness Chile.

This requires dealing with an army sworn to defend the capitalist state, a police force likewise, a judiciary and a set of laws predicated on the defense of capitalist property (witness the Helms-Burton Bill) as well as a range of NGOs which are politically committed to capitalist rule, plus a powerful imperialist, military political force – primarily the USA.

Refusal to accept this reality consigns them to the role of being just another tweedledee-tweedledum in the process of capitalist politics.

Here another contradiction appears – not just between the NDP and the working class and people’s movement, but in its own ranks. The linkage to labour through its organizational connection with the CLC brings it into direct collision with the needs and wishes of the working class. Its constituency organizations, which have shed their original socialist character, more easily capitulate to the lure and glitter of capitalist politics and the personal rewards suggested. Add to this the contented labour lieutenants co-opted by right wing social democracy and other forms of capitalist ideology.

Nonetheless, the majority of working people inside the NDP net constitute an important component of the left and progressive forces, and a major component of the working class. As well, they are experienced in the art of political campaigning.

However it is to be done, it would seem that the most advisable course to follow inside and outside the NDP, would be a systematic, relentless exposure of right-wing social democracy with the aim of breaking its influence on the program and policies of the NDP and the trade union movement. If this proves ultimately unrealizable, this struggle will have created the best possible conditions for winning from its ranks the left and progressive forces.

The Communist Party has long called for an end to the organizational linkage between the trade union movement and the NDP, whereby the unions declare the NDP as their political arm. Unions should not delegate that responsibility to any party, while they may well favour the NDP in given elections, depending on a satisfactory program. After all, the immediate alternative is even bleaker.

Primarily however, the exposure and defeat of the right wing needs to centre on elaborating and fighting for an alternative program.

Such a program should resolve the following dilemma so as to be clearly understood by the working class and the people: How to break with the neo–conservative agenda, which is global in its scope, without breaking entirely with the capitalist system? Such a break appears beyond the bounds of realistic politics in today’s Canada.

The Communist Party of Canada calls for a democratic renovation: a new “democratic” government, pledged to reverse and replace the neo-conservative program. Such a government would need to be made up of the various strands of the labour and peoples’ movement, including but not dominated by the NDP, with full input into its program. Its candidates would be decided on a pro-rata and historical conditions basis. It would be drawn from and directly answerable to the people.

Its mandate should include:

· a program to establish full employment in Canada, including a massive social spending program;

· restoration of all social funding to its level prior to cuts;

· restoration of the public sector;

· restoring the level of currency production by the Bank of Canada to 20%;

· control over the export of capital;

· a new tax system making corporations pay their full share and all back taxes;

· reducing the work day and week; curtailing overtime;

· raising UIC benefit rates to 90% of previous earnings and reducing qualifying time;

· overhauling the Workmen’s Compensation Acts to protect injured workers and not corporations;

· making education a full and free right for all at all levels;

· eliminating all poverty quickly and child poverty immediately;

· implementing full gender equity and affirmative action to guarantee immigrant access to meaningful well paid jobs;

· making work ghettos illegal;

· amending the constitution to provide full national rights to our French Canadian fellow nation;

· protecting full aboriginal rights of native Canadians and according them full self government on their lands;

· expanding budgets significantly for culture and the arts, including the CBC, whose television should shed all private advertising. Giving significant grants to public radio and TV;

· financially encouraging the publication of community, labour and peoples’ print media to provide an antidote to the press of the Conrad Blacks et al; breaking up media monopolies;

· abolishing the senate and replacing it with an elected house of provinces, aboriginals and French Canada;

· abolishing all discrimination against gays and lesbians;

· tightening all laws to protect the environment and establishing a commission to determine the long term rational use of resources compatible with environmental needs;

· getting out of NAFTA, NATO, NORAD and all US imperialist and military alliances;

· declaring Canada a nuclear–free zone and establishing a neutral non–aligned foreign policy of peace.

This program, upgraded and amended by the members of such a political coalition, could form the basis of political campaigning for a new democratic government and alternative within the bounds of capitalism.

It would not win the majority of Canadians if placed before them today. It would first have to become the program of the left and peoples’ organizations.

It would have to be fought for day in and day out, until it captures the hearts and minds of the Canadian people. Social change cannot be achieved through elections until it has been won in the factories, streets, offices and communities.

If this process is not undertaken consciously, it will not just grow out of misery and suffering. What will arise out of misery and suffering, unaddressed by a conscious alternative, is more misery and suffering.

Victory for such a coalition would not bring an end to the struggle against capital. In the short term, it would likely intensify as capital, in the name of democracy and the sanctity of capital, would fight to protect and regain its lost positions of strength.

The only guarantee would be the eternal vigilance of the working class and peoples’ movements. So long as capital rules, there can be no end to the class struggle.

Only the socialist re-organization of society based on the peoples’ needs, not the profits of capital, can resolve this struggle. And as events in the Soviet Union and Eastern Europe demonstrated, even the winning of people’s power does not ensure the uninterrupted development of democracy and socialism in a hostile imperialist world.

Together, the working class, its political party, and the peoples’ organizations are the sole guarantee of extending and protecting democracy, winning and ensuring the firm establishment and continuity of socialism.

The labour and peoples’ movement in France, Germany and other European countries are blocking the worst excesses of the neo–conservative onslaught. Black and white American labour, women, youth and students, are mounting a spirited fight back. Cuba is standing firm as a socialist state, withstanding the despicable attempts of US imperialism to crush it. Mexico, Brazil, El Salvador, Nicaragua, Peru, Chile in fact most of Latin America, is struggling for freedom and sovereignty.

We can draw great confidence and strength from the knowledge that the working class and democratic forces around the world are fighting for similar policies. In different ways – perhaps not always understood or accepted by us.

Communist and workers’ parties are undertaking the construction of socialism and the building of democracy in China, Vietnam, North Korea and Laos. In India, the Communist Party is elected in areas representing more than 100 million people. The Communist Party of Japan scored a major success in recent elections. In the East European countries, communists and workers are drawing painful lessons from their downfall and are winning the growing support of their people.

In South Africa, the National African Congress, in close cooperation with the South African Communist Party is forging the core of a new liberated African continent. Socialism and the onwards march of the world’s peoples has not been halted, and history continues to unfold. The future belongs to the people, not capital.

Spark! #9 - pgs. 6-11