The Multidimensional Crisis and Inclusive Democracy, Takis Fotopoulos (2005)

Chapter 6:

The causes of the collapse of the socialist project


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The decline of socialist statism


A crucial part of the present multi-dimensional crisis, at least as far as its political dimension is concerned, refers to the decline of socialist statism which, after its victory in the 19th century over libertarian socialism (a product of the autonomy/democratic tradition), was seen as the  material manifestation of the socialist movement itself. The view about the socialist movement which had become dominant in the wake of the Enlightenment was that it constituted the precondition for employing our knowledge about nature and society in order to shape the natural environment and the course of social evolution. This view involved a course of linear (or dialectic) progress into the future. Politics could be grounded on science, on an effective knowledge, regardless of any collective, creative, or self-instituting activity on the part of social individuals. The socialist statist view flourished in particular during the quarter of a century following the end of World War II, as a result of the vast geographic expansion of the socialist growth economy in East Europe and the take-over of power by social-democratic parties in West Europe.


Socialist statism, in its two main historical forms, namely “actually existing socialism” in the East and social democracy in the West, has dominated the Left in the past hundred years or so. However, despite the significant differences between the social-democratic view, which involved the conquest of the bourgeois state in order to reform it, and the Marxist-Leninist view, which involved the abolition of the bourgeois state and its reconstitution into a proletarian state, still, both views involve a mechanism to achieve radical social change that implies the concentration of political and economic power. Even Lenin’s[1] proletarian state or “mini-state”, which eventually withers away, involves a significant degree of concentration of power in the hands of the proletariat that could easily degenerate, as Bakunin[2] had predicted, into a huge concentration of power in the hands of an elite of ex-workers (avant-garde).


Today, the socialist statist view seems effectively demolished from the concentrated blows of the New Right and the civil-societarian” Left, as well as those of the new social movements. The socialist statist tradition itself is also in deep crisis, as indicated by the two major developments of the last fifteen years: the eclipse of actually existing socialism in the East and the parallel collapse of social democracy in the West. The crisis of socialist statism is, of course, understandable, considering that numerous socialist statist parties succeeded in their aim to seize state power. Thus, social-democratic movements in the First World, communist movements in the Second World and various self-styled socialist national-liberation movements in the Third World seized power, and they all failed to change the world, at least in accordance with their proclaimed declarations and expectations. In fact, even the very superstructures that these movements erected in the post-war period, which gave the impression of some change, have either been pulled down (“actually existing socialism” in the East) or are in the process of demolition (social democracy in the West). So, the failure of socialist statism refers to both the form of socialist statism in the East, which is associated in theory with Marxism and in practice with state centralism, as well as Western social democracy, that is, the statism which is associated in theory with Keynesianism and in practice with the welfare state and the mixed economy.


To my mind, as I tried to show in TID,[3] the fundamental reason for the historic failure of socialist statism in both its versions lies in its attempt to merge two incompatible elements: the “growth” element, which expressed the logic of the market economy, with the social justice element, which expressed socialist ethics. This is so because whereas the growth element, as part of a growth economy, implies the concentration of economic power (whether as a consequence of the functioning of the market mechanism, or as a built-in element of central planning), the social justice element is inherently linked to the dispersion of economic power and to equality. Thus, socialist statism, in its effort to make the benefits of growth accessible to everyone and lend universal meaning to Progress ―which was identified with growth― attempted to create a socialist growth economy, disregarding the fundamental interdependence of growth and the concentration of economic power. Moreover, the attempt to merge the growth element with the social justice element created a fundamental incompatibility between ends and means. Therefore, whereas the capitalist growth economy constituted the inevitable consequence of the market economy and, therefore, the means (market economy) and the end (growth economy) were perfectly compatible, in the case of socialist statism, the end (growth economy) was not compatible with the means (social-democratic statism/central planning). In fact, the greater the degree of statism (as in the case of central planning), the greater the incompatibility between means and ends, contributing even more to the failure of the system.


The causes of the collapse of actually existing socialism”


To give an adequate interpretation of the decline of socialist statism,[4] as far as the “actually existing socialism” is concerned, it is necessary to outline the causes of its economic failure. It was precisely the system’s economic failure that, on the one hand, led to the spectacular U-turn of Soviet bureaucracy, which was expressed by Gorbachev’s perestroika, and, on the other, functioned as the catalyst for the collapse of “actually existing socialism” in the satellite countries. Economic failure manifested itself by a significant slow-down in the development of production forces which led, at the end, to stagnation. Indicatively, the growth rate of industrial output in the USSR fell from an average 7 percent in the 1960s to 4 percent in the 1970s and to 2 percent in the 1980s.[5] Also, the average GDP growth rate fell from 7 percent in the 1960s to about 5 percent in the 1970s and barely 2 percent in the 1980s.[6] At the same time, serious shortages of consumer goods developed and the phenomena of technological backwardness and low quality of production intensified.


The economic failure of “actually existing socialism” can be attributed to the fundamental incompatibility between the requirements of the growth economy and the functioning of a centrally planned economy. Whereas in a market economy the market forces are comparatively free to secure the degree of concentration which is necessary for growth, in a planned economy the distorting interventions of bureaucrats and technocrats in the growth process, aiming at the contradictory merging of growth with social justice (for example, in the form of “hidden unemployment”), inevitably led to economic inefficiency. Similarly, in a bureaucratically organised economic system, it was practically impossible to introduce new technologies and products, particularly in the consumer goods sector where a decentralised information system is a necessity.


Furthermore, the fact that both the capitalist growth economy and socialist statism shared the same goal, that is, economic growth, meant that the same principles played a decisive part in the organisation of production and in economic and social life in general, irrespective of whether the production motive was private profit or some kind of “collective” profit. This becomes obvious by the fact that the principles of economic efficiency and competitiveness marked not only social democracy in the West but also AES in the East. One may therefore argue that from the moment both versions of socialist statism showed that, in the last instance, they rested on the same fundamental principles as the market economy did and that they were, inevitably, leading to the reproduction of similar hierarchical structures, the countdown leading to the collapse of socialist statism itself and of the ideologies on which it rested (Marxism/Keynesianism), had begun. This was due to both objective and subjective factors.


The objective factors refer to the fact, as already mentioned, that the pursuit of efficiency and competitiveness, which the growth objective implies, fundamentally contradicts the socialist aims. It is obvious that the criteria of social justice, on which the socialist aims are based, are much broader than the narrow economic criteria that define economic efficiency and competitiveness, and as such are incompatible with them. The economic failure (particularly in terms of low productivity) of the AES countries, in which the system itself relied on the socialist ideology, could be explained on the basis of this fundamental contradiction between efficiency and socialist ethics. For instance, the two main achievements of the AES countries (both reversed with dramatic consequences after the re-integration of these countries into the internationalised market economy),[7] i.e. the elimination of the fear of unemployment and the realization of a lower degree of inequality in the distribution of income than in Western countries (at the same level of development),[8] inevitably contributed to “inefficiency”. The former, because full employment was achieved through the creation of what Western economists call “disguised unemployment” and the latter because, according to the same economists, greater equality is incompatible with the creation of incentives for saving and work.


The subjective factors refer to a corresponding contradiction between the socialist ideology and the reality of “actually existing socialism”, which led to the widespread realisation of the failure of the system to lead to a new model of social life that would transcend the principles characterising the system of the market economy. The economic crisis of AES, combined with the system’s bureaucratic organisation of social life have been the essential factors that led to the credibility crisis of the socialist project in its statist form. As growth was the objective of both an AES country and one organised as a market economy, It was obviously a better bet for the average citizen to choose the “real thing”, which might better “deliver” (even unevenly) the promised consumer goods, rather than keep supporting a system that not only was failing in its socialist promises but was also a bad imitation of the market economy.


In fact, the lack of political democracy and democracy at the workplace was, according to an important interpretation of the collapse of “actually existing socialism”,[9] the basic cause of the system’s inefficiency. This lack of workers’ participation in the decision-taking process, unavoidably, led to the alienation of direct producers, given in particular the total absence of work incentives. 


Thus, the socialist ideological incentives, used mainly by Stalin and Mao in their effort to make up for the absent economic incentives  were doomed to fail in a system characterised by the fundamental contradiction between an ideology based upon the principles of equality and social justice, and the reality of a blatantly unequal distribution of economic and political power.


Also, both the main capitalist economic incentives, consumerism and unemployment, were institutionally absent in the AES countries. Consumerism was impossible, not only because of the bureaucratisation of the economic process which had created an inefficient consumer goods sector, but also because of the fact that these countries had to channel the lion’s share of their inadequate economic resources to meet the exorbitant defence expenditures imposed on them by the Cold War. Furthermore, the right to employment —usually inscribed in the constitution— not only created widespread disguised unemployment, but also reinforced an attitude of “minimal effort” and passivity. The consequences were inevitably disastrous, especially with respect to the all important (for the adequate functioning of resource allocation) efficiency of the information flow.


So, the failure of “actually existing socialism” to achieve its principal aim of creating an efficient socialist growth economy produced the following strategic dilemma for the ruling elites: either socialist decentralisation, or decentralisation through the market. The former involved the creation of an authentic socialist economy, through the institution of new structures for socialist self-management and a parallel struggle for the establishment of a new international division of labour based upon the principles of co-operation and solidarity —something that implied their self-exclusion from access to Western capital, at the very moment many of these countries were beginning to borrow heavily from the West. Even more crucially, socialist decentralisation entailed the virtual self-negation of the ruling elites and the dissolution of the hierarchical structures they had established. The latter involved the creation of a “socialist” market economy and a full integration into the internationalised market economy, which is founded upon the principles of competition and individualism ―an option which was entirely consistent with the reproduction (with some changes in form) of the hierarchical structures and of the elites themselves.


It is not difficult to understand why the bureaucratic elite had chosen the option of decentralisation through the market. It is therefore clear that the criteria used in selecting this form of decentralisation were not economic (as presented by Western analysts and politicians), but political. The discourse used by the protagonists of perestroika, in order to justify it, was indicative. Thus, according to Alexander Yakovlev,[10] perestroika signified the substitution of the theory that universal human values transcend class interests for Marxist class theory. It is characteristic that among these “universal” values the dominant one is considered to be the mixed economy and free competition! It is therefore clear that once the reformist elites embarked on a strategy to introduce a “socialist” market economy, the dynamic that was set in motion was bound to lead to the transcendence not just of the “socialist” growth economy but of “actually existing socialism” itself. This was so, because the Soviet reformist elite, unlike the Chinese one, was obliged to accompany the reforms (perestroika) with more openness (glasnost) in order to outmanoeuvre the strong military-industrial faction in the establishment, which did not wish to see any significant changes in the status quo. Thus, whereas in the Chinese case the type of capitalism “from below” that was allowed to flourish did not need changes at the political level, in the East European case the type of capitalism “from above” that was introduced by the ruling elites did require more openness at the political level. But, more openness gave the chance to the centrifugal forces (that were of course strongly encouraged by the Western elites), which had a vested interest in the restoration of the capitalist growth economy, to push for the fragmentation of the USSR and the overthrow of “actually existing socialism”.


The causes of the decline of social democracy


It is not, however, only “actually existing socialism” that today has collapsed. Despite the absurd claims by many social democrats that the collapse of the extreme form of socialist statism in Eastern Europe vindicated social democracy, in fact, the disintegration of the social-democratic version of the capitalist growth economy is no less conspicuous.


The main characteristic of the neoliberal consensus is the drastic alteration of the content of social democracy, that is, the radical shrinking, not just of statism in general but of “socialist” statism in particular. Thus, the fundamental structures of the neoliberal consensus are, above all, characterised by the minimisation of social-democratic state interventionism, in other words, of the type of interventionism which marked the post-war period of social-democratic consensus, until about the mid-1970s. The central aims of social-democratic state interventionism were, as we saw in ch. 1, first, to establish and maintain full employment, second, to create a comprehensive welfare state and, third, to achieve a fair distribution of income. The latter was supposed to be secured, not only through the introduction of a “social wage” system that was implied by the welfare state, but also through a progressive personal income tax system that could be used, in combination with public sector borrowing, to finance the welfare state.


In the event, the pursuit of these aims did have some success in improving the standard of living of the lower income strata, creating the image of a “single-nation” society. Thus, at the ideological level, social democrats were able to claim that they had created a society which secured some social justice guarantees, without sacrificing every sense of individual freedom, i.e. an “actually existing capitalism with a human face”.


However, this type of  socially credible capitalism —contrary to the claims of ex-Marxist intellectuals that have belatedly defected to social democracy— is either extinct (United Kingdom), or is rapidly disappearing (Germany, Austria,  Scandinavian countries etc). The abandonment of the state’s commitment to full employment and the subsequent rise in unemployment and poverty, as well as the crippling of the welfare state, have led to the present “two-thirds society” (or more correctly, as I tried to show in TID, “40 percent society”), which has taken the place of the “single-nation” society. The social-democratic parties, rather than attempting to bring about drastic changes in the neoliberal market economy being established, changed their ideology instead. As a result, these parties at present bear almost no relation at all to the traditional social-democratic parties of the 1950-1975 period. It is for this reason that such parties should more accurately be called “social liberal” rather than social-democratic. In fact, the collapse of social democracy in the last decade or so has taken such dimensions that an old member of the “New” Left in desperation asked:

Once, in the founding years of the Second International, (social democracy) was dedicated to the overthrow of capitalism. Then, it pursued partial reforms as gradual steps towards socialism. Finally, it settled for welfare and full employment within capitalism. If it now accepts a scaling down of one and giving up of the other, what kind of movement will it change into?[11]

So, under the structural constraints that the present internationalisation of the market economy imposes, as well as the electoral considerations prescribed by the change in class structure we saw in chapter 1, the policies of social liberals are now hardly discernible from those of pure neoliberals. And the same story repeats itself everywhere: from Australia, where the Labour party had earnestly implemented privatisation policies and taken drastic steps to cut budget deficits, to Sweden, where the social democrats, even before losing power in 1991, had embarked on a policy leading to the effective dismantlement of the employment system and the welfare state and Norway, where “the single most important goal of Labour’s strategy, full employment, has been abandoned”.[12]


The fate of social democracy in its cradle, Europe, is indicative of the failure this form of socialist statism. The substitution of the present neoliberal consensus for the social-democratic consensus is clearly discernible in the course followed by the European Union (EU).The process to create a single European market, which began in the 1950s with the Rome treaty, accelerated in the last decade with the Single Market Act that was put in effect in 1993, and the Maastricht and Amsterdam treaties which replaced the Rome treaty.  Accelerating the integration process was made imperative by the growing internationalisation of the market economy and the intensifying competition with the other two parts of the Triad (North America and Japan). The supporters of the acceleration process maintained that, in the ultra-competitive internationalised market economy of the twenty-first century that is now dawning, only a market of continental dimensions could provide the security and the economies of scale needed for the survival of European capital.


Indeed, during the past decade or so, the economic gap between the EU and the other Triad members has widened considerably, as indicated for instance by the changes in their export shares. Thus, between 1980 and 1996, EU’s world export share decreased by about 1.5 percent, whereas the US and Japanese shares increased by 12.5 percent and 15 percent correspondingly.[13] The main cause of Europe’s failure is the fact that its competitiveness has, for long, been lagging behind the competitiveness of the other regions.[14]


The form that the integration has taken reflects, in various ways, the dominant neoliberal trend. Had, for instance, the acceleration of this process started in 1979 —when a European Commission’s report was still foreseeing a European Union built on “indicative planning” at the continental level[15]— a very different picture of European integration might had emerged. In fact, the European Commission’s report was accurately reflecting the essence of the social-democratic consensus, which had just started breaking down at the time. Its proposal amounted to a kind of “European Keynesianism” that should have replaced national Keynesianism, which had already become —under conditions of increasingly free movement of capital— obsolete. However, the collapse of the social-democratic consensus, following the flourishing of neoliberalism in the 1980s, brushed aside the proposals for a European Keynesian strategy. Thus, the tendency that eventually prevailed in the EU was one that identified economic unification with the radical shrinking of national control on economic activity, without the parallel establishment of supranational control—apart from monetary control. Consequently, the EU’s executive power has been confined to creating a homogeneous institutional framework that allows for unimpeded entrepreneurial activity, while, simultaneously, providing for some minimal guarantees (those compatible with the neoliberal consensus requirements) regarding the protection of the environment and the social space.


The agreement for the single market rests on the neoliberal assumption that the EU economies are suffering from a lack of “structural adjustment”, that is, from structural deficiencies due to inflexibilities of the market mechanism and barriers to free competition that obstruct the flow of commodities, capital and labour.[16] As regards the capital market in particular, freeing this market from any controls, that is, creating conditions for the easy and unrestricted flow of capital between countries, was considered to be a basic requirement in this process. However, the most important barriers were not the ones explicitly mentioned in the Gecchini Report, but those implied and, in particular, the emphasis it placed on competition. These implied barriers were the “institutional” barriers to free competition that had been introduced by the social-democratic consensus and which the agreement for the Single Market undertook to eliminate —a task brought to completion by the Maastricht and Amsterdam treaties. Such institutional barriers were the Keynesian type of state interventionism to secure full employment, the large welfare state that created fiscal problems, the labour unions’ “restrictive practices” and the public corporations, which did not always act on the basis of micro-economic criteria to raise economic efficiency. These barriers, as long as the degree of internationalisation of EU economies was still relatively low, did not have a substantial negative effect on economic growth. However, once the growing internationalisation of the EU economy and, in particular, the enlarged mobility of capital, ceased to be compatible with the implementation of Keynesian  macro-economic policies oat the national level, their negative effect on growth became evident, as manifested by the stagflation crisis of the 1970s which hit particularly hard the European economies.


Maastricht treaty’s basic aim was to attack the symptoms of these institutional barriers and, in particular, inflation and the huge public sector deficits caused by the expansion of statism. In keeping with this logic, the only economic criteria mentioned by the Treaty were stable prices, sound public finances and a sustainable balance of payments, whereas full employment and improving (or even maintaining) social welfare standards were not even mentioned as objectives! So, it was not surprising that Maastricht’s “social dimension” was, in fact, of very little significance, since it did not provide for any effective mechanisms —of equal, say, significance to the anti-inflation mechanisms it set up— to safeguard the right to work, the narrowing of inequalities, the eradication of poverty, etcetera. The Treaty’s Social Charter itself (for which the social democrats take great pride) aims at economic rather than social goals. As one researcher observed on the subject, the Social Charter is not interested in people but in efficient and productive labour units.[17] Furthermore, the collapsing national welfare state was not replaced by a common social policy that would have guaranteed the coverage of basic needs (health, education, social security, etcetera) and a minimal income for all that would have drastically reduced “Euro-poverty”. Thus, in the interest of enhancing competitiveness to face America and Japan, the European ideal has degenerated today into a kind of “Americanised Europe”, where luxury and extreme poverty stand side by side in the “two-thirds society”.


The Maastricht and Amsterdam treaties, therefore, simply confirmed the overtly neoliberal character that the Community had begun to acquire with the Single Market Act. The improvement of competitiveness, through the reduction of inflation, remains the primary goal, as indicated by the mechanisms established by the second and third phases of the Economic and Monetary Union (EMU). Thus, the EMU, as indeed the single market, signifies not the integration of peoples, or even the integration of States, but just the integration of free markets. But, free markets mean not just the unimpeded movement of commodities, capital and labour, but also “flexibility”, that is, elimination of barriers to the free formation of prices and wages, as well as overall curtailing of the state’s control on economic activity. And this is, in fact, the essence of the neoliberal consensus that characterises the EU’s new institutional framework: the further marketisation of its economy. Thus the aim of the new institutions is clearly to maximise the freedom of organised capital, the concentration of which is facilitated in every way and to minimise the freedom of organised labour, through any means available and, particularly, through the threat of unemployment.


Therefore, the institutional framework that is being established today in Europe consists of a model in which the continuation of growth depends on a process of further internationalising its economy, through the destruction of local economic self-reliance and the continual expansion of exports to cope with a growing volume of imports. In this process, which takes place both between regions (EU against Japan and North America) and inside each region, the victors will be the most competitive ones, i.e. those who possess the production and technological bases that allow for significant and continuous increases in productivity.


So, the social democrats should not be blamed for “betraying” the socialist ideals and consenting to the neoliberal transformation of the Europe now emerging. In fact, there is no betrayal involved nor is any radical change of the institutional framework “from within” possible in the future. In other words, if we take for granted what social democrats and their fellow travellers in the Green movement take for granted, that is, the internationalisation of the market economy and the consequent need to continually improve competitiveness by freeing further the markets for commodities, capital and labour, then globalisation can only be neoliberal and the content of social democracy must necessarily be the one supported today by social liberals. The reason is that, within the framework of neoliberal globalisation, the minimisation of the state’s social role does not constitute a choice but a pre-condition for European capital to effectively compete with Japanese and American capital, which, given the lack of a social-democratic tradition in the United States and the Far East, face much weaker institutional barriers.


Today, therefore, social democracy has meaning neither at the national level-nor at the supra-national level of post-Maastricht Europe, as we have seen in chapter 1. Any attempt by European social democrats to change the present institutional framework, in order to radically enhance the state’s social role, would make Europe less competitive than Japan or the United States and would result in a mass exodus of European capital. Furthermore, a new Europe-wide Keynesianism is not feasible either, unless it is combined with a self-reliant growth led by a highly protected internal market economy. But, such a solution is in direct contradiction to the system’s logic and dynamics.


The same applies to the socialdemocratic vision of a continental-wide “social-market economy” based on the “Rhineland” model, which was theorised by  Michel Albert[18] who assumed the existence of differing national capitalisms, characterised by different financial structures and systems of social protection: from almost complete lack of social protection in the US, and rapidly diminishing social protection in the UK, to a significant level of social protection in Germany. For Albert, “capitalism is no monolithic structure, but an aggregate of tendencies out of which, in each case, two diverging currents, two broad «schools» emerge”[19], what he calls “the neo-American model” and the “Rhineland” model of the social market (which includes primarily Germany, but also the Scandinavian countries and to some extent Japan). The latter is a type of “stakeholder” capitalism which reordered the institutional structure in a way that attempts to capture for the population as a whole the social returns of their contributions to production. A key element of this type of capitalism is its regulated labour market. Thus, instead of the liberalised and de-regulated labour markets, which thrive in the UK and the US, the labour market in Germany still involves a lot of social controls: high redundancy payments, long notice periods, restrictive trade practices, long holidays etc. Therefore, given the high economic performance of Germany in the post-war period up to the early 1990s, the conclusion drawn is that the Rhine model of capitalism not only is economically superior but should also be adopted because of its obvious social superiority.


However, it is now obvious that, in the competition between the US/UK model of liberalisation and the Rhineland social market model, it is the former that is the clear winner. This is, of course, not surprising in view of the analysis in ch. 1. The Rhine model is not a model for future capitalism but a remnant of the statist phase of marketisation, which obviously could not survive the present internationalisation of the market economy. Thus, as soon as marketisation all over the world intensified in the 1990s, the Rhine model entered a period of crisis, giving the clear signal that no national capitalism is viable which has not “homogenised” its social controls on the markets, in accordance with those of its competitors. This was particularly evident in Germany as indicated by such phenomena as the long-term slowdown in economic growth, the flight of capital and the explosion of unemployment. Thus, the average annual growth rate of German GDP has fallen from 3.3 per cent in 1965-80 to 2.2 per cent in 1980-90 and 1.5 per cent in 1990-99.[20] Also, in the 1990s, German investment abroad was five times higher than foreign direct investment in Germany[21] and it was estimated that, in the first half of the last decade, shifting production to lower cost countries destroyed one million jobs.[22] This, together with the closing down of scores of “inefficient” industries in the eastern part of re-united Germany, led to a 50 percent increase in the unemployment rate.[23]


This crisis can be attributed directly to the various inflexibilities affecting unit labour cost and competitiveness that the German “social market” has introduced to the labour market that have led to a drastic decline of  Germany’s export share by almost twenty percent in the last decade.[24] This is why chancellor Kohl’s measures to liberalise the labour market and restrict the welfare state, in effect, signalled the end of the German “social market”. The rise into power of the red-green alliance could not avert the collapse of the Rhine model, particularly so since both the socialdemocrats and the Greens have adopted the Maastricht/Amsterdam treaties enshrining the neoliberal consensus. No wonder therefore that Chancellor Schröder recently declared that  unemployment pay should be tightened in order to get more people into the available jobs and to this end, he was going to introduce legislation to force local job centres to cut or freeze benefits to unemployed people who turn down job offers or fail to seek further qualifications. As regards the Greens in particular, as I pointed out elsewhere[25] their rise to power and the stand they adopted with respect to the NATO war at Kosovo (today confirmed by a similar stand in the “war against terrorism”) simply confirmed the fact of the end of the Green movement as a liberation force.


Yet, European social democrats, faced with the fact that the adoption of the “social market” is not feasible anymore at the national level, are now proposing the Europeanisation of the social market. But, this would imply cutting off Europe from the internationalised market economy ―a practical impossibility within the institutional framework of the market economy.



[1] V. Lenin, The State and Revolution (Moscow: Foreign Languages Publishing House, 1917), p. 30.

[2] Maximoff, The Political Philosophy of Bakunin, p. 287.

[3] TID, Ch. 2. 

[4] See also TID, pp. 73-85 and 100-104 and T. Fotopoulos, “The catastrophe of Marketization”, Democracy & Nature, Vol. 5, No. 2 (July 1999), pp. 275-310.

[5] A. Szymanski, “The Socialist World System,” in Socialist States in the World System, C. K. Chase-Dunn, ed. (London: Sage Publications, 1982), Table 2.3. 

[6] The average GDP growth rate for the 1980s refers to the Russian federation only (World Development Report 1997).  

[7] Fotopoulos, “The catastrophe of Marketization”, pp. 275-310.

[8] See Michael Ellman, Socialist Planning (Cambridge: Cambridge University Press, 1979), pp. 267-68.

[9] Such views are expressed, e.g., by Cornelius Castoriadis, Political and Social Writings (Minneapolis: University of Minnesota Press, 1988), Vols. 1-2 and R. Bahro, The Alternative in Eastern Europe (London: Verso, 1978). 

[10] Alexander Yakovlev, The Guardian (20 Aug. 1991); see, also, his book, The Fate of Marxism in Russia (Yale: Yale University Press, 1993). 

[11] “Introduction”, in P. Anderson and P. Camiller, eds, Mapping the West European Left (London: Verso, 1994), pp. 15-16.

[12] Jan Fagerberg et. al. “The decline of social-democratic state capitalism in Norway”, New Left Review, No. 181 (May/June 1990), p. 88.

[13] World Bank, World Development Report 1998/99, Table 15.

[14] Thus, European competitiveness has fallen by 3.7 percent between 1980 and 1992, while US competitiveness has risen by 2.2 percent and Japanese competitiveness (which for many years has been on top of the competitiveness league) increased by 0.5 percent, World Economic Forum (1993).        

[15] The European Commission, The Challenges Ahead: A Plan for Europe (Brussels, 1979).

[16] Paolo Gecchini, 1992: The European Challenge (London: Wildwood House, 1988), p. 4. 

[17] F. Weber, “Impact of the Social Charter,” Europe 1992 (Dublin, 1991), pp. 34 and 37. 

[18] Michel Albert, Capitalism Against Capitalism (London: Whurr, 1993).

[19] Ibid., p. 5. 

[20] World Bank, World Development Report 1995, Table 2 & 2000/2001, Table 11.

[21] Norbert Walter, “German Social Market Economy Need New Lease of Life”, The Guardian (13 Feb. 1995).

[22] Mark Frankland, The Observer (24 Dec. 1995).

[23] From 5.6 per cent in 1991 to 8.4 per cent of the labour force at the end of the decade, whereas the US rate stands at half this level (3.9 percent) OECD statistics, Standardised unemployment rates, News Release (8/6/2000).

[24] The German export share fell from 12.6 percent in 1990 to 10.3 in 1998; World Bank, World Development Report, 2000/2001, Table 20.

[25] See T. Fotopoulos “The First War of the Internationalised Market Economy”, Democracy & Nature, Vol. 5, No. 2 (July 1999), pp. 357-382.