Boris Kagarlitsky

The Revolt of the Middle Class

Foreword
The name of this book, The Revolt of the Middle Class, arouses inevitable
associations not only with the well-known essay by Jos Ortega y Gasset The Revolt
of the Masses, but also with the brilliant work by Christopher Lasch The Revolt of the
Elites.
The successive waves of the industrial revolution brought new masses to the centrestage of history, masses that were more educated, organised and politically radical.
Capitalism had to find a compromise with the rising movement, or perish.
The reply from the enlightened bourgeoisie was Western democracy and the
welfare state. It should not be forgotten, however, that democracy started to work
only after the Second World War. Italian fascism and German nazism were attempts
by the ruling class to solve the same problem of controlling the masses, only by
different, less humane methods. It was only when democracy had managed to rest on
the welfare state, and the bourgeoisie had reached an institutional compromise with
the labour movement, that Western democracy stabilised. In the countries of Asia,
Africa and Latin America capitalism could not permit itself the luxury of the welfare
state, and as a result, stable democracy could not exist either.
In the countries of democratic capitalism, the masses turned into the middle
class. Their revolt culminated not in revolution, but in compromise. But how durable
was this compromise? In the late twentieth century, as the communist system
collapsed in Eastern Europe, the ruling classes of the West put the compromise
increasingly in doubt. The welfare state began to be dismantled in a process of
neoliberal counter-reform. Christopher Lasch has termed this the revolt of the elites.
Historic compromise of the XX century is undermined from above. In
response to the revolt of the elites, we are seeing the revolt of the middle class.

Chapter 1. The New Middle Class

The middle class was considered the social norm, but over time the norms
changed. Precisely because the concept of the middle class is diffuse and ambiguous,
it can be used to characterise and interpret the most diverse phenomena. To the degree
that the consumer society of the twentieth century gave way to the information society
of the turn of the century, social differentiation was transformed.
Traditional middle class of the XX century was in crisis already in late 80s but
a new middle class, linked to technological revolution, started emerging in the 90s.
Neoliberal project would never have reached the point of full-scale implementation
had it not been for the technological revolution that began in the 1980s. It allowed to
split big factories and geographically remove big concentrations of the working class
away from the centers of global capitalism without losing control over production
process. The new middle class was a necessary element of this project.
Chapter 2 Standardised Diversity
This chapter deals with the new global culture of the middle class as it was
shaped throughout the 1990s. This standartisation includes movies, food, toys,
lifestyles. An important tool of cultural standardisation is the computer. From the
moment when Microsoft installed Windows as the worldwide operating system,
millions of people started using the same programs, recognising the same icons on the
screens of their monitors. A single language of symbols is retained even as the
programs are translated into dozens of languages. Once the programs have been
translated from English into other languages, they are eventually appropriated by
millions of users, becoming theirs, and being transformed into part of their own
culture.
Cultural standardisation is ensured by the markets. One of the demands of
neoliberal theory is for an end to protectionism. This means that culture created in, for
example, Finland, has to compete on an equal basis with American mass culture.
The question in this case is not one of quality, but of the capacity of the market, of the
number of consumers.
However, this new culture reaches the frontiers of banality when resistance
of consumers becomes a problem.

Chapter 3. The End of Arrogance

Technological revolution created its own myths, illusions and superstitions
what Marx called false consciousness. Privilege is dressed as meritocracy and
market winners are seen as rewarded for the best performance. But the crisis of
neoliberal model that erupted in 2000-2002 undermined these ideologies. The myth of
meritocracy dissolves before ones eyes, and the network person enters into conflict
with the corporate chief.
Class contradictions in a new form reemerge within information society. In
essence, society is faced with a choice: intellectual property, or information freedom.
The reason is simple: the laws of information dissemination contradict the laws of the
market. The more capitalism shifts information technology to the forefront, the more
the system runs up against processes whose development has a completely different
and quite unfamiliar logic. Attempts by the old world to subordinate the new to its
logic are doomed in advance.
The system faces a crisis of control, new forms of resistance and
insubordination emerge. This crisis is getting deeper once stock market goes into
depression, companies collapse, debt becomes a major problem both for individuals
and for businesses. Attempts to reestablish control through traditional and cyberpolicing provoke increasing resistance.
Chapter Four. The Limits of the Model
The position of the middle class is now being undermined by the erosion of
the welfare state.
Antisystemic threats come from three different sources. Neoliberal model is
facing the revolt of the excluded (or marginal) masses, the working class is coming
back with its traditional agenda (becoming again, in the newly industrialized
countries, revolutionary rather than reformist). And finally, the middle class (both old
and new) is in revolt. The system cant sustain its own middle class and that means
that the middle class becomes frustrated, angry, aggressive. Its young members are
joining different radical groups and we see the resurgence of the left alongside with
new protest movements coming to the fore.

Such a revolt always coincides with a generation gap, just like the one between the liberal
fathers and revolutionary sons in Russia during the second half of the nineteenth century, or
between the old and new left in Western Europe in the late 1960s. In Russia, this gap began
opening up in 1998, the year that demonstrated what the promises of the elites were worth. In Latin
America, the crisis is unfolding before our eyes.

Chapter Five. The Crisis of Neoliberalism

Economic crisis of the system is structural. It is routed in the contradictions of
technological change as well as in the basic contradictions of the Neoliberal model
itself. That means that this crisis cant be overcome just by minor corrections or
will disappear naturally with the end of recession. The market cycle is not the cause
of the crisis, it just releases the contradictions, which were dormant in the earlier
years.
Without excessively high profits this system loses stability and to keep it
going someone has to be thrown overboard. The question is: who? Economic crisis
turns into ideological crisis, delegitimisation of the system in Waden Bellos words.
Neoliberals put a lot of effort into making their measures irreversible, this making the
system unreformable at the very moment when reforms were desperately needed by
the ruling class itself. Now even if reforms are to happen they will come as a result of
mass anti-systemic struggles, shaking the system. This is only one of the possible
scenarios, because there is always an alternative possibility: replacing the capitalist
system with something different, and hopefully, better.

Chapter 6. The Generation of Seattle

In this chapter I examine the rise of antiglobalist movement from Chiapas to
Seattle, Prague and World Social Forums. The movement has its own contradictions
and problems which become evident every time when the general context changes
forcing the activists and leaders to make new choices and decisions. Cases of Russia,
Argentina, Brazil show that there can be very different social and political responses
to the crisis of Neoliberalism. Also it is clear that the discontent of the middle class
which gives rise to the new protest movements, can as well give rise to reactionary
uprisings as we saw it Venezuela.

Chapter Seven. Archetypes of Resistance

This chapter deals with heroes and myths generated by the movement itself: sapatistas,
hackers, Jose Bove etc. There is a good and a bad side here: myths are mobilizing but also creating
illusions. Ultimately, the success of the resistance will be measured not by the vastness of its
demonstrations, but by its ability to change the world. This will depend on the degree to which the
spirit of Seattle penetrates the workplaces, and enters into everyday life. On the degree to which the
ideals of the movement are embodied in peoples actions and in politico-economic programs. On the
degree to which the general mood becomes a precondition for political organising.

All in all, the authors of the nineteenth-century proletarian song were correct.
Neither god, nor tsar, nor even a hero will provide any help. People attain their
liberation with their own hands. Through their collective efforts.
Chapter 8. The Twilight of Social Democracy
New Labour and Third Way demonstrate that Social Democracy is losing its
historic role as a reformist force capable of both changing and saving capitalism. To a
certain extend German Social Democracy managed to regain a social role by
becoming capable to express an anti-war sentiments of the society. But it isnt enough
for the long run. The far right is coming back as well as the politics of class struggle.
Class struggle, or a clash of fundamentalisms those are the only real
alternatives for the twenty-first century.

Chapter 9. Networks of solidarity

There was a lot of trendy noise made about the network society of the XXI
century. But in reality it can only come into being as an alternative to the capitalist
system. Network organization needs public property and collective control, or it is a
joke. Basic networks (such as electric energy, transportation etc. must be socialized or
soon they will become completely disfunctional. This is becoming evident even for
some representatives of the ruling elite. But irreversibility of Neoliberalism turns
that issue into a field of gigantic struggle.
Socialization is hard to accept for the elites even when it doesnt undermine
the core structures of capitalism, because the question emerges: if it was needed and
worked here, why not elsewhere?

New concept of public enterprise must be worked out democratic,

transparent, consumer-friendly. And a new system of public investment must be
linked up with new models of participatory democracy.
Conclusion. Revolt of Revolution?
The middle class is turning against the system, but does this mean a new
revolution coming? Or a reactionary uprising of frustrated consumers defending their
privileges against the elites as well as against the masses? Much depend on politics.
But if the anti-systemic challenges come together (uprising of the excluded, workers
revolution and the revolt of the middle class), then we see the beginning of the most
important social transformation.
In any case Neoliberalism is finished. The big question, remaining open, is:
whats next?

Boris Kagarlitsky
The Revolt of the Middle Class
Foreword
The name of this book, The Revolt of the Middle Class, arouses inevitable
associations not only with the well-known essay by Jos Ortega y Gasset The Revolt
of the Masses, but also with the brilliant work by Christopher Lasch The Revolt of the
Elites. The Spanish philosopher of the first half of the twentieth century saw a threat
to traditional society in new forms of political organisation that rested on mass action.
In this sense, democracy and totalitarianism were kindred phenomena. Both were
incompatible with the power of the traditional elites.
Around the beginning of the twentieth century the revolt of the masses
overthrew the familiar rules and brought an end to traditional culture and patterns of
consumption. Mass production, mass culture and weapons of mass destruction
became elements in everyday life.

Capitalism too has undergone changes in the epoch of mass society. It is

supposed to have become democratic, something it never was in its earlier history.
Democracy, for all its ancient Greek name, is a relatively new phenomenon. Even in
independent America and free Britain, nineteenth-century society was not
democratic, merely liberal. It allowed slavery, restricted the franchise, and banned
trade unions. There was more freedom in it than democracy, and the freedom and
progress in which the elites took such delight turned into a limitation on the rights of
the majority. Nor was this majority allowed access to consumption. It was precisely
for this reason that nineteenth-century production had to be of a quite different nature
from the mass production of the twentieth century.
The successive waves of the industrial revolution brought new masses to the
centre-stage of history, masses that were more educated, organised and politically
radical. Capitalism had to find a compromise with the rising movement, or perish.
The reply from the enlightened bourgeoisie was Western democracy and the
welfare state. It should not be forgotten, however, that democracy started to work
only after the Second World War. Italian fascism and German nazism were attempts
by the ruling class to solve the same problem of controlling the masses, only by
different, less humane methods. It was only when democracy had managed to rest on
the welfare state, and the bourgeoisie had reached an institutional compromise with
the labour movement, that Western democracy stabilised. In the countries of Asia,
Africa and Latin America capitalism could not permit itself the luxury of the welfare
state, and as a result, stable democracy could not exist either.
In the countries of democratic capitalism, the masses turned into the middle
class. Their revolt culminated not in revolution, but in compromise. But how durable
was this compromise? In the late twentieth century, as the communist system
collapsed in Eastern Europe, the ruling classes of the West put the compromise
increasingly in doubt. The welfare state began to be dismantled in a process of
neoliberal counter-reform. Christopher Lasch has termed this the revolt of the elites.
The new society proclaims inequality as its principle, and injustice as the
engine of progress. This society has abjured shame and abolished compassion. Most
importantly, it has repudiated the very thing that rendered capitalism stable for two
centuries: it has ceased to understand the limits of the market.
As the motor force of capitalism, private initiative used nevertheless to be
combined with traditional institutions based on non-commercial principles. The

bourgeoisie worked out its own forms of solidarity, allowing it to employ its
collective efforts in order to cope with the destructive consequences of its own
activity. Universities and government ministries, railways and armed forces,
aristocratic colleges and artistic academies lived their own lives, serving the ruling
class but not subject to the rules of the market. The twentieth century culminated in
the unchecked triumph of a new generation of the bourgeoisie, destroying all
resistance in its path and living by the slogan Everything is for sale!
Those whom the gods wish to destroy, it is said, they first send mad. A better
way of putting it would be to say that when a class is heading for its downfall, it loses
its historical memory. The orgy of bourgeois self-congratulation that we observed
around the turn of the century most likely heralds a vast catastrophe. The only
question is who the main victim will be capitalism, or humanity as a whole.
During the twentieth century, a social compromise between capital and labour
gave birth to the middle class. Towards the end of the century this compromise was
destroyed, placing the future of the middle class in question. The middle class is
putting up resistance, defending its privileges, and it is precisely this situation that
impels it to revolt. Ordinary, comfortably-off individuals are becoming insurgents;
conformists are discovering within themselves a bent for revolution. To their
astonishment, they are finding that engaging in struggle and defending their
principles, however hard this might be, is far more interesting than simply playing the
role of a consumer and a cog within the system.
In response to the revolt of the elites, we are seeing the revolt of the middle
class.
The circuit has been completed. The masses, to secure their pacification, have
been transformed into a middle class. But the elites have destroyed the social
compromise. War has been declared, and the middle class, against its will and to its
enormous surprise, is again being turned into an ungovernable, mutinous mass of the
kind that caused such alarm to bourgeois thinkers in the late nineteenth century.

Chapter 1. The New Middle Class

The new middle class first made its appearance in Western Europe and North
America during the second half of the 1980s. As a general concept, the middle class

had its origins in late feudal times, when it was understood to comprise the
bourgeoisie that occupied an intermediary position between the aristocracy and the
people. Every new epoch in the history of capitalism has developed its own idea of
the middle class. Nevertheless the concept of the middle class, for all its conditional
nature, its diffuseness and near-indefinability, has been very important to the
bourgeois system. It has served as an expression of the bourgeois idea of order and
comfort, of stability and honesty. It represents the golden mean of social life, the
social norm, the model of well-deserved prosperity. The middle class is the basis for
the stability of society! sociology textbooks used to maintain categorically. The
middle class is the vital factor upholding democracy! the political science texts
declared in their turn.
A large sector of society strove to be middle class. To belong to the middle
class meant to be normal, to meet all the requirements of social life, while conceding
nothing to others.
In the mid-twentieth century, the main criterion for membership of the middle
class became consumption. In this respect the Marxist concepts of class, with their
basis in property relations and wage payments, were not so much cast off as pushed
into the background. Consumer society supplemented them with its own norms, much
more conditional in nature but no less real for this fact. The working class was
supposed to strive to become middle class. Instead of the freeing of labour, there was
freedom of consumption. Meanwhile, it was quite possible to exchange the shining
future, as promised by the revolutionaries of the nineteenth century, for a modest
happiness and well-being in the present especially since this well-being had not
been provided gratis, but had been won honestly in the course of class battles.
The middle class was considered the social norm, but over time the norms
changed. Precisely because the concept of the middle class is diffuse and ambiguous,
it can be used to characterise and interpret the most diverse phenomena. To the degree
that the consumer society of the twentieth century gave way to the information society
of the turn of the century, social differentiation was transformed. Most of the people
whom Western sociology defines as "middle class" are better considered as worker
aristocrats, who are still very much dependent on their ability to sell their labour
power, and who accordingly in the 1990s have lost out. Even where the real incomes
of employees at specific levels haven't fallen, the cutbacks to middle management in
both state and private sectors have meant that the usual remedy for mediocre living

standards - promotion up the hierarchical ladder - is much less readily accessible. In

many cases this has led to impressive union militancy in such "middle-class" layers as
health workers, teachers, public servants, university staff, etc. In addition,
various categories of "professionals" that traditionally have been selfemployed (doctors, lawyers) have become extensively proletarianised in recent
decades, and as state outlays for health care, legal defence and so on have run down,
the incomes of many of the practitioners involved have suffered.
Journalists and even sociologists like to speak about middle class being by
definition upward-mobile. Unfortunately, in the 1990s a considerable part of
traditional Western middle classes became rather downward-mobile. However at
the same time a new middle class has emerged on the scene. The world has been
divided into people with credit cards, mobile phones and access to the internet, and
others who have none of this, or at least, for whom it is not an accepted part of daily
life. Humanity now consists of people who earn a decent salary in an economy
permeated with technological innovations, and others who remain behind in the
traditional sector.
Access to advanced technologies is becoming one of the key distinguishing
features of the middle class. The members of this class include not just the writers of
programs and the administrators of computer networks, but also the millions of users
a community of people who have radically altered their way of life and methods of
work, entering the information epoch. Unfortunately, those who have entered this
epoch are far from making up the whole of humanity. Despite their massive numbers,
the members of the new middle class are far more privileged than the middle class of
the mid-twentieth century, since at least in the initial stages the fruits of the
information revolution are being distributed very unequally, even in the well-off
societies of the West. On the scale of the planet as a whole we are talking about a
minority, but this minority still numbers millions of people. Most importantly, it is at
the members of this minority that propaganda, advertising, politics and culture are
aimed. At times one has the feeling that no-one exists except the middle class, even in
the poorest of countries.
The new middle class thus owes its appearance to the information revolution.
This class can be defined as the mass of people who have gained access to
information technologies, and who have the opportunity to enjoy the fruits of these
technologies to the full. From the start, the new middle class has been emerging as a

global phenomenon. The way of life of these people, and even their manner of
thought, is being shaped not only by their previous social and cultural experience, but
also by the unique logic of the information technologies.
It could be said that the new middle class is the child of the globalisation
epoch. The class is unified and integrated on an international level not merely by its
shared way of life and characteristic pursuits, but also by its common supranational
culture. Formally speaking, these are the people who have won as a result of the
changes, or at least, who have not lost. Wherever they live, their salaries are
denominated in Western currencies. Their jobs allow them to feel part of global
processes. They are educated, mobile, and convinced that this is the reason for their
achievements. Nevertheless, the new middle class is not only a product of the
information revolution, but also of the class struggle.

A Cure for Revolution

At the end of the 1980s, the bourgeoisie won a historic victory. It not only
managed the solemn exorcism of the spectre of communism, but also put an end to
a whole era of concessions that had been torn from it by the labour movement and by
social democracy. When the ruling class proclaimed a return on the ideological level
to the original principles of Adam Smith and other prophets of classical capitalism,
this signified that the bourgeoisie had overcome its fear of revolution. This fear had
provided a subtext to the social and economic policies of the Western elites for at
least a century. The fear of revolution had arisen together with the European workers
movement. The socialist parties of the nineteenth century were radical; they did not
demand concessions, but a fundamental reordering of society. The fear increased after
the First World War, when the revolution in Russia showed that this reordering was
possible. The Russian Revolution, however, also showed how far the reality of the
new society was from the initial ideal. The revolutionary breakthrough into the realm
of freedom turned out to be a far more difficult and prolonged process than the first
generations of socialists had anticipated. The outcome in the Soviet Union, was not
the realm of freedom, but the Stalinist gulag.
Nevertheless, the Soviet Union played a huge role in democratisation and the
development of social reforms in the West. The Soviet threat and the Cold War

forced a consolidation of Western society. A cruel and heartless market capitalism

had no chance in this struggle, especially after the efficiency of the market had been
placed in question by the Great Depression of 1929-1933.
In order to survive, and to prevail in this struggle, capitalism had to
humanise itself, and to curb its destructive forces. The invisible hand of the
market was replaced by regulation, and pitiless exploitation by social compromise.
The cost of the shortcomings of this system was loaded onto the countries on the
periphery of the international order, that is, the Third World. Even for these countries,
however, the compromise was a reality, expressed in the granting of political
independence and development aid. This aid has gone nowhere near compensating for
the sums that have been and continue to be extracted from the dependent countries,
but it has signified a recognition by the Western elites of their responsibility, of a
readiness for partnership and collaboration.
From the early 1970s, the situation gradually began to change. After failed
efforts at reform, the Soviet Union entered an epoch of ineluctable decline. The
Soviet threat meant less and less. Meanwhile, labour power in the countries of the
West was becoming more and more expensive. The high wages were no longer
perceived by entrepreneurs as an unavoidable social concession, but as unacceptably
high costs.
By the late 1960s, everyone had started to sense the exhaustion of the postwar
model. Social democracy had done everything it was capable of, and had nothing
more to offer. From being parties of reform, the social democrats were decisively
transformed into parties of rulers. The temptations of the consumer society aroused
irony in the young generation. If their elders had viewed the arrival in their homes of
a refrigerator or a television set as a major victory, the young people who had grown
up in the 1950s and 1960s saw this as their due, and demanded other things. In the
West, the achievements of humane capitalism were placed in question, while in
Eastern Europe people were trying to make the breakthrough to democratic socialism.
Be realists demand the impossible! the Paris students proclaimed in 1968. The
New Left threw down a challenge to the established order, to the political parties, and
to familiar conceptions of good sense and propriety. From Prague to Paris, from
Warsaw to Lisbon, mass protests shook Europe. The left, however, proved incapable
of suggesting a realistic alternative. With its military intervention in August 1968, the
Soviet Union not only put an end to the democratic reforms in Czechoslovakia, but

also showed that the communist system was in profound crisis. It was now unable
either to ensure rapid growth, or to reform itself, and while relying above all on
coercion, it was incapable of applying repression on the former totalitarian scale.
From this point it was clear that the end of communism was merely a question of
time. The Eastern bloc had been hopelessly vanquished in the Cold War, and leftwing ideas had suffered a defeat. The hopes of the radicals had turned out to be
illusions. Instead of being the prologue to a great revolution, the events of 1968 had
become the starting point for a prolonged, world-wide counteroffensive by the right
wing.
In the early 1970s, the World Economic Forum began to meet each year in the
Swiss resort centre of Davos. It was here that the Western political and business elite
started consultations in order to develop the new project that later received the names
of neoliberalism and globalisation.
This project took on its characteristic features over a considerable period,
gradually becoming more radical and aggressive. The initial discourse centred mainly
on stopping the increase of social costs, considered to have gone beyond
permissible bounds. At a time when ideologues of the new left still saw the dawn of a
new revolution, and when social democrats (including even thinkers such as Jurgen
Habermas) were prophesying a continuous expansion of the social sphere, the
actual rulers were preparing and implementing a complex counter-reformist project of
social restoration. It was essential to drive back the advance of the social sphere,
while at the same time reducing the risk of revolution to a minimum.
The idea of a return to the values of the free market had long been
propagandised by conservative economists, but it had not been taken up in the 1950s
and 1960s. The supporters of such notions were perceived by society as economic
romantics, as ideologues who were hopelessly out of touch with real life and who
most importantly, did not understand the needs of the scientific-technical revolution.
From the mid-1970s, however, the situation changed rapidly. The ideas of
conservative ideologues were suddenly in demand. Market romanticism received a
new name, neoliberalism, and was granted official recognition by state officials,
international financial institutions, and business leaders.
The first attempts at social restoration were made in the mid-1970s in Latin
America, and were accompanied by ferocious terror against left organisations, trade
unions, and the free-thinking intelligentsia. Although European right-wingers have

been inclined to talk with hindsight about the achievements of the Latin American
dictators, all of these regimes met with defeat to one degree or another. In the end, the
generals who had used mass terror to implant economic liberalism finished up on trial.
The neoliberal wave, however, continued to mount. In 1979 Margaret Thatcher came
to power in Britain, to be followed by Ronald Reagan in the US and Helmut Kohl in
Germany. Behind these victories stood the weariness and confusion of the social
democrats, and the determination of the ruling elites, who were setting out to radically
alter the rules of the game. But the neoliberal restoration would never have been
successful had it not been for the incipient technological revolution.
The initial impulse for the technological innovations was the demand by
property-owners for reductions in outlays linked to the high cost of labour power.
This was not the first time such demands had been made. In the early nineteenth
century, the high cost of labour power in Britain had prompted the industrial
revolution. In the artisan world, qualified manufacturing workers had won
exceptionally high wages, large numbers of days off, and their self-respect. With the
widespread introduction of steam engines and of new, simpler equipment, the old
trades were devalued, mass unemployment appeared, and the relationship of forces in
the labour market moved sharply in favour of entrepreneurs. The introduction of
machinery required scientific knowledge, but it could be operated on a massive scale
by people with very low skills and minimal education. The entrepreneurs began using
the labour of women and children in the factories, with the sole aim of paying them as
little as possible. The guilds of manufacturing workers collapsed. Working conditions
became monstrous. A mere half-century later, new trade unions arose, and a new
labour movement that put forward revolutionary demands.
The technological revolution of the 1970s and 1980s developed according to a
similar scenario. It freed up a mass of labour power, and devalued many trade
qualifications. The governments of Thatcher in Britain and Reagan in the US did not
hesitate to use force against striking workers, but it was not this that ensured their
success. The history of the labour movement includes instances in which the use by
the authorities of far greater violence has been quite in vain. The victory in this case
was gained, ultimately, not through the resort to police clubs and lockouts, but thanks
to the restructuring of production. It was this restructuring that undermined the
position of the trade unions, made them powerless in the face of repression, and
demoralised activists.

The neoliberal right-wingers in their turn began to speak the language of

progress, presenting themselves as the parties of modernisation, innovation and
change. This was a new conservatism, that differed decisively from that of the past. It
did not rest on tradition, but demolished it. It spoke the language of reforms, and at
times, even of revolutions. On the cultural plane, it was as though this conservatism
had hatched from the movement of 1968, but at the same time had turned it inside out.
The offensive against the industrial proletariat came on three fronts. The first
was the introduction of new equipment, which allowed sharp reductions in the
number of jobs (and which, by raising levels of unemployment, created a new
situation in the labour market). The second was new ways of organising production,
which changed the balance of forces between capital and labour on the market. In
place of huge factories with thousands of workers, numerous small enterprises
appeared. The total number of jobs might not have diminished at all, but their quality
was a different matter. In the small enterprises there were no powerful trade unions,
and in most cases, no trade unions at all. The exploitation of workers and their
dependence on the boss were greater by an order of magnitude, while their wages
were lower. The technological level of production ranged from a few factories that
embodied a futuristic dream, to thoroughly obsolete workshops employing the most
primitive methods. But even where enterprises used primitive technologies, the
dispersal of production was possible due precisely to the information revolution.
When capitalists in the nineteenth century concentrated workers in huge
factories, they were perfectly aware that at the same time they were creating
exceptionally favourable conditions for revolutionary agitation and organisation. But
they had no choice; in that epoch, there was no other way of effectively controlling
large-scale production. An extreme case of this logic was a remark I heard in the
1990s from a new Russian entrepreneur: As soon as my workers are more than two
hundred metres from me, they start stealing! When complex productive processes
were concentrated in a single place, the entrepreneurs gained the ability to coordinate
everything that was happening, while managers at all levels had the chance to
intervene directly if something went wrong. In many cases, the information revolution
made it possible to disperse production while keeping the same level of
manageability. Often, entrepreneurs were quick to take advantage of this opportunity.
Numerous outsourcing programs appeared; goods that had earlier been made in
factory departments came to be produced in small workshops on the side.

Inventories were reduced through the use of just in time deliveries, with parts from
outside sources supplied directly to the assembly line.
Of course, there is a great deal of production that cannot be divided into small
parts. Only in large enterprises can metal be smelted and cars assembled. Such work,
however, can be dispersed geographically, and this is also a result of the information
revolution. Immediately after the textile industry, steelmaking and auto production
began shifting to South-East Asia, Brazil and Mexico. This is explained in formal
terms as the result of cheap labour. Cheapness, however, is something relative; as the
Russian proverb has it, Beyond the sea cattle are a penny each, but transport is dear.
While production costs fall, transport and management costs rise, and extra customs
duties have to be paid. All this is made up for, however, by the huge social benefits
for the ruling class. Industry is shifting from Western Europe and the US to the
periphery of the world system. This is not only a geographic shift, but also a social
one. The industrial working class is being dispatched, along with industry, to parts
remote from the centres of power and property. Meanwhile, workers remain a
minority in Third World countries despite the rapid industrial growth.
The situation in which the industrial proletariat was concentrated in direct
proximity to the centres of global economic power, and made up most of the
population in the countries where these centres were located, is vanishing into the
past. The threat of revolution would appear to have been banished. Disappearing
along with it is the need to pay off the proletariat, which has ceased to be so
dangerous.
Meanwhile the corporations, having become transnational, have begun putting
unprecedented pressure on all the national governments, demanding cuts to import
and export tariffs, the abolition of all restrictions on the movement of goods, and the
institution of a regime of absolute free trade. In other words, capital is demanding of
the state that it resolve all the organisational and financial problems that capital itself
has created as it pursues its attacks on workers.
The governments are giving way. From a distance, the lowering of trade
barriers might look like a move to encourage trade. With each new concession,
however, the state loses not only funds needed for solving social problems, but also
control over the processes occurring within the countrys own economy. The policy of
encouraging trade turns into the subsidising of transnational capital at the expense of
society.

So Was There a Spectre?

The culmination of the neoliberal offensive was the collapse of the Soviet
Union. The technological revolution posed a challenge to which the Soviet system
was in no condition to respond. The defence plants and closed research institutes
were capable of producing first-rate technologies, at times outstripping Western
developments by whole years even after the decadent state halted all financing. But
the rigid, ossified system proved incapable of implanting information technologies in
everyday life in a massive fashion.
By rejecting reforms in the late 1960s, the Soviet bureaucracy doomed itself to
dependence on the West. Technological innovations and consumer goods for the
population were paid for by exports of oil and gas. The Soviet Union gradually
became integrated into the world economy as a raw materials appendage of European
capitalism. The ultimate dream of the Soviet elite came to be joining the elite in the
West. In Eastern Europe, it was precisely the bureaucratic elite that initiated the
change of system.
During the first half of the twentieth century Russia, and then the Soviet Union, had become
the symbol of socialist hopes. As the end of the century approached, the neoliberal wave swept across
Eastern Europe and the former Soviet republics. The destruction of the welfare state took place here on
an unprecedented scale, in some cases putting in question the elementary conditions of civilised
existence for the bulk of the population. The downfall of the USSR was accompanied by a global crisis
of the left. The international communist movement, which had viewed the Soviet Union as its ideal,
ceased to exist. It is significant that the parties to survive were mainly those which from the late 1970s
had taken their distance from the Soviet brother, earning themselves the sobriquet of
Eurocommunists.
Those on the left who suffered least in moral and psychological terms were the people who
from the first had denied the Soviet Union the right to call itself socialist. But this does not exhaust the
question. Even if the socialist character of the Soviet Union was more than doubtful, its revolutionary
and socialist origins were obvious. It was this genetic heritage that for many years allowed the Soviet
system to feign socialism more or less successfully. All leftists, from social democrats to Trotskyists,
suffered moral damage from the defeat of the Soviet Union. Even Eastern European socialists and
Marxists, who in the 1970s and 1980s had fought to change the system, were subjected to repression.
Their language, slogans and culture were discredited. Meanwhile, for leftists to renounce their
traditions and language was suicidal. To stop talking about socialism and to reject the past did not
mean to renew the movement, but simply to quit the ideological field of battle, leaving it to the
neoliberal propagandists.
Numerous high-paid writers have declared that history has come to an end, and that the
spectre of revolution has been definitively banished. The spectre, it is argued, should not only be driven
out, but also forgotten. It should vanish without trace. The final victory over the Marxist spectre needed
to be consolidated by comprehensively purging any vestiges of the socialist tradition and language
from public usage. Once deprived of these remnants, the defeated classes would become politically
dependent, as though deaf and dumb. Marx wrote that when the proletariat acquires consciousness, it is
transformed from a class in itself to a class for itself. When the class loses this consciousness, it

stands to be turned once again into an unthinking mass, a workforce capable only of selling itself
cheaply on the labour market.
By the end of the 1980s the defeat of the industrial proletariat in Western Europe and the US
was an accomplished political fact. In the case of Eastern Europe one has to talk not about a defeat, but
a catastrophe. The communist system that had held sway for decades had deprived workers of their
capacity for self-organisation. Trotsky observed in the 1930s that the bureaucracy had expropriated the
proletariat politically. As they departed from the scene at the end of the 1980s, the state communist
parties left workers without organisation, without ideology and even without their own language.
Race to the Bottom
While the left suffered ideological defeat, the trade unions finished up in crisis. Everything
which the labour movement regarded as its historical conquests during the twentieth century was
placed in doubt. This did not mean, however, that industrial workers as a social type would disappear
from East and West. This was certainly not the task posed for the neoliberal counter-reform, and still
less was it the purpose behind the technological revolution. Nevertheless, the relationship of forces
between employers and workers in industry has changed radically.
We have seen the beginning of what trade union activists call the race to the bottom. Each
enterprise, each sector and each country is faced with the fact of ruthless competition. The labour
market is becoming global, but only for capital. Shifting from country to country, money seeks out the
cheapest workers. For workers in general, there is only one choice: to renounce their social conquests,
to reconcile themselves to a fall in their living standards, and to agree to heightened exploitation in the
hope that by doing so, they will get to keep their jobs. The participants in the race are workers, but the
winner is always capital. Every enterprise that lowers its social costs forces all the others to do the
same. States become caught up in the race. If governments in the 1950s and 1960s competed to raise
the living standards of their citizens, now they compete just as furiously to lower these standards. This
goes ahead with impunity, since the citizens themselves, playing by the new rules, recognise that there
is no alternative.
Not everyone, by any means, takes part in the race to the bottom. If the whole of society had
been rapidly and uniformly degraded, the neoliberal model would not have lasted ten months, let alone
ten years. In parallel with the social degradation of the traditional industrial proletariat, a new middle
class has been rising up. During the early stages, this new middle class has not only been spared from
suffering, but has made big gains. The more production becomes diffused, the more people are needed
to oversee it. These people are managers, staff members, office workers and systems controllers
members of the middle class. Initially, the vast army of white-collar employees is much easier to
control. In these quarters, the ethos is of bureaucratic discipline and of readiness to obey orders. As in
any administrative system, the main stimulus is the hope of advancement through service and in line
with the demands of the organisation. Collective conflict between workers and employers over
questions of wages and job conditions is replaced by individual competition between company
employees striving for promotion.
The neoliberal counter-reform took place thanks to the support of the middle class. The
middle class itself, however, only reached massive dimensions thanks to the social reforms of the midtwentieth century. In no way is it a product of the market economy, which throughout the entire epoch
of classical capitalism invariably reproduced the polarisation between rich and poor, bourgeoisie and
proletarians. Redistributive programs, diverse forms of social insurance, state investments in education
and health, and the growth of government spending on development created the conditions under which
the middle class took shape. On the historical level, the middle class is just as much the creation of the
welfare state as the proletariat described by Marx was the creation of capitalism. The mass middle
layers in Eastern Europe and Latin America are the product of state redistributive policies to an even
greater degree than in the West. But if the middle class has not been the gravedigger of the welfare
state, it has at any rate provided a massive base of support for the right-wing politicians who have
begun a crusade in the name of freeing up the market.
The social arithmetic has changed. In the 1940s, redistributive measures created the middle
class, putting the squeeze on the rich. By the 1970s, it was a matter of the middle class itself making a
contribution to improving the situation of the poor. In hindsight it became clear that it was the middle
class that had received most of the benefits of the welfare state. Nevertheless, the same middle class
showed an astonishing and at first sight suicidal reluctance to support this system. After consolidating
their position in the early 1960s, the middle strata now felt themselves to be independent. They
perceived their situation in society as standing to reason, as requiring no justification. In the 1940s and

1950s millions of people in Western and Eastern Europe had supported state-run social programs,
seeing them as a means through which their own positions could be improved. In the 1970s the new
generation of the middle class perceived their position as given, as their due. Indeed, they set out to free
themselves from the tutelage of the state, reacting with irritation to bureaucratic inefficiency, to the
oppressive monotony of official procedures, and to the rhetoric of social justice, which after many
years they now found tiresome.
In the 1960s reformed capitalism and post-thaw communism competed to construct
consumer societies. The program of the Communist Party of the Soviet Union, adopted at the TwentySecond Congress, spoke in essence of the same things as the advertisements for the American way of
life. Communism was conceived of as abundance, as the triumph of consumption. Material provision
was becoming equivalent to happiness. The capitalism and communism of the 1960s were permeated
by the same ideals. These, however, were the values and ideals of older generations that had
experienced deprivation and the horrors of two world wars and of totalitarianism. The younger
generation dreamed of something more than material prosperity and personal security. The 1968 revolt
in France and the Prague spring in Czechoslovakia were born of a striving for freedom; manifesting
themselves in different ways, they gripped people in both East and West. The 1960s, however, ended in
failure. The Prague spring was crushed by Soviet tanks, and the student protests were stifled. It was at
this very time that nascent neoliberalism suggested to the middle class a new concept of freedom as
consumption. The values of consumer society, against which the students had risen in revolt, merged
with the ideals of the protesters. Freedom was reduced to variety, to a multiplicity of goods and
services, to the possibility of choice. Consumption, from having a mass character, was supposed to
become an individual concern. Society, which had not managed to realise its freedom in the area of
social transformation, was urged to bring it about in a quite different field. Collective action was
replaced by individual pleasure. The right of free choice that was promised by neoliberal ideology was
not simply realised in the free market. It represented the path to enjoyment. The essence of
consumption was not in the satisfaction of material needs, but self-realisation, in self-affirmation. In the
minds of consumers, trade marks were no longer associated simply with the reputation of a firm. They
were becoming symbols of a way of life, images linked to social and cultural ideals.
It could be said that consumer culture was transformed in response to the challenges of the
1960s. Just as the counter-reformation of the sixteenth century rested on the cultural achievements of
the renaissance, the neoliberal reaction in its own way continued and developed the patterns of youth
revolt. Precisely because neoliberalism imbibed the impulses of the rebellious sixties, it was able to
transform capitalism. Neoliberalism not only bought up, perverted and debauched a multitude of the
intellectual and artistic idols of the great decade, but on an emotional level, became a sort of
synthesis of protest and conformism. Anarchistic slogans of struggle against the state were turned into
the summons to put an end to bureaucratised social insurance. Hatred of all authority was replaced by a
readiness to undermine the authority of government for the sake of the freedom of corporations. The
appeal to social liberation was replaced by a readiness to liberate talented and dynamic entrepreneurs
from oppression by dim-witted, obtuse bureaucrats. The market was proclaimed to be the sole
significant realm of freedom. It was this that became the third, in its way decisive, thrust of neo-liberal
counter-reform. The new ideology of consumption became the dominant one. To use the words of
Gramsci, hegemony had been attained.
The cultural hegemony of neoliberalism ensured that the counter-reform would enjoy the
support of the middle class. The collective egoism of the more prosperous sector of society was
sanctified by morality, ideology and aesthetics. To this social egoism, the technological revolution
added historical justification. Describing the situation in the 1990s, the leader of the Italian Party of
Communist Refoundation, Fausto Bertinotti, spoke of the loneliness of the worker. The broad masses
of the post-industrial middle class have not shown any great sympathy for the sufferings of the
socially deprived. People who feel they have been integrated successfully into the new economic
model think of what has happened as a natural process. Those who have remained on the outer have
belonged to the outmoded economy. Those who have prospered consider themselves part of the new
economy. Everything happens of its own accord. No-one is to blame. Industrial workers are doomed
to suffer simply because they are figures from the past. Nothing personal, as the hired killers say in
Hollywood movies.
The global labour market has also changed the face of the lower orders. Mass immigration
from poor countries is turning low-paid jobs into a province for ethnic minorities and foreigners.
Millions of people on the lowest levels of the social hierarchy are not only deprived of their civil rights,
but in many cases are simply illegal. In the US, this approach to labour relations was successfully tried
as early as the nineteenth century. The result was the notorious weakness of the American trade union

movement. Competition between communities undermined class solidarity. In the final decade of the
twentieth century the same model was applied in Europe.
Social contradictions are transformed into a question of inter-ethnic relations, and are
insoluble as such. In this respect they are just like ethnic problems, since solving them is possible only
through social transformation, which is not even up for discussion.
Two nations was the term used by the radical journalist Benjamin Disraeli when he
described the social contrasts of Victorian Britain. But the two nations of that time spoke the one
language, belonged to the same race, and followed the same religion. In the epoch of globalisation,
Disraelis words are taking on a new concrete meaning. An ethnic division of labour is taking shape. It
is as though the lower social orders are ethnically and culturally outside society. Accordingly, their
misfortunes, if anyone should chance to notice them, are not perceived as a manifestation of social
conflict, but as the result of racial or cultural discrimination. Instead of fighting for the rights of lowpaid workers, compassionate liberals seek laws guaranteeing the rights of religious minorities, humane
treatment of refugees, and the right of muslim girls to wear the chador during school lessons. Solidarity
is replaced by benevolence and religious tolerance.
The New Social Stratification
The illusion has arisen that post-industrial workers are supplanting industrial ones. This is not
entirely correct. The reorganisation of industry is in fact creating a significant number of postindustrial jobs, but for the ruling class, unlike the intellectuals who discuss the end of work and the
beginning of the information epoch, this is not what is important. The main thing is that a new social
structure is taking shape in the countries of the West and on a world scale.
Society is disintegrating into a mass of marginals; an organised but relatively small working
class; and an ever-growing middle class. This social structure seems absolutely secure. The workers are
ceasing to be a dangerous class for the simple reason that in the vital centres of the system their
numbers are becoming few. The workers can no longer seize power in Berlin or Paris, since they do not
make up a majority there. The marginals can rise in revolt, but a revolt is not a revolution. A revolt can
be put down by the police, and since the marginals are often also foreigners, immigrants and illegals,
they can easily be made scapegoats; they can be blamed for all the ills of society, and the extreme right
can be sooled onto them. Neofascist parties are again finding themselves in demand, and are receiving
financing and access to the mass media. Unlike the situation in the 1920s and 1930s, however, the
ruling elite are not about to admit the extreme right to power. Such a situation arises only when the
traditional ruling classes are in mortal terror, and see no other means of averting revolution. This time,
the elite have overcome their fear. The ultra-nationalist organisations, however, are taking on a new
role, as an element of social control. When they terrorise foreigners, they lend support to the
established ethno-social order, while preventing cultural antagonisms from expanding into class
conflict. Let the leftists and politically correct intelligentsia mobilise to resist the nationalists. So long
as this struggle has a fundamentally cultural character, it is not dangerous to the system.
Meanwhile the middle class, comprising the majority of Western society, is proclaimed to be
the guarantee of stability and the basis for democracy. This middle class is doomed to live and work
according to the rules, in exchange for the promise of careers and prosperity.

Chapter 2
Standardised Diversity
The middle class makes its appearance wherever capitalism develops. Wealthy
and successful societies proclaim it to be the social norm. Beyond the borders of the
West the middle class is far less massive. For all that, it is no less Western. Most
surprising is the fact that while it remains an insignificant minority, it constitutes the
socio-cultural norm in non-Western countries to no less a degree than in Western

Europe. The television orients to the middle class, and it is for the middle class that
goods are advertised. Newspapers set out to appeal to it, while politicians try to draw
it onto their side, as though the impoverished majority of the population simply did
not exist.

Cultural Integration
The basis for the stability of the global system is coming to be not just the
promised well-being of the middle class, but also its cultural integration. This culture
is that of standardised diversity. In the early 1990s a certain Russian firm advertised
itself with the words, For all the wealth of choices, there is no alternative. This, in
essence, is the principle underlying all cultural policy around the turn of the twentyfirst century. We are faced with a fundamentally new phenomenon. English is
becoming the modern equivalent of Latin the language which is a globally
indispensable requirement for social life, and a condition of access to information.
Residents of London, Delhi, Moscow and Buenos Aires are turning out to be
strikingly similar to one another. They consume goods with identical trade marks.
They clutter their native languages with the same neologisms. They watch the same
films, and listen to the same music. Their children play with the same toys.
Toys! Epidemics sweep across the planet in organised waves, forcing children
one after the other to demand from their parents either new dresses for Barbie, or
plastic mutant turtles, or complete collections of Pokemons. In the home of a friend in
Johannesburg in 1995 I glanced into a childs bedroom, and was stunned to see that it
was practically identical to the room of my son in Moscow. Not only the toys, but also
the posters on the walls were the same! The musical culture that in Russia is
disseminated by Moscow Television shapes uniform tastes in each new generation,
irrespective of geographical differences. Of course, the ten top clips in London will
not be the same as in Moscow, and the Moscow ones will be different from those
chosen in Kiev, but of the clips from which these ratings are compiled, half or even
two-thirds will be the same.
An important tool of cultural standardisation is the computer. From the
moment when Microsoft installed Windows as the worldwide operating system,
millions of people started using the same programs, recognising the same icons on the

screens of their monitors. A single language of symbols is retained even as the

programs are translated into dozens of languages. Once the programs have been
translated from English into other languages, they are eventually appropriated by
millions of users, becoming theirs, and being transformed into part of their own
culture. Operating systems and the internet organise leisure, work and even thought in
a particular fashion, forcing countless numbers of people all over the planet to
perform one and the same series of operations each day on a totally voluntary basis.
At first glance, the developed system of electronic entertainment provides a reliable
and effective mechanism for escape from reality. Computer games, television shows
and deceptive news broadcasts create a variegated but in its own way integral world
of illusory pseudo-events. Show business in turn has become one of the most
profitable sectors of the economy, permeated with the spirit of capitalist accumulation
and market competition. Global communications lend it a new dimension, making it
all-pervasive and aggressive.
People have always made money out of art. The plays of Shakespeare drew
crowds, just like Hollywood blockbusters, and most of the dramatists who wrote for
the London public of Shakespeares day were nowhere near his level. Even the
second-rate writers and actors of that era had to win over their public on their own,
relying solely on their own abilities. Modern-day show business has enriched the
people who create the spectacles, but at the same time has made them dependent on
technology and capital. A film cannot be shot without money, but most importantly, it
cannot be shown to the public unless it has the support of investors. Completely
ungifted writers and mediocre performers can be promoted with the help of a highpowered advertising firm, and second-rate actors can be turned into stars, while
genuinely talented artists may be taken on to perform an inferior script. Moreover, the
role of a star is more suited to an ungifted singer or actor than to a talented one. Such
people are more convenient to work with, easier to manage. The fewer real creative
gifts a star has, the more dependent he or she is on the producer, on publicity, on the
organising that guarantees the idol of the public his or her popularity and income.
Wherever there is money, success follows. The show-business personality is
turned into an entrepreneur. Such people do not sell themselves, but their names.
Their names are turned into trade marks, just like any trade mark that is touted about
the market through advertising campaigns. Actors, directors and writers sell their
trade marks. But they cannot do this independently, since however rich and famous

they are, their success is entirely determined by their relations with the capital that
controls the system of global communications. It does not by any means follow from
this that the artistry behind the brand is necessarily bad, vulgar or banal. It may be
banal or innovative, mediocre or talented. Ultimately, this is not important for show
business, and it is not this that decides whether a trade mark will be a success.
Marketing campaigns do not always succeed either. You can put your money
into promoting a brand, and go broke. But the success or failure of such a campaign
bears no relation to the quality of the creative product. The main thing is to enter the
market at the right time and to find your niche. Show-business personalities lose their
right to independence. The individual becomes an appendage of his or her trade mark,
and is compelled to serve it. He or she cannot have either a private life, or an
individuality that does not meet the requirements of the trade mark. In earlier times,
the creative personality was regarded as a model of independence and freedom, but
show-business personalities are now faceless in the extreme. It is not a case of the
individual abusing the position he or she occupies in society, but of the position
abusing the individual occupying it.
The shift from art to show business has transformed the creative artist from an
unalienated individual to an entity embodying the principle of total alienation. This
emptiness of the personality, however, must not be observable by the public. It is
therefore hidden by extravagance, luxury, and the external appearance of intellectual
attainment. The show-business personality becomes a cultural norm for the middle
class, a walking object lesson. Just as the advertisement establishes the norms for
consumer behaviour, show business along with the quasi-creative medium that
surrounds it creates the norms and stereotypes of behaviour for cultured people.
While setting norms for the middle class, capital simultaneously proclaims
these norms as having universal significance. The elite itself is obliged to follow
them. The situation compels it; the elite is the victim of its own propaganda. The
members of the elite themselves start imitating the middle class, reproducing its
behaviour, tastes and prejudices. Princes of the blood put on jeans and prance around
discotheques. The owners of large companies waste their time watching idiotic
blockbusters. The pointless, vulgar luxury of show business remains the property of
the illustrated magazines, while the members of the elite are less and less capable of
surrounding themselves with the refined, subtle luxury of aristocratic life. Wealth is
no longer associated with beauty.

Unfortunately, the more universal the norm becomes, the greater the difficulty
of maintaining it. Repeating the same words and actions becomes burdensome. Most
importantly, the demands of life and the generally accepted rules become more and
more remote from one another. The more problems the middle class encounters, the
less it conforms to its own norm. People start acting unpredictably. The norms begin
to decay.

Cultural Restoration
The culture of the new middle class is located around the midpoint between
the mass culture of the 1960s and traditional high culture. More precisely, it
represents a combination of both, something that arises on their borders, out of their
contact. This culture is no longer satisfied with primitive goods and wretched
surrogates. It demands a certain standard, just as the new middle class demands a
degree of respect. Nevertheless, this culture has not lost its mass character, its general
accessibility and ease of assimilation. Hence, for example, the fantastic success
enjoyed by the Harry Potter books of J.K. Rowling and similar works. They represent
generally accessible reading which is not, however, without a certain degree of
literary skill. They do not confront you with serious questions, and do not force you to
torment yourself with reflections on the meaning of life. But there is nothing shameful
about giving them to your children, or reading them yourself. Among left-wing critics
of globalisation the view is widespread that a cultural process controlled by large
corporations is a sort of one-way street along which everyone is doomed to travel in
accordance with the rules of Hollywood. This is not in fact quite correct. It is more
accurate to talk of a two-way street, but of a very strange street, one side of which has
five lanes and the other only one, with traffic allowed on it only on alternate days.
Nevertheless, cultural countercurrents are undoubtedly to be found. From time
to time they even seize hold of the masses, and consequently, of the consumer market.
The entertainments aimed at the middle class lay claim to variety. Otherwise, the
system cannot fulfil its own promises. It demands a constant renewal and dynamism,
which the simple replication found in uniform serial production cannot even simulate.
In the area of culture, therefore, the system continually allows certain divergences,
non-standard decisions which cannot exist in the classical variant of mass culture.

Diversity of this kind, of course, can only serve to support and strengthen the general
dynamic of standardisation.
In the 1980s and 1990s, the ideas and models that had arisen in the depths of
the counter-culture during the 1960s were assimilated and reworked by the new mass
culture. Manuel Castells wrote that the computer revolution became possible in
California thanks to the cultural revolution carried out by the young radicals of the
1960s. In precisely the same fashion, however, the ruling system digested all the
social and cultural material of the great anti-systemic revolt. In the cultural sense, the
formation of the new middle class would have been impossible had the generation of
the 1960s not lent Western society a fantastic renovating impulse. The system not
only digests ideas and models, but also uses people, transforming failed
revolutionaries into successful managers and well-off intellectuals. The techniques are
reproduced, the models are disseminated, but the content is turned inside out. The
music of protest becomes show business. The alternative style becomes the dominant
fashion, almost a uniform. Individual resistance to social demands becomes
conformist individualism. This is a cultural restoration which, like any successful
restoration, does not negate the achievements of the revolution, but which in its own
fashion rests upon them. The key feature of the cultural restoration has been the
rehabilitation of consumption. The revolt of the 1960s was based on condemning
consumerism, on criticising the consumer society in which, as in a swamp, the
revolutionary ideals of the European workers movement had sunk. The restoration of
the 1980s presupposed a return to consumption, but to a consumption that was now
aestheticised, diverse and individual. The consumer culture was supposed at the same
time to become a culture of self-affirmation. From being a mechanical act, the
acquiring of goods was transformed into the symbolic self-affirmation of the
personality. The numerous brands were supposed to give consumption a differentiated
character. Every brand created its own symbolism and aesthetic, with few links to the
commodity as such, but of fundamental importance for the self-esteem of the
consumer. Advertising was turned into an art form, attracting artistic talents and
appropriating the most advanced aesthetic ideas.
The magazine Wired is illustrative of the cultural restoration of the 1980s.
Here a radical style born of the revolution of the 1960s is placed at the service of
conservative politics. This is one of the characteristic features of the California
model, in line with which the information society of the 1990s was constructed.

Radical culture, or at least elements of it, is successfully integrated into a conservative

bourgeois project, lending it dynamism and a progressive air.
From now on, style is substituted for content. The idea of collective social
emancipation is replaced by the joys of individual self-satisfaction. Meanwhile the
system, seeking to rely on antisystemic models and traditions, is drawn into a risky
game. Classical conservatism categorically rejected anything suspicious, anything in
which a critical consciousness manifested itself in any fashion. The neoconservative
restoration flirts with models born of critical consciousness, puts them at its service,
and in the process, partially legitimises nonconformism.

The Post-Soviet Paradox

Of course, a controlled nonconformism is not in itself any threat to society. It
merely imparts to life a taste of variety. The borders of the permissible, however, may
be breached spontaneously and unexpectedly. This became especially noticeable in
the late 1990s in Eastern Europe. There the radical style, exported from the countries
of the centre to those of the periphery along with other elements of the new culture,
gradually began acquiring a radical content. To a substantial degree this happened
spontaneously. When the Eastern European societies, which had not experienced the
revolution of the 1960s, came to partake of the culture of the Western middle class,
they also became receptive to the complex of ideas and feelings that had given that
revolution its initial impulse.
By the 1970s, the official art in the so-called communist countries was
becoming more and more formal and soulless, while at the same time gradually losing
its links to the cultural and ideological tradition that had nourished it earlier. The
search for new ideas yielded no better results than the search for a new aesthetics.
This represented a desperate effort by Soviet people to cease being Soviet, without
becoming anything else.
The cultural crisis of the 1990s is often depicted in economic terms; there was
no investment in the cinema, the subsidies to the theatres became derisory, large-scale
exhibitions became a rarity, and so on. Nevertheless, the mounting crisis of identity
was much more terrible than the lack of money. The acuteness of this crisis,
meanwhile, was in direct proportion to the efforts of the creative intelligentsia itself to

put an end to the Soviet tradition, the only one this intelligentsia possessed. This
fanaticism for destruction (perhaps the last thing to remain alive from all of
revolutionary culture) was not only an extremely powerful emotional principle, but
also became the intelligentsias sole unifying idea, in the process making the
appearance of any other creative ideas impossible. It was assumed that the ideals of
the free market would automatically give birth to a new culture. Such nave ideas,
however, could arise only in the Soviet population, without experience of the market
and hence with no conception that the market, and bourgeois life in general, were
hostile to culture as a matter of principle (it was precisely for this reason that all the
waves of innovation in Western culture in the nineteenth and twentieth centuries were
based in one way or another on anti-bourgeois feeling).
The disintegration of Soviet culture also spelt the end for the anti-Soviet
opposition in culture. Interest in the underground of the 1970s and 1980s began
rapidly to evaporate as these cultural phenomena lost their underground character; this
applied also to the new avant-garde, with its semi-legal art exhibitions and samizdat
novels. It was not that these works of art were bad; on the contrary, many were of
high quality. But they had fulfilled a particular cultural-political function, which had
disappeared along with the Soviet order. An exception was the rock culture of the
1970s and 1980s, which continued to develop even after being legalised. Here, big
money played the same corrupting role as in the West. By the 1990s such rock idols
of the 1980s as Andrey Makarevich had been corrupted, and turned into models of
snobbism and bourgeois conformism. The heroes of the early 1990s, whether Alisa,
DDT or Lyube, also compromised themselves, often losing their capacity for
innovation. But they were replaced with striking speed by new faces and new names.
In this respect, the picture differs little from that in the world at large. Show business
has the ability to commercially appropriate the counter-culture and at the same time to
destroy it; the works of Tom Frank provide a brilliant description of this process1. But
at the same time as the counter-culture loses its heroes, it gives birth to others, whom
it will also most likely expend before long. There is a nutrient medium which is
capable of reproducing itself, and of spawning ever new creative leaders whose selfaffirmation requires them, at least initially, to throw down a challenge both to the
official norms and to the sold-out and corrupted representatives of the previous

See T. Frank. The Conquest of Cool. Chicago & London, 1997.

generation. This permanent revolt is the mode of existence of the counter-cultural

milieu; swallowing the milieu completely is not in the interests even of show
business, since show business itself is unable to give rise to new creative ideas.
Why should the musical counter-culture, in particular, have survived and
developed when everything else from Soviet times, from the censored cinema to
samizdat literature, went into crisis and collapse? Most likely because it was never
fully or organically linked to the Soviet tradition. Its rise took place in the early
1970s, and was not associated in any way with the continuation or revival of the
revolutionary impulse. The musical counter-culture arose under the influence of
Western rock and roll, which was imported along with mini-skirts, jeans and other
manifestations of the Western protests of the years from 1968 to 1972. The antibourgeois point of this process remained hidden from the majority of Eastern
European youth, but the allure of the style was irresistible. The anti-bourgeois essence
was replaced by a simplified and at times, thoroughly vulgar nonconformism, now
aimed against the conservative bureaucracy. From the very first, Russian rock thus
found its own completely organic justification, and its own enemy. It became
thoroughly rooted in Russian (or Ukrainian) soil, but significantly, it never defined
itself as part of Soviet or even anti-Soviet culture. It simply developed on this territory
and during these years.
After the Eastern European cultural expanse was opened up to Western
influences, it quickly began taking on the characteristic features of provincialism, of a
provincialism that was triumphantly perceived by part of society as proof of
modernisation and of joining the civilised world. But together with Western cultural
standards, the viruses of cultural radicalism were borne into the East. Ten or fifteen
years later, it was discovered that these viruses had fallen on exceptionally rich soil.

The Frontiers of Banality

Culture is anti-bourgeois in principle. The accumulation of capital in and of
itself cannot be an attractive topic for artistic production. The mountains of dollars for
the sake of which the heroes of adventure movies join battle provide a symbol for the
rewards that correspond to the ideas of the bourgeois world, but there is nothing
bourgeois about the adventures these heroes undergo. Art could exist in the courts of

pharaohs and kings, it could serve dictators, but most difficult of all is to sing the
praises of bourgeois valour, especially if this valour is non-existent. That which is
bourgeois is banal and dull by definition. Hence, the more bourgeois the pattern of life
of the everyday world, the greater the demand for the creation of a virtual reality, full
of drama and dynamism. Virtual reality, however, also quickly becomes banal and
standardised. Thousands of monotonous monsters march across the screens of
cinemas and computer monitors. Hundreds of familiar vampires cheerlessly suck the
blood of their habitually screaming victims. Conquering heroes shoot whole armies of
helpless villains, heaping boredom on the viewer who knows the rules of the game in
advance. Mass production not only amplifies the bourgeois tedium, but itself becomes
part of it. To acquire a certain purpose, artistic production has to counterpose itself to
this banality. The cultural process grows more complex; submerged currents and
internal conflict appear in it. The films of Quentin Tarantino or Takeshi Kitano have
acquired cult status precisely for the reason that while penetrating the mass market,
they place in question the norms that prevail in that market. Mass culture in turn
constantly assimilates new methods and techniques furnished by its opponents. As a
result, any serious art that falls beneath the millstone of this system plays a dual
role. While counterposing itself to the dominant norms, it simultaneously comes to
represent material used to support these norms.
Purely economic factors also play a substantial role. Cultural standardisation is
ensured by the markets. One of the demands of neoliberal theory is for an end to
protectionism. This means that culture created in, for example, Finland, has to
compete on an equal basis with American mass culture. The question in this case is
not one of quality, but of the capacity of the market, of the number of consumers. A
film produced in the US recovers its costs on the domestic market even before it
becomes available to the world public. The smaller a country, the more difficulty it
has in recouping its costs. The only solution is to produce films, books or music that
have a chance of appealing to the American public. European culture is thus placed in
a hopeless losing situation. In order to survive, it has to Americanise itself.
Of course, there are no rules without exceptions. The producers of Japanese
cartoon films, for example, have been able to counter the Americans with a whole
army of pocket monsters or pokemons, which have squeezed out Mickey Mouse,
hero turtles and Barbie dolls from the screens and from the counters of toyshops.

Pokemon versus Cheburashka

In Russia, the pokemon series even aroused political discussions. The first
television channel had only to start showing the cartoons for a whole stream of
criticism to pour forth in the press. Why did we need all these little monsters flashing
onto our screens when our own wonderful heroes, Kolobok, Cheburashka and Yozhik,
were in the shade? The first channel was even forced to put a special broadcast to air,
defending the pokemons and showing how they were linked to Japanese culture. The
upshot, however, was that the series ceased to be shown. Significantly, it was replaced
not by Russian cartoon characters, but by Disney ducks and other creatures of
American mass culture. The children, of course, reasoned quite differently; they
watched both the Russian Cheburashka and the Japanese pokemons with equal
delight. In adults, this aroused even greater alarm; the younger generation could not
tell good from bad.
As it happened, the artistic level of the Soviet cartoon films of the 1970s was
far higher, both in the quality of the artwork and in literary terms, than that offered by
mass culture in its American or Japanese variant. Meanwhile, it seems that extremely
labour-intensive puppet cartoons were produced only in our country. Cheburashka,
devised by the childrens author Eduard Uspensky, is in itself interesting, but there is
nothing to be said on a literary level for the Japanese product, based on simple comic
books.
The chief pokemon, Pikachu, is of course very appealing, and it is no accident
that children eagerly buy clothing with his picture on it, and decorate their rooms with
his portraits. At times, the creators of the series managed to think up something funny
or original, as for example when the pokemons, having lost their masters, stop
fighting and sit drinking tea and reflecting on life. The series also features a quasiFreudian motif; unlike the creators of American cinema villains, the writers of the
pokemon series pose the question of why the evil characters became evil. In full
accord with the theories of Doctor Freud, it turns out that each of the bad characters
suffered some moral trauma in childhood. Mass culture demands that good should
always triumph. As a result, the villains of mass culture meet with failure again and
again, as many times as episodes about them are produced. This has already become a
topic for jokes. Unlike the American characters, however, the negative heroes of the

Japanese cartoon films turn out to be capable of reflection; they recognise themselves
as failures, and dream that at least in one episode they might be lucky, and at last
begin to evoke pity in the viewer. Much as the creators of the series might try to avoid
banality, however, it is ineluctable. Things could not be different, since the Japanese
animators have to come up with a mass product, turning out a hundred episodes a
year. This does not make for aesthetic subtleties.
Unfortunately, it is precisely this mass character that predetermined the victory
of pokemon. Only four films were ever made about Cheburashka. The pokemons
attacked along a broad front. This included daily cartoons on the television, toys in the
shops, T-shirts with pictures of the heroes, and God knows what else. The products of
traditional artisans were of better quality and incomparably more refined than those of
modern industry, but they were doomed to give way before the onslaught of mass
production. The same is happening with cartoon films.
The advent of pokemon does not by any means signal the demise of
Cheburashka and his friends, since the latter will stir the imagination of children just
as in the past. But it is no longer possible to get by without mass production. In this
regard, it is worth considering what happened in Finland. Instead of complaining
about the offensive by American and Japanese mass culture, the Finns started fighting
it using its own methods. The stories about Mumi-Troll, by the wonderful Swedishlanguage writer Tuve Janson, have provided a basis for mass production. This is now
a whole sector of industry, involving books, toys, comics, and childrens clothing.
Mumiland not only competes with Disneyland, but provides children with a quite
different experience, since the articles to be found there are quite real household
utensils, an old typewriter, and jars of jam. In essence, the world of Mumi-Troll
romanticises the way of life of the middle and working classes in provincial Sweden.
Naturally, Mumi-Troll has appeared on the television screen, with the help of the
Japanese, who put the character into mass production. The profundity, elegance and
beauty of the Scandinavian stories is combined with mass editions and the efficiency
of Japanese technology. Jansons heroes have started speaking not only in their native
Swedish and Finnish, but also in English, German and Japanese. No-one need worry
about the future of Mumi-Troll.
It was easy for the Finns; they never had the possibility of simply shutting
themselves off from alien influences, and as a result they had to look for serious
answers to the challenge posed by the Americanisation of mass culture. Aside from

everything else, this was the response of a wealthy country that was prepared to spend
money on its own culture. In Russia, out of inertia, the habitual words are being
uttered: shut down, ban, and cut off. If the showing of Japanese cartoon films cannot
be banned, then parents can at least be called upon to use their authority to forbid their
children to watch them.

The Problems of Standardisation

Cultural standardisation cannot be reduced to Americanisation, but at its basis
lie American norms and rules. It is not simply that Hollywood puts the squeeze on, for
example, film production in other countries; the problem is also that any successful
alternative to Hollywood is established according to the same criteria. In order for
national cultural products to pay their way and bring in real profits, they have to be
sold successfully on the American market and on a global market subject to
Hollywood standards. The more culture becomes standardised, and the more it is
turned into a variety of business, the more its creators and consumers become
hostages of the corporations.
This is not the first time in history that cultural standardisation has occurred.
The Hellenistic world already provided an example, with norms that had originally
been established in the world of the ancient Greeks penetrating first into Egypt and
Persia, and then, together with the Roman legions, spreading throughout Europe.
Nevertheless, the scale of the present-day cultural integration is
unprecedented. The middle class in the countries of the periphery has always been
oriented toward the norms and rules of the countries of the centre. In the nineteenth
century, after the revolt of the sepoys in British India, the colonial authorities set
themselves the goal of creating there a middle class which, while Indian in blood and
skin colour, would be British in everything else. The colonisers succeeded in this,
though their victory proved to be Pyrrhic; after some time the colonial middle class,
assimilating European conceptions of rights and freedoms, began demanding political
independence. In the late twentieth century victorious transnational capital was
repeating the same operation on the scale of the planet. The dependent countries were
receiving a new middle class which in terms of culture and way of life belonged to the
West. The leaders of the Western powers and the transnational companies were

convinced that this middle class would act as a base of support for them on the local
scene, as a bearer of their interests, and at the same time as a reservoir of personnel
for the corporations. Before this middle class, after all, unprecedented prospects of
social mobility were being opened up. Through adopting certain norms of behaviour,
natives of the peripheral countries could make careers for themselves in the world
capitals, could enter the governing bodies of international financial institutions, and if
they were particularly lucky, finish up in the executive ranks of major corporations.
Such success is, of course, achieved by only a handful among millions, but it stands as
a symbol of new opportunities open to the many.
The American sociologist Bill Robinson, describing the evolution of the ruling
elites in Latin America in the 1990s, notes the rise of a new class, the transnational
bourgeoisie. Its power and property are now inseparable from those of the global
corporations, and its prosperity depends directly on the state of world markets. The
transnational bourgeoisie perceives itself not as the elite within its own country, but as
part of the global ruling class, vitally interested in ensuring that its country should
not quit the general ranks, should not diverge from the one true path. This shock
troop of crusaders for world civilisation is immune to all manifestations of
originality and free thought.
Unlike the earlier elites, which had close ties to the national culture, traditions and
way of life, the new transnational elite sees itself rather as part of the world ruling
class. It regards its local origins as a matter of chance, a secondary circumstance. Its
capital and business are inseparable from those of the transnational corporations,
whose headquarters are at the other end of the world. These people head local
branches of the transnational companies, or have their own firms which are formally
independent, but which in essence have become affiliates of the international giants.
These individuals are involved in global financial speculation. The extent of their
dreams is a post in the head office of a corporation somewhere in New York or
London, and at the same time, a small share of its vast property.
The life-style of the transnational elites is little different whether its
representatives are based in London, Lusaka, Moscow or Buenos Aires. In a certain
sense the peripheral capitals are even better. Even in the most impoverished of
African countries there are a few districts of the capital with boutiques and restaurants
in no way inferior to those of Paris. Meanwhile, a few hundred metres away a quite
different world begins, a world in which a piece of soap can be a luxury item (in this

respect as well, the situation has become incomparably worse than it was twenty years
ago). By no means everyone, however, sees the parallel existence of these two worlds
as a problem. So long as the residents of the poor districts raise no political demands,
they remain merely a cheap and accessible labour force. This means that the
inhabitants of the prosperous world receive all their services far more cheaply than
their class brothers in the West.
However for the transnational bourgeoisie to rule effectively, it needs masses that
share the same values, but which are far better rooted in the day-to-day life of their
own country. In short, it needs the same global middle class.
In the late 1980s and the first half of the 1990s the social project of
transnational capital could be considered brilliantly successful. A new middle class
had not simply taken shape on the periphery, and had not just assimilated Western
culture and values. It had also been educated in a spirit of haughty contempt for the
backward local masses; for the older generation which was unable to adapt to the
new life; and for the traditional culture and national history, which had finished up
on the sidelines of the world process. Rejecting the values of the populist
intelligentsia, the new middle class identified itself with the elite, counterposing itself
to the marginals and proles. In Eastern Europe and Latin America this middle
class saw itself as the support base for market reforms. It believed implicitly that it
had been chosen to carry out historic tasks.
The ideology and self-esteem of this social layer rested on a banal principle:
the middle class was a factor for stability. Like a mantra, the politicians repeated the
formula: increase the size of the middle class, and society will be more stable.
Moreover, the politicians themselves believed this uncritically.
The middle class relished its new opportunities, entering into the world of
entertainments, and despite some prophesies, not experiencing the slightest regret.
The members of the class saw their rise as thoroughly deserved, convinced they were
the cleverest, the most competent, and the best able to adapt. In short, since these
people were the best, they were doomed to succeed, while the failures of the vast
majority of their compatriots were seen as natural retribution for their backwardness
and incompetence. The supreme expression of this ideology was the slang term
sovok [this complex pun combines the word soviet with the Russian for dustpan tr.], which filled Russian speech and was invoked to characterise all the
features of Soviet life and conduct. that posed obstacles to the attaining of success in

the splendid new world. Contempt for the sovok became the basis for the morality
and ideology of the middle class.
The future was imagined as a gradual overcoming of the sovok, to be
followed by an inevitable prosperity and by the turning of the majority of Russias
population into the very same Western-style middle class. Initially, the utopian nature
of these beliefs failed to register in the consciousness of the people who embraced
them. Since it is precisely the super-exploitation of the periphery that makes it
possible to maintain stability in the centre, the middle class in the non-Western
world is fated to remain a minority, at least while the principles of neoliberal
capitalism hold sway. An insoluble contradiction had arisen. Objective reality did not
leave any chance for the development of the middle class, while the ideology
demanded that the middle class steadily expand. Worse still, the content of such
ideological illusions represented one of the main conditions for the system being
viable. To keep itself intact, the system had constantly to undermine itself. For
neoliberal capitalism, the strategy of expanding the middle class was a time bomb.

Plasticine Man
The ethic of neoliberalism consists of the following: dont get in the way of
the strong. If this ideological system admits of any morality, it can be summed up in
the following simple formula: once the strong have received their well-deserved prize,
they should help the weak. Or else, this will be done by the state, which now
guarantees the citizen nothing as of right. The principle of directly targeted assistance
presumes that the place of social rights will be taken by government philanthropy,
already humiliating for the reason that accepting it signifies that one is counted among
the weak. But how are the strong to be distinguished? According to the logic of
neoliberalism, these are the people who achieve success. Success, in its turn, is always
a matter of people receiving their personal deserts. In short, whoever wins is also
right. The triumphant victors do not feel any particular compulsion to aid the weak.
Indeed, why should people who have achieved everything through their own
knowledge, talents and labour provide help to losers? Self-satisfaction among the
victors, and disdain for the vanquished, are becoming the ethical norm.

Paradoxically, in the new situation the concept of strength, which used to

presuppose firmness, inflexibility, and clearness of purpose, above all signifies
flexibility, adaptability, and an ability to evolve quickly to meet the demands of a
constantly changing situation. It is not by chance that flexibility and adaptation
have become key words.
In reality, any victory or defeat depends on the rules of the game. A champion
boxer has no chance in a biathlon competition. The rules, furthermore, change
constantly. The cult of adaptability leads to the overturning of professional ethics, to
the rejection of independently developed strategies for living, and to conformism.
People finish up not as what they wanted to become, but as faceless, plastic material,
subject to constant reworking. Plasticine people mould themselves in one fashion or
another, but they do not do this on their own initiative. On the contrary, they are
subject to the unambiguously formulated demands of the system.
The idea of changes, innovations and flexibility becomes a cult, a goal in
itself. Innovation is transformed into a fetish. No-one any longer asks why the new
is necessary, or whether it is better than the old. Innovation becomes a virtue in and of
itself. The cult of flexibility and innovation is a sort of religion, or more precisely, a
superstition of post-industrial society. This is a classical example of what the young
Marx described as false consciousness, when causes and consequences change places,
and side-effects are perceived as the basis of a process.
If the constant renewal of technological systems is transformed from a
condition of success in market competition to a goal in itself, human beings are
obliged to subject themselves to the same logic. In the process, however, the promised
freedom turns into complete dependency. The innovation economy becomes a new
system of enslavement. Individual human being remain appendages of machines, and
are not only doomed to constantly change these machines, but also to change
themselves along with the machines. The demand that people adapt themselves to
changes becomes the basis for a new conformism.
Unlike earlier varieties of conformism, this type is inseparable from constant
stress, and most important, is doomed sooner or later to failure. In a conservative
society, people who know the rules of the game can make more or less reliable
provision for their future, adapting themselves to the prevailing requirements once
and for all. By contrast, the conformism of the plasticine man or woman is doomed.
Even a readiness on the part of such people to constantly violate themselves, to cave

in and refashion themselves in line with the latest innovation, fails to guarantee that
the system will not, in a single not-so-pleasant instant, crush the person who has been
unable to fall into step with its rhythm.
A readiness to constantly adapt oneself to the changing demands of the system
has its limits. This is not just a matter of the finite capacities of human psychology.
Sooner or later an economic downturn, a financial crisis, or a stock-market crash will
bring all efforts to nought. All these developments, it should be noted, occur as if
outside the world of constantly developing technologies, but abruptly reveal the
genuine, basic laws according to which this world too is condemned to live. At the
moment when the system itself meets with defeat, we find that the greater the extent
to which people have accommodated themselves to its demands, the more
painstakingly they have adapted themselves to it, and the stronger they have appeared
to themselves and to those around them, the more cruelly they are liable to be
punished.
The strong are transformed instantly into the weak. They are shamed and
humiliated in the eyes of society. But it is precisely at this moment that plasticine
people are again able to become independent individuals, growing indignant and
speaking out against the rules.
Neoliberalism promised to build for the middle class a world of selfrealisation and enjoyment. Instead, there arose a society of stress. The middle class is
full of ambitions and unrealised desires. Society presses on it constantly, from above
and below. Its principle is success, but society in no way guarantees that this success
will come about. The middle class strives for material well-being, while at the same
time it acquires education, and protests at the vulgarity of the bourgeoisie. It is
capable of considering itself part of management, and also of sensing its profound
kinship with the proletariat. In short, it is riddled with contradictions.
Chapter 3. The End of Arrogance
Every revolution creates its own myths, and the technological revolution is no
exception. The flickering monitors hypnotised people. Enthusiasts predicted the
beginning of a new age, opening up boundless possibilities, and most important,
guaranteeing general happiness with a minimum of effort. The new economy,
coming into being in a virtual world, promised to be completely free of the limitations

of the material world, and hence to grow without restriction, to develop without
money, to expand opportunities without limit. Meanwhile, panic-mongers forecast the
downfall of culture, promising mass unemployment and frightening us with the
spectre of total dependence on electronic devices. Here in Russia, the authors of
patriotic publications added their horror that these devices, along with the process
of selection, would be foreign. The internet first appeared to them as the weapon of a
Masonic conspiracy, a sinister web with the help of which the Jews were anxious to
take over the world. There was even a new word appeared technophobia.
The technological revolution has given rise to a mass of real problems, which
have had nothing in common with the fears of the technophobes. The ideologues of
the new economy and the technophobes have been united in their certainty that
computers are radically altering our lives. The real problem has been that for all the
importance of the technological innovations, they cannot by themselves alter society.
New technologies cannot create a new economy in and of themselves. All that arises
is new economic sectors. The economy is changed by crises, reforms and revolutions.

Meritocracy
Every society creates its own myths, illusions and superstitions what young
Marx called false consciousness. In our own time, the people who are becoming the
custodians and interpreters of these myths are the ideologues of the information
society, the authors of numerous books celebrating the post-industrial era. Like all
professional ideologues, they have an interest in ensuring that the legends are spread
as widely as possible, and that the myths are not placed in doubt; the social position of
the ideologues themselves depends on this.
The myths need to be entrancing, and the superstitions have to become so
familiar and accepted that they take on all the marks of self-evident truth. The endless
repetition of the same theses turns them into axioms of mass consciousness.
Meanwhile, the ideology of the information society is full of obvious, and at times,
downright preposterous logical contradictions. On the one hand, we are told that the
era of network structures is dawning, that traditional hierarchies are now breaking
down, and that top-down bureaucratic control is being replaced by horizontal ties,

very much in the spirit of nineteenth-century anarchist utopias. On the other hand, the
same writers tell us of the coming era of meritocracy.
Meritocracy is a strange Greco-French neologism meaning rule of the
best. In principle, the internet utopia places a question mark over any rule and any
authority, replacing them with self-organisation. On the other hand, the ideologues
persistently avoid answering the question of who is to choose the best, and on what
basis. This happens somehow of its own accord; the superiority of the leaders is so
obvious that it is as though no selection even takes place. These people are simply the
best, and that is all there is to it.
In reality, every privileged class and every ruling group has explained its
position on the basis that its members are better. Since the time of ancient Egypt,
every ruling power has considered that it is a meritocracy, and that no other power can
exist as a matter of principle. When doubts have arisen in the ruling layer as to its
chosen character, this has meant that the rulers enjoyment of their position has not
had long to run. Meanwhile, the grounds on which superiority is claimed may alter in
the course of time. The priests of ancient Egypt, like an information guru in the early
twenty-first century, based their claim on knowledge, while zealously guarding
their secrets from the uninitiated. A feudal lord would explain to a peasant that he, the
lord, was better because of his ancestry, while a capitalist would try to convince a
worker that the superiority of capitalists lay in their entrepreneurialism. Soviet
officials used to tell people that as officials, they were superior because they
possessed a uniquely scientific and progressive ideology. They were supposed to
instruct mere mortals in this ideology, but it was assumed that the leadership
understood the ideology better. Everyone else could only try their hardest, and while
playing by the rules, hope that the system would reward their diligence.
To the people who finish up on top, such a state of affairs seems natural and
legitimate. What some people consider privilege seems to others to be natural justice
and well-deserved rewards. There is nothing accidental about this. The members of an
elite all know for a fact that they deserve their position, even if they cannot explain
why. Only sixteenth-century Calvinism, with medieval naivety, acknowledged that
success contained an element of chance, but called this chance divine providence. The
unpredictability and irrationality of the market were still too obvious, and millions of
tons of paper had not yet been expended on teaching public consciousness to regard
chaos as the highest manifestation of order. Chance represented the whim of God, and

hence the ultimate law. The chosen ones did not know why it was they who had been
chosen, but because of this they took even more pride in their position. The merit of
the victors lay in the fact that they were pleasing to God. Could there really be any
greater achievement?
Later, the bourgeois world came up with far more clever means of
demonstrating the moral superiority of the victors. The rational theoreticians of the
industrial society of the mid-twentieth century wrote about meritocracy using
virtually the same words as the ideologues of the information society a half-century
later. Meanwhile, the managerial revolution, that transformed capitalism after the
Second World War, was seen not as a natural complication of the administrative
system, born of the concentration of corporate capital, but as representing the triumph
of knowledge and competence. Now, we were told, it was not our birthrights, not
inherited capital, but our own personal achievements that would form the basis for our
careers. Unfortunately, the twentieth-century writers were by no means the first here;
the same myth about personal achievements had inspired the ideologues of the Third
Estate in their struggle against feudal privileges.
If the myth that personal deserts are the basis of hierarchy needs to be
constantly reinvented, this speaks volumes about the insubstantial nature of the
merits and achievements on which privileges are based. Nevertheless, the rule of
certain people over others is preserved and reproduced. The changing elite requires
new myths. The problem faced by the ideologues of post-industrial society,
however, lies in their need somehow to combine the myth of meritocracy, supposedly
providing a basis for the superiority of the elites, with the myth of the network
society, answering the hopes and democratic aspirations of the new middle class. It
is precisely here that the novel, ground-breaking character of the information epoch is
manifested. The contradictions of the ideologues reflect the contradictions of real life.
Network organisation itself is in no way a concoction of philosophers and
propagandists. The new technological order would have been impossible without the
development of information networks and the corresponding coordination. The
bourgeois market, however, requires the accumulation of capital. Going ahead in
parallel with the development of the networks is the concentration, on an
unprecedented scale, of corporate power and property. The vertical hierarchy not only
remains in place, but triumphs. Social inequality turns into inequality of rights and

opportunities. The new networks are subordinated to, and weighed down by, the old
hierarchical order.
How does the system choose its victors? This may be through market
competition, in which success and defeat are given over to the invisible hand. In
such a case we are supposed to recognize as superior anyone who chances to finish
up on top, simply because success (in line with four hundred-year-old Calvinist ideas)
is its own justification. The only difference is that no-one believes the religious
explanations any more. There is no place here for morality, or for any criteria
whatever. Divine caprice is replaced by the irrationality of the market.
Or, the best may be chosen by the corporation. It is not by chance that this
medieval word, corporation, should be used to describe how modern-day capitalism
is organised. The medieval principles of corporate solidarity, of loyalty and respect
for authority, of conservative ethics and of respect for strict rituals are indispensable
conditions for success. Unless these rules are observed, recognition and advancement
are impossible. The corporation does indeed choose the best, but according to its
own criteria and in line with its own interests.
In practice, it turns out that Bill Gates, the creator of the altogether mediocre
operating system MS-DOS, finishes up as one of the richest people on earth, while his
more talented contemporaries stay on the sidelines. The company Intel binds
humanity to its microprocessor standard, excluding other, far more promising devices.
Such successes are determined by the business strategies chosen, and by the correct
choice of partners (in the cases cited, the alliance of pragmatic innovators with the
conservative giant IBM). The successful strategies have nothing in common with the
network ethics, personal knowledge and intellectual attainments cultivated in the
information society. What we see here is the victory of capitalism over network
organisation.
The best people in the network never become the best (that is, the principal)
people in the corporation, where quite different qualities are demanded. Of course, the
network also rewards its leaders after its own fashion, ensuring that they enjoy fame
and respect. Moreover, the corporation requires experts, and is obliged to reward
them; otherwise, it could not successfully exploit them. The corporation, like the
network, encourages knowledge, innovations and research, but on one condition: all
intellectual efforts must be subordinate to the basic goal of making profits for the
shareholders. Any other research is not simply pointless, but even harmful. At best, it

represents the loss of valuable time, and time is money. At worst, it is a sign of revolt,
of sabotage. It is not surprising that the network leaders sooner or later wind up in
confrontation with the corporate chiefs. The hatred of programmers for Bill Gates is
already the stuff of anecdotes, and this is by no means simply the result of envy on the
part of relatively unsuccessful people for a luckier colleague, even if this doubtless
has a place. Above all, this hatred is a manifestation, on the level of offended
consciousness, of a conflict between two principles. Professional people are well
aware that their colleagues who make it to the top in business are far from being the
best in the profession. Bill Gates resembles the ancient Egyptian priest in one respect:
he justifies his privileges on the basis of knowledge. The ancient Egyptian priest,
however, had one indisputable advantage over Bill Gates, since he could hide his
knowledge from the uninitiated, while Gates cannot. The corporation depends on
experts who perform professional work, but are denied the right to control it. The
experts become more and more convinced that the people who manage them have no
special qualities, and are in no way better than the individuals under their command.
The myth of meritocracy dissolves before ones eyes, and the network person enters
into conflict with the corporate chief.

The Cyber-Lords Versus the Business Guerrillas

Subordinated to the logic of capitalism, the new technologies were doomed to
reproduce the traditional relationships and conflicts. The virtual space cannot be
divorced from the social one. Just as in the agrarian or industrial system, information
products are appropriated, profit is extracted from them, and labour is exploited. A
conflict of interests arises. In the late 1990s the Filipino scholar Roberto Verzola
wrote about the emergence of new privileged stratum, the cyberlords. The cyberlords
are the propertied class of the information sector. They control either a body of
information, or the material infrastructure for creating, distributing or using
information. Cyberlords are a rent-seeking capitalist class.2

R. Verzola. Cyberlords: The Rentier Class of the Information Sector. 1997:

http://dkglobal.org/critict/rv2.htm

There is nothing surprising about the fact that an economy based on private
property and profit implants the same principles in the sphere of high technology. The
problem lies in the fact that the cyberlords, as Verzola notes, are by no means
bourgeois entrepreneurs of the classical type. In practice, the principle of intellectual
property amounts to a variety of class monopoly. The privileged position of the elite
is ensured by the impossibility of free competition. In most cases, the cyberlords
themselves play no particular part in the research and creative activity through which
the information protected by their patents and intellectual rights comes into being.
Meanwhile, they exploit not only the labour of others, but also the knowledge, and in
the final analysis the individual personalities, of the people working for them. Their
power is based on control over the virtual, information space as such, in just the same
way as the power of landowners is based on control over land. Nor is the quality of
the information product always important. The norms and standards imposed by the
great companies become universal, irrespective of whether they are good or bad in
themselves. Standardisation is an objective social need, but thanks to the system of
intellectual property, it is transformed into a source of monopoly private profit.
On the other hand, we are dealing in many cases with a unique product, which
means that competition is impossible in principle. Even where the product is not
unique, any infringement of the monopoly of the intellectual property-owner results in
a political and legal conflict. Hence pharmaceutical companies wage an incessant
struggle against attempts to replace their expensive patented drugs with cheap
analogues, even if their victory in this struggle threatens to result in the loss of
hundreds of thousands of lives. If modern ideas of intellectual property had held sway
in the sixteenth and seventeenth centuries, the rapid development of entrepreneurship
in Europe would simply have been inconceivable. This is why Verzola speaks not of
cyber-entrepreneurs or even of a cyber-bourgeoisie, but of cyberlords. Like
landowners in the eighteenth and nineteenth centuries, this stratum plays a huge role
in the market economy, but the basis of its income lies not in profits, but in rents. If
the landowners lived on land rents paid to them by tenants, the cyberlords force
virtually all of society to pay them information rents.
Verzola divides the cyberlords into two categories. To the first category he
assigns the owners of software companies, corporations owning the rights to audio
and video products, firms involved in genetic engineering, pharmaceutical companies,
and so forth in short, all those who, once they have gained monopoly rights to one

or another item of information, live by exploiting this monopoly. To the second

category belong the owners of infrastructure, the people who physically control
information networks. The former demand money for access to information, the latter,
for its transmission.
It is not hard to see that this dual information rent is becoming an intolerable burden
not just for society, but also for small and sometimes medium business. At times,
even big business revolts against information rents. For example Finnish Nokia
doesnt hide its animosity towards Microsoft. Producers of audio and video equipment
are at odds with the music and film industries.
Intellectual property is becoming the object of fierce struggles, even if the participants
in the confrontation are not always conscious of its political significance. The claims
of the elite to monopoly rights are provoking mass resistance. The spontaneous
violation of intellectual property rights is becoming an everyday norm not only in
poor countries, but even in prosperous Western societies. A wave of piracy is
sweeping the market for computer programs and for audio and video products.
However many times they are repeated, arguments to the effect that it is
wrong to steal run up against a wall of incomprehension. And indeed, it is impossible
as a matter of principle to steal an intellectual product. If someone steals a piece of
bread from me, I can no longer eat it. But when I share information, I also keep it for
myself. The artificiality and conventionality of intellectual property is all too obvious.
Therefore, all the cyberlords have been able to achieve through a vast propaganda
effort has been to create an atmosphere in which piracy does not evoke the open
and public approval of society. To have society condemn it is fundamentally
impossible.
A paradoxical situation is arising. Every new turn in the technological
revolution is making it easier to disseminate information, to copy texts, music, and
scientific data. At the same time, every new stage of technological development is
accompanied by attempts to tighten the rules controlling access to information, to
impede its free distribution, and to restrict the use of new tools and programs. The
very mild conventions on authors rights in force in the 1970s have been replaced by
new and stricter rules. The corporations are trying to patent genetic and biological
discoveries that earlier were regarded as accessible to all.
Such a situation, however, seems paradoxical only if we view technology in
isolation from social development. Meanwhile, the new technologies being

appropriated by capital are giving rise to a new elite. As this elite acquires more and
more power and influence, it tries to consolidate its position, winning recognition
from society for its privileges.
Nevertheless, spontaneous opposition is also growing. Those who are
mounting it are not by any means limited to members of the lower orders or
oppressed classes. The more the groups in society that are forced to pay information
rents, the broader the dissatisfaction.
In essence, society is faced with a choice: intellectual property, or information
freedom. The reason is simple: the laws of information dissemination contradict the
laws of the market. The more capitalism shifts information technology to the
forefront, the more the system runs up against processes whose development has a
completely different and quite unfamiliar logic. Attempts by the old world to
subordinate the new to its logic are doomed in advance.
Information technologies constantly and spontaneously create little islands of
non-market relations (one could almost say communist relations, in the Marxist
sense). A real challenge was mounted to the principles of intellectual property by the
Napster system on the internet. Napster allowed millions of young people throughout
the world to exchange music which they liked. Strictly speaking, they were doing on
the internet what they had earlier done with tape recordings. At first glance, the only
difference lay in the quality of the recording, which remained virtually unchanged
however many times a particular song was copied. It was unexpectedly discovered,
however, that Napster was encroaching on the sacred foundations of intellectual
property. A broad campaign was mounted against the network. In the US, the
corporations distributed a poster depicting a Red commissar rising up behind the back
of a youth transferring a music file onto his hard disk. The poster warned: Every time
you download Napster, you are installing communism! It would be hard to think of a
better way to propagandise communist ideas among the young.
The attacks on Napster culminated in a reform of the network, which
renounced its non-commercial principles. The victory of the cyberlords, however,
turned out to be Pyrrhic. The absurdity of their claims was obvious to vast numbers of
internet users who earlier had given no thought to such questions. The technologies
that Napster had employed grew in popularity. Having reformed one network, and
subordinated it to commercial principles, the cyberlords found a multitude of such
networks appearing. The problem proved insoluble, since millions of people

spontaneously carried on doing the same as before, creating new exchange networks
or simply sending files to one another on a private basis.
The struggle against internet piracy turned out to be just as vain as the struggle
against samizdat publishing in Soviet-type societies. The authorities in the latter,
despite having a vast repressive apparatus, could not root out even the relatively
labour-intensive copying of texts using typewriters. The secret police were helpless
when faced with tape recordings of the uncensored songs of Vladimir Vysotsky and
Aleksandr Galich. With the appearance of the internet, attempts to exert control over
information became obviously hopeless.
The millions of people who acquire pirated disks or who illegally copy music
from the internet are merely satisfying their needs, while ignoring absurd and
incomprehensible bans. For small business, however, breaching the monopoly is a
strategy for survival. The pirate companies are perfectly aware that they are breaking
the law. The point is, however, that society does not see their activity as being in the
least immoral. The result is that they can function unimpeded, doing virtually nothing
to conceal their activity, and enjoying societys active or passive support.
Piracy is a business guerrilla war waged by petty bourgeois circles, a
spontaneous, but at times also organised, war of small property owners against the
cyberlords. Brigands who rob the rich are not as a rule without self-interested
motives, even if they give part of their booty to the poor. But Robin Hoods cannot
survive unless their actions meet with broad approval. The approval bears witness to
the fact that social morality has diverged fundamentally from the official law, and that
the law is in conflict with the obvious needs of the majority of society. Property is
perceived not as a right, but as a privilege, whose very existence humiliates the
majority of the population while restricting their rights and freedoms. Such a law
cannot be obeyed in principle. Everyone will break it at the very first opportunity. The
heroism of a Robin Hood therefore lies not in the fact that he breaks the law
(everyone does this in one way or another), but in the fact that he does this openly and
publicly, issuing a challenge to the custodians of an unnatural right.
As is well known, the Robin Hood ballads not only recount the victories of a
noble brigand, but also mock the elite, showing its impotence and helplessness. In the
process, they clearly subvert the myth of a natural order in which the common
people can only look with envy and admiration on the members of high society.
The daily humiliation to which the information corporations are subjected by their

helplessness to deal with piracy plays the same role. The more actively the corporate
elites try to defend their monopoly, the more doubts arise as to their merits. Not only
are the creative achievements of the business leaders placed in doubt, but their
entrepreneurial ones as well. The myth that information society represents the rule of
the best dissipates before ones eyes.
As they attempt to maintain their privileges, the elites reveal their social
egoism to the public. This causes irritation even in the corporate milieu. Hence, for
example, the companies that produce computers, video recorders and other devices
capable of copying information start protesting when they are called on to equip their
products with all sorts of defensive systems to stop them being used with pirated
discs. A typical example is provided by the court case between the company
Sonicblue and the movie industry, represented by the Movie Producers Association of
America (MPAA). The latter demanded a ban on sales of the television accessory
Replay TV, on the grounds that this device gave the owner excessive possibilities
(for example, to skip over annoying ads in recorded television programs). It is not
hard to guess the sympathies of the video apparatus users, who responded to the
claims of the movie companies by bringing their own court suits. The users accused
the movie studios of trying to limit personal freedoms, and of trying to prevent the
spread of new technologies. In analogous fashion, the film companies had tried to ban
video recorders in the early 1980s. The firms that produce computers and mobile
telephones are increasingly interested in all possible varieties of open-source software
that is, freely accessible, open programs. The firms subsidise the development of
this software, and organise conferences on topics associated with it. The cyberlords
are becoming increasingly isolated.
The outcome of the dispute is not hard to predict. Sooner or later it will be
necessary to recognise societys right to free access to information, and to replace
intellectual property with a more democratic conception of authors rights, rewarding
creative and scholarly effort but not allowing the possibility of monopolising
knowledge.
The struggle for free access to information is only the first stage of the
struggle for power, since what is at issue is not just intellectual property, but the very
principle of power that is proclaimed in society. Particular cases merge into the stream
of events. Along with information rents, the myth concerning the deserved success
of the new elites is threatened with collapse. The cult of success makes any failure,

even an accidental one, an ideological problem. People who have cited their personal
success as justification for their privileges simply do not have the right to suffer
defeats. Failure demonstrates their bankruptcy, the groundlessness of their claims to
leadership.
The questions of intellectual property, Napster and piracy are far from being
simply technical, legal or even economical. They are instances of economic problems
being transformed into political ones. They can only be resolved through political
struggle. Might Slavoj Zizek thus be correct in anticipating the emergence of a
cyberspace Lenin? (International Socialism, Summer 2002, no. 95, p. 87).
Sensing this, one part of society is beginning an exhaustive search for new
leaders, while the other is looking for new principles. Network ethics suggest that it
is also possible to get by without either gods, supreme leaders, or heroes.

Games with Big Brother

A surprising peculiarity of modern-day information technologies is that one
and the same piece of equipment is used both for work and for entertainment. A good
metalworker no doubt derives pleasure from turning a piece on a lathe, but it is
nevertheless difficult to imagine the lathe as a tool of the entertainment industry.
Things are different with computers, not to speak of the great multitude of other
electronic devices that have come to fill our lives in the last decade and a half. The
picture of bank employees playing Doom or solving puzzles in their workplaces is too
banal to dwell upon. Such genre scenes merely distract our attention from the main
point: in the world of computer technologies, the border between working time and
leisure is being effaced. This means that all the principles of labour relations that have
taken shape over the ages are placed in question and along with them, in the final
instance, the principles underlying relations between people in society.
The well-known Russian economist Mikhail Delyagin writes that in the new
epoch, work is increasingly being transformed from a biblical curse into
entertainment. (Praktika globalizatsii: igry i pravila novoy epokhi. M.G. Delyagin
(ed.), Moscow, Infra-M, 2000, p. 21). Nevertheless, Delyagin continues, such changes
may at times exact a high price. Acquiring one thing, we risk losing another, often
without even knowing the rules that govern the exchange. Delyagin thus terms the era

of the implanting of information technologies the sorrowful age of entertainment

(ibid., p. 22).
Pekka Himanen, in his book The Hacker Ethic, goes still further. He is
convinced that in the information society, the protestant work ethic described by
Max Weber is giving way to new values, to a hacker ethic in which work is no
longer a duty and a responsibility, but a joy and a passion. Work is attractive not
because it is paid, but because it is interesting. Himanens arguments immediately call
to mind the prophesies of Marx concerning the abolition of labour in communist
society, and its replacement with activity through which the free personality finds
self-expression.
Linnus Torvalds, the creator of the well-known operating system Linux, has
also written that it was the joy of work that provided his main stimulus. When he was
devising Linux, he did not expect any reward from the corporations. To the contrary,
he risked making large numbers of enemies in those quarters, since a free, generally
accessible and open operating system would undermine their business. Nevertheless,
Torvalds was correct in anticipating that he would also make large numbers of new
friends, and would have the chance to work with colleagues who would join
voluntarily in developing the new program. He does not conceal the fact that he also
had thoughts of fame, or at least, of his professional reputation.
The practical experience of Torvalds serves as direct proof of Himanens
theoretical postulate. Nevertheless, Himanen himself tips cold water on us; despite the
spread of the hacker ethic, society is still dominated by the familiar values of the
protestant ethic:
Seen in a larger historical context, the continued dominance of the Protestant
ethic is not so surprising when we remember that even though our network society
differs in many ways from its predecessor, industrial society, its new economy does
not involve a total break with the capitalism Weber describes; it is merely a new kind
of capitalism.
Unfortunately, Weber in this instance needs to defer to Karl Marx, with his
strict economic categories. No sooner do we turn to such concepts as profit, wages,
capital and hired labour than we find how artificial the distinction between
information and industrial society really is. In real life, the new network
structures turn out to be strictly subordinate to the traditional hierarchies, and placed
at their service. This is why both Himanen and Castels, describing the triumphant

progress of the information society about the planet, arrive finally at the sad
conclusion that there are no grounds for considering that technological advances
will, somehow, automatically make our lives less work-centred. This is nothing but
an illusion. (P. Himanen. The Hacker Ethic and the Spirit of the Information Age.
Vintage, London, 2001, p. 12).
In any case, nothing in society happens automatically. The contradiction
between the hacker ethic of the information epoch and the protestant ethic of
capitalism is quite real, just like the contradiction between the logic of the network
organisation and the harsh discipline of the corporate hierarchy on which bourgeois
production is based. This contradiction is becoming a new source of social tension,
and ultimately, of political struggle. The fact that this will not be a traditional class
struggle, considers the Russian sociologist Alla Glinchikova, does not make this
contradiction less acute, because powerful economic interests are tied up in each of
these areas, and particular socio-economic and political changes are required if the
clash of these interests is not to take on a harsh form. (Voprosy filosofii, 2001, no. 9,
p. 52). In real life, unfortunately, social and political changes do not result from the
desire of the various sides to soften an acute struggle, but are the outcome of bitter
clashes. With all its new entertainments and conflicts, the information society not
only fails to do away with class conflict, but on the contrary , adds to it,
superimposing new contradictions on the old.

The Crisis of Control

Traditional capitalism was based on the sale of labour power. When people
started work, they knew that of every working day twelve hours (and later, in a more
humane era, eight hours) of their time belonged not to them, but to their employer.
The latter, however, had no rights to the workers remaining time.
Things were always more complex in the case of creative individuals.
Mendeleev conceived his famous periodic table in a dream, while Pushkin, when he
sold his manuscripts, warned that he was not selling his inspiration. Such individuals
made up an insignificant minority of society, and they could either be provided with
exceptionally favourable conditions, or repressed (most often, both at once). The
creative intelligentsia in turn constantly expressed its dislike of capitalism and the

bureaucratic state, but could not overthrow either one or the other (especially since
throughout the twentieth century its struggle against the one ended, as a rule, in
attempts to ally itself with the other). Finally the intellectuals, revolting against
bourgeois discipline, looked for support in the iron talons of the proletariat, which
in turn had been constructed in line with the iron discipline of the factory, created
by the same capitalism. Hence the numerous personal and creative tragedies of the
twentieth century, the heroic attempts at liberation which culminated in a new slavery,
and so forth.
The new technologies have changed everything. Creative workers have come
to be needed by the economy on a massive scale. Capital has sought to control them,
since whoever pays the piper must also call the tune. The familiar system of control,
however, is crumbling to pieces. On the one hand, people are more and more left to
their own devices even in the workplace. On the other hand, every attempt by the
employer to restore his or her power turns into an encroachment not only on the
lawful six or eight hours, but also on the workers leisure, on their very being.
Marx maintained that the alienation of the personality stemmed from the
alienation of workers from the means of production. Unable to control their labour,
people were rendered defective in their other relationships as well. It might seem that
the new epoch promises a solution to this problem. As Mikhail Delyagin notes, with
the advent of the new information technologies workers carry the key means of
production in their own heads, and in the memories of their home computers,
connected to the World Wide Web3. In Delyagins view, this means that exploitation
in the traditional Marxist sense is becoming impossible, its place being taken by
relations of cooperation between the owners of fundamentally different but
complementary productive forces. Accordingly, the role of compulsion quickly
shrinks, since people can be compelled to perform only routine, mechanical work4.
What Delyagin sets out here is an ideal corresponding to what ought to be, not
to what actually exists. Relations of cooperation provide a perfect match with the
logic of information technologies, but the problem is that this logic is in insoluble
contradiction with the fundamental principles of capitalism. Since it is capitalist

Praktika globalizatsii: igry i pravila novoy epokhi. M.G. Delyagin (ed.), Moscow, Infra-M, 2000, p.
20
4
Ibid.

relations that form the basis of modern society, it is these that triumph, distorting the
development of information technologies and turning entertainment into a curse.
Is compulsion impossible? Why should it be? The capitalist practice of
exercising compulsion through money also differed from the accustomed violence;
the worker was forced to do the bosss bidding quite voluntarily, and even without the
whip of the overseer. Compulsion through hunger and the stimulus of the dollar do
nothing to aid the development of creative labour, but they do not make it impossible
in principle. They simply render it defective and inferior, and at times agonising as
well. Paradoxically, Delyagin himself writes very expressively of this when he takes
up particular questions (in this case, the organisation of scientific research). From the
very moment when the corporations and the foundations they established took over
the administration of science, research degenerated into
the process first of seeking out, and then, to use a Soviet term, of
appropriating specific funding. The researchers are forced to strive not so much to
discover and interpret new phenomena, as to draw up their accounts in line with the
ideas and sometimes prejudices of particular representatives of each specific grant
donor. In the process, qualitative leaps in the development of human thought become
an institutional impossibility, since grants, for thoroughly objective commercial
reasons, are offered only for advances that are guaranteed, and hence in most cases
insignificant. The grants are not meant to fund discoveries, but only to refine existing
knowledge5.
At the same time as limitless opportunities to seek out the truth might seem to
have opened up before people, society is surrendering to the forces of the market even
the limited creative freedom it has possessed since the origins of academic science.
University autonomy and freedom of research, together with other conquests of the
enlightenment, are vanishing into the past. Creative freedom, the same writer states
implacably, is inconceivable in an epoch when significant numbers of scholars work
to the orders of various commercial or political forces. This situation forces them
willingly or unwillingly to adjust not only their conclusions, recommendations and
methods of analysis, but also their initial observations to the demands of the client, as
clearly defined in advance. Or else, they are forced to adjust to conventional
ideological prejudices. From the point of view of its baneful impact on the intellectual

Ibid., pp. 17-18.

outcome, this latter is even worse, since the self-censorship of the creative worker is
harsher and more effective than the usual censor6.
The moral agonies associated with such contradictions are no less horrifying
than those suffered by a slave beneath the whip of an overseer. The traditional
exploitation of workers labour is replaced by the total exploitation of their
personalities. In other words, a situation arises in which there is nowhere to flee, since
the creative process is not limited either by time or place. Subordinating it to the will
of another, the individual no longer sacrifices a few hours of his or her indispensable
work time, but his or her very ego. Instead of overcoming alienation, we make it allembracing and all-permeating.
The corporations find themselves in an ambiguous position. They need the
creative personality that is, they need workers who are capable not just of carrying
out orders, but of giving free play to their fantasies, of formulating non-standard
ideas. What is vitally necessary to them, however, is that these ideas should be of
advantage exclusively to the corporation, that the behaviour of the workers should
remain within the bounds set out in advance by the corporate elite.
The American sociologist Nick Dyer-Witheford describes cyberspace as an
area of contradictions, in which capitals development is both opposed and spurred by
alternative initiatives. In this sense, the information revolution is in its own way
duplicating the fate of the industrial revolution; while aiding the development of
capitalism, it simultaneously creates a new hired worker capable of entering into
conflict with the system. It may be said that capitalism is once again failing to carry
out its promises. The world of unlimited creative opportunities is turning into a
system of routine procedures. To create and operate computer systems, commerce
had to summon the whole new strata of labor power, ranging from computer scientists
and software engineers, through programmers and technicians, to computer-literate
line and office workers, and ultimately to whole populations relegated to tedious,
mundane jobs yet required to be sufficiently computer literate to function in a system
of on-line services and electronic goods. As this virtual proletariat emerges, there also
appears a tension between the potential interest and abundance it sees in its

Ibid., p. 17.

technological environment, and the actual banality of cybernetic control and

commodification7.
The Russian sociologist Alla Glinchikova also writes of a crisis of control
which post-industrial corporations have to confront. Every new twist of the
technological revolution creates in the elites a sense that the problem of effectively
administering post-industrial workers will finally be solved, but instead, the
problem merely becomes worse. From being a means of serving business, global
communications are turning in pluralistic fashion into channels for the propagation of
dissent. From being an ideal medium for market transactions, information links and
network contacts are being transformed into a medium in which a new anti-market
solidarity is taking shape, and new relations of equality are coming into being.
For the corporate elite, however, the light-mindedness and irresponsibility
of workers who break the corporate rules is a no less serious problem than direct
resistance. Such spontaneous manifestations of human unpredictability are far more
difficult to foresee, and it is not always clear how they can be punished. The
corporations are unable to resolve a fundamental contradiction. Creativity cannot be
simply an object of administration. It requires a certain freedom, and this freedom is
fraught with the danger that people will unexpectedly go beyond the bounds of the
permitted. Someone will write a program different from the one ordered, or will use
expensive equipment for unplanned experiments. They will prefer playing computer
games to working on their e-mail. They will illegally copy for their friends software
that has been paid for by the corporation. They will transfer money to the wrong
account. The employer cannot rely totally on the self-control of the worker, but
neither can the use of compulsion be effective. The system is torn between the poles
of anarchy and totalitarian control. An embodiment of the first has been the revolt of
the younger generation which did not begin in Seattle in November 1999 (it began far
earlier), but which manifested itself there. The second has been embodied in the
attempts to install a new police state in the US since the terrorist acts of 11 September
2001.

Nick Dyer-Witheford. Cyber-Marx: Cycles and Circuits of Struggle in High-Technology Capitalism.

Urbana and Chicago, University of Illinois Press, 1999, p. 123.

There is nothing new about contradictions leaping across from the economy to
the sphere of politics. Nevertheless, the form which the conflict has taken has been
unusual, and at times unexpected even by the participants in events.
Cultural norms and modes of behaviour that have become established in the
internet have begun unexpectedly to splash out onto the street. From the very
beginning, the protest movement became international. This had little in common
with the ritual internationalism of most of the twentieth century, when columns of
demonstrators paraded ceremoniously about the streets, expressing support for people
they did not know who were fighting somewhere in distant Africa. Internationalism
took on an emotional and political meaning only when the people involved included
ones own for example, during the war in Vietnam, where young Americans were
dying or becoming killers. The events of recent years have been a quite different
matter. People in Nigeria, defending the environmental balance destroyed by World
Bank projects, are quite likely to be internet acquaintances of people active in New
York or Buenos Aires. Internet links have prepared the way for organisational
contacts whose outcome has included international demonstrations.
During the demonstrations against the International Monetary Fund that took
place in Prague in the autumn of 2000, I was able to see at first hand how contingents
that had arrived from all corners of Europe joined in a united mass. The reason why
the participants were able to speak in a single language was not only that all of them
knew English in one fashion or another. More fundamental was the fact that they
belonged to a single generation and possessed a common culture shaped by the
internet, by global television networks, and by transnational corporations. The more
integrated the world economy becomes as a result of information technologies, the
more vigorously a common culture of protest grows up within it.

Great Plans
Innumerable articles have set out to show that from now on the world will be
divided into two parts: the fortunate people of the future, capable of constant
innovation, and the people of the past, doomed to a pointless, vegetable existence.
This is not the first time such forecasts have been heard. Every time when
technical advances change our lives, people are divided into two camps. Some people

expect catastrophes, if not for all of humanity, then at least for the world to which
they are accustomed. Others are proudly convinced that they are among the chosen
ones, able to divide the world afresh thanks to no more than their technological
innovations.
In the Soviet Union during the period of Stalinist industrialisation a booklet
was published with the edifying title The Story of the Great Plan. This was a time
when the first Soviet five-year plan was perceived (and not only in the USSR) as the
pinnacle of economic thought. As befitted a Soviet citizen, the author of the book,
who signed himself simply Engineer A. Ilyin, believed in the resplendent future in
which neither artisan production, nor manual labour, nor even villages would any
longer exist; there would be continuous industry. Activity of every kind would be
automated, and conveyors and machines would solve all problems. It should be
pointed out that there was nothing specifically Soviet about the utopia of Engineer
Ilyin. His class approach was expressed solely in the conviction that the planned
economy would open up the vast possibilities of industry. In everything else, Ilyin
mimicked the ideology of American industrialism. It was no accident that Stalin
during the same years noted that Bolshevism combined American efficiency with
Russian scope. The class struggle does not even figure here; the main thing is to build
factories.
The theoreticians of post-industrialism have revived the enthusiasm of
Engineer Ilyin, only now, the belief in a miraculous transformation is no longer linked
with industry, but with its disappearance. The confidence in the universal power of
the plan has been replaced by an equally nave faith in the universal power of the
market, but they use the same words and think in terms of the same images.
Engineer Ilyin was not altogether wrong when he described the industry of the
magnificent future. The successes of twentieth-century industry were immense, just
like the development of new technologies today. But even though Ilyin predicted the
disappearance of the peasantry, it continues to exist. On the scale of the planet as a
whole, there are even more peasants than there used to be. Meanwhile, there are huge
and growing numbers of people who are not needed either in the cities or in the
countryside. The technological revolution has increased the number of workers
engaged in the most primitive and unskilled kinds of work. Semiliterate people have
learnt to press the buttons of Windows. In the factories of the firm Nike, Vietnamese
or Chinese women living in conditions close to slavery put together models of

footwear developed using high technology. The repressive Communist apparatus in

China and Vietnam carefully ensures that no-one prevents the American capitalists
from receiving their profits. Manual labour has come to be employed far more
efficiently thanks precisely to the new system of global communications. The
revolution in the communications field has dealt a severe blow to the new technical
ideas in the area of production. By pressing a button in New York, several thousand
Chinese can be sent to dig a ditch somewhere in Shanghai. Excavators are no longer
needed. In the port of San Francisco, Chinese cranes were to be delivered together
with Chinese workers, who were to assemble them by hand. The scheme was
abandoned only because of a strike by American workers, who understood the
consequences for qualified workers of this kind of rationalisation.

The Technological Skyscraper

People who sit at computers performing clean work, immersing themselves in
the depths of the internet often without even leaving their homes, are sometimes
simply unwilling to notice the whole mass of unmodernised human beings. As far
back as the 1960s, sociologists observed the Matthew effect. The Gospel According
to St Matthew states: To him that has much, much shall be given, and from him that
has little, what he has shall be taken away. The spontaneous development of the
market guarantees precisely this polarisation. But at the same time, the situation
undermines the basis of the new technological and economic model itself.
The industrial revolution was subject to the logic of the pyramid.
Development begins on a broad basis, with the process involving virtually the whole
population, but by no means everyone is obliged to alter their way of life in order to
participate. Every new technological stage has been smaller and narrower than the
preceding one, but at the same time has rested on it, has answered its needs and served
its apex. The processes occurring in the upper stages have made their effects felt
directly on those lower down. This has not always been pleasant for the dwellers on
the lower floors, who have had to elevate themselves, sometimes against their
will. Several generations have been needed for the carrying out of a thoroughgoing
technological modernisation. Peasants have become industrial workers, while their
descendants, after receiving education, have become engineers, members of the new

middle class, and finally, have made up the backbone of the modern technological
elite. Attempts have constantly been made to leap over one stage or another, but have
invariably been punished. The price of acceleration has become more and more
excessive. The Soviet Union paid with decades of emotional and social stress, not to
speak of wasted lives. The countries of the Third World have simply been unable to
cope. In the new technological revolution, the skyscraper principle has triumphed.
Instead of a slow and agonising process in which society is dragged into a new way of
life which not all its members need, a rapid dash forward and upward has been
preferred. The skyscraper of technological revolution has grown up before our eyes.
While people are still just settling into some storeys, new ones are being built. They
are self-sufficient. Meanwhile, we are called upon endlessly to raise ourselves further
up, in order not to fall behind. People and computers need countless upgrades. All this
is strongly reminiscent of the famous running-on-the-spot in Alice Through the
Looking Glass; you have to run very hard to stay where you are.
The social base for this experiment has become extremely narrow. In the
1990s, rapid growth rates were often cited as confirming the thesis that new
technologies would soon become accessible to everyone. High growth rates, however,
are a feature of every new technology in its initial stage. Do you recall the
magnificent achievements of the first Soviet five-year plans? If, next to a little
factory, you were to build another one, the growth would immediately amount to 100
per cent.
Unfortunately, it is easier to begin than to continue. It is easier to create new
structures than to maintain order in them. The rapid rates of expansion of the internet
in the 1990s were evidence only of its youth. The early years of the next decade were
a time of great crisis. There were falls not only in the share prices of firms that
embellished their names with the suffix dot.com. The demand for new technologies
also fell. The markets were becoming glutted. Fewer and fewer people were wanting
to perform upgrades, while there was less and less new information on the internet. It
was not simply that many people lacked money. Many of them did not have the need
either. Instead of participating in a race, people preferred to take a breather.
As long ago as the mid-1990s, computer producers were finding that each new
generation of processors was becoming far more difficult to implant in the market
than its predecessor. People made their first replacements of hardware enthusiastically
and on a massive scale. There was no need either for advertising campaigns, or for

moral pressure. Later, they made changes without special enthusiasm, as necessity
dictated. Even though out-of-date models remained on the market for two years
longer than earlier, the stocks of obsolete computers refused to be shifted. In the same
way, users defended themselves against new software, holding on till the last, for
example, to the dying MS-DOS. Meanwhile, there was no such conservatism in the
younger market for mobile communications. People who had no wish to change their
computers readily changed their telephones. By the beginning of the new decade,
however, saturation was appearing here as well.
Corporate plans to enter the European markets with the new generation of mobile
phone technology ended in a spectacular failure around 2001-2002. Companies spent
hundreds of millions of dollars to buy licences and didnt manage to use them.
Finnish Sonera, which was presented as a typical success story of high-tech
privatisation, was pushed to the brink of bankruptcy by trying to get the biggest share
of this non-existent market.
The middle floors of the skyscraper are closed off and inward-looking. What
comes down from above is perceived not as indispensable change, but as aggressive
pressure that needs to be resisted. The middle floors are a dull world of traditional
industrial technologies and of a habitual urban way of life. The techno-elite in its
pride saw all this as an element of the vanishing past, and could therefore offer
nothing to the dwellers on these levels. At the same time, the techno-elite cannot
dispense with this part of the structure. Someone has to assemble the computers (often
in dirty sheds somewhere in China, Mexico or Russia). Someone has to use the
computers (apart, of course, from the programmers themselves). There is a need for
metal, for plastic, for food. Someone has to dig trenches and lay cables. Most
importantly, the people on the upper floors have to come from somewhere.
If we live on the upper floors, life is fascinating. Things are being built,
structures are being shifted about, and there are experiences to be had. If people look
down, they have the sense that nothing is going on there, and young people who are
tearing themselves out of that dull routine do not want to look back. The problem is,
however, that with every year the number of people who are newly chosen by the
technological revolution grows less. At first, the companies complained about the lack
of qualified experts, then started sacking them. The system proved unable to
maintain its equilibrium. Without a broad base, the process starts slowing down. Then
comes a slump.

Garbage
The information super-highway promises us a constantly-growing flood of
information, coming to us ever more quickly. But what sort of information? It consists
of messages about various events occurring in the outside world. It does not
automatically follow that the amount of news increases because the speed of
transmission becomes many times greater. The significance of news does not depend
in any way on the technology used to transmit it. Nonsense is still nonsense, even if it
is sent off to a million addresses. A mistake simply becomes more harmful if a few
thousand people repeat it.
As the new technologies open up new channels for the transfer of information,
they encounter a growing shortage of information itself. Or more precisely, of
significant, genuinely useful material. The gap between the limited quantity of really
useful information and the constantly growing capacity of the information channels is
filled by a huge volume of garbage of every possible description. Philologists call this
semantic noise.
Even large corporations are starting to complain at the large amounts of work
time that are being lost as a result of the progress of information technologies. The
managers of many companies spend up to a third of their time separating out really
useful messages from the mountains of information garbage. Computer journals are
full of recommendations on the struggle against spam senseless messages that are
poured onto the heads of users. To this end, special programs are written, and
defensive filters are installed. Meanwhile, the growing torrent of information
garbage, just like the environmental problems of industrial society, are not just a
technical side effect of the new technologies. This is a cultural problem with its roots
in society itself, a symptom of the crisis of the social and technical-economic model.
By the late 1990s a striking contradiction was apparent. On the one hand,
everyone was talking about globalisation, about how we were becoming world
citizens. Everything that happened everywhere, it was said, would from now on
affect everyone. On the other hand, almost all cultures were encountering a growing
provincialism. Newspapers were reducing their networks of foreign correspondents.
The quality, and even the quantity, of international information available from large

television networks declined rapidly. On the internet, of course, reports could be

found on practically any topic, from the development of the anarchist movement in
Israel to the grain harvest in India. The search for genuinely necessary reports on the
outside world, however, required extra work. News that had once reached the
population as freely available information about the world now appeared as special
reports, that needed time to seek out. Citizens of the Western world would sometimes
go for years without hearing a word about some country in Africa, until a bloody coup
detat occurred there.
In Estonia people love telling a story about a little boy who did not speak a
word until he was three years old. Despite all the efforts of his parents, he remained
silent, until one day he declared, The soups too salty! When asked why he had not
started talking earlier, the child replied, Everything before was all right. The
modern mass media operate on the same principle. Either they fail to report at all on
the processes occurring in the world, or they soothe public opinion with selective
success stories and pseudo-news about the lives of celebrities. The latter include not
only film stars and sports heroes, but also politicians (with the real content of their
statements and public acts rating no higher than in stories about the purchase by a
Hollywood actress of a new toy dog, or about the scandalous divorce of another
beautiful aristocrat).
Such pseudo-news is meant to fill the information void, and at the same time
to convince ordinary people that everything is for the best in this best of all possible
worlds. It is only when something terrible or dramatic happens a war, a revolution,
a terrorist act, the attack on the World Trade Centre in New York that all the
information channels are simultaneously filled with reports about what is happening.
At this moment all other stories suddenly disappear. International reporting works
according to the rule: No bad news is no news. That is how wars in Kosovo or Iraq
happened to be the only news really televised as long as the hostilities really took
place. But once the bombing stopped, the media lost all interest in people of both
Kosovo and Iraq with all their daily problems.
In a sense, mass tragedies are the only news which, in the view of the media
elite, deserves our attention. Meanwhile, this applies only to tragedies and
catastrophes which people suffer in collective and spectacular fashion. The media
system is not interested in people who suffer alone.

The bourgeois mass media were already coming under criticism many years
before the technological revolution. The growing provincialism of the press and
television, however, is ultimately an indirect result of globalisation. Or more
precisely, of the socio-economic counterreformation that lies concealed behind this
term. In the first years of the technological revolution it was fashionable to talk about
the global village. Those who came up with this image, unfortunately, did not
understand its significance. What Marx called the idiocy of rural life really is
becoming a global phenomenon, seizing hold of the most advanced cities and the
most fashionable cultural centres. It seems that provincialism, ignorance and prejudice
are spreading in proportion to the development of technological innovations. Peoples
seclusion in a narrow and intellectually squalid little world is relieved by the new
opportunities for communication.
In reality, of course, the reason lies not in the technologies, but in the way
society uses them. Investments in information technologies were needed in order to
serve the growing requirements of transnational finance capital. But the greater the
economic significance and profitability of financial transactions, the worse for the
real economy. For there to be something to sell, something has to be produced. For
there to be something to report, something has to happen. But the more funds are
directed into the area of speculation, the worse the situation in all other areas. The
rapid growth of information technologies acts as a brake on the renewal of other
sectors, at least while the development of the information revolution is subordinated
to the egoism of financial capital.

Correction
During the best years of the technological revolution it seemed as though
computers, the internet and credit cards would create a new, crisis-proof economy, in
which uninterrupted expansion would be ensured by the limitless possibilities of the
human mind, giving birth to ever new inventions. The introduction of new
technologies on a massive scale in the 1990s really did modify the market cycle, but
no more than any of the previous technological revolutions. The point is that with the
emergence of new types of production or services, markets of a seemingly new type
appear. The new sectors witness the formation of their own cycles, which do not

coincide with the overall dynamic, and which have the effect of correcting it. In the
1930s the great British economist John Maynard Keynes urged the state to take on an
anti-cyclical function; when a slump began, the government should spend as much
extra money as possible, and so create demand. In the epoch of the new economy,
the same result was achieved spontaneously through massive investments in
technological innovations. The only problem is that this cannot be continued
indefinitely. The situation is like cultivating virgin soil; so long as there is land
enough for everyone, and so long as it can be ploughed up and harvests obtained
without any particular thought being given to fertiliser, growth will continue, and
competition will remain minimal. The numerous firms that arose in the new sector
barely impeded one another. There was room for everyone. Accordingly, investments
in such enterprises were perceived as absolutely reliable, and highly profitable. The
NASDAQ crisis was not merely a correction of stock-market prices. It was a
symptom of the fact that the limits of the new market had been reached, and that from
now on the new economy would live by the same laws as the old one.
A second factor in the economic miracle of the 1990s was credit and stockmarket inflation. From the point of view of the neoliberal economists, the only
sources of inflation were state budget deficits and the printing of paper money by the
government (the first of which, they considered, automatically gave rise to the
second). In reality, the growth of share prices and increases in the indebtedness of
companies and individuals are also a form of inflation. It is simply that this inflation is
pumped up by the private sector, and is not expressed in a prompt fall in the exchange
rate of the currency. As a rule, cash does not figure here, and the state can therefore
avoid printing unsecured banknotes. For a time, goods and services continue flowing
to the consumer, although there is nothing with which to pay for them. As with our
MMM tickets and GKO bonds, the sale of shares allows participants in the market to
solve the problem of cash flow up to a certain limit, though in reality everyone is
living above their means. In essence, what we have here is deferred inflation, just like
the deferred demand that accumulated in the Soviet system.
The soaring prices for shares in computer firms represented no more than a
redistribution; funds left other sectors and went there. In essence, traditional industry
was paying to support high technology. But the new economy in its turn was
supporting the economic growth that everyone needed. The shares of industrial
companies also rose in price. Up to a point, everyone was satisfied.

This, however, could continue only so long as the actual possibilities of

growth in the new sectors were not exhausted. At a certain moment it was discovered
that people had been living beyond their means for years. The time had come for them
to pay their bills.

Our Burdensome Debts

Meanwhile, it turned out that everyone was in debt. During the times when the
government, following the prescriptions of Keynes, had been printing paper money
and paying for generous social programs and for scientific research, everyone had
condemned the extravagance of the bureaucrats, seeing it as a source of inflation
(while at the same time delightedly enjoying the fruits of these programs). Now that
the state had begun to fear inflation worse than the devil, to economise with every
cent and to cut taxes, private individuals and companies were running into a shortage
of cash.
Those that borrowed most were, of course, the most promising the
computer firms. To grant them loans was to invest money in the future, even if this
money went immediately on rent for expensive offices, and on lavish presentations of
a new internet portal that no-one wanted to visit. The indebtedness of private
individuals and companies in the US built up throughout the 1990s, reaching
astronomical sums by the beginning of the new decade. No-one had a precise figure
for the total indebtedness; all that was obvious was that the country was living in a
manner it could not afford. The state debt was also immense, but until 11 September
2001 there were hopes that it would be repaid at least in part; for the first time in
decades the US budget had been brought into surplus. Where this surplus had come
from was a different matter. People and firms bought goods on credit, but the taxes on
every purchase were paid in real money. The overspending on the credit cards of
ordinary Americans turned into a financial boon for the government. After 11
September 2001 all these funds were consumed by military spending and by the cost
of tax cuts for the rich.
In America today, everyone is in debt. Firms owe money to the banks, and to
one another. Almost every last private citizen is in debt to the banks, since people buy
houses and cars on credit. Overspending on credit cards is a norm of life for the

middle class. The notorious Soviet ten rubles until payday has turned into a chronic
overdraft on American personal bank accounts at the end of the month. No-one,
however, can stay in debt forever.
The security for credit is provided as a rule by property, not only real property,
but also virtual property, which in traditional political economy used to be called
fictitious capital. What is the real worth, for example, of Microsoft? No-one
knows. It is impossible to reach a correct estimate of the worth of a company simply
by multiplying the stock-market price of its shares by their number. If, for example,
Bill Gates were to decide to sell off a large packet all at once, the price of the shares
would automatically fall.
Stock-market inflation in the US is strongly reminiscent of our experience
with MMM and the GKOs, though there are substantial differences. With the high
price of its shares, the US economy attracts capital from throughout the world. This
guarantees the high price of the dollar, which makes the US an even more attractive
place for investment, and so forth. Nevertheless, the general dynamic is the same as
with the Russian GKOs, even if on a scale many times greater. At a congress of the
American Sociological Association in August 2000 Bob Brenner presented a table
showing the dynamic of share prices and the growth of enterprise profits. The chart
was extremely instructive. In the previous period of economic growth, profits and
share prices had risen more or less in parallel (strictly speaking, the price rises on the
share market simply reflected the growth of profits). In the 1990s, however, these two
curves began to diverge sharply. The growth of profits was even less than in previous
times, while the share prices leapt upward without restraint. The gap increased
literally with every month and day that passed.
Brenner slyly reminded the audience of Marxs thesis concerning the tendency
for the rate of profit to decline, and concluded that, since it was no longer possible to
dramatically increase enterprise profitability (with the enterprises, as the saying goes,
playing as well as they can), equilibrium would sooner or later be restored through
a collapse of prices on Wall Street. No-one voiced any objections to this forecast.
The crisis, promised by Brenner, didnt make us wait for long. It has hit
hardest at those who until recently were considered leaders members of the
technological elite, internet companies, and developers of new technologies. It was as
though the top floors of the technological skyscraper had hung in a vacuum, and then
begun crashing down. The collapse of the World Trade Centre towers reproduced,

tragically and in concrete form, what had occurred in the economy. Collapsing along
with the dot.com companies was the illusion of a post-industrial paradise.

Disillusionment
The world economic crisis that broke out as the new century dawned added a
new dimension to these misfortunes. Hundreds of thousands of members of the
technological elite unexpectedly found themselves without work. Young people who
had been trained to make the running in the information society discovered that there
were neither career prospects nor jobs for them. No less devastating was the
humiliation suffered by the leaders and ideologues of the new economy, and also by
their faithful followers. A few years ago they thought they belonged to the elect, to
whom the possession of knowledge would guarantee success and prosperity
regardless of what happened to everyone else. Now they found that the logic of
capitalism was the same for everyone, and that the privileged workers of the
information sector were no more able to control their fate than industrial proletarians.
The hopes of the first half of the 1990s turned out to be illusory. The economic
growth became a balancing act between stagnation and slump. The new economy no
longer seemed like a world of limitless possibilities, becoming simply business, the
same as all the rest. The fabulous careers vanished into the past. For the people who
remained underneath, this meant not simply disappointment, but also feelings of
outrage, since they were not in any way inferior. In the language of sociology, this is
known as a reduction of vertical mobility. In the language of everyday life, it
represented the betrayal of hopes.
If the race of technologies that characterised the 1990s has not ended, it has
moved into a new phase. The market has become saturated, and as this has happened,
the internal bankruptcy of many companies has been revealed. During the period that
saw the rapid rise of the dot.coms, evaluating the efficiency and prospects of each
individual firm was effectively impossible. Early in the new decade, the moment of
truth arrived. The processes of concentration of capital were occurring in the new
economy, just as in industry. The wave of bankruptcies not only overturned the
notion of a new economic logic, but also showed that the people controlling the
game were the same as before. The only new firms that were flourishing were a few

that had transformed themselves into large transnational corporations. Those that had
operated according to the ideals of the California information revolution, including
the belief that small is beautiful, faced grim prospects. In a typical phenomenon
from the years 2001 and 2002, the names of dot.coms were bought up by old
commercial firms which had not prospered in the electronics business, but which had
retained their capital. Now they gathered in the electronic upstarts, turning them
into departments of their own organisations.
It cannot be said that a new economic logic was absent entirely from the
scene. It was simply that this logic contradicted the logic of money, with its demands
for the accumulation of capital. The realisation that this was the case aroused shock
and fury in the children of the California revolution. Their outrage was followed by
protest, ranging from smashed shop windows and downed telephone poles to hacker
attacks on corporate servers.
Nevertheless, the main inspiration for the violence came not from anarchists
(as all protesters have come to be called, irrespective of their political views). The
violence of individuals is nothing compared to the organised machine of violence
belonging to the state. State violence does not stand still either. It constantly develops,
trying to place new technologies at its service.

The Unsleeping Eye

In seventeenth-century Muscovy, all letters that arrived from abroad were read
unashamedly in the ambassadorial department, and the foreigners who described this
practice, far from being astonished, were full of admiration for the way the
Muscovites handled the matter. When the telephone appeared, so did the possibility of
tapping into conversations. With the appearance of e-mail, faxes and mobile phones,
there was additional work for Big Brother. But still, what possibilities! Gogols
postmaster so loved to read other peoples letters that he kept some especially
interesting ones as souvenirs. The electronic media allow modern postmasters to copy
interesting files automatically. The only problem is that society relates to such games
without due understanding. Numerous projects devised in various investigative and
police organisations in the US or in Russia are forever being revealed to the public. In
most cases, the officials deny everything. Strangely enough, however, the same

instrumentalities simultaneously seek the adoption of laws that would allow them,
quite openly, to read and listen to things not addressed to them.
State hacking is becoming normal practice, while the very same governments
declare that draconian measures are needed to banish hacking from society. Since 11
September 2001 the position of the government bureaus that intercept our e-mails,
read our faxes and listen to our conversations has been dramatically simplified. The
American legislation is being hurriedly adapted to the increasing demands of the
security services. These services, in turn, are demanding additional budget allocations
to allow them to carry out ever-greater tasks. Parkinsons famous law operates here in
the most direct fashion. The bureaucracy multiplies as if by cell division. There is no
reason to suppose that it is especially important to Big Brother that he should know
everything about you, down to the smallest details. It is simply that the new
technology assumes the erection of ever new structures, with their budgets, staffs, and
chiefs.
Meanwhile, the electronic surveillance systems, for all their sophistication,
defer in their effectiveness to everyday informers. The latter, unlike employees in
other areas, are not threatened by staff cuts associated with technical innovations.
Back in the Cold War years, American intelligence was famous for wasting millions
of dollars in an unsuccessful effort to find out, through electronic means, the calibre
of a new Soviet cannon. The despairing Americans turned to the British, who took a
simpler approach: they broke a lock during the night, measured the calibre with the
help of a ruler, and then in place of the broken lock installed a precise copy, at a cost
of $80. The approach of the French, however, was simpler still: their representative in
West Berlin phoned a Soviet colleague and asked the calibre of the weapon. The
Soviet official replied that the cannon was not secret, and invited the Frenchman to a
picnic, where he showed him the tank and plied him with vodka at great length.
During the Iraq war of 2003 high-tech weapons and electronic surveillance,
contrary to the US military propaganda, also failed to perform. Missiles missed targets
by hundreds of miles ending up in the neighbouring countries. Many of targets
reportedly hit happened to be primitive card-board models. Antiaircraft complexes
supplied with the most advanced fiend-or-foe identification systems successfully
destroyed friendly jets.
The effectiveness of electronic surveillance is not great, but when combined
with conventional methods, it yields the results demanded of it. This is particularly

true of the collection and exchange of data which we do not perhaps take special steps
to conceal, but are in no hurry to spread abroad. Numerous state and private
organisations use various methods to collect information about citizens. This activity
is controlled to one degree or another in countries that lay claim to being
democratic. At the same time, there are almost no controls on the exchange of
information that has already been collected. Under the Russian labour code that is
now in force, for example, an employer may collect information about workers only
with their consent. If a worker were stupid enough to give such consent, there is now
no law that would prevent the employer from sharing this interesting information with
his or her colleagues or with relevant state organs. Most likely, on a basis of mutual
advantage (this is a market economy, after all).
In general, Russia has one advantage over the West: we still behave with the
nave openness of savages, while Americans, and in particular the sophisticated
Europeans, prefer to yield themselves up to political voyeurism on the quiet. Despite
the end of the Cold War (and perhaps thanks to it), the technical re-equipping of
armies is proceeding at full pace. Meanwhile, a substantial share of their efforts goes
on acquiring equipment and weapons that can be used both for military and for police
purposes. The very appearance of the guardians of law and order has changed. During
the antiglobalism demonstrations in Prague, someone from among the demonstrators
noted that the column of police resembled two hundred Darth Vaders from Star Wars.
I later discovered that this George Lucas film had in fact influenced the designers of
police uniforms and weapons. Together with the uniforms, the psychology had
changed as well. Participants in British protests of the 1960s have said that the
bobbies, in their comic Victorian-era helmets, were rarely capable of anything
thuggish. When a policeman lost his headgear in a scuffle, everyone felt sorry for
him. The rows of faceless and malevolent robocops are a different matter. Their faces
cannot be seen. There are no moral problems.
The end of the Cold War turned into a crisis of democracy. Instead of
becoming a connecting link between the politicians and society, the television and
other mass media were transformed into a screen defending the former from the latter.
The miraculous opportunities for the manipulation of mass consciousness, however,
were not limitless. The internet and the small-volume press, pirate radio stations and
other alternative modes of distribution acted as the terrain for an informational
guerrilla war that was waged with growing success.

Imagine a demonstration of bankers protesting against the World Social

Forum in Porto Alegre, the American radical leader Kevin Danaher said ironically.
They simply cant do it. Its the same with the internet. Of course, they can open a
site for themselves, but on the net, their site wont have any advantages over ours.
Now it all just depends on us.
On the one hand, the political establishment is being rejected by a growing
sector of society, and this is happening not just to individual parties or politicians, but
to the whole establishment. A graphic example is provided by Argentina, where the
enraged middle class went into the streets, set fire to the parliament, and demanded
the resignation of all the politicians irrespective of what party they belonged to.
The same angry crowds we saw in England, Australia and California during anti-war
protests of Spring 2003.
On the other hand, the alternative movements at times take on a carnival character,
with these carnivals often arising on the net and then spilling onto the streets. Marx in
his time stated that revolution was the carnival of the oppressed. At the beginning of
the twenty-first century, carnival performance is becoming the first act of the
revolution (it is no accident that people in the West continue to read and quote from
the books of Mikhail Bakhtin, who in Russia has almost gone out of fashion). People
who run the world do their best to prove that they are serious and competent. On the
contrary, revolting society doesnt take their claims seriously any more. The bosses
are not only criticised and condemned, they are being mocked.
All the mass actions have a carnival note to them. This colourful mosaic is not
just a reflection of the moods that have arisen in the protesting milieu, but also a
continuation of the mode of communication that has emerged on the net.
To Bill Gates in the 1990s, the idea of a virtual plebiscite replacing or augmenting
representative democracy seemed wonderfully progressive. This idea has now been
totally rejected, if only for the reason that even in wealthy countries millions of
people not only lack access to the internet, but if the present-day situation endures,
never will have it. The spread of the net is becoming really universal in those places
where even without the net, people were used to taking part in resolving social
questions. Nevertheless internet activism, arising within the net but directed outside it,
is developing more and more.
In the early 1970s Herbert Marcuse wrote about new technologies which at
the same time served both as means of enslavement and control, and as weapons of

liberation. During the same years the German thinker was mocked at length by
another well-known philosopher, the Pole Leszek Kolakowski, who considered that
Marcuse had gone quite mad. What sort of new technologies were these,
Kolakowski asked, about which Marcuse plainly knew nothing except that they were
new. Meanwhile, the prophesy has been borne out. The expression new
technologies, about which each of us now knows a good deal from our own
experience, has entered into circulation independent of Marcuse. Philosophers, too,
sometimes turn out to be right.

The Postindustrial Revolution

For the epoch of new technologies, the current crisis is playing roughly the
same role as the depression of the 1930s played for the industrial system constructed
on the basis of the technologies of Henry Ford. Is it tragic, what is happening?
Possibly. But at the same time it is also natural, and in the philosophical sense,
inevitable. Ridding itself of illusions and surviving the crisis, the world of the new
technologies is maturing, and finding its authentic place in the world rather than its
imagined one. The most important thing is not the shutting down of one or another
company, nor even the loss of millions of dollars in fictitious capital. Far more
important are the processes starting to occur in the consciousness of the techno-elite.
The idea of their own absolute superiority over the backward masses is being
placed in doubt, along with their faith in the infallibility of the free market. The
techno-elite are starting to understand how insecure their own rights are, and the need
to defend these rights is appearing as well. If the owners of capital and the possessors
of technological knowledge once had little trouble finding a common language,
conflict is now breaking out between them. The first signs of this conflict were the
revolts of the anti-globalists in Seattle, Prague and Genoa, where the most
advanced youth of the post-industrial world expressed their categorical
disagreement with the way this world was organised. The most important
developments, however, still lie ahead. The technological elite, which possesses
knowledge, is starting to realise that although this knowledge multiplies capital, the
people who create it cannot control the investments; the financial markets obey their

own laws. Pride is being replaced by resentment and anger. Before our eyes, the
conditions are ripening for a new social conflict, which could turn out to be no less
dramatic than the class struggle of the twentieth century.
Will it perhaps be the offended techno-elite, not the industrial proletariat, that
finally becomes the grave-digger of capitalism?
Chapter Four. The Limits of the Model
By the mid-1990s the neoliberal reform had culminated in full-scale success.
Ideologically and in programmatic terms, it was sealed in the form of the
Washington consensus, shared by practically all the governments of the world and
by the overwhelming majority of serious economists. In the press and in academic
publications, the term the narrow corridor of possibilities began appearing. This
meant that whoever was in power, whatever they had promised during the elections,
and whatever ideas they were guided by, the economic policies of any government
were strictly defined by the framework, outlined in advance, of the neoliberal
corridor privatisation, deregulation, cuts to social spending, and the liberalisation
of foreign trade. The only allowable discussion was on the question of how quickly
progress should be made along the path sketched out earlier. The direction of
movement was no longer discussed. Except for a few pariah states, the whole world
accepted the new rules of the game. Not only bourgeois political parties, but also their
social democratic opponents acknowledged that there was not and could not be any
alternative. Unanimity triumphed not only among the politicians, but to a substantial
degree among the intellectuals as well. From being the impassioned prophets of a
looming tempest, the opponents of the system were transformed into something
between court jesters and village idiots.
Meanwhile, the tempest was indeed looming, and the less we were supposed
to talk about it, the more serious its signs became.

Antisystemic Threats
The triumph of neoliberalism in and of itself gave rise to new problems and
contradictions. Consumed by its exultation, the system was unwilling until a certain

point to acknowledge this. The new threats, however, were perfectly real, and by the
late 1990s were making their presence felt.
The first threat to the new order was the revolt of the marginals. The
ideologues and practitioners of the counter-reformation of course recognised that such
a development was possible and even inevitable, but they were quite incapable of
foreseeing that the revolt might take on really serious dimensions.
It was only the terrorist acts of 11 September 2001 in New York and
Washington that forced the entire world to start talking about the threat of a new
barbarism. Just as the scale of the problems had earlier been underestimated, after
the September tragedy they came to be exaggerated. Talk of a new threat and
extremism became an ideological fashion, a justification for state policy. It is
ironical that as a panacea the authors of the official reports and leading articles urged
a continuation of the same neoliberal course and a broadening of the middle classes.
The inability of the official ideologues to analyse the real causes of the
sickness, and to propose effective remedies, is not hard to explain: the system cannot
admit that it is itself the main source of the problem. To the degree that destitution
seizes hold of an ever greater mass of people, the social base for all forms of
extremism grows as well. Ideologically, the protest takes the shape of endless versions
of fundamentalism. Its adherents are not only followers of political islam, convinced
that with the help of the internet and of terrorist self-sacrifice they can return the
world to the ideal state in which it found itself somewhere between the seventh and
ninth centuries. The fundamentalists are all those who, protesting against the injustice
of the new order, seek intellectual, political and moral salvation in recollections of a
golden age, a pure islam, national greatness, or communist law and order.
This golden age has nothing in common with real history. It is nothing more than a
utopia projected back into the past. Initially, such movements struck the ideologues as
rather amusing. The glossy journals were delighted to publish snapshots of demented
old women marching through the streets of Moscow with portraits of Stalin, and
related horrifying stories of muslims trying to cover women in the chador. These
images were intended to strengthen the system by providing graphic evidence of the
futility of protest. Reasonable and progressive people, even if they still had doubts,
were nevertheless supposed to recognise the advantages of liberal Western
civilisation.

The ideologies of fundamentalism, however, are becoming dangerous. The

more remote they are from reality, the greater is their mobilising power. Movements
based on such ideas will never create a new society. Moreover, they will never be
victorious if by victory we understand not the seizure of government buildings, but
the realisation in life of some consistent social project. It is precisely for this reason
that the ruling elites of the West, despite the furious anti-Western rhetoric of such
movements in the islamic world, long regarded them as a lesser evil compared to
the left and the traditional national liberation movements. Accounts of the way
Western intelligence during the Cold War put money into radical islamic
organisations (from the Islamic Brotherhood and Hamas to Osama bin Laden) have
been published repeatedly, and have attracted few denials. What the Western
strategists underestimated was the destructive potential of such movements. Certainly,
they were incapable of building a new world, but they were capable of destroying the
old one, or at least, of making its existence dramatically more complicated. Worse
still, the triumphant procession of neoliberalism and Americanisation, accompanied
by the cultural and material impoverishment of most of the population of the
periphery, have created unprecedented opportunities for the growth of a new
fundamentalism. The problem with fundamentalist protest lies in the fact that within
itself it combines both democratic and totalitarian principles, progressive and
reactionary ideas, hope for social justice and blind submission to a chosen elite, the
dream of freedom and a preparedness for the most hopeless bondage.
Such protest has accompanied capitalism throughout its history. Marx devised
a multitude of scornful terms to describe it from barracks communism to feudal
socialism. Throughout most of the twentieth century, however, the workers
movement was strong enough to take its place at the center of any protest. The
fundamentalist hostility to capitalism, falling into orbit around the powerful political
gravity of the left, effectively split apart and disintegrated into its component parts.
Some of its adherents assimilated the ideas of the left, and rethought their protest in
the spirit of progressive ideology, while others became supporters of open reaction,
for whom the struggle against the left was the most important task of all.
It was only in the 1920s that the frightened petty bourgeoisie managed to
consolidate itself around a fundamentalist program. This program, meanwhile, was
consistently hostile to the left movement. The result was the victory of fascism in
Italy and Germany.

After the collapse of fascism, left parties throughout the world became even
more attractive. The neoliberal counterreformation, however, changed the rules of the
game. The left went into decline, the workers movement suffered one defeat after
another, and any ideas connected with socialist transformations were compromised. In
sum, fundamentalist protest again became an attractive alternative, especially since
this protest could now manifest itself in a multitude of different forms, from bands of
skinheads in Western Europe to wahhabi islam in Central Asia. The social and
ideological mix of these movements was just as diverse. They contained the whole
political spectrum, from openly reactionary, fascist, pogrom-style groups, to
nostalgically communist ones, employing left rhetoric, and at times open to dialogue
with the democratic forces.
Fortunately, the revolt of the marginals, taking on the form of
fundamentalist protest, was not the only type of resistance. By the late 1990s the
notorious spectre of communism was materialising once again. Moreover, this was
occurring mainly on the periphery.
Over three decades, the Western corporations had systematically shifted their
industrial production further and further to the South, moving it away from the vital
centres of the system. The result was a multi-million-strong working class in the
newly industrialising countries. In South-East Asia, Brazil and South Africa there
arose a proletariat that corresponded fully to the Marxist theory of the nineteenth
century. Like any young class, it gradually became conscious of its potentialities,
organising itself and putting forward ever more radical demands. The trade unions in
South Korea or South Africa are young, and resemble the European workers
organisations of the early twentieth century. This does not mean that they are
invariably revolutionary. For them, however, reformism is impossible without day-today struggle, solidarity and self-organisation. The class struggle remains an everyday
experience, through which the socialisation of working people takes place.
Compared to Western Europe, this is a matter of repeating the past. But if you
can enter the same river twice, it is not quite the same river. It took several
generations for the European bourgeoisie, at the cost of social concessions and
compromises, to tame the labour movement. Now on the horizon there has appeared
a new mass of many millions of workers who simply have no choice except to wage a
determined struggle for their rights. Worse still, the system this time has neither the
resources nor the strategy to ensure an analogous taming. Throughout the twentieth

century Western capital used the exploitation of backward countries to solve social
problems in the advanced ones. But what is to be done when the same problems
have arisen on the periphery?
The strategy of the parallel industrialisation of the Third World and
deindustrialisation of the West was supposed to reduce the costs of taming the
traditional proletariat. Returning to the policies of social compromise in the new
conditions has required an increase in spending, on a scale inconceivable earlier. In
addition the Western workers, whom the self-satisfied ruling elites were now almost
ready to forget, have again been making their presence felt. There is a saying that
conquered armies learn well. The defeats of the 1980s and 1990s have created a
situation in which the labour movement of the West has started to feel an acute need
for new ideas and new organisational forms. It has had to become radicalised, or else
to degenerate once and for all. The ossified trade union bureaucracy has tried to live
by the old rules, as if the defeats of the previous twenty years had never happened.
But the workers have demanded changes.
The neoliberal project has undermined the conditions for its own
implementation. The bloated trade union bureaucracy of the consumer society has
been easy to defeat. At the same time, the failures of the labour movement over many
years have undermined the social base of the traditional trade union and political
leadership, creating a need for new leaders. The only obstacle to this was the
demoralisation of the workers. Experience had showed them that nothing could be
done anyway, that any struggle ended in a humiliating defeat. But a few victories
were enough for mass consciousness to start to change. In France, the strike by civil
servants in December 1995 had been such a turning-point. In Italy, the general strike
against the government of Silvio Berlusconi in the spring of 2002 had been another
such earthquake. It was then that Fausto Bertinotti declared that the loneliness of the
worker had retreated into the past. In Russia, where workers had experienced
humiliation and depression throughout the 1990s, the first symptom of change was the
rail war of the summer of 1998, when miners unexpectedly discovered that it was
perfectly possible to obtain the wage debt owed to them, if they blocked transport
routes. Workers revolution thus remains a genuine possibility, if not in the countries
of the centre, then at least in those of the periphery. In this regard, the Russian
experience of 1917 retains its significance. After all, the Bolshevik revolution did not
take place in Britain or Germany, as the founders of Marxism had expected, but on

the periphery of the system. This, however, did not prevent it from shaking the
world.
Now finally a serious threat has arisen where it was least of all expected. On
the political horizon looms the global revolt of the middle classes.
The efforts of the elites over many years to found a new middle class have
borne fruit. Even in the most backward countries, this category of people are now
present in massive numbers. But the larger the middle class becomes, the greater the
difficulties of satisfying it, and the more resources go on maintaining its lifestyle. The
ideological and social inertia of the system is such that the numbers of the middle
class have everywhere, and long since, exceeded the economic needs and capabilities
of capitalist society. On the other hand, the promises of neoliberalism have not been
fulfilled. The new middle class was promised not simply consumption, like its
precursors of the 1960s, but also a fuller, more interesting life, and limitless
opportunities for growth. Meanwhile, another prospect has appeared on the horizon:
the inevitable stagnation of the system, a stagnation exacerbated by the exhaustion of
the potential of the current stage of the technological revolution.
In many ways, the position of the new middle class of the early twenty-first
century replicates what happened to the intellectuals of the 1960s. After the Second
World War, Fordian production and the consumer society created the conditions for
transforming the intellectuals into a mass stratum. Millions of people began receiving
higher education. Against a background of universal literacy and of the rapidly
growing university system, the need for experts even in ancient Roman history and
classical German philosophy, not to speak of specialities closer to everyday life, took
on massive dimensions.
Nevertheless, it was also clear by the 1960s that however much the education
system expanded, there were objective limits to this growth. As the growth ended, it
became clear that the chances of personal success for educated young people were
also diminishing. The best jobs were already taken, and new ones were not being
created. Meanwhile, the system displayed an extraordinary inertia, continuing to
educate more and more people whose prospects were increasingly less enchanting.
The impossibility of enjoying a successful career is not in itself a tragedy;
people may find meaning in their lives through the pursuit of quite different values (of
the kind proclaimed, for example, by the hippy movement and other subcultures of
the 1960s). The problem, however, is that the system demands that people orient

themselves to a career and to personal success, while at the same time blocking or
restricting the path to it. It is precisely this contradiction that gives rise to protest.
One outcome was the enormous student revolt of 1968, with the intellectuals
in revolt, barricades in the streets of Paris, and the emergence of a whole generation
of young people for whom left radical ideas became a natural response to the selfevident injustice of the world.
Memories of the 1960s
At times, the first years of the twenty-first century have seemed like a re-run
of the 1960s. Mass protest movements based on young people have burst onto the
political scene. Adding to the anti-capitalist slogans have been others aimed against
war (in the 1960s they targeted the war in Vietnam, while in the early twenty-first
century they have addressed the aggression against Afghanistan and Iraq). Even the
images of Che Guevara on T-shirts, and the words chanted at demonstrations, take us
back to the Revolution of 1968. The decade of the 1960s has become a kind of cultobject; even before the period ended, it had begun to be entwined with legends.
It was in the 1960s that the world finally overcame the nightmare of war. For
the preceding several decades, people had been preparing for war, waging war,
rebuilding what war had destroyed, and terrifying one another with the threat of a new
war. People had been shut up in concentration camps, had shut up enemies of the
people, had fought against fascism, and had exposed the cult of the personality.
Then, suddenly, it was discovered that all this lay in the past. A new world was
emerging, in which people could simply enjoy life, love one another, listen to music,
and look around without a sense of fear. Everything suggested that an era of narrowminded well-being was about to ensue. But things turned out differently. Having
glimpsed the opportunities that had opened up for a new, happy life, millions of
people promptly discovered how incomplete these possibilities were, and how
ephemeral the happiness. They proceeded to rebel against everything that lay along
the road to happiness.
The 1960s began as the era of mass consumption, and ended beneath the
banner of social criticism. The symbols of the opening years of the decade were
meant to be the cheap car, the washing machine, the refrigerator and the television set.
In the event, the 1960s went down in history as a time of barricades, of rock music, of

anti-war protests by the New Left, and of heated discussions about the philosophy
of Marxism.
That, of course, was in the West. The Soviet Union had its own 1960s, that
included the final, most dramatic moments of the Khrushchev thaw; daring texts in
the journal Novy Mir; the first samizdat manuscripts; and the birth of the dissident
movement. In Russia the shestidesyatniki, the people of the sixties, became cult
figures just like the new leftists in the West. And indeed, the ideological
declarations of our shestidesyatniki bear a striking resemblance to the ideas of the
New Left. Both called for socialism with a human face, appealing to the Marxist
tradition and setting out to reveal its original humanist meaning. Both rejected
Stalinism, with its cult of organisation; criticised bureaucracy; and sought to prove the
value of individual self-expression. If, for example, one compares the Soviet
philosopher Evald Ilyenkov with the American sociologist Erich Fromm, one is struck
by the similar formulations, by the parallel course of the two authors thinking.
Does this mean that the Soviet shestidesyatniki were a sort of analogue of the
New Left? If this was the case, why did our shestidesyatniki themselves not sense this
affinity, and note the resemblance? Somehow, the events in Paris and West Berlin
remained alien and incomprehensible to them. This seems even more strange in light
of the keen interest in everything Western that captivated Soviet society as the iron
curtain opened slightly. People read books, watched films, and listened to records.
The works of Jean-Paul Sartre were passed from one person to another, but somehow,
Sartres political ideas did not penetrate to the readers. Meanwhile, second-rank
Western figures, youth leaders with cult status such as Daniel Cohn-Bendit or Rudi
Dutschke, rarely attracted any special interest in the East.
What was the reason for this? Misunderstanding? A case of like not
recognising like? Or did this non-recognition have its own logic, an underlying
meaning that was hidden beneath the surface layer of cultural models and ideological
manifestos? Unfortunately, this was precisely the case. At its deepest psychological
level, the Soviet movement of the shestidesyatniki represented something directly
contrary to the movement of the 1960s in the West.
In the West, the criticism of the system posed a clear objective: the overthrow
of the established order. The critics rejected the system, and refused to live according
to its rules. They dreamed of revolution. By contrast, the Soviet shestidesyatniki in no
way considered themselves enemies of the system. Furthermore, they had no intention

of overthrowing anything. While they might sing nostalgic songs about :commissars
in dusty helmets, revolution was something romantic to them precisely because it
belonged to an irretrievable past. It could have nothing in common with the future.
The members of the Soviet intelligentsia constantly condemned the leadership.
But the main listener was supposed to be the leadership itself. In appealing to the
authorities, the members of the intelligentsia were calling on the regime to look at
itself and to be ashamed. They were not offering themselves as an alternative. They
were trying to assert their right to give advice, and to establish moral reference-points
for the existing order and the current leaders.
The movement of the New Left was massive, not only in the number of its
participants, but also because these participants all represented autonomous forces
within the movement, or at least, believed they did. The Soviet movement of the
shestidesyatniki had a broad social base in the form of the mass intelligentsia that read
Novy Mir and copied out the songs of Bulat Okudzhava and Aleksandr Galich. In its
essence, however, the movement was profoundly elitist. Those with the finest
minds spoke, and everyone else listened. The struggle for freedom of speech did not
presuppose dialogue or open discussion. The advanced thinkers were supposed to
receive the platform they deserved.
The movement in the West was a movement of youth, though this did not by
any means signify that it consisted solely of young people. Most of the important
gurus of the 1960s, people like Sartre, Marcuse and Fromm, were far from young.
They had unquestionable moral and intellectual authority, but their youthful audience
did not treat them as godheads. In order to teach the new generation, the gurus had
to interact with it, and answer its questions. They could teach, but they could not
impose dogmas. It was young people who defined the style, the spirit and the dynamic
of the movement. There were a good many young people among the shestidesyatniki
as well, but the style of the movement was anything but youthful. The typical figure
in the movement was a man of about thirty, who had graduated from university not
long after the war. The main moral authorities were people who had served in the
conflict, and whose experience of the front lent them weight. Looking at these older
people, their younger co-thinkers imbibed their manner of thinking and style of
behaviour. The Soviet shestidesyatniki were men in suits, with neat haircuts, and for
whom the height of dissidence was a carelessly done-up tie and a cheap cigarette
hanging from the corner of ones mouth. Jeans and mini-skirts appeared in the Soviet

Union only in the 1970s, when they became the fashion of the next generation, which
had assimilated the style and musical tastes, but not the ideology, of the Western
radicals. This was now a generation of cynics, who had torn themselves loose from
the thinking of the shestidesyatniki no less completely than from the official ideology
of the Communist Party.
The movement of the New Left in the West culminated in 1968 on the
barricades of Paris, and continued during the hot autumn of 1969 in Italy. In West
Berlin the movement dissolved into the everyday culture of run-down urban districts
that had been taken over by squatters. In the early 1970s the participants in the New
Left still believed in the imminence of revolution, and tried to detect its signals, now
coming not from the main European capitals, but from the periphery and semiperiphery, from Portugal, Angola and Chile. In 1972 the cult books of Andre Gorz
and Herbert Marcuse were still appearing. A year later, the military coup in Chile
snuffed out the hopes of revolution in Latin America. Then the hopes tied up with the
Portuguese revolution collapsed just as completely.
The epoch of Sturm und Drang was drawing to a close. What Rudi Dutschke
described as the long road through the institutions was opening up. Nothing now
remained for the New Left except to join the old left parties, in order to change
them from within. Yesterdays revolutionaries became parliamentary deputies,
professors and civil servants.
The Soviet shestidesyatniki intended from the very beginning to change the
party from within, especially since the great majority of them belonged to the party
in any case. Their political project, however, collapsed in the space of a day when
Soviet tanks rolled into reformist Czechoslovakia. By the evening of the following
day most of the adherents of socialism with a human face were firmly convinced
that Marxist humanism was nonsense, and democratic socialism an absurd utopia.
From a theoretical point of view, this turnabout might of course seem strange.
After all, when a state attempts to crush an idea by force of arms, that testifies
precisely to the ideas strength. When Brezhnev and the other Soviet leaders resorted
to tanks in order to set ideology right, they merely demonstrated their lack of any
better arguments. It was for this reason that the events of August 1968, though a
tragedy for leftists throughout the world, did not precipitate a collapse. The 1970s saw
a new upsurge by the left in Western countries. It is true that the dream of revolution

was replaced by the hope of reform. This was the time of Eurocommunism in Italy
and Spain, of big strikes in Britain, and of the Union of Left Forces in France.
What collapsed was not socialist ideas, but the illusions of the Soviet
shestidesyatniki, who had believed in humanist reforms supported by a leadership that
had responded to the appeals to its conscience. Strangely enough, the defeat suffered
by the ideology of the shestidesyatniki did not signify ruin for the careers of the
people involved. Quite the reverse; it was after their own ideas had undergone a
definitive collapse that the members of this generation achieved their greatest success
and fame. However, they were doomed to lose their integrity. The supporters of
reforming the system split into two groups. Some became conformists in greater or
lesser degree. From inertia, they continued rising up the career ladder, pursuing the
same long road through the institutions, only without any political project, with no
pronounced ideology, simply taking things as they came, out of inertia and for their
own benefit. At the same time, they in no way renounced their past, and still less their
earlier connections, remaining a more or less united group. It was this comradely
unity, in the complete absence of a common project, that distinguished them from the
ideologues and functionaries of earlier times. Not long before, they had revolted
against the system, while simultaneously declaring that they shared its basic
principles. Now they had ceased to revolt, and had begun successfully moving upward
in their jobs, contemptuously thrusting those very principles aside.
Others, bolder and sometimes simply more nave, became dissidents.
They broke with the system they had once dreamed of reforming. But they lost their
positive program all the same. For the ideology of social transformation, they
substituted the principles of human rights, which at least provided them with moral
support in their conflict with the state. It should be pointed out that Western leftists
hoped constantly to see their own likenesses in the dissident movement. They
stubbornly imagined that the dissidents in Eastern Europe must be like the fighters for
democracy who, in their hundreds of thousands, were being thrown into prisons in
Asia and Latin America. There had to be some common values! Moreover, there were
abiding memories of the shestidesyatnik past. After all, the shestidesyatniki had
entered into conflict with the system in the name of socialist humanism, and had
spoken out in support of the communist reformers in Czechoslovakia in 1968.
Western leftists reasoned that if the dissidents were not co-thinkers of the New Left,
they could at least be partners in dialogue.

This was quite wrong. The dissident movement either failed to notice the hand
the Western left was extending, or indignantly pushed it aside. Nature dislikes a
vacuum, and the ideologically neutral human rights principles were gradually forced
out by the ideas of the new right. The Moscow and Leningrad intelligentsia,
including both its dissident and conformist wings, became permeated with sympathy
for Margaret Thatcher, Ronald Reagan, and above all, for General Pinochet. The
admiration expressed by Soviet democrats for Pinochet is so well-known and
striking a fact that it is scarcely necessary to spell it out here. In any case, no-one even
tried to conceal these sympathies. When the dam-wall of censorship was finally
breached in the late 1980s, a stream of monstrous declarations gushed forth, both
horrifying and shameful at once. If one were to assemble all the texts in which pillars
of the democratic movement in the former USSR expressed their love for the Chilean
general, the result would not just be a single weighty tome, but a whole encyclopedia,
containing almost all the well-known names from the capital-city intelligentsia, the
names of people distinguished by party and government awards or, on the other hand,
by long stretches in prison.
How could this have happened, that in Russia people who honestly considered
themselves democrats could have been enraptured with a leader who to the rest of the
world was a symbol of merciless dictatorship? In the first place this was because
democracy and civilization, so far as the intelligentsia were concerned, were identical
to anticommunism. This formula had been enunciated by none other than Aleksandr
Zinovyev, now proudly publishing his writings in the communist press. Accordingly,
the more people with communist views who were shut up in camps, exiled or killed,
the more complete the triumph of democracy. Meanwhile, anyone who defended
communists, and did not understand the need for reprisals against them, also needed
to be done away with, in the name of the triumph of freedom.
It is not surprising that Noam Chomsky described Russian intellectuals as
monsters. However, they were not monsters; they were simply apolitical people
selflessly involving themselves in politics. Here lies the second part of the problem,
since many of the people who were speaking and thinking in this fashion remained in
the Communist Party until the very last moment. Often, they had made careers for
themselves in the party, and even as its end approached, took up leading posts within
it. Nor were these people double-dealers or hypocrites. They simply did not believe in
the power of ideas. For some reason, people who were motivated by ideas became

more repellent and hateful to the intellectuals, the higher the positions which the
intellectuals themselves occupied in the official herarchy, political and cultural.
The trouble was that the shestidesyatniki were not democrats in the strict sense
of the word. The rejection of Stalinism with which their political road began was not
yet equal to consistent democratism. For them, democracy was above all the
attainment of power by their own people. Then their moment of triumph arrived.
Perestroika had need of the shestidesyatniki. In the mid-1980s the Soviet leadership
unexpectedly did just what the young intellectuals of twenty years earlier had dreamt
of. Gazing into the crooked, self-made mirror of glasnost, the authorities took fright at
their own ugliness, and called urgently on the help of the democratic intelligentsia.
The inevitable had occurred! The shestidesyatniki had finally been called to power. It
is true that by this time, some of them had already made their way into power by their
own devices.
The dissidents were urgently brought back from exile, from the camps, and
even from abroad. For the most part, they were assigned a decorative role; ultimately,
those who had triumphed were not the dissidents, but the conformists. The long road
through the institutions had ended in total victory. Since the shestidesyatniki had
begun by affirming the validity of the underlying principles of the system, it was
logical that having now attained the pinnacle of power within it, they should reform
the system in line with its original postulates. Twenty-year-old ideas and slogans were
pulled out of various archives. They were employed, however, only very briefly, since
by this time not even the people who had espoused these slogans believed in them any
longer. Moreover, the leadership which had called on the intellectuals for help was by
no means as nave as might at first have appeared. The secretaries of the party
provincial committees were feeling restricted in their grey suits, dreary offices and
ungainly Volga sedans. They wanted to become part of the world ruling class, and the
old Soviet ideology was simply an impediment to this.
Many years ago, Trotsky likened the Soviet system to the cocoon with which a
capitalist caterpillar was covered in order for it to turn into a socialist butterfly. At the
same time, he expressed alarm that the pupa might die without its transformation into
a butterfly being completed. In the 1980s, the cocoon was finally cast off. What flew
out of it, however, was not a butterfly but a monster, and moreover, a completely
capitalist one. The shestidesyatniki had been called upon not to cleanse and rejuvenate
the original Soviet ideology, but to definitively destroy it. It is true that in this

process of destruction the party nomenklatura did not always get what it sought (or
more precisely, the things that were sought did not always finish up in the hands of
those who were meant to get them). On the whole, however, everything passed off
successfully, and the shestidesyatniki shared the renown of victors with the corrupt
officials. The people who had promised to renovate the system unhesitatingly
acknowledged the contribution they had made to destroying it.
At this very time, ironically enough, the long road of the Western
intellectuals was nearing its end. They too had won positions in governments, in
parliaments, and in international organisations of all conceivable types. The
institutions, however, had proven more durable than the young radicals had imagined.
The system had managed to digest the former rebels. They had become the fresh
blood that was so vital if the system was to be strengthened.
Significant numbers of the protesters turned their revolt into a tool for
pursuing their personal careers, with its help achieving positions as thoroughly
respectable professors or politicians. It is no accident that by the late 1990s people
from the generation of radical students were occupying eminent positions in the social
democratic governments of France and Germany, while numerous university chairs
were occupied by former rebels who had chosen an academic career. Meanwhile, their
radical moods were replaced by bourgeois sobriety in direct proportion to their
advancement up the career ladder.
This happened, of course, against a background of general defeat for the left
and of the onset of the counter-reformation. The rational choice for yesterdays rebels
was reduced to the formula: if there is no possibility in any case of solving the
problem for everyone, you have to look after yourself.

The New Insurgents

Naturally, by no means all the leaders of the New Left turned into mindless
bureaucrats. Many remained loyal to the ideals of their youth. This was even more
true of the ordinary participants in the movement. These were the people who in the
years from 1999 to 2002 passed on the baton to the generation of Seattle. It was
these veterans of the earlier movement who spoke of the romantic past, raised the
necessary slogans, and warned of errors. Strangely, however, the people who retained

their firmness and consistency remained outside the field of vision of the mass media.
To the press, these people were uninteresting failures who had been unwilling (or
unable?) to convert their prominence as revolutionaries into bourgeois success. Those
who finished up in the spotlight were of course other, successful cultural and
political figures, who provided models of reconciliation with reality. The failures
were not even in the picture. Success, after all, is the only thing to which the
bourgeois consciousness is able to relate. The successful representatives of the
shestidesyatniki became bankers, while the prosperous Western revolutionaries turned
themselves into ministers, without showing an inclination even for moderate reforms
within the framework of the system.
As it turned out, the achievements of the Soviet shestidesyatniki and of the
New Lefts in the West were the complete opposite of what these people had
promised. The principles of hierarchy, subjugation and privilege had triumphed. A
utopia of social injustice had been brought to the fullest possible fruition, not without
help from people who had promised to fight for the ideal of a just world.
Does this mean that the revolts of the 1960s were pointless? Not in the least.
The fate of ideas is richer and more interesting than the fate of the generations that
give birth to them. The books of the decade of revolt have come back into fashion
at the very time when the young rebels themselves have turned into ageing
bureaucrats and demoralised bribe-takers. The new generation of radical young
people have taken to the streets with familiar slogans. Does this mean that everything
will follow the same course? Not at all. The present movement is far more massive
and powerful than the one that emerged in the 1960s. The social roots of the new
movement are incomparably deeper, just as the problems the system itself is
encountering are far greater.
The new radical movement is different from the New Left simply by virtue of
the fact that its activists and leaders are familiar with the experience of the past.
However much the 1960s might be romanticised, and however important the cultural
impulse they imparted to the left movement, there is no returning to that period. The
main weakness of the 1960s lay in the absence of organised movements. Spontaneous
actions and mass protests could not take the place of proper political structures.
Suffering defeat in their first attack, the intellectuals and movement leaders set off
alone on their long road through the institutions. It is not surprising that despite

their best intentions, they had no prospect of changing anything. Apart from
themselves, of course.
The new movement has the chance to turn into something more than a
spectacular but brief outburst of youthful political energy. It is nearing the point
where it will have to create its own alternative institutions, of which the Social
Forums are only one of many possible forms. The movement is compelled to critically
examine not only the reasons for the bureaucratic degeneration of the traditional
left, but also the unsuccessful experience of the New Left. In one way or another,
however, the New Left passed on a political heritage to the radicals of the next
generation. The struggle that was begun but not completed in 1968 is having to be
continued by other people, under different conditions and in a different fashion. The
political heritage of the Soviet shestidesyatniki, meanwhile, has been so insignificant
that that for the present generation of activists in Eastern Europe this movement is no
more than a historical curiosity, an ironic episode from the past. Todays activists in
Eastern Europe draw inspiration from the 1960s, but from the Western European
movement of the period, not from anything in the Soviet Union. For the
shestidesyatniki, this represents the ultimate moral catastrophe..
When the revolutionary wave of the 1960s subsided, it seemed to many people
that radicalism had vanished from the scene once and for all. The reconciliation with
reality of many former leaders of the youth revolt supposedly bore witness to the
ability of the system to overcome any show of discontent, to tame any rebels. The
revolt of the 1960s, however, was far from being the last. Many radical leaders
achieved personal success by renouncing the ideals of the movement. But does this
mean that the movement was definitively suppressed? No. The movement of the
1960s was merely a first draft, crude and unsuccessful. Each new attempt at liberation
will be more serious and successful. It is only at first glance that the situation of the
1960s seems to be reappearing in the early twenty-first century. In fact, the scale of
the conflict is quite different this time, and the movement incomparably more
powerful.
The position of the middle class is insecure. This is the result not just of
limited opportunities for career advancement, but also of growing material
difficulties. Up to a certain point these difficulties can be coped with, but as time goes
on it is becoming increasingly obvious that the future is not bright.

The position of the middle class is now being undermined by the erosion of
the welfare state. After the Second World War, sweeping social programs transformed
the relatively narrow middle layers into a mass middle class. The new middle
class, in turn, gave its support to neoliberal reform, hoping to free itself from the
bureaucratic tutelage of the state. Technological changes and expanding markets
created the illusion that if people played by the new and far more captivating rules,
their accustomed level of consumption and social status could be maintained. The
collective egoism of the middle class demanded a reduction of the tax burden.
In fact, the expansion of the market was based on preparatory work carried out
during the epoch of state intervention. The neoliberal model, with its cult of
consumption, devoured public resources and used them to satisfy private interests.
The bacchanalia of bandit privatisation in the former Soviet Union was only an
extreme example of a worldwide process. What society had created became the
property of a select minority. The number of these chosen ones, however, was not so
small, and there were even more people who hoped to penetrate the circle of the elect.
Or, who found that small pieces had fallen their way as the big pie was divided.
By consuming the reserves accumulated during the 1960s and 1970s, society
was able to move forward. What was involved here was not only material things
(infrastructure created at state expense, the equipment of privatised factories, and
mineral deposits located at the cost of the government), but also ideas, technologies
and theories generated through collective effort over the preceding decades.
When the reserves ran out, society encountered a crisis. It was precisely at this
point that the middle class discovered just how insecure its position was. Meanwhile,
the middle class itself started becoming increasingly stratified both in terms of its
level of prosperity, and of its lifestyle.
When the working class sinks downward, the middle class stops rising. The
threat of increasing poverty appears, even for people who are relatively well off. The
poverty is accompanied by growing crime, epidemics, and spreading filth. The middle
class is still able to defend itself from all this, but from now on, simply maintaining its
habitual way of life requires special efforts. This is especially noticeable on the
periphery of the capitalist world-system. The more acute the problem of poverty,
the stronger its impact on the way of life of the comfortably-off section of society.
The wealthier groups start hiding from the outside world behind the walls of guarded
residential complexes, sending their children off to semi-privileged educational

institutions, and moving about the streets exclusively by car. Life starts to lose its
flavour. This is the comfort of the inhabitants of a besieged fortress. The less
prosperous section of the middle class is doomed to come into day-by-day contact
with the unpleasant reality of mass poverty, thinking with horror of what will happen
if it should happen to sink downward any further.

Returning to the soil

A great many banalities have been written about the globalisation that has
changed the world. The tales that fill popular articles and books, tales of the way
space is shrinking, of how events occurring in different parts of the world influence
one another, are in fact completely unoriginal. Participants in the crusades were
already writing something similar, then Dutch merchants of the sixteenth and
seventeenth centuries, and still later, British journalistic commentators in the
Victorian era. Of course, modern information technologies have accelerated all global
processes. For society, however, the most important thing is not how fast a process
goes ahead, but its direction and results.
Modern globalisation has indeed changed the world, but this has not happened
in the way a superficial glance might suggest. On the periphery, the national
bourgeoisie has disappeared or grown weaker. The local elites are becoming more and
more closely tied to the global elites, or more precisely, to the Western ones.
Unlike the national bourgeoisie of the two previous centuries, the transnational
elites are not about to enter into conflict with the imperial ruling classes, to fight for
independence or to defend their cultural distinctiveness. Meanwhile, anyone who for
one reason or another is outside the boundaries of the transnational elites feels for
them a constantly growing envy and hostility. These new elites are marginal in
relation to the society in which they live. They are, in a sense, privileged global bums
who view any society in which they happen to be living as a sort of garbage heap that
provides them with almost free resources, a chance external environment without
inherent value. It is not surprising that the conflict, characteristic of Russian history,
between Westernisers and children of the soil should be spreading throughout the
world with the speed of a forest fire. The children of the soil, meanwhile, can do
little to resist their opponents. However much they might talk of great national

traditions, their call for people to turn their backs to the world does not win the
approval of the masses. After all, the problem faced by the hungry masses is not that
the world of global civilisation is bad for them, but that they are refused admittance to
it. There is simply nowhere for them in that world; the prosperity of some is built on
the cheap labour of others. Cultural values are not the main thing here; the problem is
wages. And also the fact that the rapid development of global markets holds back (and
often even prevents) the development of local markets. It is all a matter of simple
arithmetic. The exporters need the wages within their own countries to be as low as
possible. By contrast, the people who are oriented to the internal market need a rise in
wages, and along with them, in the consumer demand of the bulk of the population.
Meanwhile, society is not divided solely into the elite and the masses. There is
also the middle class, which politicians and journalists have thoughtlessly proclaimed
a bulwark of stability. The majority of revolutionaries, and virtually all well-known
terrorists, have come from the middle class. This is no accident. Whatever the
supporters of bourgeois values might think, human beings are not primitive creatures
whose lives can be reduced to the consuming of material goods. They are much more
complex. Lets look at Russia. For the first time since the First World War, and
against a background of the impoverishment of the general population, Russia has
acquired a whole layer of people who have access to the joys of Western life. The
roads are full of expensive cars, the suburbs of Moscow and St Petersburg are adorned
with new country houses, and in the boutiques elegantly dressed ladies choose
fashions for themselves, while consulting with friends over mobile phones. Exactly
the same occurred during the 1990s in India, where a real consumer boom was to be
observed against a background of hunger. While the middle class was experiencing
the taste of luxury, consumption of foodstuffs in the country declined for the first time
since the colonial era.
Having become a transnational community, the middle class has started to
develop a corresponding way of life. Work may be sought not just in the homeland,
but also abroad. Unlike the illegal immigrants from Russia and Mexico who make
their way to Western Europe and the US in order to occupy the lowest rung on the
social ladder, the young professionals fit easily into local life. They enter on legal
visas, and are offered good contracts. It is becoming quite normal for a middle-class
family in India to have relatives in America or Britain. The same, though on a lesser

scale, can be observed in Russia and Poland. Meanwhile, business trips abroad are
becoming part of everyday life.
By all these criteria, it would seem that the members of the new middle class
are among the privileged, the winners. There is, however, a substantial difference: the
middle class does not hold power. It does not even have control over its own work, its
own future. For its representatives, the instability of the world economy turns into
personal dramas. Prosperous managers in Uruguay can finish up on the street because
of a stock market crash in New York. Thousands of people in Russia lost their jobs as
a result of the Asian crisis of 1997-98, which in turn made inevitable the Russian
default a few months later. This was followed by setbacks in Latin America. Russians
were dumbfounded; why should they be going broke because of the collapse in
Thailand of the local currency, the baht, whose very name had been unknown to
people in Moscow only a few weeks earlier? Brazilians in turn might have had trouble
understanding why their savings had been devalued because of the crash of the
Russian ruble.
The well-being of the middle class is vulnerable and insecure, and this
insecurity increases as globalised capitalism develops. The more time passes, the
more obvious become the problems and contradictions of the neoliberal system that
has triumphed across the planet. The more acute the crisis, the further the paths of the
elites and of the middle layers diverge. In order for the elites to be able to hold onto
their position, they have to sacrifice something. Nothing can any longer be taken from
the impoverished masses. It becomes necessary to sacrifice the prosperity of the
middle class, or at least, of a certain section of it. It is always more agreeable to throw
overboard a neighbour from a lower deck than to fling oneself into the abyss.
The Indian economist Jayati Ghosh once noted that the middle class lives in a
global world during boom times, but that a crisis returns it to its native soil. For
many Russians in this stratum, the collapse of the ruble in 1998 meant the end of their
accustomed way of life. Elegant dresses that no-one could buy hung absurdly in the
empty boutiques. Expensive cars on the streets were ghosts of their former selves
the people behind the wheel no longer had the money to buy petrol. The owners of
stylish foreign vehicles started making extra money by using them as taxis. After the
Argentinian collapse, the middle class came out into the streets of Buenos Aires,
banging empty pots and smashing everything round about. Unlike the transnational
bourgeoisie, the middle class, even in the epoch of globalisation, cannot tear itself up

completely from its roots. It simply does not have the money to do this. Its members
can shift more or less freely about the world in search of work, but they cannot move
their property as freely. The paradox is that the more they achieve, the more they are
tied to a single spot. People who have nothing except knowledge are light on their
feet. But a house they have built and a tree they have planted, a job they have won
with difficulty, and simply the relations they have built up over years with colleagues
and neighbours all have the effect of anchoring them to the soil. Ultimately, for all
the standardisation, the way of life of the middle class is by no means uniform around
the globe. The middle class, after all, not only consumes, but also creates its own
culture (for which the entrepreneurial elite, naturally, has neither the time nor the
desire). Therefore, every international fashion takes on its local characteristics, every
global trend has its own local stars, and a general style becomes overgrown with its
own peculiar variations. It is these little distinctions, to use Tarantinos expression,
that make up the plot of culture.
In the countries of the periphery, the middle class can enjoy all the
advantages of modern civilisation, but unlike the elites, it cannot wall itself off from
the majority who are denied the chance to partake of this civilisation. Advertisements
for elite housing in Moscow promise the buyers homes where they can mix only with
people from the same circles (the servants do not count). Precisely similar
advertisements can be found in Johannesburg or Mexico City. The middle class
cannot allow itself the luxury of dividing itself off from its fellow citizens with the
same wall. This is not just because of the cost of elite housing, a cost it cannot afford.
It is also a matter of the social function of the middle class. Someone has to fill the
space between the elite and the masses. Otherwise, society would simply cease to
exist.
So long as the system is developing successfully, the middle class is able to
play the role of a connecting link, a sort of interpreter between the transnational elite
and society. Under conditions of crisis, however, the roles change. Then it is the
middle class that is ready to call the elites to account on behalf of society, taking on
itself the task of expressing, formulating and generalising the demands of the masses
who until recently were speechless. Social injustice becomes a personal problem,
and the thought of the oppressed and downtrodden prevents the middle class from
sleeping at nights.

At the beginning of the twenty-first century, the middle class is suffering a

genuine catastrophe in the countries of the periphery. The system can no longer
support it. However small this middle class is in relation to the mass of the
population, it is simultaneously too big in terms of the possibilities of an
impoverished society. From Zimbabwe to Brazil, from Russia to Argentina,
disillusionment is growing, mixed at times with fear and bitterness. In order for the
middle class to hold onto its position, it has to change society. Conservatism is turning
into revolt, and the desire to live in the old way, into revolutionary passion. But who
will lead the disillusioned middle class? What political forces will head up the
insurrection?
The experience of Western Europe shows that there is no simple answer to this
question. The middle class is becoming divided into the traditional layers, which
achieved their position long before the information revolution, and new layers which
owe their prosperity to the technological innovations. Both are experiencing a lack of
confidence. Some are afraid of further cutbacks in traditional industry, and of a
consequent decline in the cities that have grown up on the basis of it. Others are
finding that the technological revolution, for all its brilliance, has not justified their
social expectations. The traditional middle class is starting to draw closer to the
marginals. The new middle class feels itself betrayed and slighted.
The globalisation of capitalism has thus given birth not only to a transnational
elite, but also to a new middle class that is ready to become its gravedigger. This
middle class is simultaneously global and local. It is included in the world system
of interrelationships, and is enmeshed in national cultures. It uses the newest
information technologies, but also suffers from the squalor and backwardness of daily
life in a peripheral country. In sum, it is both global and national at once.
It is not surprising that the middle class sooner or later becomes a source of
problems. What journalists unthinkingly christened the anti-globalisation movement
is in fact the revolt of the middle class, turned against the transnational elites. It is
precisely for this reason that the disturbances which began in Seattle have spread first
to Western Europe, and then to Latin America. In the globalised world, a new
spontaneity is appearing, a new radicalism.
Such a revolt always coincides with a generation gap, just like the one
between the liberal fathers and revolutionary sons in Russia during the second
half of the nineteenth century, or between the old and new left in Western Europe

in the late 1960s. In Russia, this gap began opening up in 1998, the year that
demonstrated what the promises of the elites were worth. In Latin America, the crisis
is unfolding before our eyes.
In sum, the social changes that began in the 1980s with the global triumph of
neoliberal capitalism are still far from complete. The most interesting and dramatic
period still lies ahead.
Chapter Five. The Crisis of Neoliberalism
The first years of the new century did not bear out the hopes of the global
elites. As often happens, pompous ceremonies were followed by major setbacks. A
warning should have been provided by the Asian crisis of 1997-98, whose
consequences were overcome only through the spending of vast sums. The ideologues
and journalists, however, reassured the world with references to the peculiarities of
the new economy which had triumphed in the late twentieth century in the US and
Western Europe. According to this theory, we have entered a new phase of history in
which the main factor of development becomes the capacity for innovation that is said
to be an organic quality of Western culture. The Asian countries, which were oriented
toward industrial production, were simply incapable of becoming part of this
marvellous new world. Globalisation became not just the slogan of the day, but also
the justification for all sorts of outrages occurring before the eyes of literally
everyone. Opponents of the system were declared to be dinosaurs and Luddites,
resisting technological progress. Everything would have been wonderful, had the new
onset of the crisis not occurred precisely where the dominant theory said it could not
happen as a matter of principle: in the most advanced country, America, and in the
most advanced area of the economy, the information sector.

Finances and Computers

The mainstream press and intellectuals close to the authorities explained to us
that in the epoch of globalisation, new technologies allowed an unprecedented
mobility of capital. Thanks to this, we were witnessing the beginning of an era of the
free market, which state regulation was powerless to resist. With a single press of a

button, we were told, huge sums of money could be shifted in any direction. From
this, naturally, the conclusion followed that we were in a completely new epoch, when
control over the movement of capital would become technically impossible, and the
national state would therefore lose a substantial part of its influence.
In fact, the technological explanation has the drawback that it explains
nothing at all. Even a simple glance at the history of the question is enough to
establish that the liberalization of the market for capital began long before the
appearance of personal computers and the internet. The first steps in this direction
were taken by Richard Nixon in the 1970s, and an even more decisive break occurred
under Reagan and Thatcher in the early 1980s. In the countries of Latin America,
liberalisation of the investment markets and of transnational capital also became the
dominant tendency as early as the 1970s.
Meanwhile, the speed with which information is transmitted in no way
testifies to a weakening of the possibilities of financial control. Quite the reverse. The
same mechanisms that can be used to transfer capital can also be used to trace this
process. The key question has never been the technical possibility of exporting money
European countries were struggling against the illegal export of silver at least from
the seventeenth century but the ability of the state to detect violations after the
event, and to punish the guilty. When surveillance is highly efficient, punishment
becomes inevitable, and large-scale violations are thus virtually excluded.
The paradox is that electronic transactions gave the state the theoretical power
to receive one-hundred-per-cent complete information on what was happening, and
consequently, the ability to control the legal financial market. If The Big Brother is so
good at spying after individual citizens why does it always fail when it comes to
tracking the illegal actions by corporate capital? Blocking the accounts of the guilty
could be done automatically. In the 1980s and 1990s all countries liberalised their
financial markets to one degree or another. It is significant, however, that the
Scandinavian countries, which were less thorough-going in their liberalisation, did not
encounter more massive violations than countries which took a more orthodox
market approach.
It was not technological innovations that gave rise to the mobility of capital,
but the mobility of capital dramatically increased the demand for the introduction of
new technologies. The globalisation of the 1980s and 1990s represented the victory of
financial over industrial capital.On this basis, a bloc had been formed by the mid-

1990s between financial capital, the fuel and energy corporations, and high tech.
Financial capital sought to lower inflation as much as possible, even at the cost of
reducing economic growth. The mobility of capital became the key principle. Trade
can be world-wide, information knows no borders, and even in ancient times money
made its way throughout the entire world. Production, by contrast, ties capital down,
binding it to a particular place.
The history of capitalism has witnessed periodic shifts in the relationship of
forces between commercial-financial and industrial capital. The epochs that saw the
development of commercial-financial capital were, as a rule, also times of political
reaction. During these periods, the state played the role above all of a military-police
instrument of the ruling class. Transport and communications developed faster than
industry. The ideology of free trade was dominant. This was characteristic, for
example, of the first half of the nineteenth century, when the industrial revolution had
yet to unleash its full might.
The late twentieth century saw a similar triumph of financial capital. The new
technologies were supposed to service the economy that was taking shape, and the
relevant sectors of business thus readily entered into alliance with the dominant
group, adopting its ideology. These sectors in turn became attractive to finance
capital. In the high-tech sector, rapid growth with small investments created the ideal
preconditions for a speculative boom. The growth of stock-market prices, as measured
by the American NASDAQ index, in practice amounted to a redistribution of wealth
between the traditional and new sectors of the economy. This situation was
acceptable to industrial capital so long as the economy as a whole, and the profits of
the corporations, continued to grow.
Industrial capital made up for its losses by transferring production to countries
with cheap labour power, and by an intensification of exploitation. In the process,
however, the whole model of the consumer society that had been established since the
Second World War was placed in peril.
During the era of classical capitalism, the main consumers were the upper and
middle layers, including the urban and rural petty bourgeoisie. The proletariat was the
main producer, but its labour power needed to cost as little as possible, so as to ensure
supplies of cheap products to the market. As a result, workers had little importance for
capitalists as consumers.

Everything changed with the advent of Fordism and of the Keynesian model
of capitalism. Henry Ford declared that his workers themselves should be able to buy
his cars. The new rules of the game meant that high wages were to the advantage of
entrepreneurs, on the scale of the economy as a whole. Whoever proceeded first along
this road, however, lost out in terms of competitiveness. There was thus a need for
state regulation, forcing the entire capitalist class to make concessions to all the
workers at once. The drawbacks of this model were compensated by the use of cheap
raw materials and by exports to the markets of the Third World.
The new model required not only a massive shift of industry to the poorer
countries, but by drafting Western workers into a race to the bottom, created the
danger that the consumer society would effectively be destroyed. The gap between
consumption and industrial production on a global scale returns us to the model of
classical capitalism. The new equilibrium can be maintained only so long as the
middle layers remain relatively large, and the growth of their incomes ensures a
steady expansion of consumer demand via market mechanisms. A gradual erosion of
the consumer society and of the middle class, however, is becoming inevitable. The
less stable the position of the working population as a whole, the more vulnerable
become the worker aristocracy and the middle layers of white collar workers.There
are two factors which, over a certain time, may compensate for this; first, the spread
of new technologies, which create well-paid jobs in a few fashionable sectors, and
second, the growth of the credit indebtedness of the middle layers, which can no
longer allow themselves their accustomed standard of living, but which cannot
renounce it either.
The high-tech and financial sectors ensured the rise of the new middle layers
so long as they themselves were on the rise. The potential for growth in this case was,
however, extremely limited. Meanwhile, the limitations involved were not of a
technological nature.
The high-tech sector grew on the basis of demand for its products from the
rapidly growing commercial-financial sector. This sector, however, is neither the sole,
nor in essence the ideal source of growth for the high-tech area. In the 1960s and
1970s, for example, the main customer for this area was the state. The alliance
between the high-tech and commercial-financial sectors is therefore tactical and
conjunctural.

The Crisis of Desynchronisation

If the speed at which information is transmitted has risen dramatically, this
does not mean that the processes which this information is supposed to describe have
speeded up at the same rate. Moreover, the speed and mechanisms of decision-making
did not change radically in the 1990s. In a certain sense, the abundance of information
that has become available thanks to the new technologies has even created new
problems. If the speed of transmission and the volumes of data transferred are
constantly growing, while the changes in production are occurring more slowly, the
growing gap is being filled with pseudo-information with noise.
The technical means that were originally developed in order to expedite
management have themselves become the source of problems. In March 2001 the
Financial Times published a survey which reported that company mangers were
overloaded with work. As the newspaper notes, the average American office worker
now spends almost half his or her day dealing with messages arriving by telephone or
electronic mail. Worse still, a significant part of this work is totally pointless: Sixty
per cent of the white collar workers surveyed felt overwhelmed by the daily flood of
information pouring down on them. As a result, they are being found to suffer from
information fatigue syndrome and attention deficit , while the really valuable
messages are lost in the mass of the secondary and unnecessary8. Ultimately, the
quality of management is declining. The cause has nothing to do with the introduction
of new technologies as such, but with the fact that their development has been
divorced from the requirements of the real economy. The information channels have
become excessive compared to the volume of meaningful information engendered by
our social existence. Mobile financial capital has been best able to exploit the
advantages of the new technologies, which is not surprising, since it is the main
customer for the new developments in the high-tech sector. The problem, however, is
that the faster finance capital has circulated, the greater has been the gap between
stock market speculations and the processes occurring in the real sector. Production
requires time. After the initial investments are made, time is needed for the additional
means of production to come into play. Buildings must first be constructed before
equipment can be bought and installed, and only then can workers be hired. Goods for

Financial Times, 30.03.2001, Recruitment, p. 11.

sale must also be provided to the consumer, requiring a certain time. The speculative
market, by contrast, promises instant profits. The velocity of circulation of capital is
higher here by whole orders of magnitude. In this regard, the speculative market is far
more attractive. The funds, however, have to be invested in real companies. Fictitious
capital cannot exist without some real functioning economy. As was explained earlier,
high-tech companies were attractive to speculative capital in this respect precisely
because they needed only small initial investments, and were characterized by the
rapid circulation of funds. The union of speculative capital with high technology
created the effect of the new economy, explaining the rapid growth of stock prices
in the US, and then throughout the world.
These same peculiarities of the financial market inevitably gave rise to the
desynchronisation of investment processes in different sectors. As always with the
market, the sectors where the likely profit rates were lower experienced a shortage of
capital investment. But unlike the situation with classical capitalism, the money
flowed not only to the areas where profits were higher, but also to those where returns
could be extracted more quickly. In this regard, even a highly profitable undertaking
in the productive economy paled before a thoroughly dubious and (from the point of
view of the real economy) quite pointless stock-market operation. Trillions of dollars
were taken out of the real economy in order to circulate on the stock exchange.
Because of this, the industrial sector was obliged to bear a dual burden: it had to
ensure the profitability of enterprises, and at the same time, to finance an orgy of
financial speculation. The result was an inevitable shortage of capital investment in
industry, felt with special acuteness in the Third World, as well as in Russia and
several other countries of Eastern Europe. Demand for their products was restricted
by the ripening crisis of consumer society. By the late 1990s a classical crisis of
overproduction had gripped East Asia, while in other parts of the world money was
short for modernizing industry, and real wages fell.
The slowing growth of industry, against a background of speculative
bacchanalia in the area of financial capital, could be concealed for a time behind the
illusion of technological revolution. The new technologies were assumed to be a
sufficient source of growth in and of themselves. But with industry subject to growing
difficulties on a global scale, the technological revolution itself started to get bogged
down.

Liberal theory assumes that the synchronisation of parallel processes must be

ensusred spontaneously by the mechanism of the market. In principle, this is correct.
It should not be forgotten, however, that the means through which the market solves
the problem does not cause the entrepreneurs any special joy. This means is a global
economic crisis.

The End of High Profits

The expansion of 1992-2000 was not only one of the most prolonged in the
history of capitalism. This period was distinguished by high profits and rapid growth
in the area of stock prices, accompanied by economic growth that was by no means so
rapid. Marx in his day noted the tendency under capitalism for profit rates to fall.
History as a whole confirms this conclusion. In particular periods, however, profits
start rising rapidly, and economists join in arguing that the conclusions of Marx are
wrong or out of date. The reason for this paradox is that the structure of the capitalist
economy does not remain unchanged. New sectors and new markets make their
appearance. Profit rates in these areas are at first extremely high; only later do they
start to fall in line with the general laws inherent in the system. These new sectors and
markets have the effect of sharply increasing the average rate of profiton the scale of
the entire capitalist system.
In the 1990s, new sectors underwent rapid growth this was the period that
saw the infrastructure established for the information society while at the same
time capital opened up new markets. What was involved in this case was not only the
introduction of a neoliberal economic regime in the countries of the former
communist bloc and the third world, but also the marketisation of a whole
series of areas of life in the West, areas that had once been outside the sphere of
market relations. Health care, education, public transport, and so forth, were
transferred to a commercial basis. The need to increase profits by taking over new
sectors also explains the urgent desire of the neoliberal decision makers to implant
free enterprise in ever new areas of life. It was for this reason, to note one example,
that in 2000-2001 the General Agreement on Trade and (in?) Services (GATS) was
drawn up.

Market cycles are subject to the same laws as profits. As new sectors and
markets arise, their own cycles take shape within them, and these may not coincide
with the cycles of the old sectors and markets. Hence in Eastern Europe the
transition to capitalism was accompanied by a prolonged depression, which shifted to
economic growth only toward the end of the 1990s, when the potential for growth in
the West was already becoming exhausted. This was especially evident in the case of
Russia, where productive output started growing only in 1999-2000, after the Asian
industrial crisis had already shown that the period of world expansion was drawing to
a close.
For capitalism, the unevenness of growth between sectors and countries is
both a factor of growth and a factor of destabilization. In the open wold economy of
the 1990s, the United States became a sort of magnet attracting capital from the entire
world. This was less the result of the exceptional dynamism of the American
economy, as celebrated in popular journalism, as of the unique position occupied by
the US in the world system. Not only did the US constitute the largest market, but the
US dollar was also the world currency. The more open the economies of other
countries, the greater was the flow of foreign capital to the US. The greater the
American market for capital, the more attractive it was to investors. Drawing capital
out of other parts of the world, the US destabilized the situation there, but at the same
time the growth of the US economy was a sort of shock-absorber that prevented a
world depression. This astonishing flow of foreign capital, two or three billion
dollars a year for the last few years, helped ensure economic growth, notes Doug
Henwood. It ensured the growth of market rates, and allowed American consumers
to live beyond their means. Under the conditions of the open economy, the
depression in the countries of Eastern Europe and of several countries of the Third
World simply aided the outflow of funds, in the process bolstering the growth in the
US. The flight of capital from Russia brought a pile of money to the US, and the
same can be said of Asia, Latin America, Eastern Europe and of the countries of the
former Soviet Union in general. All of them did their bit to aid the rise of the US
stock market. The greater the problems throughout the world, the better things were
for the American ruling class.
In the same way as the emerging markets of Eastern Europe and the Third
World pumped in additional capital to support the growth in the US and to some
degree in the European Union, the rapid development of the new information sectors

in the West supported and prolonged the general growth. From this, the theoreticians
of the information society promptly drew the absurd conclusion that the
technological revolution guaranteed us continuous growth. In reality, the information
economy was subject to the same market cycles as the traditional economy, but in
this case, these cycles were acting in delayed fashion. Once the possibilities for
expansion in these areas were exhausted, however, the new economy itself became
the decisive factor precipitating a slump.
The increase in profits also had another cause, a completely traditional one:
more intnse exploitationof the workers. The Wall Street Journal wrote about this more
or less openly: In the long term, corporate profits cannot grow quicker than the
economy, unless companies find some way to lower the wages of workers, to extract
higher prices from consumers, or to obtain profits from abroad. Ultimately, the
newspaper noted, a significant part of the growth in profits is simply taken from the
pockets of workers, and sooner of later this comes to an end. The companies
transferred production to countries with cheap labour power, and so broke the
resistance of the trade unions in the West, but by the late 1990s they had reached the
maximum limit in labor relations.
The race to the bottom to which the bourgeoisie has committed the workers
has its limits, as Karl Marx already explained. If the cost of labour power falls without
interruption, the proletarians sooner or later turn into paupers, whom the bourgeoisie
is itself forced to feed, instead of their being able to eat at their own expense. When a
crisis hits, the natural reaction of the entrepreneurs is once again to lower costs at the
expense of the workers. This, however, is precisely what was being done throughout
the entire period of growth, and the opportunities for the companies to lower wage
costs further have practically been exhausted. Moreover, and contrary to the familiar
scenarios, the crisis is accompanied at least during its early period by an
intensification of the pressure exerted by workers on entrepreneurs.
Ultimately, the eight-year economic expansion created the conditions for a
new rise of the workers movement, which gradually started winning back the
positions it had lost. This means that the resources available to the corporations for
raising their profits had been exhausted. In 2001 company profits were still relatively
high, but the tendency for them to fall had become obvious. For a decade, the growth
of stock prices had markedly outstripped the growth of profits, but so long as profits

were also rising noticeably, this was of no great importance. From the moment when
profits started to fall, maintaining the stock-market bubble became impossible.

The Oil Crisis

During periods of economic growth, the prices of raw materials are buoyant.
This could not fail to have an effect on the oil market. The spasm of the Asian
industrial crisis also set oil prices tumbling, but the resumption of production in Asia
saw them rise sharply.
When oil prices began growing in the autumn of 1999, everyone expected that
after a certain time demand would fall dramatically, that a stabilization of the market
would follow, and that prices would then decline once again. Fuel prices always fall
in the northern hemisphere spring and summer, despite the tourist season. The same
was supposed to happen this time as well. The oil producers too assumed that there
would be a very brief jump in prices, of which they needed to take prompt advantage.
There was more and more fuel on the market, and this, naturally, would become ever
cheaper. But nothing of the sort happened. People began to feel that the market had
gone mad. To an increase in oil production, it was reacting with new price rises!
The reason for what was happening lay beyond the bounds of the oil market.
For roughly fifteen years, funds had systematically been taken out of the real
economy throughout the world, and had been invested in financial speculations
where profits were far higher. In this sense the Russia of the 1990s, with its starved
industry and increasingly fat banks was not an exception, but merely an extreme case
illustrating a general tendency which had also triumphed in the US and Western
Europe. The key dogma of monetarist economic theory is that inflation can have only
one source the social spending of the state, for the sake of which the government
prints unsecured paper money. In fact there are other, no less dangerous sources. The
rapid growth of stock prices in the US created billions of dollars in fictitious capital,
at the same time as all the governments and central banks were pursuing harsh
financial policies, restraining the emission of paper money, and maintaining its value
in every possible fashion. A paradoxical situation had arisen: the currency was stable,
while finance capital was expanding like a soap bubble. This was a new form of
inflation, born of monetarism and neoliberalism. The growth of financial capital no

longer bore any relation to the development of production. Vast sums of unsecured
non-cash money accumulated in the accounts of corporations and private individuals;
their property, expressed in securities, was assigned totally baseless dimensions. With
these non-existent assets as security, fresh credits were issued. A sort of inflationary
overhang arose in Western economies. Sooner or later, this superfluous money had
to pour out onto the market.
The inflationary potential that had accumulated in the Western economies
could not be realised because of the harsh policies of the central banks, but the more
time passed, the greater this potential became. All that was needed was a breach that
would allow the excess monetary resources to burst out onto the market. After the
Organisation of Petroleum Exporting Countries had assessed the situation and sharply
reduced quotas, oil prices leapt upward.
Under the pressure of oil prices, the financial overhang collapsed, and inflation
ran out of control. The excess money, which had initially been concentrated in the
speculative banking sector, spread throughout the world economy. Soon after the oil
prices, the whole system of exchange rates became destabilised. By an irony of fate,
the oil shock of 1973 had disorganised the system of state regulation, Keynesianism
and the socialism of distribution that had been based on it in the West. By contrast,
the second oil price shock disorganised the system of market-corporative distribution
and dealt a blow to neoliberal capitalism. The response to the first oil shock was a
general shift to the right, though this did not begin immediately; for all its political
consequences to become evident, around ten years was needed. By the time of the
second oil shock, the liberal model was in its death agony, and a shift to the left has
now become, on the whole, simply a question of time. The circle has closed.
For the oil exporting countries, including Russia, the rise in oil prices meant
not only an unexpected rain of gold, but also a chance to maintain the illusion of
economic success without serious structural reforms. Neither in Russia, nor in the
Arab countries, nor in Mexico was the influx of petrodollars accompanied by attempts
to implement serious investment programs. As in the aftermath of the 1973 oil price
shock, the money therefore started to return to Western banks, strengthening the
inflationary pressure on the world economy as a whole. In the year 2000 the economy
of post-Soviet Russia achieved a record growth of 7 per cent after ten years of
depression. But it was precisely in this year that the flight of capital to the West
increased sharply.

In the oil exporting countries, the increase in world fuel prices created the
illusion of prosperity, while its impact in the West was to create the preconditions for
a new round of inflation. The flow of petrodollars was greater, to the degree that this
money lacked a back-up in the real economy. As in the 1970s, the growth of oil prices
was followed by a fall in the exchange rate of the US currency. Instability in exchange
rates turned into a new world economic problem, whose victims included Russia and
the countries of the Middle East, which sold oil for dollars and purchased their
essential imports for euros.
The structural problems of the oligarchic economy in the countries of the
periphery did not allow the flood of petrodollars to be used effectively, but as in the
1970s, stimulated the political irresponsibility of the elites. In the 1970s the oil boom
precipitated a series of political crises and catastrophes in the countries that had
gained from the new energy prices; the culmination of these processes was the Iranian
revolution. The new oil boom created the preconditions for the same kind of political
shocks, above all in Russia.

The Riddle of the American Middle Class

Until 2000, the American economy gained more than any other from the
existing rules of the game, and at the same time remained the chief stabilising factor
for the world system. With the beginning of the new century, however, the situation
changed radically. Not only was the American market now incapable of
extinguishing the crisis tendencies that had accumulated on a world scale, but had
itself become the source of problems.
The rapid growth of stock-market prices and the rise of the financial bubble
in the US during the 1990s had not escaped the attention of economists, but the
growth in the indebtedness of the American middle class was not usually perceived as
cause for special alarm. Still less were the accumulation of middle-class debts and the
growth of the financial bubble linked in public consciousness. Meanwhile, these two
processes were not just closely associated, but fed on each other.
The expansion of financial capital could not fail to be accompanied by a rapid
development of the credit market. This was aided both by the spread of new
technologies - from electronic cards to online banking which made credit more

accessible, and also by the general market conjuncture. Meanwhile, the financial
corporations themselves pursued a consistent policy intended to draw growing masses
of the population within their service zones. By the late 1990s the American middle
class was thoroughly entangled in debt. Since this occurred against a background of
general growth in the economy, the rise of indebtedness did not in itself evoke alarm
so long as it was accompanied by a growth of money incomes. Meanwhile, it was by
no means of fundamental importance whether incomes rose more rapidly than
indebtedness or more slowly. If they rose more slowly, this still allowed the positive
dynamic to be maintained to a certain point. If they rose more rapidly, this led in
practice not to a fall in indebtedness but to an even greater rise, since the growth of
incomes allowed increases in borrowing capacity.
The historian Robert Brenner has described what was happening ironically as
private Keynesianism. In the past, the state had supported the economy by
pumping up demand with the help of government programs. Now, private banks
were doing the same, handing out credit to right and left. From the point of view of
neoliberal theory this was thoroughly acceptable. The growth of the state budget
deficit was seen by the ideologues as the only source of inflation. By contrast, private
debt in whatever quantities, and whatever its social significance, was regarded simply
as the private business of debtor and creditor, with no macroeconomic impact.
Beginning in the first half of the 1980s, when the neoliberal model triumphed
definitively in the US, debt whether private, state or corporate began growing at a
furious pace. During the period of the Clinton expansion, the increase in debt
accelerated still further. Consumer debt exceeded one and a half trillion dollars. In
2000, overall mortgage debt outstanding topped $6.8 trillion, after more than doubling
during the 1990s. Meanwhile, private indebtedness in the US continued to exceed the
state debt, which by 2000 amounted to $5.62 trillion. The state debt kept growing
despite the favourable conjuncture and the budget surplus. In 2001 the total of private
and corporate debt reached $13.5 trillion9.
The growth of the stock-market pyramid was thus accompanied by a similar
growth in the debt pyramid. These two processes support one another, and are one
anothers mirror images. Both pyramids consist of fictitious capital in two of its
different forms. Just as shares cannot be sold in large quantities without provoking an

Economic Report of the President, 2001. US Government, Washinghton, D.C., 2001.

immediate fall in share prices, a sharp reduction of debt at any given moment would
result in a crisis of the banking institutions. But neither could the pyramid continue to
grow indefinitely.
On the social level, the two mirror-image pyramids were effectively
superimposed on one another. This reflects the structure of the American middle
class, which simultaneously was getting further and further into debt, and was being
drawn into stock-market speculation, which according to the dominant theory should
have given it the funds to secure and pay off its debts. The middle layers, meanwhile,
were divided into three groups: a topmost group which did not have burdensome
debts, and which actively put its funds into playing the stock market; a bottom group
that was sunk in debt and incapable of playing the stock market; and a middle group
which had accumulated both debts and stocks simultaneously. The same applies to
significant numbers of small and middle-ranking companies, which became more and
more dependent on external sources of financing, and also on stock-market prices. A
rise in share prices allowed them to attract new credits, and so forth.
Such a situation , however, could not continue indefinitely. The crisis that
began in 2000-2001 could not fail to affect both the debt pyramid, and its stockmarket counterpart. The stock-market pyramid was capable of correcting itself
spontaneously, burying beneath its fragments the hopes of a substantial part of the
middle class. The debts of private individuals, however, could be written off only
through the benevolence of the creditors. The American middle class thus finished up
in a situation reminiscent of that in which the more developed countries of the Third
World found themselves. They had neither the ability to pay their debts, nor any
chance of having them written off.
When the industrial downturn began in 2001-2002, it was discovered that
American consumers were incapable of servicing their debts. During the economic
boom of the 1990s Americans were accustomed to living in debt, notes the leading
Russian business journal Vedomosti. The banks eagerly lent them money for goods,
for travel, and for property purchases. Now the American economy has fallen on hard
times. Unemployment is rising, and many people are having to meet unforeseen
expenses. During the second quarter a record number of Americans (390,991) were
unable to pay their debts; this is 5.9 per cent more than in the first quarter. From June

2001 to June 2002 1.47 million Americans declared bankruptcy (during the same
period, 39,000 companies went bankrupt).10
The US has extremely lenient laws dealing with personal bankruptcy, and
citizens do not fail to make use of them when times are hard. Nevertheless, the mass
bankruptcy of debtors has now begun turning into a problem that threatens the
stability of the entire financial system and consequently, the jobs and savings of
more fortunate members of the middle class.
There remains one final mechanism that offers a solution to this problem:
inflation. But the financial capital that now holds sway in practically all areas of life
cannot allow this.

Euro-Ambitions
In the US, financial capital was able to make use of the specific advantages of
the dollar. At one and the same time a national monetary unit and the world currency,
the dollar attracted investors, while the excess dollars spread throughout the world,
lowering the risk of inflation in America (and by virtue of this, making the dollar even
more attractive). The European financial markets did not have such advantages. It is
this, and not the imaginary backwardness of Europe in developing advanced
technologies, which explains why the new economy has not managed such rapid
development on the eastern shores of the Atlantic. Stock prices rose, but not at the
same rate as in the US. For one thing, the European companies could not erect a
financial pyramid, since they did not have the resources to maintain it, and for
another, it was impossible to increase the credit indebtedness of companies and of the
population on the same scale as in America. In principle, this could be considered a
sign of healthier and more stable development. But from the point of view of the
financial capital that is as dominant in Europe as in America, it is precisely this
situation that is the main problem, the source of the weakness of the European
economy. The desire to even things up, and to attract speculative capital to the
European financial markets, explains the ambitious project, adopted by the ruling
classes of the European Union in the late 1990s, of introducing a common currency.

10

Vedomosti, 19.08.2002.

Becoming a second or alternative world currency unit, the euro was recognised as
equalising the chances of competitors by infecting the European economy with all the
illnesses suffered by the economy of the US. The population instinctively sensed the
danger and put up resistance, but naturally, the politicians and the mainstream press
put this down to conservatism, and to the emotional and cultural attachment of
Europeans to their old national currencies.
The euro project was as ambitious as it was adventurist, and most importantly,
it was very badly thought out. In the late 1990s, the European Union imposed on all
the countries common rules that were supposed to lower inflation to a uniform level
of less than 3 per cent. In the best Soviet traditions, this took on the character of a
one-off campaign in which the countries rushed to report on time the results they had
achieved. The trouble was that a uniform level of inflation was impossible without
equalising the other parameters of economic development, and this had not occurred.
Quite the reverse; in the absence of redistributive policies, market disproportions have
a tendency to grow. Although the European Union implemented some redistributive
measures, in line with its general neoliberal ideology it put its stake on the anarchy of
the market. This undermined the chances of the euro having a stable long-term future.
The new currency turned out to be not so much a symbol of European
integration as a source of problems. It either fell, devaluing the savings transferred to
it, or else began rising just as unrestrainedly, undermining the business of
exporters.What occurred in the unified financial space was not convergence but
divergence, since each state had its own conception of what should be done with the
common currency.
With the help of administrative and political pressure, inflation was
momentarily lowered everywhere. Then it began growing with even greater strength
in those countries which had artificially lowered it for the sake of entering the euro
zone. Only now, inflation was no longer a problem of one or another particular
country, but a destabilizing factor for the whole European project. The country that
finished up in the most paradoxical position was Germany, since it was the German
elites that had made considerable efforts to impose generally binding laws on all
Europeans. By 2002 it had become clear that these laws were far from ideal for
Germany itself. If the Greeks and Portuguese had managed by hook or by crook to
keep inflation to the levels planned in advance, the German inflation rate was clearly
out of control.

The liberal ideologues who had dreamt up the project of the euro were
convinced that inflation arose exclusively from government spending, and that there
was no objective economic basis for it. The entire project of financial integration was
constructed according to this thoroughly voluntarist, bureaucratic philosophy.
Objective factors were not taken into account. Southern Europe was supposed to
reconcile itself to a level of inflation that it found unnaturally low, and that held back
its economic growth. By contrast, northern Europe found on entering the euro-zone
that it was forced to import inflation from other countries. This was the reason for the
problems and unexpected disproportions that began to multiply in 2002 and 2003.
With the German mark, maintaining a balanced budget had not been particularly
difficult. But with the euro, the officials overseeing Germanys budget found they
could not make ends meet.
It seems now as though the greatest problems await the country in the very
heart of Europe Germany, which is trying desperately to cut its budget deficit to 3
per cent of Gross Domestic Product, wrote the London Economist in January 2002.
The figure of 3 per cent is vitally important, since the countries that have accepted
the euro voluntarily have donned a fiscal straitjacket known as the stability and
growth pact. Such self-limitations are supposed to guarantee confidence in the
strength of the new European currency. Paradoxically, it was Germany that insisted
on this most of all. For violators, this pact foresees the most severe penalties, up to the
payment of a fine equal to 0.5 per cent of Gross Domestic Product.11 If for Germany
the introduction of the euro was fraught with serious problems, for the Eastern
European countries that were preparing to enter the European Union accepting the
euro was tantamount to renouncing any attempt to raise living standards throughout
the lives of the next few generations. The very same Economist wrote soberly and
cynically to this effect: Renouncing the right to independently set interest rates and
adopt financial policies that might be either too harsh or too lenient means to place in
question the chance of raising living standards in line with the Western model. This
situation suited foreign investors perfectly, since Eastern Europe was necessary to
Western capital above all as a reservoir of cheap and qualified labour power, like
Mexico for American capital. Things were different for the populations of the .former
communist countries, who had burst out to the West precisely in the hope of living

11

The Economist, 5.01.2002, v. 362, no. 8254, p. 11.

the way they do. Such massive illusions cannot lead to anything except
disillusionment. The more luxuriant and irresponsible were the promises of the
politicians, and the more naively they were believed, the more unpleasant the
awakening. The self-interest of business has threatened to create serious problems for
the political system.
The euro was supposed to replace the national currencies on 1 January 2002. It
would be hard to imagine a less suitable point. By the time when the new monetary
unit was to go into circulation, the world and European economies were already at the
stage of downturn. This meant that in order to support growth and at least to soften
the crisis, it was necessary to lower Central Bank interest rates. But the European
Union could not allow itself to do this without running the risk of simultaneously
burying the hopes of turning the euro into a real rival of the dollar that is, the reason
why the whole project had been devised. Still worse, the various countries went into
the crisis in different states. To effectively manage the situation required
fundamentally different approaches in Germany, Scandinavia and the countries of
southern Europe. This, however, had become technically impossible. The single
European Central Bank had been set up precisely in order to implement a common
policy.
Drawing up ships into a single squadron requires the observance of definite
rules. The whole squadron has to move at the speed of the slowest ship. If this rule is
not observed, the lagging ships will be lost, and the squadron will fall apart. The
paradox is that the European Union could allow itself neither to brake, nor to
maintain a single speed, nor, above all, to stoke the boilers of the slower ships.
Southern Europe could not keep pace with Germany. The shift to a single currency
coincided with the process of integration of the countries of the former Eastern Bloc
into the European Union. The Czech Republic, Poland and Hungary were already in
the first ranks, awaiting a final decision. However, there was not the slightest hope
that the novices would be able in the long term to cope with tasks that were proving
beyond the strength of countries that had been integrated into the European Union for
many years. The European squadron was becoming still more heterogeneous.
In the spring of 2001 the European Central Bank again refused to lower
interest rates, reaffirming its commitment to maintaining a strong euro at any price.
And in fact, by mid-2002 the European currency had started to gain weight in
relation to the dollar. Unfortunately, this was accompanied by a deepening of the

social crisis, by falling popularity for the governments, and by growing hostility to the
new money. In the summer of 2002 shops in Germany even began displaying prices
in the now abolished but familiar German marks. Paradoxically, the price that will
have to be paid for a strong European currency could well become the collapse of
the single economic space, and ultimately, the collapse of the euro.
The sole hope for the European project was that the crisis would lead to a
spontaneous fall in the exchange rate of the dollar, and to an increase in inflation in
the US. These expectations were confirmed in 2003. But such a turn did not suggest a
happy future for the euro either. In this case the European Central Bank had the
opportunity to lower interest rates and really unleash inflation, in the process
applying the brakes to the squadron and giving the laggards the chance to catch up.
This, however, was remote from the original ambitious plans of the European elites.
Instead of drawing closer to their strategic goals, they now had to think exclusively of
minimising the damage that had flowed from their own previous decisions.

A Political Dilemma
History records a multitude of cases in which free producers occupying the
middle position in the socio-economic hierarchy of society starting with the
ancient Roman peasantry, and ending with the European petty bourgeoisie and a
section of the white settlers in the seventeenth-century Caribbean have been
subjected to debt slavery. Within this scheme, the drama experienced by the American
middle layers in the twenty-first century is far from unique. From ancient times, such
debt crises have been accompanied by a sharp growth in social tensions, and by the
appearance of populist movements. The subsequent development of events has
depended on the relationship of political forces. If the populism has met with defeat,
the middle layers have lost their status, independence, property, and at times their
personal freedom as well, being transformed into slaves or proletarians. If, on the
other hand, the middle layers have been victorious, then financial capital has not only
had to bear colossal losses, but has also lost a substantial part of its influence in
society. Precisely this kind of struggle must inevitably unfold in the countries of the
West. At first, it will more than likely take the form of a struggle around the question
of inflation.

During the period of growth the upper (stock-market) and lower (debt)
pyramids balanced one another. The collapse of the stock-market pyramid
destabilized the debt pyramid, altering the relationship of forces and the mood in
society. It was not simply that important sections of the middle layers had an
objective interest in inflation, as the ultimate means of reducing their debt burden, but
the conjunctural alliance between financial capital and the high-tech sector was
disintegrating. During the period of high stock-market prices, the high-tech sector had
regarded financial capital as the locomotive of growth; now, it saw in financial capital
the source of its problems. Meanwhile, financial capital in turn sought to make up its
losses by beating debt payments out of the high-tech sector. The characteristic feature
of the new economy was the combination of comparatively low wages with the
opportunity to participate in profits through stock options. The collapse of the stockmarket pyramid meant that the bond between the employees and the real owners of
the enterprises was undermined. The white-collar workers who had felt themselves
almost the owners in their workplaces found themselves in the position of proletarians
(if, that is, they retained their jobs at all). In sum, the new economy turned out to be
doomed to suffer from the same class conflict as the old. The workers began to feel
the need for wage rises, and to understand why trade unions exist.
Not only was financial capital (along with its last faithful ally, the fuel and
energy complex) forced to beat off attacks from ever-greater numbers of adversaries,
but the inflationary pressures were growing in objective terms. After the second oil
shock had set free the excess financial resources and flung them onto the market,
governments were faced with the dilemma of whether to reconcile themselves to
inflation and to try to manage it, or to resist it to the last, while at the same time trying
to cope with the growing discontent of formerly loyal strata of the population.
Winning in this struggle was impossible, but to recognise this fact would signify a
fundamental break both with the neoliberal model, and with the groups of financial
capitalists who throughout the last decade had determined the course of governments,
regardless of which parties had made these governments up.

The Promise of Growth

The neoliberal economic model did not promise social justice, but it did
promise economic growth. The court experts patiently impressed on the public that it
was the growth of the economy that was the precondition for prosperity. For the sake
of increased output, many people would have to make sacrifices. Inequality would
increase, and people would have to pay for things that had earlier been provided free
of charge. People would have to work harder, and better. The sacrifices, however,
would not be in vain, and obedience and diligence would be rewarded. Ultimately,
free trade and privatisation would speed economic growth, while economic growth
would sooner or later enrich everyone. Or almost everyone. Or at least, it would give
many people the chance to become rich.
In the early 1990s, this sounded convincing. Of course, a growth of production
was not in itself a guarantee that distribution would be more just. It was hard,
however, to deny that solving social problems was easier in a dynamically growing
and developing society than in one whose economy was in decline. The only trouble
was that the neoliberal model turned out to be incapable of ensuring economic
growth.
The results of the last two decades of the twentieth century proved dismal. The
system of free trade turned out to be incapable of accelerating the growth of
production. In most countries, economic growth rates were considerably lower than in
the 1960s, when state regulation, according to the neoliberal experts, had held back
entrepreneurial initiative and undermined the stimulus to work.
The position of the countries on the capitalist periphery was especially
difficult. For these states, writes the American economist Mark Weisbrot, the two
final decades of the twentieth century were a period of the greatest economic failures
since the time of the Great Depression. Just think: income per capita in Latin America
grew by 65 per cent between 1960 and 1980. Between 1980 and 2000 it grew by only
7 per cent, or, one could say, did not grow at all. In Africa things turned out even
worse; there, incomes per head of population fell by approximately 15 per cent.
Meanwhile, the Asian countries where strict state regulation was retained, and where
the governments were in no hurry to privatise their assets, saw continuing growth.
The most impressive results were in China and Vietnam, where despite market
reforms, state intervention in the economy was at its most substantial. By contrast, the
Asian countries which by the end of the decade had encountered the greatest
difficulties were those which, under the influence of the Washington consensus, had

begun liberalising their economies. Until the 1980s, Weisbrot continues, it was
considered normal for countries with low and middling incomes to work out their own
development strategies. Now, in most cases, this has been rejected in favour of a set
of ready-made recipes including the liberalisation of trade and financial flows, the
privatisation of state enterprises, and other types of deregulation. These policies,
which have received the name of the Washington consensus, started out by working
badly, and in recent years have led to a whole series of catastrophes. The Asian
economic crisis of 1998, for example, followed an influx of hot money onto the
liberalised Asian financial markets. This was followed by financial crises in Mexico,
Russia, Brazil and Argentina, which undermined world economic growth.12
The problems always followed one and the same scenario, willingly repeated
by the international financial institutions in each particular country. Meanwhile, the
heads of these institutions more and more recalled the heroes of Russian literature
who for some reason, always tripped up at one and the same place. For the
countries of the periphery, suffocating in conditions of poverty and economic
stagnation, the example of the prosperous West remained the final justification for the
policies that were being implemented. The failures themselves were explained as the
result of local conditions, of incompetence, of corruption, of a good-for-nothing
traditional culture, and necessarily, of the reluctance of workers to toil with sufficient
enthusiasm. This happened in countries where people had long since been working
more than their counterparts in the West, and for incomparably less money.
For the countries of the periphery, the West was transformed into an
ideological utopia, an image of the happy future, a model for imitation. Europe in turn
looked to America, and America, revelling in the swollen financial figures of the
corporations, convinced itself that everything was fine.
Unfortunately, the tricks were about to be exposed. Neoliberalism was unable
to guarantee industrial growth. All it was achieving was an unprecedented
redistribution of wealth in favour of the financial oligarchy.

The Start of the Great Depression

12

The Moscow Times, 7.08.2002, p. 7.

The1990s had been a time of great promises. The twenty-first century had
begun with economic confusion, with falling share prices, with unstable exchange
rates and with low economic growth. This was not simply the latest market crisis. The
neoliberal model was simply incapable of coping with the problems and
contradictions it had itself created. The economic problems turned into ideological
ones. Worst of all was the fact that this time, the epicenter of the crisis was America.
For two decades, the mainstream liberal view had impressed on the entire world that
the US economy was the strongest, the healthiest, and the most correct model for
the entire world. When a crisis erupted in Asia in 1997 and 1998, dozens of experts
rushed to the spot, and set about teaching the incompetent Asians the norms of
American corporate management. Unlike the corrupt Asian concerns, the American
corporations in their view were models of responsible management and
transparency. In order to avoid corruption scandals and abuses, it was necessary to
quickly rebuild corporate structures and to change legislation in line with American
models. The Russians, after their default, were told the same. Then in 2002 it was
learned that in huge American companies Enron, WorldCom, Xerox, and
Johnson&Johnson, - corruption, irresponsibility and falsification of accounts had
reached a scale of which neither the Asians nor the Russians had even dreamt. It was
discovered that once freed from excessive state tutelage, American managers
instead of raising production had set about robbing consumers and small shareholders,
while the free-market economy had staged a bacchanalia of crooked accounting that
veterans of the Soviet state planning apparatus might have envied.
Enron and WorldCom, corporations that had been regarded as symbols of
American efficiency, went bankrupt, ruining a multitude of small investors. It became
obvious that the abuses that were being revealed were merely the tip of the iceberg.
Precisely for this reason, stock-market speculators throughout the world saw the
bankruptcies of Enron and WorldCom not just as isolated instances, but as pointers to
the state of American corporate culture as a whole. There were sharp falls not only in
the share prices of the bankrupt companies, but also in the exchange rate of the dollar.
The stock-market crash of 2002 was an ideological catastrophe for the
neoliberal elites throughout the world. The stream of bad news even forced some
commentators in Russia and the West to declare the beginning of the end of
globalisation; since the world market was in such a lamentable state, it was necessary

to develop local markets. Unfortunately, no-one explained how these local markets
would grow in conditions of world depression.

The God Fails

In Europe, the social significance of the American financial crisis was not
understood immediately. This was even more true of Eastern Europe. For the
overwhelming majority of the Russian public, the news coming from the stock
exchanges remained something abstract even in 2002. Unlike the case in America, in
Russia the stock exchange was by no means the heart of the capitalist system. For
good or ill, the 1998 crisis in Russia had seriously undermined the positions of
financial capital. The strength of the oligarchs did not lie in the share prices of their
main assets, but in rich deposits of oil, gas and mineral ores which they had no
intention of sharing with anyone. The price of oil in London and Amsterdam worried
them far more than the price of shares in New York or Moscow. Even if these shares
were their own.
In Russia, where remnants of the social security system still remained, few
people realised how dangerous the stock market crash was for the American middle
class. Along with the share prices, pensions suffered as well. People who had agreed
to modest wages in exchange for stock options felt the blow even sooner. The
American system had forced substantial numbers of ordinary citizens, who had not
the slightest bent for entrepreneurship, to turn themselves into petty capitalists, since
the pension and insurance funds were using the savings of these citizens to play the
market. Now, through no fault of their own, these people have lost out.
At the time of the 2002 stock market crash, the Western European pension
system was less dependent on the market for securities than its American counterpart.
It could be said that the Europeans were lucky; when the securities market collapsed,
the European countries were still only beginning to reconstruct their pension system
in the American manner.
By the time of the stock-market crash the initiators of the pension reform had
already managed to explain to the public how much superior the dynamic American
system was to the ossified European method. The American system stimulated
people to work, since the future of every individual was in his or her own hands.

In reality, of course, the supporters of liberal reform were least of all interested
in the future of working people. Their interest was in the savings of workers and in
the pension deductions that could be used to warm up the capital markets that were
encountering difficulties.
The European conception of state guarantees, of the social pension and of
the solidarity of generations was declared to be inefficient, to have outlived its time,
and to be incapable of stimulating personal achievements. Throughout one and a half
decades the dynamic American economy was counterposed to the inert European
one, weighed down with redundant state regulation and excessive social security.
The industrious American middle class was supposed to become the model for the
indolent Europeans, who had never overcome their habit of solidarity.
The stock-market crisis put an end to all this. It showed graphically that the
main principle of the market was precisely the lack of any direct connection between
labour and reward, effort and success. Putting their savings into pension funds, the
members of the American middle class found that the more zealously they had
worked, the more they had now lost.
It was not only pensions and savings that were taking blows. The myths of
neoliberalism had collapsed. For substantial sections of the middle class, the slump in
the market meant the loss of their faith in capitalism. This was noted by even so
conservative a commentator as Robert Skidelsky: The financial markets are falling
everywhere, in New York, London and Tokyo. People are losing their money, and are
blaming capitalism. In addition, a wave of financial scandals has rocked the United
States, affecting even the largest companies Enron, Tyco and WorldCom. The
scandals and the stock-market slump are interlinked; when a downturn begins, it is
discovered that the basis for the prosperity of corporations was crooked accounting.
In sum, Skidelsky concludes, capitalism is under attack.13
Skidelsky considers this extremely unjust. You should not condemn a good
system because of the miserable results of its functioning. Nevertheless, the logic of
mass consciousness is implacable. In earlier times, communist leaders explained all
their failures as the result of isolated shortcomings.The champions of capitalism, by
contrast, have proven that the failures of the communist regimes bear incontrovertible
witness to the bankruptcy of the very principle of collectivism. Now they must

13

The Moscow Times, 31.07.2002. p. 7.

themselves face up to an analogous problem. Developments which they try to depict

as isolated instances are viewed by society as embodying a general principle.
Neoliberalism made America a model for the entire world. The US economy
simply did not have the right to fail. The success of the United States was supposed to
prove on a daily basis that the market rewards the dynamic and progressive, while
punishing the inefficient. Leading newspapers and hundreds of experts were united in
explaining that the Asian and Russian crises were the results exclusively of local
conditions, and that nothing of the kind could happen in the US. Not only the Asian
and Russian entrepreneurs, but also the Finns and Germans were lectured on the
advantages of American corporate culture, based on transparency and accountability.
Everyone else should reconstruct themselves on the model of Enron, WorldCom and
Xerox. These were precisely the companies that were specified!
The problem, in reality, did not lie in the differences between the US economy
and its European, Asian or Russian counterparts. The problem was that America had
become a symbol for everyone in Western Europe, Asia or Russia who was seeking
transform his or her own country in line with the ideology of the free market. Those
who believed in American success were not only right-wingers, but also social
democrats. The crisis of 2002 led not only to the collapse of numerous companies, but
also to the ideological bankruptcy of the people who were calling on the entire world
to reconstruct itself according to the American model. Of course, it does not follow
from this that everything was proceeding happily in Western Europe, not to speak of
Russia. The point was different: The US could no longer be pointed to as an
ideological model. America itself had not been a god, but people had made a god of
its ideology. The New York Stock Exchange and the Harvard School of Economics
had become the Mecca of neoliberalism. Now the apologists for the free market were
experiencing what orthodox communists had experienced after the death of Stalin,
and then a second time after the collapse of the USSR. The god had failed.

A Trap
Even if the ruling groups were ready to correct their course, this was almost
impossible for them. The point is that in the course of the 1990s they had driven
themselves into an institutional trap, one that threatened to be fatal for them.

The key principle of neoliberal reform, both on a global and on a national

level, is that it is IRREVERSIBLE. This means that once the structures, rules and
relationships have been established, it is impossible in principle to alter them. The
system does not have a reverse gear. Not one of the international documents of
neoliberalism outlines procedures for reversing decisions that have been taken, or for
particular countries opting out of an agreement. Once the mechanisms of regulation
have been abolished, restoring them is fundamentally impossible.
Not only has regulation in principle been outlawed (paradoxically, when the
capitalist class itself is starting to be in ever-greater need of it), but the institutions
themselves are being destroyed. To mechanically restore them is now impossible, and
pointless. The new level of development of the market demands new forms of
regulation. The problem is that the creation of a new institutional system from
scratch is not merely complex, but presupposes a far higher level of radicalism, far
more acute conflicts, and most importantly, the destruction of the neoliberal order on
a corresponding scale.
However much the bourgeoisie might want to escape from this institutional
trap, it cannot do so on its own. As in the 1930s, the only means for resolving this
conflict is a dramatic strengthening and radicalisation of the left. The crisis of the
early twenty-first century is not just the latest conjunctural downturn within the
framework of the natural market cycle. It is the result of long-term processes that
have been occurring within the capitalist economy over at least two decades, and
places in question the neoliberal model that has been dominant throughout this epoch.
In other words, what is involved is a clearly expressed systemic crisis. The twentieth
century knew at least two such crises, in 1929-33 and in the early 1970s. Both times
the crisis was overcome through the introduction of a new model of capitalism (in the
first instance Keynesian, and in the second neoliberal), but each time the very
existence of the system was under threat. Although the main threat to the system in
1929-33 and in the 1970s came from the left, ultra-right-wing forces were
simultaneously on the rise. During the years of the Great Depression Nazis came to
power in Germany, and in France the fascist threat was absolutely real. Significantly,
it was at precisely this time that the Stalinist regime in the USSR took on its final
totalitarian form. The repressions and the closed, centralised economy were Stalins
answer to the crisis of the world market. The revolutionary movements of the red

thirties also met with failure, but the social democratic reforms in Europe and the
New Deal in the US had changed the appearance of capitalism by the early 1950s.
In the 1970s, the left alternative was represented by the Chilean and
Portuguese revolutions. It seemed as though the radical movements that had been
defeated in 1968 were about to gain their second wind. Precisely at this time,
however, the neoliberal model was put into practice for the first time by the military
dictatorships in Latin America. The defeat of the left that had become obvious by the
late 1970s decided the outcome of the crisis.
This time, the left has a chance to stage a revanche. Historically, the left has
always played a dual role under capitalism. On the one hand, it has fought for a
qualitatively new society, for socialism. On the other hand, it has reformed capitalism,
and in the process, has essentially saved it. The above applies not only to reformists,
but also to revolutionaries. Paradoxically, the one has been impossible without the
other. Reform has required people to act on the system from below, both in the
political and social, and in the ideological sense. Without an alternative ideology, it
would also have been impossible to formulate the new ideas which subsequently lay
at the basis of the reformist programs. The crisis of capitalism between 1929 and 1934
culminated in sweeping reforms. The crisis of the 1970s ended in a bourgeois counterreformation. How will the crisis of 2001-2003 end?
The inevitability of the return of the left to the center of the political stage is
obvious, even from the point of view of the long-term interests of the bourgeoisie
itself, or at least, of a certain section of it. Meanwhile, those left parties and politicians
who accepted the rules of the game in the 1990s have become totally powerless in the
face of the crisis. They cannot propose anything meaningful to the working class, and
at the same time they are incapable of effectively serving the ruling groups. More
radical forces are moving to the forefront. What will they be able to suggest?
Just as in previous epochs, two currents are taking shape within the left. One
of these strives to overcome capitalism, and the other to improve it.

The Results of Globalisation

The crisis that began in 2001 is forcing a rethink of the outcomes of the
twentiethcentury. The globalisation that is hailed by thousands of journalists and

analysts is by no means anything new for capitalism. As far back as the 1970s,
Immanuel Wallerstein showed that capitalism arose initially as a global system.
National capitalisms (or the notorious local markets) began developing later, under
the impact of the processes occurring in the world economy. Capitalism is cyclical,
and this is true not only of the market business cycles of growth, decline and
recovery that are to be observed, in one way or another, every decade. The same
applies to processes on a far more massive scale. In the 1920s the great Russian
economist Nikolay Kondratyev, analysing the dynamic of prices over a century and a
half, discovered so-called long waves of capitalist development. Statements to the
effect that history repeats itself (and in the form of farce) have become a
commonplace with relation to political events. But this is even more true of economic
history.
The periods of globalisation have been times of the expansion of commercial
and financial capital, epochs when the ideology of free trade has prevailed. These
periods have been accompanied by a barbaric use of people and resources, by a rapid
accumulation of capital, and by impressive technological innovations that have
done nothing to improve the lives of the bulk of the population.
Such periods end in prolonged crises, military conflicts and revolutions.
Following these shocks the capitalist world-economy regains its equilibrium, but this
time the dominant position is held by industrial capital, enjoying the active support of
the state. Local markets do indeed begin to play a decisive role in development. But
this does not occur of its own accord, not because entrepreneurs disenchanted with the
world-economy rush to invest money in their own homelands, but because the rules of
the game are changing. The conditions for the development of local markets are
protection and state regulation.
The first cycle of globalisation coincided with the great geographical
discoveries. It was at this time that the first transnational corporations made their
appearance. When the English king Edward VI in the mid-sixteenth century sent an
expedition to search for a northern sea route to China, he wrote an accompanying
letter which arrived eventually in the hands not of the Chinese emperor, but of the
Muscovite tsar Ivan the Terrible. This letter represented a brief exposition of the
doctrines of the free market, little different from the recommendations brought to
Moscow four centuries later by the emissaries of the International Monetary Fund.

Following the expansion of the sixteenth century came the crisis of the
seventeenth century, accompanied by the Time of Troubles in Russia, by the Thirty
Years War in Germany, and by civil wars in Britain and France. Europe emerged
from the crisis beneath the banner of mercantilism, which as the dominant ideology
held sway in the courts both of the French Sun King and of the Muscovite
Romanovs. This was the ideology of protectionism, of the encouragement of national
producers, and of state intervention. The economic growth of the eighteenth century
began; its culmination was to be the industrial revolution in Britain.
An analogous cycle can be observed in the nineteenth and twentieth centuries.
After the industrial revolution Britain, as the leading power, set out to impose free
trade on the entire world. The liberal economy flourished, but already in the 1870s a
drawn-out depression had begun. An escape from it was sought in the seizure of
colonies and in the arms race. The situation merely became worse. The twentieth
century began with wars, crises and revolutions (not only in Russia, but also in
Mexico, China, Hungary and Germany). After this, the epoch of Keynesianism began.
It is not hard to see that the theory of J.M. Keynes that took hold of the minds of
world leaders in the late 1930s was a more intellectually developed version of the
very same mercantilism.
The technological revolution of the late twentieth century, it seemed, returned
us once again to free trade and globalisation. But not for long. The distinguishing
feature of the present, third globalisation is that despite its improbable scale and the
huge ideological clamour surrounding it, this globalisation has turned out to be much
less long-lived than the previous ones, exhausting its possibilities in twenty-five years
or so. Capitalism is again in crisis, and this crisis is structural. Even if the market
conjuncture improves somewhat, the difficulties will not be overcome. Before us is an
epoch of economic depression, social crisis, and political and economic instability.
Just as Kondratyev might have predicted, the Iraq war of 2003 coincided with a
crucial point in the development of the economic cycle. Entangled in its own
contradictions, the ruling class resorted to the salutary measure of a war of
expansion. But in the process, and as in 1914, it risked destabilising itself.
At the beginning of the era of globalisation, analysts were united in linking it
to the strengthening of the military, political, economic and cultural domination of the
US. But if we look at the history of capitalism, we readily see that every stage of its
commercial expansion began in conditions of the almost undivided hegemony of a

single power. As the crisis of the economic model grew nearer, the world empires that
rested upon it approached their sunset as well. The sixteenth century began with the
rapid rise of Spain, dominating the entire Christian World. Spain, however,
emerged from the crisis of the seventeenth century as a second-ranking power. The
nineteenth century was the age of Queen Victoria, when the sun never set on the
British empire. Most importantly, Britain was organising the world economy,
dictating the rules of international trade, creating and destroying alliances between
states. Unfortunately, at the time of the late Victorian depression, the power of the
empire was beginning to melt as well. The decline of an empire, of course, is a
prolonged process. Sometimes it takes centuries. The first symptom of decline is that
the empire has to go to war more and more often. The Spanish empire lost wars, while
Britain won them. But as is explained, this is of no significance. Armaments have to
be used precisely because economic might and political influence are no longer
enough.
Present-day America is displaying all the same symptoms. This empire, with
its almost limitless power over the world, is incapable of overcoming the worlds
problems. The unsolved global problems are turning into weaknesses of the empire.
Maintaining American hegemony is becoming more and more expensive, and most
importantly, the methods being applied are becoming less and less effective. The
crisis that began in Asia and Russia in 1997-98 has waxed and waned in intensity, and
together with it, the enthusiasm of liberal analysts has returned and then again
evaporated. The depressive state of the world economy, however, will last until the
rules of the game (and, in the final analysis, the players themselves) change radically.
Sooner or later, a return to protectionism and state regulation will become inevitable.
At first this will be shameful and secretive, presented in the guise of temporary
measures; later, it will be officially acknowledged policy. In order for local markets
to develop, they will have to be defended from the negative impacts of the world
market. In a unified global market, a single world cop is quite sufficient, but the
development of local markets means that each is dominated by local interests, which
demand government protection. This automatically means a return to the notorious
multipolarity of the political world.
While globalisation was on the offensive, multipolarity could be proclaimed
endlessly as a political slogan, but events nevertheless moved in the opposite
direction. Now, by contrast, people can glorify the unconquerable might of America

as much as they choose, but year by year Washingtons problems will multiply, and
its friends become fewer. In 2003, official Washington was astounded to discover that
the world had changed, that American leadership no longer applied, and that even
such partners in the Atlantic Alliance as France, Belgium and Germany were refusing
to support the war on Iraq. Even humble Russia began defending its rights, while
casting a sideways glance at its German protector. All this was still more strange
because the same states a few years earlier had given their approval to humanitarian
intervention against Yugoslavia. Meanwhile the new victim, Iraqi dictator Saddam
Hussein, was worse on every count than Yugoslav President Slobodan Milosevic. The
same European politicians and parties that had frothed at the mouth as they argued in
favour of bombing Yugoslavia were now joining with pacifists and leftists in
defending the right of Iraq to its sovereignty.
During the war on Yugoslavia in 1999, the US exhausted the last reserves of
Atlantic solidarity. Even then, the countries of Western Europe showed no special
enthusiasm as they lined up behind Washington. Four years later, in conditions of
global crisis and general discontent, it was simply impossible for the French and
German leaders to support someone elses war.
The Iraq war of 2003 put an end to all the arguments that the state was dying
out, and that an impersonal network empire was taking shape throughout the world.
The war showed that imperialism - in the most traditional, Victorian sense of the word
remained the reality of the new epoch. Also still on the scene were interimperialist
conflicts, rivalries between great powers, and military-diplomatic clashes. Full of
conflicts and dangers, this world was the direct opposite of the liberal utopia we had
been promised over the previous two decades. This outcome, however, was
unexpected only to those who had watched so much of the television propaganda that
they honestly believed in the end of history.
In any case, there is always an alternative possibility: replacing the capitalist
system with something different, and hopefully, better. Kondratyev wrote that the
dividing line between cycles was marked not only by conflicts, wars and crises, but
also by revolutions.
The anticapitalist alternatives of the twentieth century turned into totalitarian
nightmares, but this does not signify by any means that a democratic exit from
capitalism is impossible. Marx was completely serious when he wrote that the first
task of the victorious proletariat would be to establish democracy. In other words, that

social order within which the direction of development will be determined by the will
of citizens, and not by the interests of corporations. It is this that has been the main
spectre pursuing capitalism throughout most of its history. Call it what you will the
spectre of communism, the socialist alternative, or the democratic opening.
One way or another, it will return.

Chapter 6
The Generation of Seattle
The international financial crisis of 1997-98 became a political and
psychological watershed. After the collapse of the ruble, which was followed by a
wave of devaluations in Latin America, the political elites and the leaders of world
business were in confusion. Within a few months things stabilised, and it seemed to
the ruling classes that the situation was returning to normal. Their habitual selfconfidence returned. From this time on, however, their arguments along the lines of
there is not and cannot be an alternative, maintaining that the free market
economy was to the advantage of everyone, lost their former conviction even for
people who not long before had believed such fables. The promises of brilliant
success in the near future began to be seen as helpless incantations. Neoliberalism had
lost its hypnotic force. The magic had disappeared. The system was encountering
growing difficulties, and throughout the entire world disillusionment and anger with
the new order were increasing. A little more time was required for this dissatisfaction
to be transformed into political protest. The protest burst into the open in the autumn
of 1999 during the meeting of the World Trade Organisation in Seattle.

Chiapas: The Magical Revolution

The revolt in Seattle was not the first act of protest against neoliberal
globalisation. It lent impetus to the global movement. But the success in Seattle would
have been inconceivable without the victorious strikes in France in 1995, and without
the uprising of the Zapatistas in Mexico.

On 1 January 1994 the agreement on the North American Free Trade

Association (NAFTA), uniting the US, Canada and Mexico, entered into force. On
this day political and business leaders went to Mexico to mark the event. And on the
same day, Indians in the southern Mexican state of Chiapas rose in revolt, seized the
city of San Cristobal, and announced to the world the founding of the Zapatista Army
of National Liberation (EZLN). Somehow, the political and business leaders no
longer seemed so interesting. Attention was concentrated on the events in Chiapas and
on the Indians, who had declared that they were continuing the struggles of the hero
of the Mexican Revolution Emilio Zapata.
The Indians were wearing masks. Many did not have weapons, for which they
substituted wooden prop rifles. The insurgent army was strange. It did not threaten to
seize power in the capital, and did not promise a general popular uprising. It avoided
armed actions where possible. Its slogan was for armed struggle without gunfire and
bloodshed. In essence, the people had taken up arms not in order to shoot, but to
force the authorities to take notice of them and of their problems.
One of the leaders of the uprising was a man who was not only faceless but
nameless. He was known as Subcomandante Marcos, but the only thing we know
about him for certain is that this was not his real name. Nor was Marcos a movement
leader of the type of Castro or Che Guevara. Rather, he was its ideologue, and at the
same time a propagandist and press-secretary for the Indians, allowing their problems
and concerns to be understood by New York youth and Parisian intellectuals. It was
thanks to this international attention that the revolt of the Zapatistas was not drowned
in blood like hundreds of other Indian uprisings in Mexico. The army was rushed into
Chiapas, and the village dwellers fled into the mountains, but the troops were not
permitted to destroy everything forthwith; news from Chiapas was appearing instantly
on the internet, and was being discussed in the Western press. Meanwhile, the
Mexican government was scared of frightening off investors.
This was the first guerrilla war in Latin America that saw the struggle waged
more actively in the virtual space than on the field of battle. The masked Indians,
many of whom were armed with unloaded rifles or with wooden imitation guns,
seized not only the population centres of the province of Chiapas, but also the
imagination of radical youth on both sides of the Atlantic. In Europe, the image of the
Mexican insurgent became the object of a peculiar cult. The Zapatista became a

model even for people living and struggling in conditions totally opposite to those of
Chiapas.
Six years into the struggle, the one-party regime that had ruled Mexico for
decades fell. The Zapatistas entered the capital, not as an army of conquerors, but as
guests of the newly elected parliament. They were greeted by massive crowds.
Nevertheless, talks with the new authorities finished up in a dead end. It turned out
that the democrats who had come to power on a wave of popular discontent were
little better than the old regime. President Vicente Fox, who had won office on a
slogan of democratisation, pressed ahead with the same only possible neoliberal
policies. This meant that the democratic promises ceased to have any point. The
people of Chiapas rejected a peaceful accord that left them without rights. The result
of the talks was a situation of neither peace nor war, of armed resistance that
avoided military actions.
The struggle of the Chiapas peasants awakened the political consciousness of
hundreds of thousands of young people not just in Mexico, but throughout the entire
world. It showed that resistance to neoliberal capitalism could arise and could achieve
successes under the most unfavourable conditions. The Zapatistas provided an
example to the urban radicals of Western Europe and North America.

The Uprising Begins

In 1999 Seattle, which was supposed to become the symbol of free trade and
of the new global capitalism, was transformed into a symbol of anticapitalist
resistance. People began to speak of the spirit of Seattle, and of the Seattle
generation. The fact that the organisers of the meeting had chosen Seattle as the
place where the new round of talks on the liberalisation of world trade would begin
was by no means accidental. When Seattle was chosen for the meeting of World
Trade Organisation, transnational bureaucrats had been convinced that in this city, the
neoliberal order would find massive support. Unlike the old industrial centres of
America, where deregulation and cuts to social programs had destroyed the
accustomed way of life, leaving thousands of people without jobs, Seattle had the air
of a thoroughly prosperous city. This was the model city of the new middle class. It
was here that Microsoft had located its enterprises; here one could find the staff of

numerous head offices of companies conducting business with the countries of Asia.
In Detroit, Asian imports were taking the jobs of car workers, but in the port of Seattle
employment was growing. Here, too, were the engineering and administrative
personnel of Boeing. Nevertheless it was in Seattle, in the city of the new middle
class, that the protest found massive support.
On the eve of the WTO meeting, a march of many thousands of trade unionists
passed through the city streets. There had already been a good many similar
demonstrations. The authorities and transnational capital simply ignored such actions,
especially since the trade union leaders rarely decided to back up their criticism of
neoliberalism with calls for strikes. In Seattle the unexpected happened. It was not
just that there were more demonstrators than usual, but that their mood was more
decisive. Acting in parallel with the trade unionists were thousands of young activists
employing unusual and innovative methods to try to break up the meeting. Hotels
were blockaded by crowds of people, and central streets were blocked off by masses
of protesters. The participants in the meeting were thus unable to gather. Despite
harsh repression, the police were unable to restore control over the city centre.
Nevertheless, the most unpleasant surprise for the ideologues and strategists of
neoliberalism was the fact that young members of the middle class were proving more
radical than the trade union leaders. The moderation of the leaders of the old left
and the trade unions was the result of many years of defeats. By contrast, the young
middle class had grown up with neoliberalism, and was its product. These young
people were angered and affronted by the system, but were not weighed down by
constant defeats. The radicalism of the movement reflected the spirit of a rising social
layer. The new anticorporate movement united precisely those people and social types
that the liberal political elite had in the past counted on mechanically as being among
its most enthusiastic supporters, declaring them its best and most progressive. For
twenty years, the propagandists had been promising that a new generation that had
grown up under the conditions of the free market would make its appearance. Here,
finally, this generation was making its presence felt coming out onto the streets in
struggle against the capitalist order. This was an ideological catastrophe for the
systems apologists. They were confused and demoralised. The neoliberal elite, that
had shown its total indifference to protests by miners and steelworkers, was
unprepared for mass demonstrations by computer specialists and by students from
privileged colleges. Still more of a shock for the elites was the fact that these two

currents had merged into one; the young representatives of the new economy were
marching in a single column with the traditional working class, having recognised a
common interest in the struggle against corporate capital.
The form of the movement was also unexpected. The Seattle police
complained that the young protesters had better technical equipment, using mobile
telephones and portable computers with access to the internet. The new social layers
and the new generations were developing their own culture of protest. They were
capable of acting in a way that was decentralised, but at the same time coordinated
and effective. The coercion of the state was being confronted with network solidarity.
The antiglobalist actions that gripped the Western world following the battle
in Seattle seemed to many people like a second edition of the youth revolt of the late
1960s. Both feature a massive and largely spontaneous youth movement. In both
cases, rebel youth have risen up not only against the bourgeois order, but also against
the official left parties integrated into this order. In both cases, a movement that has
rested on a Marxist analysis of society has come under the powerful influence of
anarchist tradition. Nevertheless, the social base of the radical movement of the turn
of the twenty-first century is significantly broader than that of the new left. This is
apparent in the geography of the movement, that has become truly global. In the
1960s the world was divided into two systems. Even if the revolt of the new left had
echoes in Eastern Europe, the East had its own life and its own problems. In the
countries of the Third World, the radicals believed in national liberation.
As a global system, neoliberal capitalism ensured that the resistance to it
would also be global. Similar social problems appear throughout the entire planet, and
everywhere we see the same conflicts. It is not surprising that the ideology of protest
is also spreading like wildfire. If the revolt of the 1960s was prepared on the social
level by an overproduction of the intelligentsia, the rebellion of the late 1990s was set
off to a significant degree by the inability of the system to provide for the future of the
middle class. This does not mean that all the participants in the movement came from
the middle class, just as the rebels of the 1960s were by no means all intellectuals.
The growing discontent of the middle class, however, created an emotional nutrient
medium for young activists.

The Lessons of Prague

After Seattle, the movement started sweeping across the world. From the facile
hands of journalists, it received the name antiglobalist. The term is an absurd one,
and deliberately lacking in political meaning. It pleased the elites to depict the
protesting youth as a backward mob, resisting natural processes and not
understanding where their own advantage lay as modern-day Luddites out to stop
world trade. The movement, however, quickly acquired its own voice. Consequently,
it was impossible to conceal the fact that what was involved was global anti-corporate
protest, the rise of a new internationalism. Practically all large international gatherings
called by governments and the financial elites came to be accompanied by
demonstrations.
In September 2000, when ten thousand demonstrators who had gathered from
throughout Europe blocked a meeting of the International Monetary Fund and the
World Bank in Prague, the movement entered a new phase. It was in Prague that the
movement against corporate globalisation became genuinely international and global.
In Seattle it was above all a manifestation of protest by the new generation of
American youth, to a significant degree retracing the course of the radicalisation of
the 1960s, though in new historical conditions. Thanks to Prague the movement took
shape in Europe. For the first time since the International Brigades in Spain from
1937 to 1939, people from different countries joined in confronting a common enemy,
and in confronting it physically. Solidarity was transformed from a slogan and an idea
into practical action, into a way of life. In Prague Turks and Kurds came together,
Greeks and Turks, Germans and Poles, Spaniards and Basques. Meanwhile, it was
necessary to confront not only the police, but also the local neo-nazis.
The antiglobalist movement showed that it was simultaneously
internationalist. In turn, the defenders of globalisation resorted to the power of the
national state, not only when they used the Czech police against the demonstrators,
but also when they illegally stopped people on the borders of the republic, and
banished undesirable foreigners from the countrys territory. After the IMF and the
World Bank had fled, the police took their revenge on the Czech activists, subjecting
them to massive repression. The point was graphically demonstrated that globalisation
does not signify the powerlessness of the state, but the renouncing by the state of its
social functions in favour of its repressive ones; the irresponsibility of governments;
and the abolition of democratic freedoms.

The radical infection from the West had begun to penetrate Central and
Eastern Europe. Throughout the 1990s the ideologues of neoliberalism had constantly
repeated the story about Moses, who for forty years led the Hebrews about the
wilderness until all those who had grown up in slavery had died out. The generation
that had taken shape following the collapse of the communist regime was called upon
to become the embodiment of bourgeois values and market efficiency. Meanwhile, it
was precisely among young people that the anticapitalist moods were starting to
spread. Forgetting its own theories, liberal sociology with hindsight has begun to
think up all sorts of explanations for this unpleasant phenomenon. Some writers have
said that young people do not value market freedom because they have not known
the horrors of totalitarianism (in other words, the wandering in the wilderness has
yielded results strictly contrary to those that were planned). Other writers have
explained in all seriousness that while the older generation was out earning money
and trying to participate in the new market relationships, the children were left with
Stalinist grandmothers who raised the youth in a spirit of class hatred. Meanwhile, noone even entertained the thought that the experience of living under capitalism might
in itself induce people to join socialist organisations.
When the movement spread to Europe, it changed in many ways. Having
reached Europe, the movement took on a still more massive and politically tougher
character than in America. Criticism of corporations was replaced by anticapitalist
slogans, and appeals for a more democratic organisation of economic life, with
references to socialism and to revolution. If an anticapitalist spirit and mood had
prevailed in Seattle, in Prague it was possible to speak of a far more distinctly
formulated anticapitalist message. Here, the difference in political cultures was
making its effects felt; Europe possesses a far stronger socialist tradition.
To be truthful, it should be said that the red flags and revolutionary rhetoric
frightened off not only the ordinary citizens of Prague, but at times also the more
moderate participants in the movement. The ultraleft groups unexpectedly showed
that they were capable of uniting and of collaborating on a European scale,
overcoming their sectarian habits. They also showed that masses of young people
were now once again pouring into their ranks. At the same time, they revealed
infantilism, political light-mindedness, and an unpreparedness for serious discussion.
People who for many years had called themselves a historical vanguard found that

such a role demanded not so much regular self-praise, as constant work on oneself. By
no means all of these people were ready for such a thing.
When the World Bank and the International Monetary Fund planned their
annual meeting in the Czech republic, they hoped for a peaceful meeting in the only
Eastern European state where hatred for neoliberalism had not yet become a mass
phenomenon. In the event, the situation encountered in Seattle was seen once again: a
city chosen as a symbol of the success of the system came to symbolise its defeat. The
international bankers had to flee the Czech capital, on whose streets battles unfolded
between police and thousands of demonstrators who had gathered from all of Europe.
The bankers did not even hold a concluding press conference.
In Prague, the police expected the demonstrators to try to repeat the Seattle
Scenario: blockading the hotels, and closing off the streets at the approaches to the
meeting venues. Instead, the demonstrators allowed the participants in the meeting to
gather in the Congress Centre, and blockaded the exists. The Battle in Prague
showed the surprising tactical skill of the protesters. The columns of activists
manoeuvred, reserves were switched from one sector to another, and different groups
backed one another up. For two hours the representatives of the world banking
community were unable to return to their hotels. They were forced to travel there by
public transport, which as the bankers themselves admitted, was a real shock for them.
The tear gas with which the police drove the protesters away from the Congress
Centre in Visegrad seeped through into the building, and poisoned the participants of
the meeting. The discussions were wound up. Without even adopting a final
document, the international bankers made haste to abandon the now-inhospitable
Czech capital.

The Generation of Protest

Mass protests took place in Nice in December 2000 during the consultation of
leading organs of the European Union, and then in Switzerland during the World
Economic Forum in Davos. For the international financial institutions, Prague was a
severe defeat, in a certain sense even more severe than the Seattle uprising. For
precisely this reason, however, the executive committee of the ruling class drew
conclusions from what had happened, and began devising a strategy for counter-

attack. The growth of the movement was paralleled by an escalation of police

violence. In Prague, demonstrators had been hunted down with dogs, and beaten. In
Switzerland, the police blockaded the entire region of Davos, throwing transport out
of kilter and arousing indignation in the respectable burgers. Demonstrators were
drenched with cold water in frosty weather. Army detachments with armoured
personnel carriers were used to defend Davos (this technology was actively
employed in Prague, where one such vehicle was even set on fire by anarchists).
Later, in Quebec and Genoa, the city districts where the international meetings were
taking place were fenced off with special defensive walls, along which battles
unfolded between youth and police. In Quebec such a structure was termed the wall
of shame. In June 2001, police in Goteborg for the first time used firearms against
demonstrators. Several people were wounded. Mass arrests took place (also in
Goteborg, those arrested included for the first time a citizen of Russia).
The new radicalism took the trade union leaderships and the traditional left
parties by surprise. Sometimes they supported the movement, but all the same they
were unsure of themselves. Politicians were happy to play the role of friends of the
radical youth, but at the same time could not hide their fear of them. The trade union
leaders tried to shield their rank and file members from the ideological influence of
the young activists, and to avoid direct clashes with the police. The trade union and
youth demonstrations took place in parallel, but not together. Nevertheless, the
influence of the radicals had an impact on the trade union marches as well. The
aesthetic changed, as did the style of the street actions. The Seattle generation
brought with it a new understanding of direct action, turning it into a celebration, a
carnival, theatricalising the protest. If Pekka Himanen and Linus Torvalds had written
of a new culture combining work and pleasure, from now on protest would similarly
be combined with celebration. And moreover, with spontaneous celebration. This
playful style began to penetrate the trade union actions as well. Protesting in
Quebec against the efforts to create an all-American free trade zone, trade unions in
the spring of 2001 came onto the streets not just with their accustomed flags and
banners. Everywhere there were puppets, jugglers, clowns, dancers, and people
playing music. Only a small group of activists, however, joined in with the young
people who were waging battle next to the wall of shame erected by the police. The
workers demonstration headed off in the opposite direction. It is not surprising that a
wave of criticism later engulfed the trade union leaders. With hindsight, large

numbers of people suddenly remembered how they had heroically stormed the
wall of shame. If even half of those who recalled their feats in retrospect had
actually been there, the police would hardly have managed to hold back the onrush of
the crowd. During the Prague demonstrations, many of the organisers and participants
had already spoken of how a weariness with street protests might sooner or later set in
among the activists. But in 2001 the protests kept growing. Prague and Davos were
followed by Quebec and Goteborg.
The European actions in 2000 and 2001 culminated with the events in Genoa.
Between two hundred and three hundred thousand demonstrators were drawn there by
the summit meeting of the big eight leaders of the largest industrial countries.
Preparations for the Genoa summit had been under way even when a left-centrist
government held power in Rome. By the time when the heads of seven leading states
arrived in Genoa, the left-centrist coalition in Italy had suffered a crushing defeat, and
the right-wing government of Silvio Berlusconi had come to power. A new political
situation had arisen. The left-centrist forces, united in the Olive Tree bloc and the
Party of Left Democrats, were demoralised. On the other hand, the trade union leaders
and heads of mass organisations who had traditionally looked to the interests of
their government found themselves freed up. However disgracefully the left-centre
government might have behaved, so long as it remained in power it could claim to be
a lesser evil, arguing that mass protests would rock the boat and aid the right.
Restraint on the part of trade unions, however, has never in any country saved
social-democratic cabinets that have dug their own graves by pursuing right-wing
policies with the enthusiasm of newly converted worshippers of the market deity. The
electoral catastrophe suffered by the social democracy acted as the signal for a
radicalisation of the mass movement first in Italy, and then throughout Europe.
The savagery of the police during the demonstrations in Salzburg and
Goteborg earlier in the same summer had left radical youth wanting to trade blow for
blow. The majority of the activists who arrived in Genoa in the summer of 2001
were Italians, but contingents of many thousands came from France, Greece, Great
Britain, Spain and Germany. Groups from Eastern Europe, including from Russia,
were also represented. The Australian journalist Sean Healy wrote that the state used a
classical counter-insurgency strategy against the protesters in Genoa14. Provoking

14

Green Left Weekly, 1.08.2001, p. 18.

violent clashes, the police sought to carry out two tasks simultaneously. The press and
the authorities used the street battles, the broken shop windows and the pictures of
violence to portray the opponents of the system as an aggressive crowd of vandals. On
one side, the possibility had emerged of politically dividing the movement,
counterposing the radicals to moderates who condemned the violence. Meanwhile, a
sweeping military-police operation was being conducted, no longer fettered by legal
norms. In practice, the police acted according to wartime rather than peacetime laws.
They had been given firearms, and used them without hesitation. Long before the
clashes in the cities where demonstrators were on the march, a de facto state of
emergency had been introduced. Certain regions of the cities had been declared
prohibited red zones. The proclaiming by the police of these red zones had
become a new cause for confrontations, since the demonstrators considered such
decisions illegal and in violation of constitutional norms (guaranteeing freedom of
movement, freedom of assembly, and so forth).
The summit in Genoa turned out to be unprecedented, by European standards,
for its violence. For the following two weeks, Italy could not regain its composure. In
Prague the participants in the demonstrations had spoken of carnival violence.
Somehow, the battles with the Czech police mixed in naturally with the theatrical
spectacle, with the pink balloons soaring above the clouds of tear gas. In Quebec in
the spring of 2001 catapults pelted the police with velvet teddy bears, and smiles had
been drawn on the banderas with which the young people storming the police
barricades had covered their faces. The local press ran pictures of shields, gas-masks
and motorcycle helmets in its fashion section. But in Genoa, the time for jokes was
past. On both sides, people were becoming more ruthless. Armoured vehicles rammed
the crowd. Young people looted shop windows, set fire to cars, and built barricades.
Here, unlike the situation in Prague, there were no safe zones; the entire city had been
turned into a huge battlefield. Not only did the police savagely beat demonstrators,
but young people threw themselves furiously on carabineri who had become separated
from the police ranks, kicking them and beating them with sticks. On 20 July 2001,
the young activist Carlo Giuliani was killed by carabineri on Kennedy Square [Piazza
Kennedy?]. He was the movements first martyr. The Piazza Kennedy, where the
young man had died, was spontaneously renamed the Piazza Carlo Giuliani. On the
night of 21-22 July, police invaded the building where the Genoa Social Forum was

being held, beating and arresting dozens of people. The number of injured ran into the
hundreds.
The counter-insurgency strategy was a failure, since the ruthlessness of the
police finished up rebounding on them. The Italian press united in condemning the
repression, while a parliamentary investigation revealed the extent to which the police
actions had been planned in advance. To a degree this process was aided by
Berlusconi himself, seeking to lay the blame for what had happened on the previous
left-centre government. A storm of criticism descended on the Italian authorities, and
the parliament was forced to begin its inquiry.
The big eight did not get what they wanted from the summit. All the
attention was fastened not on the meeting, but on the street battles. The demonstrators,
however, could not celebrate a victory either, and not only for the reason that unlike
the case in Seattle and Prague, they had not managed to stop the summit from going
ahead. The battle in Genoa showed the limits of street protest. Susan George notes
that in Genoa and Goteborg direct repression and electronic surveillance of activists
were combined with an ideological counterattack15. The events in Genoa showed
that radical youth were able to seize control of the streets, but that this was not enough
to shake the authorities. After many years of arguments from thinkers and
commentators about the powerlessness of the state in the epoch of globalisation, the
state power had again come to the forefront, demonstrating its repressive might and
class essence. The carnival was over. In the movement, a serious strategic and
ideological discussion had become essential, along with a more exact definition of
reference-points and a working out of political priorities.
Protest is not yet revolution. Protest is defensive. It allows the combining of
action with a sort of strategic passivity. Its aim is to force the elites to renounce their
plans or to correct them. Protest opens the way for social change, testifies to the fact
that society or at least a significant part of it wants things done differently, and refuses
to reconcile itself to the accustomed rules of the game. Protest, however, cannot
replace politics.
One of the most popular ideologues of the movement, Walden Bello, wrote
after the demonstrations in Seattle and Prague that a crisis of legitimacy had arisen.
No-one believes any more in the institutions of the world ruling class, including even

15

Le Monde diplomatique, aout 2001, pp. 1, 6.

the people who run these institutions. This crisis has been aggravated by the growing
difficulties in the world economy. In short, something has arisen along the lines of
what Lenin would have described as a global revolutionary situation; not only have
the lower orders ceased to accept the authority of the world financial institutions, but
the people on top have also begun to doubt that these institutions are effective. In
Bellos view, the Asian crisis of 1997-98 was the Stalingrad of the International
Monetary Fund. The left now needs to pass over to the offensive, and to fight for a
new economic order based on decentralisation, democratic control from beneath, and
the development of local markets, using resources and providing work and products
for people in the places where they live. In reality, the events in Prague and Seattle are
better compared not with Stalingrad, where a fundamental turning-point was reached
in the course of the Second World War, but with the battle for Moscow, where
German nazism suffered its first defeat, but was not smashed. After its victorious
battle on the outskirts of Moscow, the Red Army still had to survive a shameful defeat
near Kharkov and a retreat to the Volga.
In identical fashion, it became clear after Goteborg and Genoa that
demonstrations would not shake the hegemony of the financial oligarchy and the
transnational corporations. Although the political parties seem to the young radicals to
be corrupt, and elections a cynical contest between moneybags, street protest cannot
replace political action, including participation in elections. Another generation of left
activists has now come to the conclusion that political organisation is indispensable.
The activists of the new anticapitalist movements are doomed to enter the
same political arena on which the traditional left has operated. But they need to
operate in this arena in new fashion. The mass base of the left is changing. The revolt
of the new middle class has brought with it new methods of struggle, and new modes
of organisation. Nevertheless, the positive and negative experience accumulated by
the workers movement over a century and a half remains just as valuable as in the
past. Network organisation, spontaneous actions and a carnival style cannot replace
democratic principles, serious political discussion, and debate over strategy and
tactics. Each has to augment the other.

Terrorism

On 11 September 2001 reports of aircraft crashing into the buildings of the

World Trade Centre and the Pentagon plunged the entire world into a sort of
paralysis. The human race was glued to its television sets. Thousands of people
perished before our eyes in real time. For the society of the spectacle, this was the
culminating act: a catastrophe was turned into a spectacle, and a spectacle became a
catastrophe. The corporate elites, the military-police complex, the bureaucracy and
the security services instantly took on a new self-confidence and acquired a moral
justification for their activity. The struggle with terrorism went onto the agenda,
replacing the discredited freedom of trade, while liberal economics itself was
transformed into a means of defending civilised humanity from extremism. For
the world system, the crisis of legitimacy was replaced by an aggressive confidence
in the need for a new imperialism.
Everything that was considered morally dubious on the part of the authorities
and the corporations was justified as being indispensable. The invading of foreign
territory ceased to be regarded as a breach of international law, and came to look like
a police operation. As in 1967, the occupation of Palestine by Israeli forces could
again be seen as necessary self-defence, while the Russian authorities explained to the
amazed public that in Chechnya they were fighting the very same islamic
fundamentalism that had brought down the World Trade Centre. Every dictator, even
the most insignificant, discovered on his territory a small offshoot of the world-wide
terrorist network that had to be fought. Leaders who did not find terrorists within their
borders found them on the territory of neighbours, and declared that it was necessary
to unite the nation in order to fight against them. Once again, they remembered the
middle class. Acknowledging that the nutrient medium for terrorism was poverty, the
corporate propaganda performed a brilliant leap of the intellect and declared the
transnational companies to be the vanguard of the anti-terrorist campaign. With their
investments, they were developing backward countries and creating there a middle
class the bulwark of stability and democracy.
On the whole, the terrorists who aimed the Boeings at New York and
Washington (if, of course, these were the people whom the official investigation
named with suspicious haste) were members of the middle class. Meanwhile, the
monetary resources for the development of the terrorist networks had not been
provided by the impoverished lower orders of the Third World. The propagandist

hysteria that began after 11 September, however, ruled out any possibility not only of
analysis, but even of elementary discussion.
Nevertheless, the ideological counteroffensive of the elites achieved its goals
only in part. However paradoxical it might seem, the main victims of the reaction
were not the radicals, who remained politically determined to continue the struggle,
but moderate leftists, progressive liberals and realistic social democrats of all
varieties. Frightening these people was not difficult. Champions of political
correctness and minority rights, they proved impotent against a wave of open racism.
Some ran for cover, and began justifying themselves. Others made a hurried change
of course, and rushed to join the ranks of the victors.
The crisis of Social Democracy in Western Europe had begun long before 11
September, but it was now that the complete hopelessness of its position was
revealed. In elections, catastrophic failures followed one after another. The candidate
of the French socialists, Lionel Jospin, did not reach the second round of the
presidential elections. Then the Dutch Party of Labour suffered a similar catastrophic
defeat. In Germany, the coalition of social democrats and Greens began rapidly losing
popularity.
Meanwhile, the psychological effect of 11 September proved far more shortterm than might have seemed in the first weeks after the tragedy. The shock passed. It
was found that the fighters against world terrorism had neither new ideas, nor even
long-term strategic plans. The collapse of the social democratic centre opened up
the political field to more radical forces.
War and Protest
Immediately after the events of 11 September, the mainstream press declared
that the movement against globalisation had vanished into the past. It quickly
became clear that the authors of such commentaries were trying to pass off their hopes
as reality. In the late autumn of 2001, huge anti-war demonstrations were already
beginning in Western Europe. When the US and Britain started bombing Afghanistan,
demonstrations of many thousands of people came out onto the streets of Western
cities. With the struggle against terrorism a pretext for attacks on civil rights, the
anti-war movement, in the words of Ignacio Ramone, became a form of defence of
our principal freedoms.

The events during the autumn of 2001 had the effect not only of reshaping the
slogans of the movement, but also of changing its geography to a degree. In the US,
radical currents faced an undeniable crisis, but in Europe and the countries of the
Third World there was no serious crisis whatever; on the contrary, the movement
received a fresh impulse. Not only were massive demonstrations continuing in various
parts of the world, but they were occurring on a new scale. The forum in Porto Alegre
was larger than the forum of bourgeois solidarity held in 2002 in New York instead
of Davos. Surprising the organisers themselves, a demonstration in Barcelona in the
spring of 2002 attracted almost half a million people, while a demonstration in Rome
not only exceeded all expectations, but all historical precedents. By the most modest
estimates, more than two million people were on the streets. The demonstration was
followed by a general strike against the government of Silvio Berlusconi.
The Italian strike was a genuine turning-point, since it showed that the trade
unions and the workers organisations again enjoyed the support of the middle class.
According to the apt remark of Fausto Bertinotti, this was the end of the loneliness of
the worker.
In reality, the workers movement in Western Europe had come out of its
isolation a good deal earlier. The strike by public sector workers in France in 1995
became a legend precisely because it showed how much the public mood had
changed. Public transport ceased to operate, and people were late for work. The
public, however, not only failed to condemn the strikers, but rejoiced and suffered
along with them. The same was observed in London during the strike by underground
railway workers against attempts at privatisation. The protesting workers appeared as
be responsible people concerned for the public interest, and the government as a
group of irresponsible demagogues.
A new outburst of radical protest was provoked by the Iraq conflict. Once it
had become clear that after dealing with Afghanistan, the US government intended to
attack Iraq, anti-war actions took on historically unprecedented dimensions. Nothing
similar had occurred even during the period of the Vietnam war. At that time, whole
years had been needed for society to be aroused and to start demanding peace. This
time, the opposition to the war began even before the military actions themselves. On
15 February 2003 millions of people came onto the streets of cities around the planet.
The administration of George W. Bush did not even try to prove a link
between Iraqi dictator Saddam Hussein and world terrorism, or the events of 11

September 2001. The US leadership set out openly to conquer the country and seize
control of its oil, while at the same time promising to bring freedom to the people of
Iraq. How much these promises were worth was evident simply from the list of
friends of the US who supported the invasion. Bush was untroubled by the fact that in
the camp of his closest allies were dictators with no more care for their subjects than
Saddam Hussein (Uzbekistan, Kazakhstan, Tadzhikistan and liberated
Afghanistan). These authoritarian rulers were corrupt through and through, and in
exchange for financial aid, were prepared to mount a show of support for world
public opinion.
Meanwhile, the military actions in Iraq that began in March 2003 despite the
opposition of the UN Security Council were merely part of the overall politicomilitary strategy of the new American leaders. In the US itself, attacks on civil rights
and freedoms continued. The republic was supposed to turn into an empire, with all
the attendant consequences for its internal life. A substantial part of American society,
however, understood the danger and took up the challenge. The scale and
determination of the anti-war movement of 2003 resulted from the fact that it rested
on the existing achievements of the antiglobalists. The radical protests which, it
seemed, had died down after 11 September 2001 flared up with new force. The
leaders, the organisational structures, and the experience were all in place. This time,
however, unprecedented numbers of people who had not taken part in the antiglobalist
actions joined in the resistance. These were people who had realised that it was
essential to defend democracy and human rights against the extremists in the White
House. It was not only the independence of Iraq that was in danger, but American
freedom as well.
The largest US cities, San Francisco, New York and Los Angeles modern,
cosmopolitan and multinational became the centers of opposition. Here, the revolt
of the middle class took on the character of massive, stubborn resistance. The
America of big modern cities was resisting the authorities, who found support in the
sleepy nationalist and at times, racist hinterland, that even now regards Copernicus
with suspicion, and that refuses to make peace with Darwins theory of evolution. The
country had become divided into two camps, not only politically, but also
geographically. A fight had begun for the future of America.

Violence
The revolt in Chiapas was armed, but non-violent. Subcomandante Marcos
explained that the ideal of the Zapatistas was to conduct an armed struggle without
firing a single shot. The gun was a symbol of struggle, a sign that the Indians, who
had risen up to defend their rights and dignity, refused to reconcile themselves to the
violence of the state, and were ready to defend themselves. The principle of nonviolent resistance was also proclaimed by the activists who broke up the meeting of
the World Trade Organisation in Seattle in 1999. They blockaded hotels and closed
off roads, preventing participants in the meeting from reaching the venues, but did not
start fights with the police. The same slogans were announced on the eve of the mass
demonstrations in Prague in 2000, and in Goteborg and Genoa in 2001.
Nevertheless the Zapatistas, despite their obvious reluctance and inability to
wage a real war, had to use weapons, and not only the stage-prop variety.The peaceful
demonstrations in Prague and Genoa ended in outbursts of violence. The outstanding
twentieth-century sociologist Erich Fromm wrote that the daily life of consumer
society was accompanied by a hidden accumulation of aggressiveness. Outward wellbeing was combined with alienation, with peoples inability to direct their own lives,
with dependency on external control, starting in the workplace and ending in the
armchair by the television, where they were told what they should eat, what they
should wear, and what they should be. Ultimately, the accumulating sense of
discontent gave rise to diverse kinds of aggression, starting with motiveless crimes
and suicides, and extending to the irresistible desire to fling a stone at a shop window
or at the head of a police officer.
In Prague many activists were shocked by the violence on the streets, and even
more, by the united attack directed against the movement by the press. The assault by
demonstrators on armour-clad police and the sacking of a McDonalds restaurant,
whose owners knew in advance of the coming attack, do not of course bear any
comparison with the everyday repressive practice of capitalism, and perhaps represent
a natural response to this practice, though not a particularly rational one. Society is
permeated with aggression at all levels, and hence both protest and resistance at times
take on an aggressive form. In this connection, what is remarkable is not the outbursts
of violence, but the fact that throughout the entire demonstrating season in Europe
and America between 1999 and 2001 these episodes were so few.

The mass media in their turn adore scenes of violence. As was to be expected,
the mainstream press in Seattle devoted most of its attention to two or three dozen
anarchists who were smashing the windows of chic boutiques in the city centre.
Neither the strike by the port workers protesting against the WTO meeting, neither the
peaceful demonstrations by many thousands of people were considered newsworthy.
But the first glass had only to shatter, and all America, followed by the entire world,
noted with amazement the appearance of a new political force.
The same pattern was repeated in Prague, Quebec, Goteborg and Genoa,
where efforts were made to depict the protesters as an aggressive mob, something like
football hooligans. The attitude of the press to the violence in Prague and Belgrade
was typical. Both actions took place in the same month. In both cases radical-minded
youth resorted to violence, engaging in clashes with police. In Prague, however, the
demonstrators were branded as hooligans who did not know what they wanted,
while in Belgrade this was termed a popular revolt. It was clear that in Belgrade the
Western press was condemning the dictator Slobodan Milosevic, while in Prague it
was exalting the democratic president Vaclav Havel. Meanwhile, the behaviour of the
police in Prague was identical to that in Belgrade, while from the legal standpoint the
actions of the authorities in the Czech Republic were at least doubtful (illegal bans on
the entry to the country of foreigners who had the right to entry without visas; the
banning of peaceful processions about the city streets; and so forth). From the time of
the American Revolution, illegal acts by the authorities have traditionally provided a
justification for civil violence. In Belgrade, by contrast, the police in formal terms
were acting within the bounds of the law, trying to defend public buildings from being
seized by the crowd. It might be added that in Belgrade the number of injured was
greater by a whole order of magnitude. Two people in the crowd died, and looting
took place, while in Prague there was nothing of this sort.
None of this is pointed out in order to absolve Milosevic of responsibility for
the crimes that he and his associates unquestionably committed (just as his opponents
in the Balkan crisis also committed crimes, that were in no way better). The issue here
is not the Balkan tyrants of the late twentieth century, but the nature of the
enlightened and democratic Western European press. In all of the cases noted, the
mainstream press was responding not to the violence as such, but to its own political
goals, which predetermined the angle from which the violence would be presented
and commented upon.

From the very first day, most of the journalistic teams that arrived in Prague
did not conceal the fact that the only show they were interested in was the physical
confrontation between demonstrators and police. With hindsight, many newspapers
wrote that the street skirmishes distracted attention from the weighty discussion on
the problems of globalisation. In practice, everything was quite different. The
discussion continued throughout a whole week, with neither the Czech nor the
international press showing the slightest interest. South African finance minister
Trevor Manuel told the press that he did not understand what the protesters wanted.
Earlier, in Prague Castle, Walden Bello and other ideologues of the movement had
spent a full hour explaining their positions to him. Unlike Manuel, James Wolfensohn
had at least been honest enough to admit that he understood what they were talking
about. From 22 to 24 September the Initiative Against Economic Globalisation
(IAEG), which had drawn general attention to itself by organising the 26 September
protest, held a counter-summit with the participation of leading critics of the
International Monetary Fund. Throughout the counter-summit there was only one
television camera present; this belonged to a weekly program devoted to rock
music! The more moderate group Bankwatch also held numerous meetings that were
totally ignored by the press. As for the street actions of 22-25 September, which were
totally peaceful, two-thirds of the reporting on them consisted of discussion of the
coming violence. Trying to attract the attention of the press, the IAEG activists
attempted to organise street carnivals, made puppets, and mounted theatrical
presentations which in themselves could have provided material for good reporting,
but all the same the expectation of violence dominated. It is noteworthy that many
colourful pictures of the first days went to air or were published in the newspapers
only after a delay, and together with commentaries along the lines of: What began as
a carnival finished up as battles in the streets. The same could be said of a number of
statements by activists and guests of IAEG that were not quoted until well after they
were uttered, and after the press had obtained what it was waiting for so impatiently.
During the march, the journalists from the very first minutes discussed only one topic
Where are the riots? Sooner or later, what everyone was expecting had inevitably
to happen.
The media reaction to violence in turn moved the issue of violence to the
forefront inside the movement itself. The radicals accused the media of ideological
bias. On the other hand, one can only marvel at the illogic of the moderate leaders of

the movement, who in speaking out against the bourgeois order, simultaneously
sought the love of the bourgeois press. The problem cannot be reduced to ideology,
and to journalists writing to political orders. During the years of neoliberal rule the
mass media, and television in particular, had simply lost the ability to think with any
depth. Ideas are dull, while violence is spectacular. Television demands action, not
discussion. It needs pictures, not words. Ideas are complex, while action is simple.
Such are the laws of the genre. A ransacked McDonalds restaurant constitutes a
message which can be read on a television screen, while arguments about who is to
blame for the ruin of Russia or for the poverty of the countries of the Third World
remain as though in parenthesis.
Everything is reduced to the form, the image, the spectacle. This in turn
presupposes the hegemony of stereotypes, the triumph of banality and the absence of
meaning. The clip-consciousness of television journalists demands neither analysis,
nor attempts to gain an understanding of the causes and consequences of events. It is
only in hindsight, when it becomes clear that a simple showing of pictures is
insufficient, that the possibility of discussion arises. It was precisely the spectacle of
violence on the streets of Seattle, and later of Prague, that forced a section of the press
to devote attention to the growing criticism of globalisation.
It could be said that violence is the PR of the poor. If you have money and
power, then in one way or another you are assured the attention of the mass media,
even if you are talking about the cut of your jacket or the sort of coffee you drink at
breakfast. For those who have neither money nor power, protest is at times the only
way of attracting attention to themselves. The Polish and German youth who sacked
the McDonalds on Wenceslas Square in Prague simply did not have any other way of
expressing themselves.
It does not follow from this that smashing shop windows is good. Regardless
of what we think of fast food, civilisation has developed far more considered and
meaningful methods of protest. The problem, however, is that the media totally reject
any responsibility for developing democratic dialogue. While condemning the
excesses of demonstrators and police, the media refuse to accept any share of the
blame, and pretend that the dominant approach to information has no influence on
what happens. Unfortunately, this is wrong. Demand gives rise to supply.
The striving of the mass media to show the most expressive and dramatic
items leads to exaggeration of the scale of violence and conflict in the television

version of events. For example, the Russian press reported that in September 2000
not a single shop window remained intact in Prague, although the only windows to
be broken were those of a few McDonalds and Kentucky Fried Chicken restaurants.
This too is far from innocent, since the media furnish stereotypes of behaviour. Some
might think it possible to repel people in this way from committing acts of violence,
but in real life, a negative has a negative effect. Among the participants in protest
actions, the feeling is becoming established that violence is the only thing that works
with the media. Correspondingly, television viewers are forming their own
stereotypes, by no means always predictable and inoffensive. Thus, a number of the
young people who identify themselves politically with the protest movement are
starting to develop a positive stereotype concerning violence. On the evening of 26
September one of the Eastern European anarchists described the clashes that had
occurred as European ritual-carnival violence, adding that in other parts of the
world everything would be far worse. The meaning of this utterance is clear: a great
deal was being done for show, especially for the television and press cameras. This is
also a real problem for the movement; for it to put its stake on violence, even carnival
violence, as its main method of propaganda is just as absurd and dangerous as a
dogmatically understood non-violence.
Of course, the media in Prague were present at the meeting between James
Wolfensohn and representatives of non-government organisations, just as they
attended the discussion between critics of corporate globalisation and international
financial leaders that was held in Prague Castle under the patronage of President
Havel. Journalists also devoted a good deal of attention to the World Social Forums in
Porto Alegre in 2001 and 2002. The point, however, is that people took part in these
meetings who were influential and famous, even if they were on the side of the
protesters. In Prague, ordinary participants in the protests were not allowed entry to
such meetings, while the discussion itself recalled a spectacle staged especially for the
television cameras. In Porto Alegre the masses were on the streets, shouting radical
slogans, but the attention of the journalists was fixed on the VIPs discussing moderate
projects. Democracy consists not just in the possibility of expressing different points
of view (this was partly the case with the forum in Porto Alegre, which represented an
alternative to the World Economic Forum in Davos), but also in everyone having the
opportunity to put forward their ideas.

The question is not only one of politics. The root of the problem lies in the
indifference of the mass media, and above all of the television, to any attempt at
dull theorising; in the rule of the banal, and in the refusal to listen to the views of
people outside a narrow circle of newsmakers (whether official or alternative is
ultimately not important). The broadening of the movement, the involvement in it of
representatives of the Third World, the combining of demands aimed at the
international financial institutions with protest against the antidemocratic practice of
national authorities and against corruption and exploitation in peoples own national
states all this leads to a situation in which the total quantity of violence that
accompanies mass actions on the global level will not diminish but increase. This is
an objective reality that cannot be brushed aside, or evaded with quotations from Lev
Tolstoy or Mahatma Gandhi. Herbert Marcuse stated quite correctly that revolution
has to be economical with violence. People who want to minimalise violence have to
learn to control it.
Chapter 7. The Epoch of Protest
The radicalisation of the middle class is the natural result of the crisis in which
neoliberal capitalism is becoming immersed. The landmarks of this radicalisation are
the financial crash in Russia in 1998, the youth revolt in Seattle in 1999, the economic
catastrophe and mass protests in Argentina in December 2001, and finally, the
collapse of the stock exchange in the US in the summer of 2002. The agony of the
middle class began in Russia. It was here that financial catastrophe broke out,
acquiring a global symbolic meaning. When the Russian government in August 1998
was forced to devalue the ruble and declare a default on the internal debt, it did not
realise that it was initiating a socio-cultural process extending far beyond the borders
of Russia.
The Russian Way
Within a matter of hours the English word default, in the sense of refusing to
make payments, became firmly implanted in the Russian language. But it was not
only the government that suffered the default. Collapsing at the same instant were the

ideology and the image of the world that had become established in the members of
the middle class.
A norm of the neoliberal model is the constant redistribution of resources from
the real economy to the financial oligarchy and speculative capital. Sooner or later,
such a system has to collapse. But when this collapse comes, the savings, salaries and
jobs of the new middle class fall along with it.
Much the same thing happened throughout the world, but nowhere had the
relationship between financial capital and the real economy been as disproportionate
as in Russia. The growth of the banking structures and financial empires occurred
against a background of the collapse of industry, and at industrys expense. The
plunder of the enterprises laid the basis for the financial well-being of the oligarchs.
The new middle class appeared on earth in order to serve the economy that had been
created by the oligarchs in line with their needs and ideas. It is not surprising that all
this was doomed sooner or later to disintegrate. Those who would suffer would be the
new middle class, whose prosperity was tightly bound up with the obviously unviable
system. The ruble collapsed, banks closed their doors, and savings vanished.
Successful managers lost their jobs. Restaurants and boutiques were left without
clients. Former company chiefs drove about the streets in their expensive cars,
offering their services as unregistered taxi-drivers.
The crisis of 1998 did not strike at the very poorest. Even without a default,
most of the population lived in destitution, at times not receiving their wages for
months. They could not lose their savings in the banking collapses, since they had no
savings. What became a catastrophe for the middle class in August 1998 had
throughout the decade been everyday reality for the majority of the population.
The notion of the market rewarding the best and punishing the worst is a key
myth of neoliberalism. The victors are certain of the rightness of their cause, and are
convinced they deserve their success. They firmly consider themselves to be the best.
Traditional religions left the choice of the best to God. Neoliberalism has expropriated
God, handing over his functions to the market. If sixteenth-century protestantism
taught that God rewarded the elect through success in the market, for the
neoliberalism of the late twentieth century the market itself had become God.
Unfortunately, faith in this deity survives only so long as stock market prices continue
to grow.

When the market crashes, the people beneath the rubble are precisely those
who had just been declared the best and most progressive. Those who have profited
most, lose most. Reasonably enough, the question arises: if the system recognised us
as the best, what is it punishing us for?
In 1998, the collapse of the ruble marked the beginning of a rift between the
middle class and liberalism, not only in Russia but in the world at large. The
catastrophe that befell the ruble was precipitated by economic difficulties in East
Asia. The preconditions for financial collapse were ripening in Russian society, but
the Asian problems provided the shock that set the financial markets reeling,
revealing all their irrationality and instability. Russia in turn had a direct influence on
Latin America. Within a few weeks, currencies began falling one after another. The
finest pupils of the International Monetary Fund were forced to admit their
bankruptcy. The same policies had been implemented in Russia, Brazil and Ecuador.
It is not surprising that the results were similar.
The crisis of 1997-98 was successfully contained. The government of Brazil
carried out a timely devaluation of the national currency, the real, that had been on the
brink of the abyss. Argentina, with the help of Western financial institutions, kept the
exchange rate of the peso at an absurdly high level. The Japanese central bank,
lowering interest rates to zero, held back the Asian money markets from an
uncontrolled fall. Meanwhile, the US economy continued to grow from inertia,
proving to the world that an efficient capitalism was possible, at least in one country
taken on its own. Unfortunately, this was only a temporary respite. In 1998 the
system was successfully stabilised, but not one of the long-term problems had been
solved. The crisis was not overcome, but postponed. Three years later a new financial
crash occurred, this time in Argentina.
The economic catastrophe was accompanied by mass disturbances in Buenos
Aires and other Argentinian cities. Eighteen months later, the wave of financial crisis
swept across the United States, and from there rolled once again into Latin America,
bringing down the currencies of Brazil and Uruguay.

The Escalating Catastrophe

Each new crisis was turning out to be more acute than its predecessor. In
Russia the collapse of neoliberalism did not lead to mass protests. Society needed
time to realise what had happened. The revolt in Seattle, which occurred after the
Russian default, was the first organised response by members of the middle class to
the ruin of the hopes associated with the market economy. Moreover, the middle class
protested along with the workers. Nothing of the kind had ever happened before.
The Argentinian crisis of 2001 unfolded in a new global situation, in which
neoliberalism was totally discredited. In Moscow in 1998 there was no uprising and
could not be; a new self-consciousness, mood and ideology had not yet ripened. This
was true not only on a national, but also on a transnational scale. The collapse of the
financial system in Argentina, however, occurred after the catastrophe in Russia, after
the revolt in Seattle, after the economic failures in the US, and after blood had flowed
on the streets of Goteborg and Genoa. This occurred, moreover, in a country rich with
traditions of popular resistance. The financial crash provided the impulse for revolt.
After enraged residents had poured into the streets of Buenos Aires, people in
Russia recalled how three years earlier Argentina had been urged on them as a model.
The business press had published ecstatic articles about the Argentinian miracle and
its maker Domingo Cavallo. Fortunately, and unlike their usual practice, the Russian
authorities then showed some good sense. A way out of the crisis was found not by
another pupil of the IMF, but by a cabinet of left pragmatists. The oligarchs by that
time were prepared to let ideology go hang. It was necessary to do something urgently
to stop the disintegration of the financial system, and to get industry working again.
The elites were demoralised. A frightened President Yeltsin summoned to power the
left-centrist government of Yevgeny Primakov and Yury Maslyukov, which managed
to bring about a sharp change of course. Instead of reimposing harsh financial policies
in line with the Argentinian model, the Primakov government devalued the ruble,
effectively halted privatisation, and lent its support to production. The economy
started to grow. The devaluation of the ruble provided the impetus for a rise in
industrial output, while a sharp increase in state spending began to stimulate
production. After privatisation was halted, the scale of corruption diminished, and the
struggle between oligarchic groups over the dividing up of property came to an end.
Something like stability appeared. The poorest layers of the population finally saw
banknotes in their hands.

The outcome of all these economic successes was Primakovs political

downfall. Regaining their composure, the oligarchs proceeded to regroup, and
banished him from power. The left-centrist experiment was cut short as soon as the
situation stabilised. Primakov and Maslyukov were ousted in May 1999. The nature of
power in Russia had not changed; the oligarchy had held onto its positions, and at the
first opportunity, it got rid of the people who had saved it. After hurriedly
manufacturing for itself a new president, Vladimir Putin, it happily set about reaping
the fruits of economic growth and political stability.
It might be said that a sort of economic experiment had been conducted.
Inviting Cavallo, the Russian neoliberals and Western financial organisations set
about showing that the Russian collapse of 1998 had occurred not because policies
had been implemented in line with their theories, but because these policies had not
been followed rigorously enough. Inconsistent Russia was contrasted with
Argentina, where the same policies had been pursued firmly and decisively, with no
concessions either to critics or to common sense. Three years later, we are entitled to
conclude that it was traditional Russian inconsistency that saved us.
In reality, the economic miracle of the 1990s had been a social catastrophe
for most of the population of Argentina from the very first. After the administration of
Carlos Menem had set an elevated rate for the peso, production started to fall. The
decline continued without let-up for more than four years, and a significant part of the
population finished up destitute. It was impossible to buy local products in the shops.
Mass poverty appeared in a country that once had looked down condescendingly on
its poor Latin American neighbours. Shanty-towns sprang up on the outskirts of
Buenos Aires.
None of this prevented the world financial press (and the Argentinian elites
themselves) from claiming success. They noticed the social crisis only when it began
to touch the better-off groups within the middle layers, and when the economic
decline spread to the banking sector. There was nothing unique about this; in Russia,
the ruination of two-thirds of the countrys citizens and the liquidation of half of the
economy in the early 1990s was not considered a catastrophe, unlike the crash of
1998, which ruined many of the people who had waxed fat on these calamities.
The crisis in Argentina was in no way the result of inefficient management
or of mistakes by the Argentinian government. Any philosophy on which economic
decisions are based turns out to be profoundly flawed, and this is true not only in

Latin America. Money turns into a fetish, and this is not surprising. The financial
groups that effectively hold power force everyone to look at the world through their
eyes. Everything is turned on its head. It is considered that low inflation and a stable
exchange rate for the national currency will in themselves solve all problems,
although life at every step shows that everything is quite different; the stability of the
financial system depends on the general state of the economy. Recognising this,
however, would mean putting the leading role of the financial oligarchy in doubt.
In 1998 Russia was saved thanks to the fact that our oligarchs have at least
some links with production. The crash of the banks at that time simply strengthened
the positions of Gazprom and the oil magnates. In Argentina, where there are no rich
deposits of oil and gas, the hegemony of the financial groups was undivided. The
irresponsibility of the government was aggravated by the lack of an opposition. Both
Argentinian parties, the Peronists and the Radicals, shared the same economic ideas.
The unity of the political class guaranteed that government policy would remain on
the same course. In neighbouring Brazil, where there is a constant danger that the
Party of Workers (PT) will come to power, the ruling circles have not felt so
confident. The Brazilian PT has long since lost its former radicalism, but the elites
nevertheless look on it with suspicion. When financial difficulties began in Russia in
1998, the Brazilian government therefore devalued the national currency, and took
measures analogous to those in Russia. After economic growth had resumed in Brazil,
the position of Argentinian industry became even worse. In Buenos Aires, once
renowned for its leather goods, it was impossible to buy a locally-produced pair of
shoes; the shops were all full of cheap Brazilian imports.
When the British economist Alan Freeman made a presentation in Buenos
Aires in 1999, he was asked whether he considered that a devaluation of the peso was
needed for production to grow. He replied that he did not understand the question; if
the economy was in a deep depression, the currency would have to be devalued in any
case, whether this was thought desirable or not. It was the reluctance of the elite to
recognise obvious facts, and their lack of interest in what was happening to the
population of their own country, that had led to a complete loss of control over the
situation.
Despite differences between parties, the political class turned out to be united.
In this unity, they placed themselves in total opposition both to the people and to
reality. During the new year crisis in Argentina, power was literally in the streets

no-one wanted to rule. The politicians all discovered simultaneously that not one of
the decisions they took could be carried out. In such a situation, power lost its value.
What the political and business elites consider normal, natural and the only
course possible, is unacceptable to the population. What the population considers
essential, in the view of the elites is impossible, inconceivable and absurd.
Philosophy, which is controlled by the political class, declares impossible a great deal
that has repeatedly been done successfully in the past, and which, moreover, was
regarded as normal twenty years ago. Public investments are ruled out in advance.
Any measures that threaten to increase inflation are declared inadmissible, even if
they stimulate the growth of production and employment, and promise to raise the
standard of living. Privatisation is irreversible, even if everyone, including the new
owners, recognises that it has failed. State regulation is declared ineffective in
principle, and market methods irreproachable, regardless of the results they yield. The
trouble is that most of the population see things in completely opposite fashion. The
everyday experience of millions of people testifies that the official ideology does not
work, and nothing will convince them otherwise.
In many ways, the Argentinian financial crisis of 2001 repeated the scenario of
the Russian crisis of 1998. Following the recommendations of the International
Monetary Fund, the government defended an elevated exchange rate of the national
currency at all costs, looking on with indifference as industry collapsed. The peso was
pegged to the dollar at a rate of one to one. This exchange rate was a source of pride
for the neoliberal economists. As in Russia, the main priority was declared to be the
struggle against inflation, while the only causes of inflation were considered to be
state spending and the emission of cash money. In sum, and as in Russia, state
spending was reduced below the minimum point at which the basic infrastructure
needed for a modern society started to fall apart.
Already in 1998, the Russian collapse had pushed Latin American currencies
to the brink of catastrophe. The IMF, however, not only refused to admit any mistakes
on its part, but on the contrary, insisted that the only way to redeem the situation was
to replicate in minute detail all the measures that had failed in Russia. Whether new
stabilisation credits would be received depended on whether these prescriptions were
carried out. In any case, the Latin American governments, like the Russian one
earlier, had themselves totally embraced the neoliberal orthodoxy, and hence followed
the advice of their American instructors with sincere enthusiasm. Regardless of party

affiliation, all the serious Argentinian politicians shared these self-evident and
uniquely correct approaches. In the event, even a change of government meant
nothing. Whoever was installed in the presidential residence, the Casa Rosada, the
course remained identical. Each cut in government spending, commented the
British Marxist Chris Harman, led to a deepening of the depression, and the
deepening of the depression in turn reduced state revenues and increased the financial
deficit, which forced the government to cut spending still more, and so on.
Nevertheless, the International Monetary Fund recommended continuing in the same
spirit, and both Argentinian bourgeois parties agreed. In their fight against inflation
the Argentinian authorities, like their Russian counterparts a few years earlier, began
delaying wage payments in the state sector. This led to an acute shortage of ready
money, not only in the state sector of the economy but also in the private sector, and
especially in the provinces. The failure to pay wages turned into a real epidemic. For
the ready money which they lacked, the regional authorities substituted all sorts of
coupons, bonds, and surrogate money. Enterprises came to a halt, while
unemployment reached 20 per cent, and according to official data 40 per cent of the
population were below the poverty line. This occurred in a country that had once been
famed in Latin America for its almost European prosperity. From the point of view of
the Western experts Argentina, like Russia, belonged to the category of so-called
emerging markets. The use of this term immediately suggests backward agrarian
countries trying to apply the advanced experience of the civilised West. Long before
the beginning of the market reforms, however, Argentina like Russia had been a
country with developed industry and a high standard of education. Moreover
Argentina, unlike Russia, was a capitalist country firmly integrated into the world
economy. It was the neoliberal reforms that had led to the fall of living standards, to
the degradation of production, and most importantly, to the rapidly worsening
backwardness and dependency with relation to the West.
Meanwhile Buenos Aires, like Moscow in the months before the collapse of
the ruble, gave the impression of a thoroughly prosperous capital. The system, which
had reduced most of the workers to poverty, was capable as before of maintaining the
consumption of the middle class. Financial speculators actively worked the local
market (gamblers who had fled from Russia in 1998 settled in Argentina). The shops
were full of imported goods. Banks functioned successfully. The government, trying
to support the peso, kept interest rates high and lent money on the credit market. This

was ruinous for industry, making investment monstrously expensive, but for bank
depositors it was advantageous. At least for the time being.
In fact, devaluation of the peso was an objective necessity. The Brazilian
economy was in a years-long depression. After Brazil devalued its currency, the real,
pressure on the peso built up. In both countries the same neoliberal reforms had been
carried out, but the Brazilian ruling class had enough sense to behave less
dogmatically. In addition, the Brazilian elites had had to reckon with a real danger:
the forces of the left in Brazil were influential, and capable of mounting a struggle for
power. Not only were the politicians from the Party of Workers running almost neckand-neck with the government, but in rural districts the far more radial Movement of
Landless Peasants (MST) was active. In Argentina, by contrast, the left was weak and
divided. It did not pose a serious political threat to the local elites, and this in turn
encouraged irresponsibility at the top levels of society. Whatever the ruling class did,
it retained the sense that it acted with impunity. By 1999 the devaluation of the peso
was an obvious necessity, but the authorities remained obstinate. The economic slump
deepened from month to month. Not even the replacing of President Carlos Menem
and his Peronist party with a new administration changed anything. Sensing an
inevitable crash of the peso, people bought up goods in the shops, and took their
money out of the banks. In December 2001 the social crisis reached its limit. The
southern hemisphere summer of 2001 was in many ways a re-run of the Russian
summer of 1998. As in Russia, the first sign of the approaching catastrophe was road
blockades. Thousands of workers who had been left without money to survive on
blocked the highways. In Russia, they had mainly blocked railways, and the protests
by these workers, in an analogy with partisan actions during the years of antifascist
resistance, received the name of rail wars. In Argentina the privatised railways were
themselves in a deep crisis, so it was mainly automobile highways that were blocked.
Argentinians, who love to think up new terms, called the protesters piqueteros. The
situation became still more serious when protests began in the large cities. Enraged
crowds went out onto the streets of the capital, banging empty pots. Shops began to be
ransacked. Many shop owners, understanding what things were coming to, began
handing out food free of charge, but this too was accompanied by chaos, at times
extending to looting. The whole world learnt a new Argentinian word: cacerolazo, or
saucepan revolt.

The massive withdrawal of money from the banks paralysed the financial
system. The response of the financial and political elite, as in Russia two and a half
years earlier, was to freeze the accounts. The crisis struck with full force at the middle
class, which in the blink of an eye lost its savings, and often its jobs. Furious members
of the middle class swelled the ranks of the cacerolazos. The police used weapons.
Opening fire on the crowd, the forces of order killed twenty-three people in Buenos
Aires alone. Roughly as many again died in other cities. This, however, did not put an
end to the disturbances. The culmination of the protests was the uniting of the
piqueteros and the cacerolazos. Their joint actions signified something more than
simply the unification of two uprisings that had been developing in parallel. The
symbolic and social significance of what happened is difficult to overstate. The
workers protest converged with the revolt of the middle class.
The government fell, and President Fernando de la Rua fled from the Casa
Rosada in a helicopter. After this, the Argentinian ruling class was unable for several
weeks to form a stable administration. The political shocks of 2001, however, did not
by any means signal a sharp change of course. In Argentina, not even this much
happened. Presidents were changed, but the continuity of economic policy was
preserved. Despite everything, we are not seeing the final crisis of the neoliberal
order. The forces standing behind this model have regrouped, and are again imposing
it on society, wrote the Argentinian economist Julio Sevares.
Without an organised political alternative, a change of economic course is
impossible. Even the total downfall of the market reforms, the thorough
compromising of their ideologues in society, and general discontent do not in
themselves mean the end of the neoliberal experiment. Capitalism is losing its
attractiveness, and acquiring ever new enemies, but this is not yet revolution. Even
massive outpourings of protest, the flight of presidents and the replacing of one
government by another do not guarantee changes. The Russian and Argentinian
shocks demonstrated the inability of the elites to cope with the catastrophic
consequences of their own rule. But at the same time, they also demonstrated the
inability of society to do away with these elites.
In Argentina the people rushed into the streets, and in Russia, to their
television sets. Perhaps this was a matter of temperament and culture. Most likely, the
reason was that in Russia, unlike Argentina, people in the 1990s had lost their respect
not only for the authorities, but also for themselves. Neither in Russia nor in

Argentina, however, has the economic and political defeat of neoliberalism led to a
radical change of the system. The decisive battle is always political, and it still
remains to be won both on a national and on a global scale.

Venezuela: Revolt Against the Masses

In Argentina the middle class rose up against the authorities, joining forces
with the workers. In Venezuela a no less striking revolt took place. This time,
however, the middle class acted in a united front with the oligarchy.
When the radical populist Hugo Chavez came to power, the country was split
into two camps. A former paratrooper, Chavez had tried to seize power through a
military coup, but failed and finished up in prison. After being released, he was
victorious in the elections, defeating the candidates of both of the main parties that for
decades had taken turns ruling Venezuela.
Chavez won the presidency with the help of the countrys poor, and
immediately made clear to his supporters that his actions would confirm his reputation
as a defender of the people. On becoming president, he refused his salary
entitlements, saying that his colonels pension was perfectly adequate. With the
money freed up in this way, he established three scholarships for talented students.
One of his residences he handed over to be used as a school. Military personnel
bought meat and vegetables in the countryside, and transported them in trucks to poor
neighbourhoods where they were sold in subsidised markets. New state pharmacies
sold medicines at a thirty per cent discount. The government organised free breakfast
and lunch programs for school pupils, leading to an increase in student numbers of
almost a million. (Mirovaya Energeticheskaya Politika, May 2000, no. 3, p. 27).
These and other measures were paid for out of the countrys oil revenues. This meant
that Venezuela became one of the main hawks in the Organisation of Petroleum
Exporting Countries (OPEC), constantly pressuring it to seek higher oil prices. One of
the results was automatic conflict with the United States.
Chavezs radical social program, however, rested on an economic order that
had remained unchanged. The hero of Venezuelas common folk was a populist, but
not a revolutionary and not even a reformer. No structural reforms took place. The

local elite retained its property and position in society, but it was angry, frightened,
and ready to fight back.
The traditional elites, meanwhile, were not alone. By no means all Venezuelan
workers live in poverty. Workers in the oil sector and areas of the economy linked to
it are used to receiving handsome wages. There was nowhere Chavez could obtain the
funding for his substantial social programs except in this sector. The people who felt
their positions to be under threat included not just members of the oligarchy, but also
the middle layers, and skilled workers organised in trade unions. The Bush
administration in Washington made no secret of the fact that it wanted to get rid of
Chavez. Latin American leftists, by contrast, were sharply divided in their attitude to
the Venezuelan leader. To some he remained a hero of the poor, while to others he
had become an enemy of the organised working class. The Catholic Church grew
increasingly hostile to the president. In this way an anti-Chavez bloc came into being,
uniting social forces that at first sight might have seemed polar opposites.
A fall in oil prices aggravated the crisis. On 7 February 2002, during one of
the regular demonstrations in Caracas, Air Force Colonel Pedro Luis Soto demanded
that the president resign. The words of the determined colonel, Hes not the boss
here! were taken by the demonstrators as a call to action. This time the opposition,
despite laying siege to the presidential palace of Miraflores and engaging in street
battles with Chavez supporters, did not get to the point of staging a coup. Early in
April, however, opposition business entrepreneurs and trade unions organised a strike
by workers of the state oil company Petroleos de Venezuela. With the help of the
National Guard, the president tried to force the rebels back to work. This was a fateful
step. On 12 April Chavez was arrested by a group of generals and sent to the Tiuna
military base. Pedro Carmona Estanga, the head of the Federation of Chambers of
Commerce and Industry, was appointed as the new president. A transitional
government received immediate US support, but lasted barely twenty-four hours. The
trade unions did not like the new president. A wave of demonstrations organised by
Chavez supporters swept Carmona from the presidential palace. Venezuelan special
forces intervened to return the lawful president to his post.
The conflict, however, did not come to an end. Strikes, demonstrations and
street protests became a normal feature of life in the country. The Venezuelan middle
class rose up against the authorities, but not against the elites. Instead, members of the
middle class joined forces with the elites, not wishing to share their incomes with the

impoverished masses and the populist government. The egoism of the worker
aristocracy and of the well-off urban layers can justly be condemned, but the
problem lies far deeper. Populist policies cannot change society. Instead of
consolidating a broad anti-bourgeois bloc, the effect of populism was to split it apart.

The Return of Politics

Neoliberal reform was aimed, aside from everything else, at depoliticising
society. When Francis Fukuyama spoke of the end of history, he meant above all that
politics, as the struggle of opposing concepts and principles, would from then on
vanish into the past. The place of politics was supposed to be taken by the market.
The choice between alternative strategies would give way to spontaneous
movement within the narrow corridor of real possibilities. The Finnish sociologist
Teivo Teivainen writes that in the epoch of neoliberalism, decision-making shifts
from political structures to technical and economic bodies16. This means not only
a gradual restricting and emasculating of democracy, with the activity of all
representative organs becoming pointless and elections being desecrated, but also a
gradual depoliticisation of the population. The more people play at the pseudopolitical games foisted on them in place of democracy, the more apolitical they
become. Mistaking rivalry between careerists for genuine struggle between
candidates, and trying to grasp the finer points of discussion that is occurring in a
vacuum, citizens are transformed into Philistine onlookers, into the viewing audience
of an endless interactive soap opera that is substituted for the drama of political
conflict. In the process, they gradually lose their ability to make independent political
assessments and choices, not to speak of organising themselves. This is because
people who hold political views any political views are compelled to indignantly
reject such rules of conduct.
In poor countries, the masses have finished up outside the bounds of serious
politics. The soap opera has never been meant for them. The middle class is a
different matter. It is on precisely this stratum that the competing careerists, the
experts on political advertising and election campaign appeals, have focused their

16

T. Teivainen, Enter Economism, Exit Politics. London and New York, 2002, p. 178.

attention. To a certain degree, they have been successful. Nevertheless, the events of
the opening years of the twenty-first century have abruptly forced on society the need
for a political choice. The crisis of neoliberalism created the need for a new politics.
The members of the Venezuelan middle class who joined with the oligarchs in
rebelling against Chavez felt this no less strongly than their class brothers and
sisters who went onto the streets of Buenos Aires alongside the popular masses. The
traditional Venezuelan parties have crumbled into dust just like the Argentinian ones.
Society has again discovered politics, and for the most part, has been
unprepared for it. The impoverished masses have lacked the experience and resources
to organise themselves, while the middle class has forgotten the very concept of selforganisation. It is significant that of all the countries affected by the crisis of 19982002, it was only in Brazil, where the Workers Party candidate Luis Ignacio da Silva
became the countrys president, that the decay of a neoliberal regime brought an
opposition party to electoral victory in line with the accustomed rules of political
competition. The uniqueness of Brazil lies in the fact that its society was not
depoliticised in the course of the 1980s and 1990s. Not only did neoliberalism arouse
massive protest movements, but from the very first these movements were themselves
drawn into political struggle, linking their destiny with the Workers Party. Many of
the leaders of the Workers Party were clearly anxious to make it a party like all the
others that is, without a distinctive face or its own political perspectives.
Nevertheless, the party retained its identity through dialogue and interaction with the
social movements, subjected to their pressure and beneath the constant fire of their
criticism.
Russia, Argentina and Venezuela, for all their differences, shared certain
characteristics that set them apart from Brazil. The apolitical societies of these
countries were unable to respond to the challenge of the period. The Russian
population was confused and taciturn, with few people daring to predict what might
lie behind that menacing silence. The Argentinian middle class rose in revolt along
with the masses, but at least initially, this movement proved incapable of advancing a
political alternative. Finally, in Venezuela the masses and the middle class rose in
revolt against one another.
Nevertheless, the events in Russia in 1998 and Argentina in 2001 represented
a turning-point. What these events signified was not the end of the neoliberal project,
but the beginning of a new global conflict. A historic divorce had taken place between

the middle class and neoliberalism. The workers movement had again made its
presence felt, and the revolt of the middle class had become a reality.
By early in 2003 the whole world was in turmoil. Vast demonstrations were shaking
Europe, changes were beginning in Latin America, political conflict had split the US,
and Asia was tense with the expectation of new shocks. Only Russia's twin capitals,
Moscow and St Petersburg, were oases of bourgeois prosperity. Russian society,
which during the 1990s had suffered a multitude of failures and humiliations, was
quite unable to escape from its paralysis.

Chapter 8. Archetypes of Resistance

A revolt cannot make do without heroes. Repeat as you will the words of the
great proletarian song to the effect that the liberation struggle requires neither god,
nor tsar, nor hero, but mass consciousness needs recognised models. What these
models are like is another question.
A hero becomes an example for imitation, an ideal that at times is
unattainable. New norms of behaviour appear. A hero acts as a symbol. People
identify themselves with such a person. Uniting around a hero, they find one another.
The idol of the 1960s was Ernesto Che Guevara. The revival of his cult in the 1990s
was a natural development. The face of the dead comandante embellished T-shirts,
placards and tea-towels, becoming a symbol of resistance to the market, and at the
same time, a commodity to be traded on the market. The return of Che Guevara was
not a tribute to history. It was more than fashion. The ideals of the great revolt of the
1960s had again become popular. They resonated in the moods of the Seattle
generation, and who embodied these moods better than Che? Nevertheless, the
generation of the 1990s needed its own heroes, and found them. Several of them even
appeared simultaneously the Mexican insurgent Subcomandante Marcos, the French
farmer Jose Bove, and the Finnish programmer Linnus Torvalds.

The Sup

In the case of Marcos, everything is more or less understandable. Here is a

heroic individual, an inheritor of the cause of Che Guevara. A philosophy student who
set off into the jungle to take part in a guerrilla war. An intellectual who, under the
influence of Indian communities, succeeded in rethinking his own conceptions. A
man who hid his own face behind a mask so that the collective identity of the revolt,
its democratic principles and ethic of solidarity, might be better visible. A participant
in armed clashes, and the author of exquisite prose.
Subcomandante Marcos burst into history and politics uninvited. Unlike the
revolutionary leaders of the past, he turned out not to be a leader, but merely the
ideologue of the Zapatista movement. It is significant that when a delegation of
Zapatistas arriced in the capital for talks with the new, democratically elected
government, Marcos did not accompany them into the parliament building. The
delegation was headed by a number of Indian women, who had been entrusted with
voicing the demands of the inhabitants of Chiapas.
As a rule, insurgent movements in Latin America, with their peasant
composition, have been headed by members of the urban elite, offspring of the very
ruling class against which the struggle was being waged. The mask worn by Marcos
became a symbol of rejection of the privileges ensured by background and education.
The revolutionary nature of Zapatism and the extraordinary character of Marcos
himself were more clearly apparent in this refusal than in any political declarations or
profound theories.
The Zapatistas and Marcos became idols of left-wing youth in the West.
Marcoss letters, written in the jungle and distributed over the internet, aided in the
politicisation and radicalisation of numerous young people whom we saw later on the
streets of Seattle, Prague and Genoa. To the North American or European mind,
Marcos seemed like a new Zorro, though in fact the mask of the Zapatista and that of
Zorro were direct opposites. Zorro hides his eyes, while the mask of the Zapatista
hides everything except his eyes. Zorro hides his face out of concern for his safety;
returning after his exploits, he carries on with his normal life as a provincial aristocrat.
Zorro is an individualist, and his mask simply emphasises his individualism. Marcos
is a collectivist, and his mask makes him indistinguishable from ordinary fighters.
The man we now know as Marcos was once a philosophy student. There were
three friends who set off from the cities to the jungle. One of them survived, and it
was he who became Marcos. The young revolutionary remained alive because he

rejected the ideas that had led him to Chiapas. The Indians re-educated him, revealing
to him that the world was far more complex than he had imagined from the books of
Che Guevara and the popular textbooks of Marxism. Nevertheless, he did not reject
the ideas of revolution. The guerrilla ideologue simply realised that this needed to be
a different revolution.
In his image, Marcos embodies the unity of thought and action, whose divorce
had caused such harm to European radical culture. It is the unity of thought and action
that is also attractive in the image of Che Guevara. The latters tragic downfall,
however, seemingly proved that such attempts were doomed. Subcomandante Marcos
has not only carried forward the cause of Che Guevara, but beginning afresh, has
demonstrated that resistance to the system becomes successful when word and deed
become indissoluble. The Zapatista ideologue is convinced that one cannot live
exclusively within the circle of ones own problems. He clearly loves Mexico deeply,
but does not separate off what happens within his country from what occurs
throughout the world.
Subcomandante Marcos once confessed that his tastes and attitude to life had
been shaped by the book One Hundred Years of Solitude, by Gabriel Garcia Marquez.
The Colombian writer can be proud of his pupil. The guerrilla communiqus are
couched entirely in the spirit of magical realism. Figuring in them are not only the
subcomandante himself (in the abbreviated form Sup), his comrades in arms, the
Indians, children, federal soldiers and government officials. The chief intellectual in
the discourse is the beetle Durito, on whom the insurgents almost stepped during one
of their campaigns. The beetle steals tobacco from the Sup, smokes a pipe, reads
economic surveys, and holds forth on the essence of neoliberalism. The beetle is
extremely agitated at all this, and for a very simple reason: the longer the present state
of the world continues, the greater the chances that someone will tread on him.
Durito not only accompanies Marcos on his campaigns, but gradually comes
to occupy a more and more important place in the book. Some of the communiqus
are already written by him, since the subcomandante is too busy. The beetle is forever
analysing something. At one point Marcos finds him analysing Yeltsin.
Unfortunately, the reader never finds out what conclusions Durito draws, since the
Sup shifts the conversation to a different topic. All of this fantastic world, of course, is
absolutely real. The communiqu is about genuine events occurring in Chiapas and in
Mexico during the 1990s. It is about real campaigns, victories and defeats.

Meanwhile, the Sup clearly does not spare either himself or his comrades. The
sentence that begins one of the reports is priceless: During the night of the fifteenth
we reached the point of drinking our urine. I say reached the point, because we did not
succeed in doing it everyone started vomiting at the first mouthful17.

A Populist
As he aided in the radicalising of Western youth, Subcomandante Marcos
became a model for many even where he himself insisted that imitation was
unacceptable. In fact, the experience of the Zapatistas has been extremely individual,
and the peculiar experience and conditions of Mexico have influenced the ideas and
methods which Marcos describes. His communiqus contain many remarkable
slogans and paradoxes, but much less analysis. If the Sup were to yield up his place
more often to the beetle Durito, everything might be different.
In the ideology of Marcos, the Russian reader can readily find something very
familiar (or perhaps, quite forgotten). The views of the Mexican insurgent are
reminiscent of the Russian populism of the nineteenth or early twentieth centuries.
This is the source both of his strength and of his weakness. On the one side is his
bitter hostility to vanguardism, when one group or another, after mastering
progressive theory, starts speaking in the name of the masses, or worse, subjects the
masses to its will. The Sup speaks not of class interests, but of justice, dignity, and at
times simply of beauty, as opposed to bourgeois vulgarity. He finds a new language
that is unsullied by the textbooks of Soviet and Cuban political instruction; he appeals
to the heart and soul of his listeners. Politics, however, requires concreteness and
rationality.
As befits a true populist, Marcos believes that people will find their own
solutions. It is enough merely to give people the opportunity to choose, to free them
from the control exercised by the state and by capital, to force the state to listen to
what simple people have to say. This is perfectly true, but what is the role in all this
of the politician, the intellectual, the activist? What responsibilities do such people

17

Subcomandante Marcos, Drugaya revolutsiya (A Different Revolution), Moscow, Gileya, 2002, p.

13.

bear? Political leaders should not decide for the people, but they are obliged to put
forward solutions. This is expected of them, and indeed, demanded.
Subcomandante Marcos started by rejecting ready-made models, but
unexpectedly became a model himself. People imitated him, and expected him to
come up with answers to questions he had not even intended to pose. His literary
efforts were regarded as a standard for theoretical work. Having become fashionable,
Zapatism risked becoming superficial. Nevertheless, it has played an enormous role.
Penetrating beyond the borders of Mexico, Zapatism has been transformed into a
cultural symbol of global resistance.

The Irrepressible Gaul

The more widespread this resistance has become, the more diverse it has
turned out to be. The French farmer Jose Bove brought direct action to Europe,
mounting a symbolic assault on McDonalds, and being jailed as a result. Bove was
not only defending the workers rights and environmental standards that the restaurant
chain was constantly violating; in the view of many people, he was fighting for the
ideals of French cuisine. Thanks to the internet, he quickly became a hero to millions
of visitors to radical websites throughout the planet. His method of protest - extremely
colourful, and without question truly Gallic resonated not only with the general
mood (Down with the dictates of the transnationals!), but also with the cultural
experience of the global generation that grew up with the cartoons Asterix and
Obelix. The struggle of Jose Bove against the transnational monster McDonalds was
just as desperate, and to all appearances hopeless, as the little war in which Asterix
and Obelix lead the last Gallic village against the armies of Caesar. Like the cartoon
heroes, however, Bove himself has become miraculously invincible. His magic is his
ability to evoke through his actions the solidarity of millions of people around the
world. Even in jail, he is triumphant. He has presented new rules of the game, which a
whole generation of activists have been ready to follow. The streets have again
become an arena of political struggle, while attacks on property, though not on
people, have become permissible. The actions of the protesters provoke repression
from the authorities, in conditions in which public opinion is inclined to the side of
the rebels.

Jose Bove is not quite a typical French farmer. Like Subcomandante Marcos,
he comes from an urban intellectual background. Before becoming a peasant, he was
a radical activist. His parents were researchers working on contracts in California. He
spent his early years in Berkeley, at that time the centre for actions by radical
American youth. Bove became a farmer after spending several years underground,
hiding from the draft. He spent several months in prison, and took part in actions by
Greenpeace. Like Subcomandante Marcos, he embodied two traditions
simultaneously. Participating in agriculture, he became totally integrated into the
peasant milieu, but took with him the traditions of the radical student movement of
1968. The attack on McDonalds combined radical protest against a transnational
corporation, a demonstrative rejection of the rules of the neoliberal global market,
with the traditional French loathing for revolting American food. The action against
the McDonalds restaurant being built in Millau near Boves farm took on a carnival
character. Some three hundred people, men, women and children, were involved in
the festive event in the middle of the holiday season. Notifying the prefect in advance,
they proceeded to demolish the restaurant. Ten people were subsequently charged,
and Bove himself spent nineteen days in jail before being released amid a growing
wave of support (Red Pepper, June 2002, p. 19). It was this carnival atmosphere,
merged with politics, that made Boves protest effective. So the mass media wanted a
spectacle? They would get one. However, it would not be a made-to-order
presentation for the transnational elites, but a holiday celebration which the rebellious
people mounted for themselves.

Linux
France and Mexico are countries with rich revolutionary traditions. People pay
attention to these countries, and events that occur in them do not go unnoticed.
Marcos and Bove became world figures precisely because each of them belonged to
his particular culture, with all its pluses and minuses, and could have arisen nowhere
else.
Why, however, should the cult figures of modern times include the peaceful
Finnish programmer Linnus Torvalds, who never proclaimed himself a fighter against

world capital, and who at first never even gave any thought to the political
significance of his activity?
In writing his program Linux, the young Finn by his own admission was
simply delighting in his creative freedom. Later, he shared the result of his labours
with colleagues solely from the joy of personal contact with them. Nevertheless,
Linux has become no less widely known as a symbol of youth revolt than the masks
of the Zapatistas. The symbols of Linux appear on the T-shirts of demonstrators
alongside portraits of Che Guevara. Activists delete the hated products of Microsoft
from their computers, and install Linux. Corporations, of course, have remained
faithful to their accustomed operating systems, but among non-government
organisations the number of adherents of the open system has grown rapidly. In
Russia, the only reason why there has been no such mass revolt by users is that most
computer owners have preferred to use pirated copies of Windows, doing Microsoft
no less damage.
With hindsight, Torvalds describes himself as an unintended revolutionary.
He simply did not agree with Microsofts monopoly, with the fact that a private
corporation was establishing the public standards for programming, and was deriving
profit from this. He simply placed the joy of free communication with colleagues
above monetary rewards. While in no way an ascetic, and not renouncing the
possibility of making a good income from his work, he was simply unwilling to
extract profit from his knowledge. Precisely because of this, he placed in doubt the
very bases of bourgeois relations in the information sector. With his success, he
showed that these relations are by no means as durable as they might seem.
Of course, Torvalds had his prehistory. Though not a political activist, he had
grown up in Finland, where even in the epoch of the worldwide neoliberal offensive
there were strong traditions of solidarity. Moreover, he had grown up in a family of
communists. Perhaps on a subconscious level, left-wing culture merged in him with
the new hacker ethics described by Pekka Himanen. This combination, however, is
natural and inevitable.
The revolutionary act which Torvalds committed was simply to start working
for the sake of pleasure instead of for the sake of money. In the process, he
independently performed an act of the abolition of labour, of the kind which Marx
and Marcuse described as one of the final tasks of the anti-bourgeois revolution. Such
acts of individual self-liberation are, of course, quite inadequate in themselves;

society carries on according to its own rules, driving everyone into the frameworks
prepared earlier. Torvalds writes of how he has to keep his distance from Linuxcompanies that turn creativity into business (See Kompyuterra, 2002, no. 8, p. 50).
It is not surprising that Torvalds book Just for Fun has the subtitle The Story
of an Accidental Revolutionary. Starting to write programs for amusement, and
socialising with colleagues for the sake of their company, he unexpectedly finished up
in conflict not only with huge corporations, but also with the entire system of rules on
the basis of which the new economy had been constructed. Hence, Torvalds the
unintended revolutionary. This formula is characteristic of a whole social layer, a
whole generation. The new middle class is condemned to revolt, often despite its own
ideology, its own hopes and the plans its members make for their lives. It is driven to
revolt by the very logic of neoliberal capitalism.
Just as capitals introduction of new technologies, wrote Nick DyerWitheford, by potentially freeing huge surpluses of time, has unintentionally opened
up prospects of liberation from work, so its expansion of new communication
technologies inadvertently opens up a world of counterusage. As computerized
automation, by reducing socially necessary labor time, makes possible either
intensified exploitation or subversion of the wage labor, so electronic communication,
by reducing the necessary circulation of information goods, opens onto two
diametrically opposed options. It makes possible either a radical intensification of
commodification through pay-per services and consumer surveillance or a
fundamental attenuation of the commodity form, through the generalized
transgression of electronic property rights (N. Dyer-Witheford, op. cit., p. 203).
Torvalds is not simply a computer genius, but an individual instance
confirming a general rule. He turned his knowledge into a means of liberation,
becoming a sort of graphic example demonstrating that an alternative use of new
technologies is possible, that we can take their development under our own control.
Contrary to the two perspectives described by the American sociologist, he proved the
reality of an alternative. Of course, the case of Torvalds has become widely known
precisely because it is exceptional. The Finnish programmer had the resolve to do
what others merely contemplated doing.

Without Heroes

Outstanding personalities draw attention to themselves precisely because they

are exceptional. They do what other people dream of doing, but for one reason or
another cannot. They take steps which many people think of taking, but few dare to
venture. Often, however, this is simply a first step that may later be repeated
numberless times by millions of people.
In this sense, the future of the movement consists in making commonplace
what until recently seemed exceptional. The more people take initiatives, the less
heroism this requires. This does not, however, diminish the importance of making a
moral choice. Everyone has to decide his or her fate independently.
Being on the left is becoming fashionable, just like T-shirts with portraits of
Che Guevara, Zapatista masks, and using Linux. A fashion may pass, may become the
style of an epoch. But it may turn out to be only a symptom of a more profound social
shift.
The left fashion of the 1960s reflected the moods of millions of young
people striving to change society. Capitalism withstood their onslaught, appropriating
and using the numerous innovative ideas, rebellious enthusiasm and radical chic of
the epoch. In many ways, the movement that arose around the turn of the twenty-first
century is repeating the history of the previous revolt, but there is no compulsion for it
to duplicate the results.
Ultimately, the success of the resistance will be measured not by the vastness
of its demonstrations, but by its ability to change the world. This will depend on the
degree to which the spirit of Seattle penetrates the workplaces, and enters into
everyday life. On the degree to which the ideals of the movement are embodied in
peoples actions and in politico-economic programs. On the degree to which the
general mood becomes a precondition for political organising.
All in all, the authors of the nineteenth-century proletarian song were correct.
Neither god, nor tsar, nor even a hero will provide any help. People attain their
liberation with their own hands. Through their collective efforts.
Chapter 9. The Twilight of Social Democracy
In the late 1980s social democracy abandoned workers to their fate, and put its
stake on the middle class. This was done on a sociological basis. Workers in the

countries of the West were making up an ever-smaller share of voters, and they had
nowhere else to turn in any case. They continued to vote for social democratic
politicians out of habit, from tradition, on the urging of their trade union leaders, and
simply because they viewed such leftists as a lesser evil compared with
conservatives. Meanwhile, the act of voting for social democrats turned out to be
merely a prelude to massive protest. The social discontent that burst onto the surface
in Seattle was aimed not only against conservatives, but against the whole political
establishment, now integrated into the neoliberal model.
The social democratic politicians were also faced with a choice. Should they
join in the movement, and try to subject it to their control, or fight openly against it?
Vying for influence in the movement demanded the ability to make at least certain
criticisms of capital, a requirement of which the leaders of the former workers
parties had a mortal dread. At the same time, many moderate leftists were not
prepared to side openly with neoliberalism by speaking out against the movement.

Moderates and Radicals

Since Prague it had become obvious that the international financial institutions
no longer held out hopes that the movement would subside of its own accord, and
were aiming to divide it. An orientation toward moderates within the movement
was now a key element in the policies of the IMF and the World Bank. Parts of the
criticism were recognised as constructive, and it was noted that the IMF and World
Bank leaders themselves were sympathetic to reform. At the same time, a huge attack
was launched on extremists, whose actions were associated with violence, while
the street protests were compared to football hooliganism. This offensive was
heightened after the terrorist acts in America on 11 September 2001. From now on,
resistance to capitalism could be equated with complicity in international terrorism.
Immediately after the attacks on the World Trade Centre in New York, a number of
popular writers drew direct links between these events and the antiglobalist protests.
So-called serious critics of the financial institutions were in effect offered a choice:
either to give indirect support to reform from above, or to line up with the
hooligans, and so discredit themselves. Or perhaps, and still worse, to finish up in
the same camp with terrorists. Even after 11 September, however, the efforts to split

the movement did not yield the desired results. The World Bank and transnational
corporations spent vast sums in order to coopt moderate non-government
organisations (NGOs), turning them into a sort of pseudo-opposition whose main task
was to let off steam from the boiler and to create the appearance of discussion. This
approach had been extremely effective in the mid-1990s, but after Seattle the situation
underwent a qualitative change. The protests took on massive dimensions. The social
milieu from which the activists of such organisations were recruited, and where they
found support, became noticeably more radical. Seattle showed that even for
moderate NGOs it was advantageous to take part in protest action, since this increased
their influence. Moreover, they risked discrediting themselves and remaining in
isolation if they spoke out against the burgeoning movement.
After 11 September, the international elites acquired new trump cards. Not
only could they cajole and try to bribe their moderate partners, but they could also
set out to intimidate them. Meanwhile, direct repression was being employed against
radical opponents of the system; the behaviour of the police toward demonstrators
was growing increasingly savage. The escalation of police violence was in no way a
response to actions by the radical demonstrators, and still less was it linked to the
terrorist threat. The police in Goteborg and Genoa had been given permission to use
firearms even before the attack on the World Trade Centre in New York, and the first
shots had been fired at demonstrators before the terrorist acts in the US claimed their
first victims. Once the war in Iraq started the number of arrested protestors in the US
reached thousands.
Encountering police repression and provocation, the movement in turn began
learning to control itself better. In Prague in 2000 the organisers of the action were
already making highly sophisticated use of tactical violence. If this had not been the
case, if the inevitability of violence had not been taken into account from the
beginning when the demonstrations were planned, the clashes would have occurred
anyway, and would have been many times worse. All the groups inclined to violence
were separated off into a special blue column, which was going to be involved in
confrontations with the police in any case. This allowed violence to be kept to a
minimum in other areas of the city where demonstrations were also taking place.
Since 11 September 2001, and despite the hopes of political and financial
leaders, the movement has not gone into decline. The protest actions have become
even more massive, and their geographical spread has broadened. At the same time,

the demonstration organisers have started paying more attention to crowd control.
Marches of many thousands have taken place in Porto Alegre, London, Rome and
Barcelona without excesses occurring, despite the clearly aggressive attitude of the
police. The growth of the movement has been programmed by the increasing
criticism of the neoliberal model, and this trend cannot be interrupted either by
tactical manoeuvres, or by police provocations, or even by the world-wide crusade
against terrorism proclaimed after 11 September.
Nevertheless, the division of the protesters into moderates and radicals is
also an objective tendency. The two groups in 2000 assessed the results of the Prague
demonstration differently, argued openly with one another during World Social
Forum in Porto Alegre, and decisively took their distance from one another in the
planning of the 2002 European Social Forum in Florence. This demarcation is quite
natural. Similar things happened with each of the great movements of the past.
Casniki (Utrakvists) and Taborites in medieval Bohemia, Girondistes and Jacobins in
revolutionary France, and Mensheviks and Bolsheviks in early twentieth-century
Russia were only a few of the great schisms that have accompanied the struggle for
social progress.
The inevitability of disagreements does not of course mean that splits are
inevitable. The strength of a movement is manifested in its success in maintaining its
capacity for solidarity and united action, despite serious and at times fundamental
differences.

The Forum in Porto Alegre

Following the protests of the years from 1999 to 2001, the mood of the world
elites changed. Political and business leaders began trying to justify themselves. In
2001, providing a parallel to the gathering in Davos, the World Social Forum was
held in Porto Alegre. The latter city was close to ideal as the site for such an event.
For many years the Brazilian Workers Party had held power there. It was Porto
Alegre that had seen the development of the participative budget a system under
which the entire population takes part in deciding questions of local finances.
Ten thousand representatives of trade unions, social movements, political
parties and NGOs had gathered in the city. The forum, it was hoped, would unite the

protest movement with institutionalised politics. It was no accident that the

gathering was supposed to see the consolidation in the movement of the moderate,
constructive principle.
Nor was it surprising that immediately after the first meeting in Porto Alegre,
a wave of dissatisfaction with the results of the forum swept across the radical
publications and internet sites of the entire world. The forum had demonstrated both
the strength of the movement, and its contradictions. For mass consciousness,
however, it had became a sort of symbol of hope. The forum had showed that the
protest movement could not be viewed simply as a coalition of the dissatisfied. To
mount a serious struggle, it is not enough to criticise the system. It is necessary to
discuss and develop alternatives. In Porto Alegre, it was important to draw attention
to already existing forms of alternative economic and social organisation. The
participatory budget in Porto Alegre and the fair trade enterprises that had arisen
in the US became symbols of a new social order, visible proof that another world is
possible.
If the result of Seattle was the repeating of protests at every new gathering of
the international elites, the outcome of Porto Alegre was a readiness by the movement
to organise its own alternative meetings in parallel with street demonstrations. A new
form of protest action arose, in which the protest was inseparable from discussion,
from the debating of alternative projects. The social forums were counterposed to
the official summits in Quebec and Genoa. A second forum took place in Porto
Alegre in 2002. Although the gathering took place after the 11 September terrorist
attacks in the US, and against the background of the war on terrorism launched by
the Western elites, the 2002 forum attracted 60,000 participants. In 2003 when World
Social Forum gathered in Porto Alegre after the electoral victory of Ignasio Lula da
Silva in Brazil the number of visitors was even larger.
Already the 2002 forum in Porto Alegre revealed the growing penetration of
the social democratic establishment by antiglobalist ideas at least on a rhetorical
level. The Brazilian city became the centre of a veritable pilgrimage by high-placed
figures who had unexpectedly recalled their left-wing past. Here were ministers,
mayors, trade union bosses and professors who for many years had not been noted for
any displays of radicalism. The radical youth received these guests without special
enthusiasm, the French education minister even getting a pie in his face.

The Collapse of the New Centre

In the late 1990s the political map of Western Europe took on a rosy hue, with
social-democratic governments coming to power in one country after another. This
occurred after at least a decade of decline for the parties of the left. Outwardly, the
success of the social democrats even exceeded what they had achieved in their
golden post-war years. The triumph, however, was short-lived. The election
victories merely revealed the dreadful truth: over the past twenty years, the social
democrats had themselves become part of the neoliberal system. The moderate leftists
were not an alternative. They represented the final reserve forces of neoliberalism.
The prehistory of this success in various countries was different, but the political map
was astonishingly similar throughout. The Labourites had taken office in Britain after
a whole epoch in opposition, following eighteen years of conservative rule. The party
held an overwhelming parliamentary majority, the likes of which had been unknown
either to Clement Attlee or to Harold Wilson, who had come to power on a wave of
popular hopes. The same had happened with the German Social Democrats. The
French Socialists, by contrast, had ruled their country throughout most of the 1980s,
and had seriously discredited themselves. Nevertheless, the general upsurge swept
them forward, and allowed them to regain the positions they had lost.
In Italy, the left had never before headed a government. The largest communist
party in Europe was doomed to remain in opposition. In the early 1990s the future of
the Italian left looked more than gloomy; the Socialist Party was disintegrating as a
result of unprecedented corruption scandals, while the communists were experiencing
an identity crisis under the impact of the collapse of the USSR. The Party of the
Democratic Left that had been established in its place had neither charismatic leaders,
nor a heroic history. Dull, sluggish and politically amorphous, this organisation
seemed destined for a slow demise. Instead, it managed what the communists had not
achieved in half a century of heroic struggle: it came to head the country.
Such successes impelled the more light-headed commentators to talk of a new
social democratic hegemony in Europe. The party leaders, triumphantly taking their
seats in the government offices, discussed the reasons for their brilliant victories. The
generally accepted theory, shared by ideologues, journalists and functionaries, ran as
follows: during the 1970s the socialists had scared the public off with their excessive

radicalism and utopian hopes of transforming society. The working class, on which
they had earlier rested, was vanishing into the past. Under a new moderate leadership,
the social democrats had succeeded in basing themselves on the middle class, which
had totally embraced market values. Rejecting socialist utopias and fruitless efforts at
reform, the social democrats had at last found their place in a changed world,
becoming the new centre.
It was essential to change along with society, even if this meant breaking with
ones own past. Accepting the market faith and proclaiming private property their
god, the social democrats were at last regaining the ability, which they had lost in the
1980s, to win elections.
Several questions, however, remained unclear. If the social democrats had
accepted the ideology of their opponents, where then was the difference between them
and the conservatives? The leaders of the German and British parties, Tony Blair and
Gerhard Schroeder, published a manifesto on the new centre or third way, stating
confidently and firmly that it was necessary to break with the socialist past, but
immediately becoming confused and contradicting themselves as soon as discussion
turned to the question of how they differed from the neoliberals. When the relevant
sections of the document are read out loud, one has the impression that the writer has
suddenly become tongue-tied, that he is starting to mumble something incoherently,
and that like an ill-prepared student in an examination, he is in a hurry to proceed to
some different and more agreeable topic.
Inasmuch as the difference between right and left was identified with the
historically based names of the parties, the blanket victories for the left remained
quite mystifying. The run of victories for the new centre was followed, however, by
a series of no less striking defeats. If the twentieth century ended in Western Europe
with electoral triumphs for the social democrats, the start of the new century saw
conservatives being returned to power in many places. As the curtain dropped on the
old century, social democracy had come onto the stage like an actor after a play not
to perform, but to take a bow.

The Third Path to Nowhere

It requires no profound theoretical grasp for one to sense that from the very
beginning, the ideology of the new centre was no more than a collection of
banalities, steeped in the spirit of vulgarity and self-satisfaction. Precisely because of
this, however, the rapid and phenomenal success of the new centre needs careful
analysis. It is obvious that the leaders of this current, despite the myth which they
themselves propagated, had little idea of how to win elections. Their election
campaigns were dull and torpid, without striking slogans or attractive ideas. The
social democrats did not win the elections; rather, the conservatives lost them. The
impending defeat of the right-wing parties in Germany and Britain was an obvious
political fact long before people went to the polling booths to elect Blair and
Schroeder. In Italy, the crisis of the left was accompanied by an even more
catastrophic crisis of the Christian Democrats, who simply ceased to exist as a
political current. In France, the return to power of the left coalition followed the
humiliating defeat of the right-wing government in a confrontation with striking
public-sector workers in December 1995.
In these circumstances, the party leaders could afford not to be particularly
concerned about elections. Instead, they concentrated their efforts on intra-party
intrigues, ideological purges and political score-settling with dissidents within their
own camp. The task of the new centre was to smash and definitively annihilate
social democracy in the form in which it had existed during the twentieth century.
Completing this task was an urgent priority, because the crisis of neoliberalism was
opening up the road to power for the left.
The slogan of the new centre was the reorientation of its parties away from
the workers and toward the middle class. To become attractive to the middle class, a
party had to demonstrate its moderation, shifting steadily to the right. Meanwhile the
middle class, disillusioned with the conservatives, was moving leftward. Heading in
diametrically opposite directions, the politicians and voters were in effect rushing
toward one another. A meeting between the middle class and the representatives of
the new centre was inevitable at some point along the path, but was doomed to be
short-lived. The new centre represented not so much a rightward trend, as a
movement to nowhere. The kind of middle class to which the leaders and ideologues
were orienting did not exist in nature. The real middle class wanted things quite
different from what the former workers parties were prepared to offer them.

The social democratic politicians had made a monumental error. The middle
class began to abandon them at the very moment when the disillusionment, alienation
and anger of workers had reached its height.
Throughout twenty years of the neo-liberal model, the middle class had been
subject to constant pressure and erosion. The logic of the market is the logic of
polarisation; the rules of the game require that there be winners and losers. The losers
have to be in the majority, or the accumulation of capital would be impossible. The
more pure the market, the more ruthlessly this logic operates.
The collapse of the Italian left-centre marked the beginning of a pan-European
drama in the course of which voters in one country after another abjured their faith in
social democrats who had turned into neoliberals. In 2002 the French presidential
elections ended in a crushing defeat for the socialists. Party leader and prime minister
Lionel Jospin failed even to reach the second round, conceding second place to JeanMarie Le Pen, leader of the extreme right-wing National Front.
The French Kiss Farewell to Social Democracy?
At first, no-one paid much attention to the presidential elections in France. The
differences between the main candidates were so insignificant that the victory of one
or the other could have meaning only for the candidate himself and for the people
who counted on getting posts in his administration. But when France finally went to
the polls, the entire European public shuddered at the discovery that it was not Jospin
who had taken second place, but the ultra-right leader Le Pen.
There had not in fact been any massive shift by voters to supporting Le Pen.
His ideas were little more popular among the French population in 2002 than they had
been three or four years earlier. The National Front had achieved its success against a
background of the massive rejection by French voters of the main parties. In
France, as in Germany and Britain, the economic policies of the social democrats
were even more right-wing than those of the conservatives. It is understandable that
societys disillusionment with this economic model should have been turned primarily
against the Socialists. Earlier, people who had lost faith in the right voted for the left,
and vice versa. Now, knowing that there is no difference between right and left, they
simply stay at home.

Not only Jospin, but Chirac as well lost supporters. And although Chirac won
the second round with a record number of votes, this did not spare him from
humiliation. The single biggest voting bloc in France these days is nonvoters more
than 15 million people or 56 percent [check] of the electorate, the worst turnout since
1848, wrote the journal Newsweek. Among young people 18 to 35 the figure was a
staggering 56 percent (Newsweek, 24 June 2002, p. 24).
Le Pens success provoked a huge mobilisation by the radical left. Anti-fascist
demonstrations of many thousands of people appeared on the streets of French cities.
The biggest gains in the elections had been made not by nationalists, but by
Trotskyists. Two candidates representing the rival groups Lutte Ouvriere and the
Revolutionary Communist League (LCR) each polled more votes than the Communist
Party, which had entered the government. If the success of Arlette Laguiller was more
or less predictable she had stood earlier in presidential elections, with steadily
improving results the 4.5 per cent obtained by young LCR candidate Olivier
Besancenot was sensational. In nominating Besancenot, the LCR was showing a
pronounced lack of respect for the electoral system. This young person, relatively
unknown even among the Trotskyists themselves, clearly could not be a serious
candidate. Yet he not only succeeded in gaining registration, but also outstripped the
Communist Party leader, the experienced politician Robert Hue, by a full percentage
point.
The defeat of the Communist Party was an even more important result of the
elections than the success of the National Front. Numerous commentators hastened to
declare that it was the electorate of the Communists, deserting to the extreme right,
that had determined the new relationship of forces. This, however, was not quite
correct. Le Pen won most of his votes in old industrial regions where the Communists
had earlier been victorious. But this happened because such regions are increasingly
being deindustrialised. Modern industry is dispersed. The people who voted for Le
Pen were unemployed workers from once prosperous but now declining industrial
centres. Others included a certain number of workers, expecting from day to day to be
laid off, and confused, embittered members of the petty bourgeoisie.
If the extreme right was unable to attract workers to its side in massive
numbers, the Communists lost workers everywhere. Le Pen took votes from the
Communist Party in depressed regions. Where production was occurring successfully,
workers voted for the Trotskyists or the Socialists, or else preferred not to vote at all.

The Communists put their stake on the workers, then betrayed them and lost
them. The Socialists rejected the workers, placing their hopes on the middle class. But
in turning away from neoliberal policies, the middle class shunned the Socialists, who
lost as well. Le Pen put his stake on the discontent aroused by neoliberal policies, but
those he branded as guilty were not the authors of these policies, but their victims
immigrants and national minorities. Le Pen could not win either and will not, at
least while the ruling class, for all its ruthlessness and arrogance, still recognises that
playing with fascism is too risky. The failure of the French socialists bore witness not
to a weakening of the left within society, but to a heightening of social conflicts. The
Socialists were crushed precisely because they had turned themselves into a party of
the centre. Immediately after the electoral battles in France had come to an end, a new
wave of protest actions swept across Europe. Their size exceeded all expectations.
The decline of the social democrats and the gradual exit from the scene of the last of
the old communist parties became the signal for a regrouping of political forces, for
the formation of new political blocs and of a new left movement. The French
elections of 2002 can be seen as a sort of referendum, in which society said No! to
the existing economic and party-political system. In 1995, with a successful general
strike and then with a massive vote for the left, France had already shown that it did
not agree with the policies of privatisation and with the dismantling of the welfare
state. Unfortunately, the leftists who came to power were more right-wing than the
rightists themselves. For this, they suffered the penalty they deserved.

The German Exeption?

It is not surprising that after the collapse of the left centre in Italy and the
defeat of the social democrats in France and Holland, all Europe paid close attention
to the German elections of 2002. These elections were supposed to confirm or
overturn the trend that had emerged. Everyone was waiting to see whether
Schroeders party would suffer the same fate that had befallen its counterparts in
neighbouring countries, or whether the chancellors popularity would allow the
government to survive.
Not long before the Germans, the Swedes had elected their parliament. There,
the left was victorious. The Social Democrats and their allies in the Left Party

received 48.4 per cent of the votes, while the greens attracted a further 4.6 per cent,
guaranteeing a solid majority for the left centre. Scandinavia, however, is a special
world where social democracy is not just part of the national culture and way of life,
but where it still shows traces of its own identity. Of course, the Swedish Social
Democrats were not strangers to the ideas of the third path, but renouncing their
own political tradition was simply impossible for them. The victory of Blairs third
path in Britain had been preceded by the systematic destruction, over many years, of
the workers movement and the left intelligentsia. In Scandinavia the trade unions and
the left had also yielded ground during the 1990s, but here no rout had taken place.
The workers had not been cowed, and the intellectuals had not been intimidated and
corrupted. Consequently, the cultural and psychological conditions for the third
path were not present.
Germany was a different matter. It represented a sort of intermediate variant.
The trade unions retained their strength and self-confidence, and despite all the efforts
of the right wing, the welfare state had not been totally dismantled. Nevertheless, the
Social Democratic leaders had shown during four years in power that they were
prepared to follow a strict neoliberal course. The fears (and hopes) that the German
Social Democrats would collapse were not borne out. In September 2002 the German
red-green coalition survived. The results with which Schroeders party emerged
from the elections, however, were unimpressive to say the least. The Social
Democrats finished neck-and-neck with their main conservative opponent, the
Christian Democrats (CDU). In early counting the Christian Democrats even spurted
ahead, but the final tally showed that the ruling and opposition parties had played out
a draw. For the CDU this was a disappointing outcome, but they had nevertheless
made dramatic gains. The Social Democrats, by contrast, had lost votes.
The reason the coalition survived was that unexpectedly large numbers of
votes had gone to the Greens, the junior partner in the government. The CDU's allies,
the Free Democrats, had also increased their weight, but not by so much as the
Greens. In effect, the elections had come down to two duels. The Social Democrats
had at least not been defeated in their contest with the conservatives, while the
Greens, by outplaying the Free Democrats, had saved the coalition.
There was one more notable result in the 2002 elections the defeat of the
Party of Democratic Socialism (PDS). In each of the earlier elections, the PDS had
gained votes. The party was slandered, a boycott was placed on reporting it in the

press, efforts were made to isolate it and the number of its supporters simply rose.
This occurred not only in the former East Germany, where the PDS had arisen on the
ruins of the nomenklatura communist party, but also in the West. Little by little,
however, the situation changed. PDS representatives entered the provincial
government of Mecklenburg-Pomerania, and then the coalition governing the unified
Berlin. The party leadership in turn concentrated on thoughts of future participation in
a coalition on the federal level. On the eve of the elections, the party bulletin PDSPressedienst discussed the prospects for a government accord with the social
democrats. Only one thing bothered the leaders; the party would have to become
regierungsfhig, fit for participation in government. In other words, as respectable and
moderate as possible. In sum, the PDS with every passing day became less and less
distinguishable from the Social Democrats, increasingly dull, toothless and timid. But
where was the need for another social democratic party, if one already existed?
Moreover, one that was far stronger and more influential? In becoming respectable,
the PDS made itself uninteresting, and its existence politically pointless. Accepting
responsibility for the unpopular measures of the governments in Berlin and
Mecklenburg, the party began to arouse anger among its own supporters and activists.
Coalition agreement with Social Democrats, signed by PDS in Berlin
abandoned almost every single promise made by the party during elections. Most
shocking was the decision of PDS to accept the possibility of constructing a new
airport in Schoenefeld. It was partys active campaign against this project which
guarantied its massive victory in the affected neighbourhoods. Punishment followed
during national election a few month later as voters deserted, even more of them in
the east than in the west. The PDS failed to gain party-list representation in the
Bundestag, finishing up with only two deputies elected from single-member districts.
In sum, everyone lost. The Social Democrats were humiliated, the Free
Democrats were overwhelmed, the Christian Democrats were disappointed, and the
Democratic Socialists were routed. The sole victors were the Greens. They, or course,
were celebrating. Unfortunately, their joy had nothing in common with satisfaction
felt by people who had received support for their political line. The German Greens
had not attracted such support for a long time. People did not give their backing to the
policies of the Greens, but simply voted for them as a lesser evil. The time had passed
when supporters of radical environmental movements had gathered beneath the
banner of the Greens. In the Schroeder government, the Greens amounted simply to a

group of careerists with a more or less left-wing past. The same could be be said of
their Social Democratic colleagues who had come into politics in the turbulent period
of the late 1960s and early 1970s under the slogans of anti-bourgeois revolution and
resistance to the Vietnam War. By the time the former radicals had completed their
long road through the institutions and attained their ministerial armchairs, their
strategy and tactics had been reduced to obtaining posts in ministries and on
parliamentary commissions.
The Greens nevertheless served as a last resort for disillusioned voters,
precisely because the Greens themselves had no idea what they stood for. At a time
when all the other parties evoked a negative reaction, this one aroused no feelings
whatsoever, or at worst, simply disdain. People who did not want the right to come to
power, but found Schroeder repellent, voted for Fischers careerists. Such people got
what they bargained for; the right did not come to power, while Schroeder and
company were assured of a headache for the next four years.
Consequently, there were no winners. Something else, however, should not be
forgotten. In the last weeks before the elections, Schroeder made a sharp turn to the
left. Recalling his Marxist-pacifist past, he started delivering thunderous antiAmerican speeches, demanding that Bush renounce his plans to attack Baghdad. As
soon as Schroeder reawakened his radical image of 1968, his ratings shot upward. At
precisely this point, it became clear that Schroeder might hang onto power, while the
ship of the PDS went to the bottom. Swinging to the left, the Social Democrats
effectively rammed their left partners, calculating that at least on the question of
opposition to the war they would be able to stand out against the background. The
theory that elections can only be won through moderation was disproven once again.
The new-model Social Democrats, however, were fundamentally incapable of
entering into conflict with the financial and corporate elites. As a result, they could
not carry out any progressive reforms either. Making impressive noises against US
war drive, German Social Democratic government remained dedicated to orthodox
neoliberal policies in the economy.
In Germany in 2002, social democracy was granted a reprieve. It was unclear
whether this would be for long.

The Limits of Tolerance?

The Collapse of the neoliberal model is becoming a historical fact. The

enraged middle class, stripped of its savings, will demand changes. It may well go
into action under left-wing slogans, but no-one can guarantee that the ordinary,
aggrieved man and woman will not form the mass base for fascism as was once the
case.
The rapid growth of right-wing populism is a natural accompaniment to the
capitalist crisis. It is as though we are returning to the 1920s and 1930s, and this
reiteration is no accident. Fascism was born not only of the ideological fantasies of
Mussolini and Hitler, but primarily of the economic, social and psychological
conditions that existed in Europe (and not only in Italy and Germany) after the First
World War. In destroying the welfare state, neoliberalism to an appreciable degree
recreated analogous conditions. Many economists have already dubbed the crisis of
the early twenty-first century a second edition of the Great Depression. It is not
surprising that extreme right-wing parties are again appearing on the scene. The past,
however, never repeats itself. Just as neoliberalism does not represent a simple return
to free market capitalism as it existed before the Second World War, the new
fascism and right-wing populism differ substantially from their prototypes in the first
half of the twentieth century.
European society has changed, and fascism has changed along with it. A new
hate figure has appeared. The place of the Jew has been taken by the immigrant, the
muslim, the black. The Bolshevik conspiracy has been replaced by world
terrorism. Masons have been replaced by islamists. Perhaps for the first time in a
hundred years, religion has again become a topic of political discussion in Western
Europe. This time, the issue is not the old feud between catholics and protestants, but
the question of islam.
By the late twentieth century, islam had become one of the main religions in
Europe. Muslims had of course lived in Europe since the middle ages. Arab Spain was
one of the cultural centres of the islamic world, in the Balkans the Turkish empire
managed to islamicise part of the local population, and from the nineteenth century
the mulsim elites of colonial and semicolonial countries studied in the universities of
Britain. None of this, however, prevented Europeans from perceiving themselves as a
Christian civilisation. Not even the presence of millions of Jews, whom the
Christian majority simply tried not to notice, posed any obstacle.

The European democracies took shape in the course of the struggle with the
Christian church, which invariably took the side of the authoritarian state power as it
tried unsuccessfully to suppress the revolt of the masses. The result was that European
political culture acquired, as it were, two faces. On the one side was a conservative
tradition resting on Christian values, and on the other was a republican ideology
that proclaimed the principles of the secular state and of freedom of conscience. In
France and even in Britain, the anticlerical nature of the slogan freedom of
conscience was not a secret from anyone. In the United States freedom of
conscience had arisen as the result of a compromise between numerous religious
communities and sects, none of which was strong enough to impose its control on
others, but in continental Europe it was a matter of defending the conscience of the
citizen from the encroachments of official religion.
The huge influx of immigrants to Germany, France, Holland and Britain that
began in the 1960s radically altered the demographic picture. Though the immigration
was initially to the former colonial metropolises, by the late twentieth century it had
become a fact in virtually all countries. By the mid-1990s Italy, Spain and Portugal,
which earlier had sent their own people abroad, to America and northern Europe, had
begun receiving immigrants. Sweden and Finland had adopted extremely liberal
legislation on political refugees. As a result, the new citizens in these countries
differed substantially from their counterparts in France or Germany; people who flee
from political persecution are as a rule more educated and qualified, and receive more
sympathy in the country that accepts them, than those who have simply come seeking
work.
Substantial numbers of the new Europeans have come from the Muslim
world. In principle, this has been extremely enriching for the old continent. In the
East, cultural and religious homogeneity has been rare; from ancient times, most
societies there have represented conglomerates of ethnic and religious communities.
The reason here is not so much the peculiarities of islamic culture, which has
developed its own concepts of religious tolerance, but the weakness of the state,
which unlike the situation in the West in the period from the sixteenth to the
eighteenth centuries, was simply incapable of fully assimilating or destroying
everyone who did not subscribe to the dominant norms.

Migration
The mass migration of people from Asia and Africa to Europe is an objective
reality of the twenty-first century. It is not simply a matter of people fleeing from
poverty to wealthier countries. Europe itself can no longer exist without immigrants.
The reasons are not only demographic. The economic model set in place during the
1980s and 1990s presupposes something like social apartheid. Jobs are divided into
good and bad, with an abyss in between. Vertical mobility, that is, the
opportunity to reach the heights in the course of ones career, is open only to those
who right at the beginning started out from a good spot. Approximately a third of
society is deliberately condemned to the position of outsiders. If the population is
ethnically and culturally homogeneous, this threatens serious problems. As it was said
earlier, neoliberal globalisation turns ethnic division of labour into a social
necessity. Bad jobs cease to be a national disgrace or even a social problem.
Solidarity between workers employed in good and bad jobs is reduced to a
minimum. More prosperous people may feel sympathy for the poor immigrants, but
do not identify with them. The social outsiders remain ethnic foreigners and a
religious minority, making them easier to control. If there is insubordination, those
involved can even be banished and replaced with others. Zealots for racial purity
and champions of Christian values can be set upon them. Meanwhile, the problem
is transformed from a social into a cultural-religious one. Heartsick liberals, instead
of fighting for social equality, are preoccupied with discrimination against
minorities. They urge that a cultural problem be solved, while a social catastrophe is
unfolding. They are firmly convinced that the miseries of the immigrants flow from a
lack of respect by society for their identity. All sorts of laws are adopted in order to
defend the collective rights of minorities. Because this does not change the social
situation in the least, most of the new immigrants are no better off. The people who
have grown up in inescapable poverty amid the wealth of Europe experience anger
and disillusionment.
The new generation are even more embittered. They have been raised in
Europe, and in themselves are perfectly capable of becoming normal Germans,
Britons or French, without of course renouncing their roots (exactly the same
happened with Jewish or Russian immigrants in the twentieth century). But they
cannot manage it! They simply do not have the money for this, and never will have.

The liberal toleration turns into a strengthening of apartheid; instead of social

integration, people are urged to develop their cultural peculiarities. The more they do
this, the more they counterpose themselves to the native population. Among the
native population, meanwhile, dissatisfaction increases We look after them, we
let them do whatever they like, and they dont give us any thanks for it! The more
insecure the social position of white people, the stronger these moods. There is an
evident paradox: those who start to hate immigrants most are those who are closest to
them in terms of their social standing. These people make up the section of the
genuine Europeans for whom there are not enough good jobs, or whose jobs are
under threat. Worse still, these people are even forced to compete for bad jobs with
members of the minorities, who very often win these battles. After all, the minorities
are used to such wages and conditions; they are prepared to put up with them.
It is not hard to see that the new minorities in turn are becoming fertile soil
for the spread of fundamentalist propaganda. Liberal tolerance promotes a situation in
which every community has counterposed itself to all the rest. Meanwhile, the social
situation arouses discontent, making people more and more aggressive.
The British writer Tariq Ali has described what is happening as the clash of
fundamentalisms. Among the white Christians, neo-fascist ideas are spreading,
while among the non-Christians, it is religious fundamentalism. Both are very
similar in ideological terms. In essence, they represent two versions of extreme rightwing ideology, differing from one another only in their cultural garb. The ideas of
the extreme right are the fundamentalism of white Europeans. Fundamentalism is
nothing but right-wing populism in its islamic variant. Both ideologies are based on
racial hatred, and both deny class solidarity. Most important, in both cases an
understanding of real social contradictions is replaced by a false problematic. This
false problematic cannot be resolved. Europe cannot get rid of the immigrants. Calls
to teach these barbarians our way of life simply hang in the air; the immigrants
would be happy to live like everyone else, but for this they would have to occupy the
same position in society as the members of the prosperous white middle class. On
the other hand, no-one is able, or seriously intends, to turn Western Europe into a new
Khalifate.
Neoliberalism went on the offensive against the welfare state promising a
diversity and wealth of career opportunities to people who were prepared to play by
the rules of the market. Unfortunately, the main rule of the market is that most players

lose. This is the essence of the game. Inequality of property ownership becomes
more dramatic, and as this happens, equality of opportunities vanishes into the past.
The crisis of the neoliberal model had grown more acute by the first decade of
the new century, when the opportunities for growth associated with the new
technologies had been exhausted. The information revolution already lay in the past,
and everyday life within the information society was just as rigorous as under
industrial capitalism. One economist compared the beginning of the new century with
the beginning of the Great Depression in slow motion. The social and economic
crisis is being reflected in politics. The Great Depression gave birth to fascism. We
entered the new century along with a new variant of extreme right-wing ideology. It
can be identified with fascism only in one respect: as before, hatred for aliens
remains a unifying principle. For twentieth-century nazism, the aliens were Jews
(the only aliens present in the European society of the time). Now, the same role is
being played by Muslims.

The Flight from Freedom

The confusion and fear that take hold of part of society under the conditions of
market crisis provide a nutrient medium for right-wing radicalism. Erich Fromm in
his classic work The Flight from Freedom described the psychological state of the
petty bourgeoisie of the 1930s. Unable to cope with the elemental forces of the
market, the members of this social layer had lost control over their lives, and held a
mortal dread of the future. Confused and embittered petty bourgeois look for salvation
in a strong state, which is supposed to restore order and ensure security. Such
people are incapable of understanding the real causes of the crisis, but they are full of
conviction, and demand simple, quick solutions. They are dissatisfied with the way
capitalism works, but they cannot imagine that a society organised according to
different rules might exist. Hence they put their hopes not in reforms and social
changes, but in a strong leader, and look for specific guilty parties who can be
punished. In short, such people are ripe for entry to the ranks of a fascist organisation.
The National Front of Le Pen in France, and the Pim Fortuyn List in the Netherlands,
have ridden to success on a wave of fear. Not only fear of criminal acts that

supposedly have ethnic roots, but also an elementary fear of the future, under the
conditions of an uncertain market conjuncture.
It is significant that every country and every party has its own peculiarities.
For the extreme right in Europe, the murder of Fortuyn turned him into a political
saint. But this saint, unlike the thug Horst Wessel, who was killed fighting for the
ideals of Hitlerite nazism, was also an intellectual. In tolerant Holland, Fortuyn
insisted that his organisation was not part of the extreme right, and that it should not
be identified with Le Pens movement. Immediately after Fortuyns death, the Dutch
journalist Imogen
Vermuelen was forced to explain the reasons for his popularity in an article for the
British radical journal Red Pepper. Fortuyn was unlike most of the politicians in the
Dutch parliament in The Hague. Before becoming a campaigner against Muslim
immigration, he had tried unsuccessfully to make a career for himself as a lecturer on
Marxist sociology. Where did his popularity come from? Fortuyn said what many
people thought but didnt feel free to say. He was a real populist. He deviated from
the settled Haguean culture; was open about his homosexuality and honestly uttered
his ambitions to become prime minister, instead of feigning modesty. I want to
sweep out the dust, he said, and that was what the people, sick of the old hypocritical
political culture, wanted to hear. Fortuyns star rose not so much because people
trusted him but because they distrusted the sitting politicians (Red Pepper, June
2002, p. 21).
Fortuyns homosexuality became a sort of symbol. Unlike the French
nationalists, Fortuyn was not defending traditional family values, but the principles of
tolerance, womens equality and the secular state, principles considered to be under
threat from islam. The circle had been closed. The logic of multiculturalism had been
turned inside out. Liberal tolerance had been turned into an ideological justification
for pogroms.
Anti-islamism is becoming just as much a unifying feature of extreme rightwing ideology in the twenty-first century as antisemitism was in the previous century.
Hostility to anti-islamism, however, does not in the least mean that we experience a
sentimental sympathy for fundamentalism of the islamic variety. In the twentieth
century most of the Jewish communities in Europe were secular and liberal, existing
in far more favourable social conditions than the muslim communities in the modern
Christian world. Among European Jews, therefore, a fundamentalist reaction (on

the basis of to German fascism we shall counterpose our own Jewish fascism) failed
almost completely to develop. Almost, because in Israel during the second half of
the twentieth century an extreme right-wing ideology did indeed sink roots, poisoning
mass consciousness and penetrating the state institutions. Today we are witnessing the
same clash of fundamentalisms in the Middle East. The Israeli occupation leaves
the Palestinians with neither hope nor alternatives. Meanwhile, the hamas
fundamentalists and other islamic rightists turn fear and despair into the fuel for war,
a war which they have already been waging for many years not only against the
occupiers, but also against leftists within Arab Palestine itself. The situation is
becoming hopeless. People who have become hostages to their own hatred are
incapable of finding solutions to the real problems.
The only answer to the offensive by the extreme right and to the propaganda of
the fundamentalists is the culture of solidarity. Such solidarity was the historical
response of the labour movement to the efforts of the property-owners to bring people
into conflict within the labour market. The working class united around its common
interests, and overcame its fear. Wherever class consciousness appears, social
contradictions become clear and understandable. There is no longer any need to
unearth conspiracies, or to look for someone to blame. Instead, there emerges the
desire to change the system.

The New Solidarity

The collapse of the new centre has taken place against the background of a
new wave of mass actions. The half-million-strong demonstration in Barcelona, which
was followed by a general strike in Spain and by successful strikes in Germany and
Britain, served as graphic proof that the class struggle was again becoming a fact of
everyday life.
The record for a mass demonstration was set in Italy, where some calculations
put the number of demonstrators on the streets of Rome at more than two million.
Meanwhile, this unprecedented action was merely the prelude to a general strike. In
Seattle in 1999 trade union activists and defenders of the environment joined in
protesting against the World Trade Organisation. This, however, was primarily a
symbolic unity. In Italy in 2002 the antiglobalist demonstrations merged with

workers strikes. Symbolically, during European Social Forum in Florence trade

unionists and antiglobalist protestors merged into the same demonstration. The
loneliness of the worker described by Fausto Bertinotti was at an end.
The period of retreat has ended as well. New prospects are opening up before
the left. The answer to racism and fundamentalism, to the neoliberalism which divides
people by counterposing workers to the middle class and inhabitants of the north to
those of the south, is being found in a new solidarity, in cultural dialogue and joint
action.
It was solidarity, civic, democratic and also class-based, which allowed the
creation of democratic states, breaking down the barriers that partitioned society into
estates and castes, and undermining aristocratic and bourgeois privileges. It was
solidarity that gave birth to the welfare state. The everyday experience of solidarity
lay at the basis of the socialist tradition, which united the left throughout the twentieth
century.
Culture, and even the forms of religious belief, will change along with social
reality. The question is one of changing society, of making it more just, and of giving
people genuinely equal rights. We are only at the beginning of this road. In modern
society, consisting of different cultures, ethnic groups, races and confessions, a
culture of solidarity has to be created afresh. This, however, does not mean that the
need for it is any less. However difficult the task may be, there is no other way.
Class struggle, or a clash of fundamentalisms those are the only real
alternatives for the twenty-first century.
Chapter 10
The Networks of Solidarity
Capitalism faces a serious dilemma. Dealing with the consequences of its own global
problems has turned out to be more difficult than defeating any of its enemies. And as in a horrifying
fairy-tale, the place of its vanquished enemies is taken immediately by new and ever more numerous
ones. The actions of capitalism give birth to anti-systemic movements, and will continue doing so as
long as the system itself survives.
Nevertheless, it is one thing to resist the system, and quite another to change the whole
character of life. The main victory achieved by neoliberalism has been a moral one. No, the system has
not managed to convince the impoverished majority of humanity that the current world order is a good
thing. The system has not even set out to do this. The ideological premise has been different: that this
system, whether good or bad, is the only one possible. However repellent the vices of the present
society might be, any other society would be even worse. If we accept this thesis, we are doomed to
submit to the system and to spend our lives proclaiming: everything is for the best in this best of all
possible worlds!

The History of Networks

Capitalism does not merely create enemies for itself. It provides us with the experience needed
if we are to locate the fresh shoots of the new society that are breaking through the rigid crust of the old
order. At times we will encounter islands of solidarity trying to keep themselves intact in a sea of
competition. Often, however, the system itself has need of new relationships, and cultivates them.
Network structures, professional solidarity and hacker ethics were not discovered by
revolutionaries setting out to undermine the foundations of capitalism. On the contrary, they were
developed and cultivated by corporations. In the information epoch, capital simply cannot develop
without at every step giving rise to islands of non-capitalist relations. Naturally, these relations cannot
become dominant until the political and economic might of capital is overturned. Capital strives for
centralisation and concentration. It is hierarchical by definition. Network structures cultivate horizontal
links. A network has two fundamental principles, equality and solidarity. So long as a network is
subjugated to capital, it cannot realise its potential. As the network develops, however, it is
transformed; from being a technique for organising business, it becomes an element of its
destabilisation. Or more precisely, it becomes both of these simultaneously.
In the late 1990s, talk of network society became highly fashionable. This fashion took hold of
everyone from anarchists to business entrepreneurs. Meanwhile, network structures are by no means a
recent development. The dissemination throughout Europe of manuscripts hand-copied in medieval
monasteries was subject to the same principles as the flow of information via the internet, with the
differences that the time required was far greater, and the number of subscribers to the system
incomparably fewer. The onset of the industrial age, however, gave network technologies a mass
character. First the posts, then railways and other integrated transport systems, then energy
transmission. These are all networks.
The need for the networks to be integrated led naturally to their centralisation, and then
nationalisation. The model of market competition that had worked in other spheres of the economy
broke down in network structures. The British railways had originally been built by a number of private
companies, but later, they had to be combined into a single system. In the US, the railroads were built
by private entrepreneurs only to the east of the Mississippi, where the distances between populated
centres were small and the level of economic activity was relatively great. As soon as the railroad
network spread to the west, construction was taken over by the state. Later, it also became necessary to
combine the various railroads into a sin! gle system. The Amtrac network is one of the few state
corporations in America. The railways developed in analogous fashion in pre-revolutionary Russia,
where they were at one time nationalised, at another privatised, but where the decisive role in the
development of the network was played in one way or another by the state.
The classic example, however, is the New York Subway. To this day, the city's underground
railway network astonishes newcomers with its strange and illogical system of interchanges, and also
with its two parallel lines that extend beneath Manhattan, at times only a few hundred metres apart. The
reason is simple: these two lines originally competed with one another. This corresponded perfectly to
the requirements of the free market, but was wasteful and inefficient. Ultimately, the system was
combined and became municipal property.
Why is it that industrial networks have so often finished up being nationalised, even in states
that proclaim free competition to be their supreme principle?
The answer lies both in network organisation itself, and in the nature of the services, which
the networks provide, in the product, which they create. The key peculiarity of network technologies is
that they require the greatest possible integration and cooperation between those who participate in
them. Competition between parts of the network, especially if it is aimed at the wiping out of one node
by another, disorganises the system as a whole.
In principle, competition within a network is possible. This, however, is not competition
between elements of the network, but between structures that are independent of one another and that
make use of a common network space and unified infrastructure. Examples are the Finnish providers of
mobile telephone links, or British private bus companies that operate on municipal roads. This
competition, however, more often occurs in relation to consumers than to the structures that make up
the elements of the network. Two managers of competing companies travel on a single train, and
this is both more logical and cheaper than dispatching a separate train for each, not to speak of laying a
separate track. But to have two companies running their own private trains along the same track is
something far more problematical.
A network cannot be divided, and to counterpose some of its nodes to others is undesirable.
All the participants in a competitive environment need to have an equal interest in maintaining the
network as a whole, not just some part of it, in working order. The failure of one of the competing

subjects might be to the advantage of another, but at the same time it damages the functioning of the
network as a whole. For this reason, the competitive processes require a high degree of
regulation. Here, the ideal competitive model becomes unattainable as a matter of principle. The
advantages linked to the development of competition are strictly limited, while the problems and
dangers turn out to be massive. This was why even the British Tories under Margaret Thatcher, who
sought to privatise anything and everything, hesitated when it came to the railways. Things changed
when New Labour came to power. The former socialists set about privatising the transport
infrastructure with enthusiasm; like all fresh converts, they were eager to show themselves to be the
most dedicated of all the adherents of the free market religion. The privatisation scheme envisaged that
a number of private companies would use the same tracks simultaneously. Everything would be
coordinated by the government authorities, as administrators of the system.
The result might be said to have exceeded all expectations. Even though the system turned out
to be expensive, complicated and unwieldy, trains nevertheless ran off the rails. Innumerable petty
matters were found to be in an administrative limbo where responsibility for them was concerned.
Everyone aimed to minimise spending on safety and on the maintenance of the system, or to foist it
onto a competitor. In principle, each individual problem could have been resolved, but each such
decision made the system more complex and confused. When the number of deaths in rail disasters had
passed the hundred mark, and the financial losses had simply ceased to be calculated, the government
pledged to privatise the London underground according to the same formula, striking fear into the
British capital. Ken Livingstone, who had been expelled from the Labour Party, was triumphantly
elected mayor thanks to his promise not to allow the underground to be privatised.
Meanwhile, the government was encountering a fresh problem: what should be done
if one of the companies making use of the network went bankrupt? Or if the corporation charged with
looking after the tracks were ruined financially, as happened in the autumn of 2001? The network could
not be shut down without grave cost to its innocent clients.
The failure of railway privatisation in Britain can be viewed as a test case revealing all the
problems that arise from an attempt to organise a network on a consistent competitive basis. In
Argentina, the privatisation of the railways also had grave social consequences. It was this
privatisation, considered one of the main achievements of the neoliberal regime of Carlos Menem, that
became one of the decisive measures driving the national economy toward the crash of 2001. The
results of the privatisation included a deepening of the industrial downturn and the social crisis. During
the period when the privatisation was in force, the number of railway stations fell by 40 per cent. The
closure of small stations serving passengers took on the character of an epidemic. Substantial numbers
of the countrys population were deprived of railway communications altogether. The decline of small
towns accelerated. In the eyes of its inhabitants, Argentina was transformed into a country without
railways18.
Corruption
Through privatisation, the private sector was able to appropriate assets that had been created
by generations of workers, and financed by taxpayers money to perform tasks for the nation as a
whole. As noted by the Argentinian scholars Felix Herrero and Elido Veschi, corruption is also one of
the common features of British and Argentinian railway privatization19.
Another instance, no less instructive, is that of the Californian energy crisis. The privatisation
and deregulation of energy networks has been accompanied by massive breakdowns, by unrestrained
price rises, and by the withdrawal of capital from the sector (very much in the spirit of the Russian
scandals involving Sibur and Itera, which were established by the managers of bigger corporations
basically with the purpose of stealing assets from these corporations). The use of the term
accompanied rather than led to is quite deliberate, since defenders of the free market and
supporters of regulation have interpreted the same processes in directly opposite fashion. In the
view of Russian and American neoliberals, the problems are all the result of deregulation not being
pursued consistently enough (this theory post factum is trotted out every time the liberal model fails in
practice) . Unfortunately, two generally recognised facts remain to be accounted for. First, the energy
supply interruptions did not occur in Los Angeles, where both the transmission networks and the
generating plants belong to the city. Second, once price regulation had been introduced in

18
19

Realidad Economica, 2002, no. 185, p. 56.

Realidad Economica, 2002, no. 185, p. 43.

Northern California, the blackouts also came to an end.

Behind the technical problems lie economic and social ones. For example, not all the lines are
equally profitable. Loss-making ones, however, cannot be shut down, since without them whole towns
will be thrown into decline. More, the whole system becomes dysfunctional once it drops its own lossmaking activities. In any national railway system there are cross-subsidies. The less profitable routes
are subsidised by the more lucrative ones. Of necessity, the same must also apply to telephone and
heating networks, to water supply, electricity and the internet. Network users in the remote countryside
receive services for the same price as clients in big cities. Obliging the former to pay more is not just an
instance of consumer discrimination and social injustice. It also retards the development of the
network.
Internal subsidies (or cross-subsidies) are a sort of economic law of networks. From the point
of view of business, however, this is an absurdity. Business does not exist in order to solve social
problems, but to make profits. For business, expanding networks and maintaining equilibrium within
them are goals which in themselves make no sense whatever. Networks are of interest to the market
only insofar as they allow the extraction of profit and the accumulation of capital. The effort
to subordinate networks to the logic of capitalist accumulation serves to disorganise and destroy them.
The task of sorting out such contradictions falls to the state. On the one hand, the state is
responsible to its citizens, who demand rail transport, electricity, heating and information. On the other
hand, the state cannot allow itself to arouse even the slightest displeasure of big business, not to speak
of directly opposing its interests. Ultimately, the taxpayer pays for everything. After the railways were
privatised, the new owners in most countries promptly called for state subsidies and received them.
After all, if this had not been done vitally important routes would have been shut down.
For twenty years the gurus of neoliberalism have been impressing a simple idea on the public:
everything that is private is good and efficient, while everything that is publicly owned is bad by
definition. Not a single serious study that has ever been conducted has backed up this theory. To be
precise, studies have been conducted, but the results have been rather different. Comparing the work of
the same enterprises before and after privatisation, the experts have been unable to discover any
consistent statistical evidence for the advantages of private ownership. Some firms operated better after
the form of ownership was altered, others worse, but in most cases there were no radical changes. In
just the same fashion, the results of privatisation differed from country to country and from sector to
sector. Nevertheless, some patterns did emerge. On the one hand, social programs, safety provisions,
trade union rights and the gains made by hired workers invariably suffered as a result of privatisation.
At the same time, the demands of the private sector for state subsidies also increased.

The readiness of the state to subsidise loss-making enterprises is the only serious
argument put forward by the supporters of privatisation. In their view, this is an
almost genetic predisposition of the public sector. The subsidies lower the degree of
responsibility required of managers, and allow inefficient administration to go
unpunished. It is time, however, to reveal the terrible secret of neoliberal capitalism.
The main recipient of subsidies has been, and remains, the private sector. To direct
subsidies and grants it is necessary to add all sorts of tax concessions, not to speak of
fat state contracts, and in some countries, guaranteed state credits. The incidence of
the government bailing out ruined companies is far greater in advanced neo-liberal
America than in backward Russia. Where the state is unable to hand over taxpayers
money directly, it organises operations in which it acts as a sort of unpaid rescue
service for business. As a rule, the more market the economy, the greater the degree
of direct and indirect subsidy. This is only to be expected; the smaller the state sector,
the more government money is transferred to the private sector. In the US, the term
corporate welfare has entered circulation. State aid to business, at taxpayer expense,
amounts to billions of dollars. Unlike social welfare, this kind of charity is not
considered in the least shameful; in no way does it lead to parasitism, and it does
not corrupt society. As the welfare state is dismantled, the scale of corporate welfare
steadily increases.
The state support enjoyed by large corporations is especially striking against
the background of stories concerning the market nature of the American economy.
During the two years that preceded the stock-market crash of 2002, Microsoft

contrived to pay taxes of no more than 1.8 per cent, while the average American paid
taxes of around 30 per cent. The corporation General Motors not only succeeded in
paying nothing, but also in receiving tax compensation of many millions of dollars
from the state. During two of the three years leading up to the bankruptcy of
WorldCom, that corporation paid no tax. Enron did not pay taxes in four of the five
years before it went bankrupt. During these very years both companies paid millions
of dollars to their managers who were transferring the assets of the corporations to
fictitious firms registered in the Cayman Islands. Meanwhile, as the American
journalist Matt Bivens notes bitterly, such corporations as Microsoft and General
Motors ought to be grateful to US people. These firms owe their business success to
American taxpayers because they supported Defense Department spending that
created the early Internet and decades of investment into the federally built Interstate
Highway System20.

Consumer Sovereignty
Radical moralists in the US demand that corporate welfare be ended. In Russia, liberal
journalists who encounter the same phenomenon ascribe it to national savagery, backwardness and
corruption, and promise us that it will vanish into the past once American standards of honest
competition triumph in our country. The truth is that corporate welfare can only be done away with by
putting an end to capitalism itself. The contradiction between social tasks and private interests has an
objective existence. The state has to take this into account (to the extent to which the state is forced to
concern itself with the common interest, instead of simply serving the egoism of the ruling groups). Put
simply, private business needs to be consta! ntly bribed, and the state must make profitable that which
by definition cannot and should not be a source of profit. The only way to really solve the problem is to
remove from the sphere of activity of the private sector things that should not belong to it. The theory
of free markets was formulated for a society in which a multitude of independent petty producers vied
with one another in supplying the same type of product. This product not only needed to have a price. It
needed to be clearly measurable in terms of quantity, and to have uniform criteria of quality for all
purchasers. On this basis, the consumer had a choice. Production in network systems can be measured
quantitatively, but it is fundamentally unsuited to being sold by the piece. For the consumer, the
choice does not consist in the acquiring of a concrete object. It is also quite impossible for consumers
to exercise control over quality at the moment when a product is acquired or used. Electrical energy
can be environmentally clean or dirty, but the consumer is not directly aware of this (dirty
energy may be cheaper, but this is not always the case). The same is true of water supplies, heating, and
so forth. The only criterion available to the consumer is price, and the easiest way to lower the price
(and make it more attractive to the client) is to economise on solving the general, collective tasks of
maintaining the network. In other words, one of the key elements of consumer sovereignty
disappears from the market. The modern global market, however, is in any case becoming more and
more remote from the model of ideal competition described in the liberal theories. As early as the late
nineteenth century it was found that the more liberal the rules of the market, the more rapidly capital
became concentrated, and competition was accordingly weakened. This is why a significant part of the
state
20

The Moscow Times, 5.08.2002, p. 8.

regulation that is so detested by liberals is aimed at restraining monopolisation and preserving the
conditions for competition. Every new development in the technological revolution is accompanied by
intensified rivalry in the new sectors that are taking shape, followed by a further stage in the
concentration of capital. Two decades of neoliberal reforms on a global scale have led to an
unprecedented monopolisation of markets. A system has come into being which the Singapore
economist Martin Khor has termed the oligopolised market. Competition takes place here, but in forms
quite different from those foreseen in the classical theory. Unlike Adam Smiths model, in which
producers as it were operate blindly, directed by the invisible hand of the market, the ten or so large
corporations which dominate any sector have first-rate information about one another, and about the
state of the market. They are able to manipulate prices by creating bogus market signals to which
consumers or smaller firms will react, and they can make extremely serious errors with impunity, since
their resources are sufficient to cover any losses. One of the arguments put forward in defence of such
industrial monopolies is that despite the concentration of capital, they are capable of ensuring a certain
competition between goods and brands. For example, the trade mark Mars competes with the trade
mark Snickers, while both belong to the one company. Many economists and consumer rights
advocates nevertheless condemn this practice, which they regard as pseudo-competition. In network
systems, however, pseudo-competition of this kind (for example, providing several types of water
through one pipe, or different varieties of electrical energy through one power point) cannot be
practised. Technically this might be conceivable, but there is no way the costs could be justified. As
early as the nineteenth century it had become obvious that the market system is wasteful of resources.
In the late twentieth century conclusions that had seemed obvious to the generations that survived the
Great Depression and two world wars were not so much refuted or re-examined, as simply struck from
the record. Neither socialism nor Keynesian ideas of regulation, however, arose out of a vacuum. They
were nothing other than two means of dealing with problems that the economy of market capitalism
had been unable to resolve.
Social Responsibility
In the early twenty-first century these questions not only remain unresolved, but even
suggesting solutions is categorically forbidden among the serious public. Meanwhile, the scale of the
problems has become far greater, and the wastefulness of capitalism threatens not just economic
catastrophe, but global environmental mayhem. If the competitive model does not work, maximum
efficiency in the system is achieved when it is unified and placed directly at the service of society. This
conclusion, which seemed perfectly obvious in the first half of the twentieth century, was subjected to
doubt in the 1990s, when everything connected to socialism and collectivism seemed hopelessly
discredited. A decade and a half of neoliberal reforms, however, have proved it true by default.
Network structures of collective consumption require collective property. One result of the Californian
energy crisis has been the appearance in the sunshine state of the movement Power to the People,
campaigning for nationalisation of the local energy industry. The outcome of the British experiments
with privatising railways was a mass conviction that they should be returned to the state. As
Argentinian scholars note, the failure of railway privatisations will sooner or later force governments to
learn to renationalise21. By the beginning of 2002 not only leftists, but rightists as well, had
concluded that renationalisation was essential. The Financial Times, a sort of central organ of British
capital, wrote of the need for renationalisation no less openly than Socialist Campaign Group News, a
monthly newspaper produced by left-wing members of the Labour Party. It is very simple to declare
everyone who criticises privatisation to be a defender of the old regime, dreaming of returning us to the
totalitarian hell. And indeed, there is nothing more absurd than to have a government deciding the
question of providing women with fashionable footwear, or to have a session of the central committee
of the ruling party devoted to the gathering of the harvest. The trouble is that in ten or fifteen years
time, attempts to improve the functioning of the railways with the help of private initiative will arouse
the same derision.
The supporters of capital call upon us to live by the rules of the market. Well then, they should
live by these rules themselves. Not a single kopeck, cent or penny of public money should go to private
business. No public funds should be invested in corporate undertakings. If subsidies are a social,
productive or technological necessity, enterprises should be transferred to public ownership. If a
corporation approaches the state with an appeal for subsidies, this should be understood as a request for

21

Realidad Economica, 2002, no. 185, p. 31.

nationalisation. This will be in strict accordance with the much-loved laws behind the logic of the
market.
Between the commentators for the Financial Times and the politicians, however, there lies a
whole abyss. The respectable bourgeois experts are prepared to recognise the obvious: since transport
networks cannot survive without government help, it would make more sense to return them to state
ownership. The politicians, by contrast, understand perfectly that any successful nationalisation will
create a precedent, providing a graphic demonstration of the deceitfulness of all the propaganda with
which they have regaled the public over two decades. The market is God, and God cannot make
mistakes or possess shortcomings. To acknowledge a mistake by the deity means to place the
foundations of the religion in doubt. The ideologues have expended millions of tons of paper, and
employed countless hours of air time and endless quantities of electricity, in order to prove to voters
that nothing public can possibly work, that all nationalisation is an evil, and that state enterprise must
necessarily be inefficient. Now, any example that shows the opposite, even if it is isolated and
accidental, reveals them as liars, since what they have told us has been presented as axiomatic, as
absolute truth that does not require proof or admit of exceptions.
This lie has bound together liberals, right-wing populists and Third Way social democrats in a
mutual compact. These people have simply had no recourse except to unite in cleaving to a failed set of
economic policies and in defending a dying ideology, even in direct violation of good sense and in
defiance of the obvious facts. After all, the demise of this ideology would mean their political death.
Liberal reforms and privatisation have to be irreversible, irrespective of whether they end in
success or failure.
The Northern Exception
When the defenders of neoliberalism run out of arguments, they fire their last salvo: the world
is the way it is, and it cannot be otherwise. In intellectual terms, this is the same as sweeping the
chessmen off the board in the middle of the game. The theoretical dispute becomes pointless, and the
discussion passes over to the level of commonplace experience.
The antibourgeois movement replies with general slogans such as Another world is
possible!. This is hard to translate into Russian and various other languages one has the suspicion
that the debate has turned to the hereafter, to life after death, the heavenly kingdom, and so forth. In
any case, there is no need to seek an answer to present-day questions in some other life. Elements of a
new mode of organisation of society and production arise within the framework of the global capitalist
economy, starting with the participatory budget in Porto Alegre, and extending to the Finnish model
of the information revolution.
In the early 1990s, Finland underwent an extremely severe crisis. The country had acted as an
intermediary, a sort of bridge between East and West; now it was suffering from the confusion and
disorder at both ends of Europe. Its factories were at a standstill, and thousands of people had finished
up on the streets. Unemployment, which earlier had never exceeded 4 per cent, had reached 20 per
cent. The Finnish Mark had plunged.
All this had happened against the background of a profound structural and ideological crisis
that was gripping Scandinavia. Globalisation meant open markets, into which there poured a stream of
goods produced by half-starved workers in the Third World and in former communist countries. The
highly paid Scandinavians could not compete with workers who had to be satisfied with four or five
dollars a day. Capital began fleeing to places where it could exploit cheap labour with no worries about
trade unions or strikes, where there was no need to be mindful of stupidities such as human rights, and
where the state did not trouble it with high taxes or strict environmental standards.
By the late 1990s, however, the situation looked quite different. In the countries of Eastern
Europe that had slavishly followed the neoliberal prescriptions, the situation remained critical. In
Finland, by contrast, unemployment had fallen, production was up, and living standards had risen.
Social welfare remained not as generous as before, but nevertheless stirring to the imagination not only
of Russians and Americans, but also of Europeans. Despite their high taxes, the northern countries had
again become attractive to investors. The whole world was talking over the mobile telephones
produced by Ericsson and Nokia. In the number of subscribers to mobile communications per head of
population, Finland held first place in the world, far outstripping the US.
Meanwhile, from the point of view of liberal theory the Finns had done everything wrong.
Taxes remained high; the state participated directly in production and in scientific programs, retaining a
substantial share of ownership; and social spending was still at a high level. According to the
ideologues, such behaviour should have ended in catastrophe. As if to spite them, Finland by the

beginning of the twenty-first century had overtaken the US both in its rate of economic growth, and in
terms of the technological revolution.
It was not as though the general enthusiasm for the free market had passed Finland by.
People in the Scandinavian countries, however, were too used to a social-democratic way of life. The
deep revulsion felt by their society for neo-liberal approaches had created a cultural and political
environment in which consistently implementing such programs was almost impossible. Encroaching
on free education was perceived as madness, and politicians who pledged to reduce taxes aroused the
hostility of voters.
In the heat of the crisis, successive Finnish governments put their stake not on overturning
social welfare and carrying out total privatisation, but on developing information technologies, which
were to compensate for the loss of traditional industry. An enormous role in the transforming of the
economy and society was played by the company Sitra. The success of Sitra goes beyond the bounds of
the usual success stories reported in advertising prospectuses and the business press. One look at
Sitra, and the fundamental axiom on which all modern-day economic wisdom is based falls to pieces.
Sitra, which was a public company, 100% owned by the State, has not only achieved high efficiency,
but has become a force transforming all of Finnish society. In essence, we are confronted with a model
of the new-era public corporation a model applicable not only to Finland, and not only to the
information sector.
Sitra has invested money in expensive and risky innovation projects. It has borne expenses and
faced difficulties that have scared off the private sector. But Sitra has also enjoyed the fruits of success.
The market success of Sitra, ironically, became possible exactly because it was a publicly owned
company.
The innovative projects set in train with the help of public investment have provided
funds to maintain the welfare state, have created jobs, and have ensured a flow of tax revenues into the
treasury. Moreover, the system has been decentralised. Local self-government has developed along
with the technological revolution.
In the US, the rapid advance of technology was also financed initially by the state. As is well
known, the precursor to the Internet was ARPANET, created as a structure of the US defence ministry.
Even after the network had been declassified and opened to private access, the state continued to
support its functioning until it had grown to the point where it could maintain itself. In the same
fashion, the technologies of mobile communications were born in the military-industrial complex, and
later became available to everyone. It is precisely here, however, that we see the main difference
between the Californian and Finnish models. In America the public sector also assumed the main
expenses and risks associated with innovations, but as soon as the new technologies and structures
became commercially profitable, they were privatised. The fruits of success were enjoyed by private
capital. This is the basic principle of modern-day capitalism: the expenses and risks are socialised,
while profits are privatised.
The Finnish dissidence lay not in the fact that the government spent money on research, but in
that Finnish society stubbornly refused to hand over the fruits of collective efforts to private interests.
Gradual privatisation, of course, has nevertheless occurred; Nokia has been transformed from a local
company, closely linked with the state, into a transnational monster. And privatization of a public
telephone company Sitra ended up in a corruption scandal reminding of both Russian-style looting and
American-style corporate mismanagement.
Anyhow the scale of the technological revolution in the public sector has been so impressive
that the privatisation, conducted with northern sluggishness, has lagged further and further. It is thanks
to this that in Finland, the fruits of the technological revolution have become generally available in the
true sense. By the end of the 1990s the downturn in Finland had been overcome, the debts had been
paid off, the Finnish Mark had again become a reliable currency, inflation had been cut to minimal
levels, and growth rates stood at 6 per cent higher than in the US during the last boom.
The Californian model builds the network as a gigantic virtual supermarket, while the
Finnish model builds it as a vast library. In the former case, everything is about the purchase of goods;
in the latter, about access to knowledge, information and socially necessary services. For some,
information is a commodity like any other, while for others it is common property, a part of human
knowledge.
In California, the world of amazing technologies exists side by side with filth, poverty and
street crime, as in the well-known film Blade Runner. Residents of Los Angeles are convinced that
the future world depicted in this cyberpunk masterpiece is not all that different from their own present.
Conflict, rivalry and competition drive development forward, but turn into outbursts of aggression and
destructiveness. Firms conduct deadly battles with one another to lure away experts. At the apex of the
pyramid is the new economy, with its wonderful possibilities, but at its base is the slave-like labour
of millions of illegal immigrants.

For some time, the success of Finland has been more than an individual instance, an exception
to the rule. The Finnish dissidence has not only resisted being subsumed into the general order, but
has come to seem like a challenge to it, an alternative. Not only is it possible to follow a different
road, but successes can also be scored in this way. The question is: how long can an island of wellbeing survive in a sea of poverty and mayhem?
Sooner or later, such exceptions will become the rule. This is not because the world will
become a sort of global Finland, but because new and more radical alternatives will appear.
Socialism
Capital blackmails governments endlessly, threatening to flee to other countries. Governments
submit cheerfully to this blackmail, since they are playing at the same game as the financial and
corporate elites. As they set out to justify themselves to public opinion, they conceal a key fact: the
mobility of capital is not without limits. Money can be transferred out, but this money is itself at risk of
being turned into meaningless columns of figures on computer screens, or mountains of colourful
paper. No enterprise consists solely of bank accounts, buildings and machines. It is also people, a
collective of workers who have technological knowledge, qualifications and experience. Such a
collective is formed over years, and cannot be transported across national boundaries.
With their obstinacy, the political and corporate elites could finish up doing capitalism a
thorough disservice. Most revolutions have begun with societys need for reforms. The inability of the
ruling groups to enact the changes whose time has come has then impelled society to even greater
radicalisation. If the existing elites are incapable of doing what is required, then sooner or later they
will themselves become victims of the changes. More than likely, this will be a good thing.
Sooner or later, network socialism will open up a space for itself. The more ruthless the
opposition from the elites, the more radical the common mood will become. The technological
revolution, however, is forcing a radical rethink of the traditions of collectivism. The industrial epoch
required discipline and strict centralisation, including (and perhaps, above all) in the network
structures. The new epoch is allowing organisation to take a different shape. In the milieu of the
internet, networks are typically conceived of as being self-organising and self-regulating. In practice, of
course, the possibilities of self-organisation are not limitless in any network, but however restricted
they might be compared to the utopian ideal, they are immeasurably greater than during the industrial
epoch.
The proletarian socialism of the nineteenth and twentieth centuries was permeated by the
discipline of the factory, and this simply could not have been otherwise. The new epoch opens up new
possibilities. The dreams of economic democracy that aroused the enthusiasm of socialists in the past
may finally become reality. The idea of self-management by the producers, an idea, which in the early
twentieth century spread throughout all corners of Europe from Petrograd to Turin and Liverpool, first
took the form of workers control, of factory councils of all conceivable varieties. Because this
idea was in contradiction with factory discipline, it was doomed inevitably to defeat. The practice of
self-management turned out to be full of romantic legends and organisational contradictions. Why
should only workers, the people who carry out production, be involved in management? What about
consumers, or people who simply live in the vicinity of the enterprise? What about the huge number of
questions that in technical terms are unrelated to production, but which bear directly on the lives of
multitudes of people? How are conflicting interests to be reconciled by administrative fiat, by voting,
through the market, or through some quite new mechanism?
Cooperatives and municipal enterprises are creating the primary infrastructure for a new
economic participation. But they cannot remain self-sufficient, in isolation from one another. Local
control is ineffective if each site operates separately from the others. A unifying network and
democratic coordination are essential.
The discussion on the energy industry of the future provides a striking example of how the
question becomes insoluble if all the various interests are not taken simultaneously into account.
Environmentally clean electricity is expensive, while traditional generating methods are destructive,
and lead to irreversible losses. Economising with energy is not something that can occur
spontaneously, since any substantial fall in demand automatically reduces the price as well, thus doing
away with the stimulus to further economies. Moreover, any solution requires long-term investments,
which only make sense if there are clearly defined prospects for the future, at least seven to ten years
ahead. In the 1960s, John Kenneth Galbraith wrote that long-term investments require state guarantees;
subsequent experience has shown, however, that the people in power change, and that the money
dispensed in order to provide such guarantees is by no means always used effectively. There is,

however, something more important than guarantees from state bureaucrats, and that is collective
decisions, democratically adopted. A new, environmentally-based energy policy will only work if it is
founded on a coordinated strategy that is agreed on various levels and that takes different interests into
account. This will be a strategy that includes economising on fuel, encouraging technological
innovations, making intelligent use of traditional energy sources, and implementing programs to make
up for the damage, which our planet suffered as a result of industrial development. This will only work
if the key decisions are taken not by the state, but by society itself. The only remaining role for the state
will be that of carrying out decisions under strict monitoring by citizens associations. The collectively
managed networks of the twenty-first century will be able to create transparent structures for decisionmaking. The possibility is emerging of civil society being included in management.
It has been fashionable to talk of the participation of civil society in decision-making ever
since the mass upsurges in Seattle and Prague. Even the chiefs of the International Monetary Fund and
the World Bank have felt obliged to utter a few fine words on this topic. Including a few
representatives of non-government organisations on corporate boards, however, can provide only the
appearance of democracy, while at the same time corrupting the leaders of the civil associations. The
only way to change the situation is to set in place full-blooded democratic procedures at all levels, with
civil society involved in decision-making at all levels from top to bottom. Added to this must be
democratic control over the civil associations an! d their leaders.
We are already seeing that civil society is capable of radically changing its character. In place
of many quite unrelated organisations, acting independently and to some degree in opposition to one
another, we are seeing the rise of coalitions, of networks of social solidarity. These coalitions have
nothing in common with totalitarian fronts, since they are voluntary and constructed on a basis of
equal rights, while the interactions that occur within them involve both collaboration and conflict
simultaneously. The task is to create democratic procedures that render decision-making an open
process, in which everyone involved has a chance to take part. The participatory budget that was tried
out for the first time by the municipal authorities in Porto Alegre provides an example of just such a
procedure. If the city chiefs, following the advice of progressive representatives of international
financial organisations, had shut themselves up in a room with a dozen or so hand-picked figures from
civil society and cooked up a socially responsible budget, the result would have been catastrophic
both for the city, and for the organisations drawn into this procedure. But the Porto Alegre authorities
made the budget process open to everyone, taking it from the hands not only of the bureaucrats, but
also from those of the public figures. Not only did the state finish up exposed to the scrutiny of civil
society, but civil society itself was placed under the control of the people.
Democratic procedures and open access to information create the conditions for new ways of
managing investments. Industrial corporations can no longer get by without modern information
technologies, but it is precisely these technologies that create the potential for collective control, and
consequently, for power to be taken from the corporate elite and for production to be placed under the
control of society. The capitalist hierarchy has finished up under threat. In exactly the same way, the
possibility is emerging of undermining the positions occupied by the cyber-lords in the area of modern
technology, of opening up the networks to everyone, of abolishing information rents or of directing
them toward social needs. In this lies the essence of a new class struggle, of a social conflict that not
only refuses to die out in the information epoch, but on the contrary, takes on an unprecedented scale
and intensity.
The idea of self-management, that met with defeat in the twentieth century, is now returning to
the agenda. Those who defend it include the organisers of numerous new cooperatives in Latin
America and Europe. Also linking their hopes to it are radical nongovernment organisations in the US
that are attempting to devise an alternative model of accumulation, oriented toward the interests of
the collective. When the left-wing municipal authorities in Porto Alegre opted for the novel principle of
formulating a budget with the participation of the entire population, the initiators of the experiment
were merely trying to prove that a city could be administered in a new way, that a change of leadership
should mean something more than replacing one set of bureaucrats with another. The experiment in
Porto Alegre, however, yielded a result that went far beyond the techniques of municipal
administration. If the budget of a city with a population of a million people can be drawn up with the
participation of all the residents, does this not indicate that society as a whole can be organised in a
new fashion?
The participatory budget, first devised in Brazil, quickly became fashionable internationally.
Intellectuals set about writing books propagandising in its favour, while a train of municipal
functionaries from other Latin American cities and even from Europe made their way to Porto Alegre
looking for up-to-the-minute experience. Meanwhile, the participatory budget could not by itself
clear the shanty-towns from the outskirts of the model city, or do away with the abyss separating rich

from poor. Porte Alegre enthusiasts often failed to see emerging problems and limitations of this
model. In no way is Porto Alegre a new Utopia, which can give us answers to the global problems of
modern societies. Democratic municipal order created there by the Left is much better than anything
experienced before at that level of government. But by itself it cant undo the damaging effects of the
capitalist system, and so long as it remains within the context of the existing order, it is only a minor
improvement. Like any humane innovation, it is doomed to degeneration and failure if it remains part
of an anti-human system.
If we want the experiment in Porto Alegre to be a success, if we want the remarkable
cooperatives established by the enthusiasts for fair trade to survive, and if we want the alternative
model of accumulation to be implanted and to spread, we have to ensure that the principle of
democratic participation becomes dominant in politics and the economy. Whether this happens will
depend on millions of people who are making their choices right now.

There are no guarantees that the shocks and conflicts of the present epoch will
have a happy ending. But there is a way out of the impasse. There is a chance, and it
has to be seized upon.
Conclusion
Revolt or Revolution?
We live in an epoch of gigantic upheavals.
Today capitalism is under attack for the first time since the fall of
communism, the conservative commentator Robert Skidelsky wrote in astonishment
in July 2002 (The Moscow Times, 31 July 2002, p. 7). Neoliberal capitalism has come
under attack on three fronts. The revolt of the marginals is being superimposed on
the revolt of the middle class, and workers revolution is becoming a real prospect in
diverse parts of the world. The movement against neoliberal economic dictatorship
has not split since it emerged in Seattle in 1999, but two clear poles, one reformist and
the other revolutionary, have appeared within it. Which of them will ultimately
prevail will depend not only on the arguments of the two sides, but also on the depth
of the capitalist crisis, and on how far the mass radicalisation evoked by this crisis
extends. It will be the masses, not the leaders or heroes, that decide the movements
fate.

An Unexpected Revolt
The elites were prepared least of all for the revolt of the middle class. The
beginning of the revolt was impressive and inspiring. But what are its prospects? As

the neoliberal model collapses, the middle class needs once again to think through its
role and to recognise its place in society. Who are they, these members of the middle
class, survivors of the stock-market crash, of the collapse of the new economy, and
of the downfall of the hopes associated with the information revolution? Well-off
marginals, defending the remnants of a bygone prosperity? Or pioneers of a future
network economy, based on knowledge and solidarity? What are we faced with a
petty-bourgeois uprising, of which there have already been more than a few in the
history of capitalism, or the first battles of a global anticapitalist revolution? How will
the crisis of neoliberalism finish up in a second edition of the 1930s depression,
culminating in fascist terror and social democratic reforms? Or is this the precursor of
far more radical systemic changes? The middle class is not in itself capable of altering
the system. But what if its revolt resonates in sympathy with other manifestations of
mass protest? The Marxism of the nineteenth century waited for proletarian revolution
in Europe. The old continent was shaken by wars, political battles unfolded, and the
workers movement changed the world. Nevertheless, the great revolutions of the
twentieth century were not the classical proletarian uprisings, which the pupils of
Marx were awaiting. Nor did they take place in the countries of the European
center. The Russian, Chinese and Cuban revolutions proved to be complex social
processes that took place on several levels simultaneously. The reason the system was
transformed was because the protest of different social groups was directed against
the same authorities, against the same social order.
In some cases, what occurred was a rebellion in others, a revolution. The
outcome of the revolutions, in turn, was by no means what people had dreamed of.
One way or another, however, the processes drove history forward.
The key question is whether the protest will be focused. Will the discontented
manage to unite? Will they identify a common interest? Will a common ideological
field, if not a common ideology, appear among them?
Antonio Gramsci called this phenomenon a historic bloc. At present, a new
anticapitalist bloc is still only beginning to coalesce. It is marked not only by a
diversity of private and group interests, but also by cultural dissonance. The middle
class is finding its real place in the system, freeing itself painfully from the illusions
of the 1990s. The marginal masses are torn between revolution and the temptations of
nationalism.

The socially marginalised do not give rise to their own ideas, but merely
assimilate the ideas of others. The culturally marginalised, who issue from the elites
and the middle class in an epoch of crisis, are a different matter. The worse the
situation within the system, the greater the number of these alienated ones, leading
prosperous lives, but tormented by unfulfilled ambitions, and suffering from
ideological humiliations. Within this milieu, revolutionary ideas can arise and also,
reactionary utopias. Nationalism and fundamentalism are inferiority complexes
elevated into positive ideological principles.
The people who took part in protests had earlier been failures, unable to adapt
themselves. They were not necessarily social failures. In the social sense, the
millionaire Osama bin Laden is the very last person who could be seen as representing
the outcast lumpen-proletariat. In the cultural sense, however, he is just such a loser, a
drop-out, someone who could not adapt to the rules governing the lives of the global
elite or who failed to gain the place within it to which he felt entitled.
Elites with an inferiority complex are a typical phenomenon of the turn of the
twenty-first century, and especially in the countries of the periphery, from Saudi
Arabia to Russia. Millionaire failures, marginalised rulers and frustrated bureaucrats
are not a completely new phenomenon, but they are appearing on an unprecedented
scale. The aggression of the imperial centre provokes the marginal elites to
reciprocate, and this in turn provides a pretext for new aggression from the defenders
of international law and order.
It used to be easier for the colonial elites; they had their status within the
empire. It may have been a subordinate status, but it was relatively high, and most
importantly, it was clearly defined. The imperial centre recognised, respected and
made use of cultural differences. Transnational capitalism, by contrast, has proven
unable to take them into account. This capitalism is too primitive, and hence reacts to
cultural diversity with aggression, in the spirit of Huntington in his Clash of
Civilisations. The champions of transnational capitalism in the countries of the
periphery do not feel themselves to be a privileged element in the local society, nor
even intermediaries between the empire and the natives, but part of the
transnational elite, entrusted with maintaining order on a given territory. These people
have no moral justification, and no future.
A section of the traditional ruling classes tries to maintain links with the
broader society. Even in this case, however, the peripheral elites are hampered by

their ambiguous status. In formal terms everyone is equal, and the only important
thing is money. In practice, there are also cultural barriers. The more deeply a ruling
class is rooted in its own society (and correspondingly, the more legitimate it is),
the less are its chances of overcoming the cultural barrier and of entering the
transnational community. To revolt against this community, however, means
inevitable catastrophe; for the ruling class to rest on its own masses against
foreign exploiters involves surrendering an important part of its power and
privileges. To fight on two fronts means sooner or later to suffer defeat, in the manner
of Slobodan Milosevic and other national leaders who have risked quarrelling with
the West. In such a situation, power can only be retained through strict police
surveillance and constant repression. This repression, however, discredits the regime,
narrows its social base even more, and most importantly, provides justification to the
West. The punishment of disobedient bosses is turned into the struggle for
democracy. The dilemma of the peripheral elites recalls a Russian saying: if you go
to the right you lose your horse, and if you go to the left you lose your head. Complete
cultural integration means a total loss of legitimacy in ones own society. Maintaining
cultural ties to ones homeland means restricting the possibilities for cultural
integration.
Frustrated princes turn to the masses, becoming leaders of the marginals. Their
appeals are listened to; in a society doomed to poverty, anyone who talks about
injustice will always find an audience. This audience consists not only of the poor
who are deprived of a future, but also of sectors of the middle class that are deprived
of their dignity. The ties between such leaders and their supporters, however, are not
based on common social interests, and therefore are not durable. This is unity in
hatred, devoid not only of a positive program, but also of an ideal for the future.
Islamism, nostalgia for the Soviet Union, or nationalism may become unifying
slogans, but they will not aid in the working out of a strategy for victory.
A section of the ruling class that has suffered from neoliberal globalisation
carries on with the search for a unifying idea. The essence of this idea, however
formulated, always lies in the subordination of the masses to their elites. This
subordination has to be based on some sort of common cause or shared values.
The more illusory this bond, the more attractive it is in ideological terms. Meanwhile,
the only way a basis can be found for the masses to subordinate themselves to their
elites is through counterposing these elites to foreign ones.

The Choice before the Middle Class

In many ways, the dilemma faced by the middle class outside the West
resembles the dilemma of the elites. The middle class, however, has other methods
and opportunities for solving these problems. Instead of looking for someone on
whom to blame its woes, the middle class can try to change society. This is something
the elites cannot allow themselves. They are conservative, because they are the
offspring of this very system. For them, changing society would mean expropriating
themselves wholly or in part.
Even on the periphery of the system, the middle class is far larger than the
elites. It is far more integrated into the general community, and is capable of
collaborating with the labour movement. The middle class has enormous creative
potential. It can seize on ideas thrown down from above, but it can also develop its
own. Finally, it is able to assimilate and rethink the left-wing and Marxist traditions.
The marginals subscribe to the ideas that are prevalent in society. That is the
nature of marginal layers; the more contradictory and dependent their position, and
the less capable they are of defining their own interests, the more receptive they are to
the ideas that are floating in the air. These may be the ideas of revolution, social
progress and liberation or, of the flight from freedom, of fascism and of religious
extremism. The middle class has the opportunity to choose. It vacillates between the
temptations of reaction and the dream of revolution.
The ideas of the left have to prevail. In the broader accounting, it is not only
leftists that have a stake in this outcome. The question is raised of whether a world
different from the present one is possible, but the real question is far tougher: whether
the world will exist at all in fifty years time. If the reactionary alternative triumphs in
a world packed with weapons of mass destruction, this will mean a catastrophe
compared to which the Second World War will seem like a minor indisposition.
Social progress is the ONLY remedy for fundamentalism and nationalism.

The Transitional Program

The art of politics lies in the coordinating and combining of forces. The left
has to find a way of politically unifying the workers movement and the middle class.
For the forces of the left, there is no other road apart from combining the efforts now
being exerted in the countries of the center and periphery of the modern world
system. In the more oppressed societies, more radical moods are understandably
developing. As the movement spreads to the countries of the periphery, its character
will inevitably grow more implacable. But the resistance will become effective only
insofar as it remains global.
There is a need for common principles that will prevent the movement from
disintegrating into a multitude of petty grouplets. With regard to such instances,
Gramsci spoke of hegemony. Socialist ideas are making their way back into public
discussion, but they have to take on the concreteness of political programs, resting on
specific interests.
Changing society means making life at once more prosperous for the majority,
and more dignified. The struggle to win back human dignity for the people cast aside
by neoliberalism may, as the experience of the Zapatistas has shown, turn out to be
even more important than the struggle against poverty. The principle of participatory
democracy has to be counterposed to oligarchic power masquerading as popular
representation. It is essential to declare plainly that the left does not set out to increase
the degree of intervention by the state in the economy, but to hand over economic
power to society itself. If this is to occur, the state will have to be radically
transformed.
People can win back their self-respect only through political and social action,
through independent deeds performed by each of the millions who have risen in
revolt. However circumstances might turn out, radicals and reformists must cover a
certain part of the road together. Unless some common program is worked out,
revolution will be just as impossible as reform, since nothing conduces to radical
change so much as confidence that reforms will be successful. Reformism can often
turn out to be a launching-pad, a springboard for revolution, as in France in 1789 and
Russia in 1917. The developing of a common platform that unites reformists and
radicals does not at all signify that this platform has to be as moderate as possible.
Quite the reverse; it is precisely consistency! and radicalism that guarantee success in
a world with an acute need of new ideas. The movement that began in Seattle in 1999
shows that anticapitalist protest is becoming a vital necessity for millions of people

not just in poor countries, but also in so-called rich ones. Consequently, it is not the
moderate redistributive ideology of social democracy that has to be brought to centre
stage, but the idea of public ownership.
The task is not simply to revive the public sector, but to radically transform it.
Throughout the twentieth century, socialists were divided into supporters of workers
self-management and admirers of centralised planning. They did not take account of
the fact that neither ideology can carry out the main tasks of socialisation, that is, to
place the public sector at the service of all of society. It can now be said that the
public sector will only work if real social control is assured. This involves
accountability and transparency on a scale quite inconceivable to liberal economists.
Economic democracy has to be representative, and this means that not only the state
and workers, but also consumers and communities have to participate in setting up
governing boards. The things we can only use collectively have to belong to society
as a whole. This applies to energy, transport, extractive industries, municipal services
and the communications infrastructure just as much as to science and education. No
less fundamental, and perhaps even more so, is the need for the socialisation of credit.
Unless this is carried through at least in part, it will be impossible to find a socially
acceptable solution to the world-wide debt crisis.
Meanwhile, the need to distinguish between public and private interests is
absolutely crucial. If this principle had been in force during the period of neoliberal
reforms, the International Monetary Fund would not have been able to use money
obtained from Western governments in order to grant loans to Third World and
Eastern European governments in exchange for the privatisation of public property
that is, to act in practice as a go-between, exerting political pressure in the interests of
private investors. Public credits, down to the last kopeck, cent or penny, should go to
the public sector, to projects aimed at meeting social needs. In the process, the
situation in which private commercial risks (and losses) are socialised, while profits
are privatised, will become impossible.
John Maynard Keynes wrote that the socialisation of investment was the only
socialist slogan that from his point of view was justified. The main principle of
socialism is control by society over the investment process, not state ownership of
buildings and machines. The left has never been opposed to cooperatives or to
municipal enterprises. On the contrary, these are the forms of organisation of
production that can best reflect the needs of local populations. They cannot, however,

take the place of public investments in projects intended to serve collective needs. The
public sector acts as the tool through which society DIRECTLY fulfils its collective
tasks, economic, social, ecological and cultural. The market and the private sector are
only suited to fulfilling private tasks, and no amount of regulating can do away with
this contradiction. The more pressing the common tasks of all society and all
humanity, the greater the need for socialisation. In an epoch of global warming, the
socialisation of the energy industry is becoming a question of the survival of
humanity. And if socialism can operate in this sphere, why not in others? If it can save
us from world-wide inundation, why should it not become the leading principle of our
life as a whole?
The answer to this and to many other questions will depend on the
development of the movement, on its successes and defeats, its experience, its
activists and leaders. It may be that radicals will not attain their historic goals this
time either. But one thing is obvious: without the participation of radical forces,
successful reform is impossible.

The Middle Class versus the Bourgeoisie

Marx described the proletariat as the gravedigger of capitalism. Capitalism has
survived the twentieth century, and as the end of the century approached, managed to
deal the working class some painful defeats. Could it be that Marx was wrong? Might
some other social force be destined to play the role of capitalisms gravedigger? Has
capital not created for itself a new threat, in the form of the middle class? It is very
tempting to give an immediate, positive answer to both questions. The real dialectic of
history, however, is more involved. The middle class acquires revolutionary potential
in the process of the technological revolution. Without the participation of the
workers movement, however, a successful struggle against capitalism is not only
inconceivable but also pointless. The system will collapse when it cannot withstand a
simultaneous onslaught from different sides. Even this is not the main thing; the
system may collapse quite without the participation of the left. The question is not
how long capitalism will last, but what will replace it.
It would be a disaster if the new world turned out to be worse than the old, and
still worse if this new world were without people or living beings in general. The

responsibility of the left is to make our socialist theories convincing to the majority.
To a significant degree, this depends on the ability of the left to win over the middle
class. In the early twenty-first century, the traditional workers movement no longer
has a monopoly on the anticapitalist alternative. Moreover, this alternative can only
become a reality to the degree that the new historic bloc becomes real.
This new force is coming into being before our eyes. The contradictions and
discord within the movement are a sign that as this force takes shape, it is drawing
more and more new elements into its orbit. Gramsci once wrote that collective
consciousness emerges when the masses attain unity as a result of debate. He
compared the coalescing of a social movement to the rehearsing of an orchestra. This
process, with every instrument performing its part of the score, may give the
impression of appalling discord. But it is precisely this kind of work that is essential if
the whole orchestra is ultimately to resound as a single instrument (A. Gramsci.
Izbrannye proizvedeniya. Moscow, Politizdat, 1980, p. 320). Or more precisely, as a
multitude of voices that have a common goal.