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Date Thu, 09 Jun 2005 14:20:24 +0300

1. In the document approved during the Florence Congress in 1997, the passage
from the international economy's Keynesian period to the neo-liberalist model
was described synthetically in the following table.
(Period - Technology - Production - Market - Structure - Control)
Up to 1970s - Electro-mechanics - Fordism - Oligopolies - Nation State - Currency
Since 1980s - 6 Technologies - Fragmented cycle - Competition for segments
network of companies - Homogeneous areas - ?
We left the final box relating to the control mechanism over the whole economic
cycle empty on purpose, the problem not being even considered as it was hoped
that the system would find its balance in the forces of the free market. Now,
however, this conviction seems destined for the rubbish bin and with it the
whole framework which guided the world's economic policies. Our task now is
therefore to complete a third line in the table, one which describes the new
tendencies in international capitalism.

2. In working out the second line of the table, we did not at that time analyse
the causes of the passage from a Keynesian model to a neo-liberal one between
the '70s and the '80s. But in order to understand the origin of the
difficulties in the model adopted by international capitalism in the final two
decades of the twentieth century, we now need to examine briefly the causes.
Any interpretation which attributes purely economic reasons for the switch to a
new theoretical system of reference (national debt, inflation, cost of welfare,
excessive fiscal pressure) is doomed to failure, even though it may contain
elements of the truth. It is also necessary to consider more strictly political
reasons if we are to get a more complete idea of the period. At the end of the
1970s, the workers' movement was in decline all over the world, to the extent
that it could no longer be considered a serious danger within the system.
Furthermore, the alternative world of State Capitalism was entering a spiral of
death which would bring about its dissolution within a decade. Its demise meant
the disappearance of the system's political and economic rival. The apparent
absence of enemies led the bourgeoisie of the industrial countries to believe
that the Fordist mediation phase had come to an end, and that the time had come
to re-establish systems of exploitation which could guarantee greater profits
which would not be subject to reduction through taxation to cover social
welfare costs or through high wages. The era of social involvement for the
weaker classes was ending, to be replaced by a period of open conflict with no
holds barred.

The level of high development of the productive forces and the processes of
monopolistic and financial concentration made it necessary at the end of the
1980s to introduce, gradually at first, certain activities such as education
and training, healthcare and pensions into the profit-making sector.

The activities of these sectors went from management by an administrative
monopoly to economic management, a passage which in itself was capable of
producing profit.

This resulted in a redefinition of the role and function of the State, and a
distinction now needs to be made between State activity and public interest
activity, such as services to the person or activities which directly or
indirectly affect the quality of life of women and men.

3. Now that social mediation had become superfluous, in effect pointless, the
costs borne thus far for welfare could now be transformed usefully into profit
by privatising the services. The market therefore came into play as the only
regulator of social life. The age of economic planning, which involved the
economies of the whole world from the end of World War II to the early 1980s,
gave way to free rein for competition. The spontaneous regulation which it was
thought the market could provide the economic cycle (re-discovering the
19th-century myth of the "invisible hand") eliminated all thought of any other
form of control. This is what we intended with the question mark in the
previous table.

4. The market's pre-eminence, as dictated by the established economic theories,
was accompanied, as a natural consequence, by a chase for short-term profit.
The destination of invested capital became of secondary importance as the
timescale for returns became the prime factor. Risk capital, used in the
productive processes and therefore with long-term returns, saw a reduction in
importance compared to its use in finance. This has resulted in a reduction of
investment in technological research, considered as unprofitable in the short
term. The relative lack of interest in technological development has tended to
make the typologies of production more static, if we exclude the pervasive peak
sectors such as electronics and information technology. The later survive on
the market only thanks to a frenetic drive for renewal and constant updating,
but the rest of industry, in particular heavy industry, has seen a slowdown in
research for new production.

5. Previously, there were six avant-garde technologies which were considered
central to the new productive system. Of these six, only three maintain any
strategic value (though not an equal value): information technology,
bio-technology and telecommunications. But just how central they are depends
more on military needs and on the need for social control than on the needs of
production. Also, telecommunications are required for the control of
information, as well as for the above reasons; the profit linked to
telecommunications is above all of financial origin (advertising) without in
any way originating in the productive sector of electronics.

6. At the turn of the century we witnessed an explosion in shares in what was
called the "new economy". This bubble (created mainly through speculation) was
quickly brought under control, wreaking havoc on investors who had been
attracted by the chance of a quick buck. It is a fact that one of the
conditions which enabled the boom in shares in technology was the speed with
which the e-economy can move capital. This situation of accentuated mobility of
capital has today reached exceptional levels, though the real step forward was
made between the 19th and 20th centuries with the invention of the telephone.
This has two consequences. Firstly, an increased marginalization of investment
in production, which provides returns only over an excessively long period.
Secondly, it means that economic authorities are less able to control the
economic cycle.

7. Thus, an end came to another era in which one type of industrial production
was the symbol and the motor of a period in economic history. It had been the
turn of the textiles industry during the first industrial revolution, chemicals
and electricity during the second and electro-mechanic production from the
Great Depression up to the 1970s. The second column of our table (dedicated to
technology) has gradually lost its importance and the current era is
characterized by the domination of finance alone.

8. The increasingly frantic process of spreading out the productive cycle to
different places (often quite distant), the break-up of production units into
various suppliers of parts of the final products, has had certain results which
need to be examined. Firstly, it has put the spotlight on the problem of moving
goods, leading to phenomenal development in the logistics sector and a central
place for the construction of infrastructure. Secondly, channels of
communication have acquired a fundamental strategic role - the so-called
corridors - and it has been no accident that all the conflicts of the past
fifteen years have taken place around them (be they already existing ones, in
construction or in the planning stage).

9. The costs of the preparation for the necessary infrastructure are being
borne by public funds and considerable investment is required. But the phase
which the international economy has entered is tending towards a reduction of
gross incomes and with them tax yields, and it is not possible to exceed
certain limits in taxation without disturbing the whole system. Consequently,
the required capital is often missing and work on the infrastructure is not
affordable due to the excessively high costs.

10. Two phenomena have recently become entwined, two facts which we would do
well to discern on a theoretical level: the fragmentation of production units
and externalisation. The latter consists in farming out certain functions which
were once covered within large companies (advertising, market research,
research and development, computing systems, and so on), and which are now
entrusted to external companies whose workers are often ex-employees of the
parent company. This type of fragmentation of production has a future inasmuch
as employment is more elastic, it removes certain fixed costs from the company,
transferring them onto the subcontractor. The former, on the other hand,
consists in the pure and simple dismemberment of the productive cycle into
sectors which produce a partial product that requires other operators so that
it can be completed and presented on the market. It is limited by the factors
mentioned previously regarding the fluid circulation of goods and at times
creates difficulty in the control of the productive cycle as a whole. Though
there are evident signs of difficulty, the phase in which we currently find
ourselves is still that of the fragmented cycle.

11. The increased importance in the world of finance has increased the
verticalization of command over the international economy. A few dominant
financial groups fight for control of the production and the market, trying to
eliminate each other in the process. In this way, the pulverization of the
productive cycle is matched with an increasingly accentuated concentration of

12. In recent years there has been much talk of the importance of competition
but in reality, as in every phase of economic liberalism, true competition has
actually diminished. Competition for the control of markets tends to eliminate
adversaries and has thus greatly contributed to the centralization of control.
A few large financial groups fight for domination over macro-areas of the globe
and this is the only remaining form of competition. Accordingly, there has been
a rapid decline in free enterprise and production for what were once niche
markets have been re-absorbed into the great productive cycle. Some niche areas
do remain but it is unlikely that new ones will appear, as happened in a
massive way in the 1970s in the electronics sector, for example.

13. As we have already said, in a liberalist economic phase competition rewards
the strongest company which gradually absorbs the smaller ones, often
capitalizing the know-how they have developed thanks to their entrepreneurial
ability or their inventiveness but which they were unable to make the most of
in the market. The resulting concentration cannibalises the more innovative
frontier enterprise, absorbing the intellectual heritage within the companies
that survive. So, after a phase of development of open markets, there is a
return to monopolistic concentration.

14. The tendency to concentrate production in certain areas of high economic
development continues to be seen. This production is often carried out in close
contact with depressed or under-developed areas or areas which are in economic
recession, as in fact foreseen in Kenichi Ohmae's book, "The End of the Nation
State". In this way, working conditions differ vastly from one area to another
in a way that was once unthinkable: the result is the atomisation of the
workforce with a sort of league table of up to 44 different types of contract.
It is the prelude to the end of the National Labour Contract and a future
system of different contracts, all much the same, or even a system of
individual contract negotiations between companies and each single worker.

15. Regions and districts too are facing problems of diversification and are
also beginning to be divided up. This is happening through horizontal
stratification within single companies between different types of workers with
different types of contract: see for example the working conditions of
immigrant workers which have been approved through local contracts or, more
generally, the situation created through the use of temporary employment
agencies or as a result of law N°30. It is also happening on a geographic level
from one place to another with the creation of high-development poles which can
be compared to the neurons of the new productive body, transplanted into a
system whose development is static, in decline or moribund.

16. These productive ganglions which are created are linked together by a
network of roads that make up the corridors along which every war of the last
twenty years has been fought, in order to win control over them. In the
vicinity of these communication pathways there is a lively economy, whereas the
further one travels away from them, the more sterile the situation becomes.
Thus, we can witness the creation of strips of territory where production
proceeds vigorously, almost in the manner of synapses which link the various
poles of world production.

17. So, from the point of view of the productive system, a neuronal structure
is being created, a structure which consists of poles of economic excellence,
linked together by strips which are in a phase of development, and all this is
immersed in a huge area destined for under-development. This new structure is
replacing the old one which featured areas of development alternating with
areas of under-development.

18. The real Achilles' heel of the neo-liberal model of production (if indeed
we can correctly define in this way the current phase) can be seen in the
absence of any real form of control over the cycle. The evolution of the
process has been left to the automatic regulation of the market - an automatic
system of checks and balances which (it was thought when resurrecting the
obsolete 19th-century concept of the "invisible hand") the opposing forces
would discover when the time came to allocate the goods. The consequence has
been that over the last fifteen years the international economy has suffered
from a continual, underlying sickness. There may not have been a destructive
global crisis, but the whole period has been marked by ongoing turbulence and
instability, at times dotted with minor insurrections. Neither has there been
the much-vaunted recovery, as a series of unforeseeable and ever-changing
causes has destroyed the analysts' rosy forecasts.

19. But de-regulation of the cycle, entrusted to the free play of the market,
does not only produce uncertain development with the constant (but constantly
unrealised) promise of a future boom. It also increases the margins open to
speculation, providing a target for the most unscrupulous financiers. And with
these margins there come the ever more frequent episodes of degeneration, the
likes of which bring to mind past times, that period over a century ago when
liberalism was rife (no surprise there), as were financial scandals such as the
Banca di Roma scandal. Financial crises on the scale of the Parmalat affair or,
on a global level, the Enron crisis had not been seen for quite some time.

20. The absence of some regulation other than the market (a privileged ground
for politics) has also changed the rules of politics, its operational rules.
The politician was once a professional go-between for the various economic
forces, including the labour organizations. Obviously, the forces of the
dominant class always prevailed but account was taken of the need to maintain
an area of consensus and a minimum of social equilibrium. But this phase then
gave way to one of politics as a pure and simple interface between the dominant
classes who made the decisions and the others who simply accepted them: the
politician as actor (and not just in name - see Reagan). Finally, we have
reached the present situation where the businessmen have become the politicians
(Cheney, Berlusconi, Shinawatra, etc.). When business takes direct control of
politics, it is no surprise that we find a return of the idea of greater
control on the cycle, control which is apparently public as it is being
exercised by the Executive. In reality, however, it has never been more biased
since the Executive and the business sector with an interest at stake are now
one and the same.

21. In this context, the rules at the highest level, which should embody, in a
global vision of society, the productive activity and distribution, are
replaced with controls at ground level. This results in the creation of
supranational organs of control, accountancy agencies to check and certify
accounts, delegation of powers to the Central Banks or various regulatory
authorities, where the controllers and the controlled are often one and the
same. It is the age of the Authority. The Authorities are, however, weak and
inefficient systems of control, something which the recent financial scandals
are clear proof of.


(Period - Technology - Production - Market - Structure - Control)
Up to 1970s - Electro-mechanics - Fordism - Oligopolies - Nation State -
Since 1980s - 6 Technologies - Fragmented cycle - Competition for segments
network of companies - Homogeneous areas - ?
New century - Finance - Fragmented cycle - Oligopolistic concentration -
Neuronal development - Authorities

So we arrive at the situation set out in the table which shows the
modifications that have taken place throughout the last decade. The control
mechanism over the productive cycle has yet to find anything other than a
partial solution and therefore there remains the insecurity linked to this not
inconsiderable aspect.

23. The control mechanism is not the only factor of instability. The phase of
cutthroat economic competition clears the way for appetites for total
domination, throwing open the doors to a new "gold rush". There has been a
return, in fact, to the importance of owning strategic raw materials (oil,
strategic materials, foodstuffs, etc.). In this race, the dominant power
establishes a strong presence in the places of production, which produces
international "sheriffs" and conflicts.

24. Oil, for example, continues to be a raw nerve in the international economy
and there does not seem to be much hope of replacing it as the energetic motor
of international economic development.

The search for new deposits has not provided any clear data and available
forecasts regarding deposits are untrustworthy. Oil companies in the Caucasus
tend to minimize the size of reserves in order to be in a stronger bargaining
position with local governments, while the governments tend to emphasize them,
for exactly the opposite reason. The fact remains that Georgia was recently
placed under a US protectorate.

The co-existence of areas with diminishing production capacity (which coincide
with the areas of high demand, for example the North Sea) and areas with
increasing production capacity (the Caucasus, Persian Gulf, and so on) will
result in an increasing importance being placed on these later areas in the
geo-political arena, with a consequent increase in tensions.

25. Having established certain factors of instability in the system, the aim of
this document is not only that of analysing the current situation, but also of
attempting to predict its future evolution, something made necessary by these
very factors. In order to do this we need to complete yet another line in our
table, which will represent the intentions of capital in the coming decade.

26. It is not possible to hypothesize a return to a productive system where one
sector acts as a driving force for the others, embodying an era. The economic
scene will remain dominated by finance with its extreme mobility and all the
negative consequences that speed of movement will necessarily involve:
volatility with all the uncertainty and strategic short-sightedness that
entails. It is this short-sightedness which binds finance to quick profit and
limits long-term investment (in education, for example), which is the only form
of investment that is capable of creating a stable system.

27. Big problems are appearing regarding the use of manpower, which is
increasingly less qualified and continually converted to new tasks. We have
seen how flexibility has created stratification in companies with a myriad of
contract types and this has made management of the productive cycle even more
difficult. Furthermore, there is a negative effect on the quality of labour
(and therefore on the product) as a result of the fact that those entering the
job markets are educated to lower standards and any work experience they have
is of little value as the skills needed are easily learnt but soon become
obsolete. These push factors can lead the workers, as the real actors of the
production process, to rebuild their class unity almost in a partial way.

28. The phase of property concentration has not yet ended and entire industrial
sectors are still being restructured on an international level. The car
industry, for example, lurching along from one crisis to the next, is destined
to end up with only a very few car-makers surviving throughout the world. The
tendency is therefore towards the formation of monopolies in each sector.

29. With the growing financial concentration and the tendency towards
productive pulverization, there is an increasing role for productive poles,
centres of development surrounded by depressed areas, connected to each other
along corridors which attract development along them. The neuronal structure of
production will continue.

30. Instability has its costs in the long term and though it may be useful
during a transitory phase in order to ease the process of property
concentration, in time it becomes economically impossible to maintain. The case
of the collapse of large companies with the inevitable negative effects they
have brought, is a clear example. Authorities provide no real guarantee which
can prevent the turbulence of the market and so there will be a return to some
instrument of regulation. In the case of Europe, at least, this would appear to
be once again a currency.

31. We can now add a further line to our table, taking into account what has
just been said.

(Period - Technology - Production - Market - Structure - Control)
Up to 1970s - Electro-mechanics - Fordism - Oligopolies - Nation State -
Since 1980s - 6 Technologies - Fragmented cycle - Competition for segments
network of companies - Homogeneous areas - ?
New century - Finance - Fragmented cycle - Oligopolistic concentration -
Neuronal development - Authorities
Next decade - Finance - Partial re-composition - Sector monopolies - Neuronal
development - Currency?

Neo-liberalism (which has never actually been fully applied) may have been
useful for the break with Keynesism, but it has been twenty years since it was
the theory of reference for economic operators.

There are new economic theories on the horizon.

32. Here are some examples, though none of them are truly capable of becoming
the model of reference for the global system.

1) Long waves (N.D. Kondratieff, M. Salvati, E.Screpanti, and others): the
economy sees a series of recurring phenomena in a decades-long cycle with
periods of stagnation alternating with development;

2) Strategic commercial exchange (R. Reich, L. Thurrow, P. Krugman, and
others): the competitivity of a productive system does not depend on low
running costs but on the capacity to invest in sectors of a high added value
and on the efficiency of the apparatus of production;

3) Economics of Qwerty (P. David and others): the order of the letters on a
keyboard was chosen in the late 1800s and has been passed on from typewriters
to computers even though the order is completely irrational: this theory takes
into consideration the reluctance of systems to change, given that a more
suitable set-up may involve changeover costs that are too high, as would be the
case, for example, if one were to attempt to convince keyboard users to use a
different, more rational layout;

4) Monetary circuit (B. Schmitt, A. Parguez, F. Puolon, A. Graziani and
others): the currency is created with bank credit and disappears with its
return to the bank: it is, then, a circuit, but the currency is not a neutral
instrument of mediation of the exchange of goods - thanks to it, those who
benefit from credit (businessmen) enjoy an economic privilege (profits) and a
social privilege (power).

33. The strategies of domination outlined above do, however, encounter
unforeseen obstacles. On the one hand, the permanent war of conquest gets
bogged down. On the other hand, there develops rising opposition among the
capitalist competitors of the dominant power. And then there is China. This
promised land of a (potentially) bottomless market is itself becoming a
competitor to fear - it does not acquire, except in a minimal way, but has no
difficulty selling, thanks also to the hugely inferior labour costs and rapidly
advancing technology.

34. But the main enemy, an enemy which once seemed bowed and broken, has once
more reared its head. With the arrival of the new century there has been a boom
in social protest. It exploded onto the world stage with the anti-globalization
movement and the various Social Forums, the workers' movement has had a new
lease of life, there is a growing refusal to go on putting up with wage
reductions, and so on. Even "third-world" countries are now looking for a way
to escape from the grip of the domination that was imposed on them and are
beginning to resist the cures which for years have been forced on them, as we
saw during the last WTO meeting in Dubai. The predictions of capital contained
in the last line of our table are merely imperialistic aspirations. They have
yet to come true.

(Approved at the 6th National Congress of the Federazione dei Comunisti
Anarchici, Cremona 19-20 June 2004)

From: Federazione dei Comunisti Anarchici <internazionale@fdca.it>

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