What are the advantages and disadvantages of looking at the current crisis of capitalist system from a long-term historical perspective?

The unambiguous disadvantage of such perspective is that, while defining long historical terms, in other words different periods of the capitalist system, many specificities and actual dynamics of class struggle are necessarily ruled out or reduced to mere simplicities. The inquiry into the hegemonies of the capitalist system established at the global scale grays the particularities of different countries’ relationships with the hegemonic structures at different moments of the given hierarchy. Looking at the “long-term” renders this unavoidable…

The advantage of such periodization, on the other hand, is that it enables one to develop a sense of various phenomena within the context of capitalist mode of production’s laws of motion at a world-historical level, rather than dealing with all those phenomena one by one. Theoretical abstractions on the laws of motion of the entire system allow the analyst to investigate the behavior of a single country or a region on the basis of these theoretical constructs. In other words, within this analytical context, the motion or the behavior of the entire system is taken as a determinant of the motion or behavior of its parts.

Due to its depth and extension, the current crisis has pushed questions on the movement of the capitalist mode of production as a world-historical system to the forefront. One shall see it as an irony of the history, as the order of the market declared its “ultimate victory” in the ideological sphere right after the demise of real socialism; yet only after two decades, the question now is, “how will capitalism proceed its way?”

Currently, the most frequently addressed historical reference point is the crush of 1929 and the Great Depression of 1930s. We know that this turbulence had led to a new world war, and only thereafter the imperialist hierarchy could change. The reference to 1929 makes sense within this scope; the present imperialist hierarchy may also change after such intense shocks. Academic Marxists have for long been interested in the question, “how will the world look like after such change?”

The greatest deficiency of recognizing the crisis of the capitalist system and the period that we have been going through in this manner is the disregard it implies in terms of the “subjective factor” in history, i.e. reducing the impacts of class struggle on the course of history into some sort of “probability distribution”. According to such perception, the collapse of the system as a result of revolutionary interventions is only one aspect, a probability, given within the spectrum of the assigned distribution; hence from this perspective, which nullifies the role of subjectivity, it is not possible to develop an analytical framework that recognize the process in terms of opportunities, requirements, drawbacks, tasks and responsibilities before the revolutionary subject of history.

Then, how shall we proceed, how shall we construct our analytical method? Of course, we perceive the world through the lens of Marxism-Leninism, thus we are not in a position to exhaust ourselves with an endless search of methodology. We have our methodology of perceiving historical changes, and being materialists, for sure, we would not trivialize the movement of objective factors, but being students of dialectical logic, we would focus on the surfaces of interaction between subjective and objective factors, and comprehend the strength and direction of the vectors emerging in this space.

Then the crucial question for us is not what the future of capitalism will be and our task shall not be speculating on the form of imperialist hierarchy in the coming decades. We rather look at the possibilities of a socialist revolution that would emerge from the current picture. The rivalry, tensions and power struggles between imperialist forces have a meaning only within this context.

Let me dwell a bit more on the crisis of 1929 as an historical reference point once again. The fundamental question is not how imperialism reacted to the Great Depression and whether or not these responses could be repeated in the current situation. But we should rather look at the historical conflicts accumulated by the Great Depression, and the unequal development of these conflicts and contradictions. At which territories and on which class dynamics did this great crisis of the capitalist system created revolutionary opportunities? At what degree could the working class and the toiling masses of the world could make use of these opportunities, and how did imperialism restructured itself upon the catastrophe it created?

Making use of the long-term perspective I addressed at the beginning would be helpful in this regard. However, in order to avert or at least minimize the disadvantages of this perspective, we may construct our perspective from the circles in which the contradictions of the system had accumulated to the system as a whole. Thereby, we may ease, even if not overcome, the tension between the concrete analysis of the concrete situation of the class struggle and the historical periodization of the entire system’s movement.

One of Lenin’s great discoveries in his analysis of imperialism was that, the territories in which the contradictions of the imperialist system accumulate are as a rule determined, rather than being determinant within the given hegemonic structure. Yet, among other consequences, the periods of crisis express an increase in the potential of such territories to become determinant, to have a certain impact on the course of history.

If we approach the Great Depression as an internal moment within a longer period of recurrent crises starting from 1870, we will then recognize the impacts of a previously determined territory becoming a determinant as marked by the glorious October Revolution. Considering from the long-term point of view, which extends between 1870 and 1929, we can say that the collapse of the colonial logic of British imperialism had been determined, in the final analysis, by the disengagement of Russia from the imperialist system. Hence, we may conceptualize 1929 as an historical reference point in view of the disengagement of Russia and its accelerating influence on the rise of many territories in the East from a determined to a determinant position. As the October Revolution reshaped the East radically different than the one in the imagination of imperialism, the Great Depression marked the ultimate collapse of British colonial imperialism.

As the costs of sustaining the colonial logic exceeded the economic surplus extracted from the colonies and the semi-colonies, the British hegemony unraveled. What became more essential to imperialism in early 20th century was to secure the flow of debt repayments to financial capital, rather than ensuring the subordinate nations to supply raw materials and agricultural products to the imperialist countries. However, this only increased the indebtedness of subordinate countries as it rendered the colonial resource transfer mechanism unsustainable, because the pressure put on the small and medium peasantry and the satellite industries of these countries took them to the cleaners. In a book on the global impacts of the Great Depression, a German scholar points to this unraveling as follows:

“Once the gold standard was abandoned by the majority of nations they turned to the policies of the ‘beggar-thy-neighbour’ type described earlier. The problem with many countries at the periphery was that they could not even do that as they were colonies which had no control over their monetary and economic policies. The colonial rulers had only their own interests in mind. As the case of India will show, the British profited from keeping the economy of this large colony deflated and depressed as this led to the further flow of ‘distress gold’. Reflating colonial economies was a task which none of the colonial powers was willing to shoulder. Moreover, while earlier the access to raw materials and produce was the main reason for acquiring and maintaining colonies, the depression had reduced the prices of all primary commodities to such an extent that colonialism was no longer required for that purpose. Only the national debts of such colonies accumulated in the past made it necessary to keep these debtors under control. To that extent the web of credit was still in place while it had recoiled in every other respect.” [1]

In view of these intensified contradictions, how can one ignore the grave influence of the torch of independence ignited by the Soviet Union? As a matter of fact, the rise of anti-colonial national liberation movements was not among the effects, but among the causes of the collapse of British colonial imperialism.

Looking at the current crisis in light of this historical reference, we can at first highlight the following point: we shall admit that the crisis of capitalism of late 1960s and early 1970s have approached to an end with the current global crisis. Of course, I do not mean to say that capitalist system has been in a permanent crisis from the late 1960s onwards. The last four decades mark a period during which capitalism could not overcome the structural, systemic factors that caused the crisis of late 1960s and early 1970s, but could manage to defer the “solution” on its own behalf by different means. The statement referring to the end of the sustainability of this act of deferral, in turn, implies that capitalism has run out of the possibilities to jump over these structural and systemic causes.[2] 1929 as an historical reference makes sense at this juncture.

However, the same reference point loses any meaning as we look at the situation of the territories where the contradictions and the conflicts of the system accumulate. The very same four decades have not marked any significant disengagement of any countries from the imperialist system, any transformation among those countries from the status of being determined to the position of being determinant through socialist revolution. Besides, many of the former socialist countries, which would definitely support such rupture, had become the pariahs of imperialism and dragged to a position of subordination by the latter. This fact is of crucial importance in evaluating the possible exit of imperialism from this historical period, which we refer as a possible termination of an era.

Even under the presence of a force that had become a determinant over the course of history by disengaging itself from the capitalist-imperialist system during the terminal crisis of British hegemony, the transformation of imperialist hierarchy took a destructive period of almost two decades. Today, under conditions that no such historical actor exists, we have valid reasons to expect the transformation of the capitalist-imperialist system to be even more tormenting and causing even more destructive consequences for the toiling masses of our planet.

An imperialist hierarchy centered on China? Before considering such possibilities seriously, our problem shall be to focus on the dismal effects of the long, painful and destructive transformation that awaits the peoples of the world. I mentioned above that we first need to look at the places where imperialism accumulates contradictions on this account. Central and Eastern Europe, and Turkey, which has many common properties with this region especially in terms of economic dynamics but is quite different in terms of political aspects, can be assessed in this context.

In the world economy, a picture coined as “global imbalances” by many economists has emerged especially after the 1997-1998 Asian Crisis. The Asian Crisis led to the collapse of many East Asian economies as they were unable to secure the inflow of funds to serve their debts, which in turn caused major devaluations of their currencies. As a result, many of these countries utilized their depreciated currencies to re-charge their export industries, mainly based on the intensive exploitation of their cheap labor force, hence started to accumulate external trade surpluses thereafter. This was also perceived as a precaution by these countries; a lesson taught bitterly by the collapse of 1997-1998. Thereby, during the decade after Asian Crisis, the booming consumer demand in the United States fuelled by over-borrowing was financed, gradually at a greater extent, by the surpluses accumulated by the same countries of East Asia as well as the oil exporter countries that were enjoying the sky-rocketing oil prices after the invasion of Iraq.

Table-I below traces this transfer of funds to imperialist countries in terms of different regions from the brink of the Asian Crisis (1996) to the brink of the current crisis (2006).

Table-I: Current account balances of the world economy (billion U.S. dollars)

Source: Compiled by the Independent Social Scientists Group from IMF, World Economic Outlook, 2007 data (Bağımsız Sosyal Bilimciler, 2008 Kavşağında Türkiye, Siyaset, İktisat ve Toplum, Yordam Kitap: Istanbul, 2008, p.28).

As the data presented in table-I points out, after Asian Crisis the bulk of the current account deficits of the U.S. have been financed by subordinate countries, particularly by oil exporters and China. In 1996, the surpluses of western economies other than the U.S. were covering the deficits of the U.S. as well as the deficits of the rest of the world. However, in 2006 we see a dramatic change, which is marked by the surplus of China, oil exporters etc. rising to almost 83 percent of the U.S. current account deficit.

Yet, there is another group of countries, which have configured their economies again towards exports to Western markets, but still exposed to the current crisis with utterly high external borrowing requirements. Table-II presents this bifurcation in subordinate economies.

Table-II: GDP growth rates and current account balances of selected countries before and during crisis (%)

(*) Current account balance as percent of GDP. 2009 data are estimates of the IMF.

(**) Data from Czech Statistical Office.

(***) Data for 2008 only.

Source: Compiled from IMF, World Economic Outlook, October 2009 data.

Table-II lists nineteen countries, which have a GDP larger than 100 billion USD, in terms of the downturn in their growth rates. In general, we observe that countries which had a high current account deficit before the crisis experienced a lower growth rate on average. The first nine countries on the list had a current account deficit-to-GDP ratio of 3.6 percent in 2006-2007, whereas the last ten countries had a current account surplus-to-GDP ratio of 3.5 percent in the same period. We also observe that these economies are hit much harder by the crisis than those in the second group as shown by the sharper decline in their growth rates. [3]

The countries which belong to the high deficit group have spent the period of credit boom between 2002 and 2007 by attracting short-term capital flows by maintaining high real interest rates. As the expansion of credit turned to a bust, most of these countries are left with a dysfunctional banking system and an industrial structure dependent on imported inputs, which eventually made them the countries most vulnerable against the effects of the crisis. These countries, most of which are in Central and Eastern Europe, have spent the last two decades under the surveillance of the IMF and, yet, fall into the hands of the same institution once again, despite the fact that programs imposed by this imperialist institution had particularly been effective in the development of abovementioned vulnerabilities.

The concentration of countries which belong to this category in Central and Eastern Europe is not a coincidence due to two reasons: Firstly, all of the former socialist countries have lived under the direct or indirect surveillance of the IMF after transition to capitalism. Secondly, integration with the European Union tied these countries more strictly to neoliberal recipes. Although Turkey has not experienced a transition process, these two aspects are also valid for her too.

As Central and Eastern Europe countries have become the playground of Western European financial capital, at the first instance, they have been stripped off from the means of economic sovereignty through the policies of the IMF and EU. Mechanisms which safeguarded independent development and industrialization, egalitarian distribution of income, full employment and social security for all had all been eradicated in favor of integration with and subordination to imperialist monopolies, which eventually yield in an unprecedented rise in poverty and economic injustice, and the collapse of industrial and agricultural infrastructure in a very short period of time.

The loss of economic sovereignty has proceeded along with the redrawing of political frontiers. Although in some cases this procedure had been imposed and practiced “peacefully” (e.g. the disintegration of Czechoslovakia), in others such as Yugoslavia, it was implemented by means of massacres and imperialist invasions.

Today, while imperialist countries utilize massive amounts of public funds to bail out their monopolies, the IMF recipes imposed on these countries preach fiscal austerity, reducing expenditures on social security even more and to ascertain the repayment of debts at all costs. In this sense, we can say that the bifurcation among the weaker economies of capitalist world system will continue to enlarge, dragging some rapidly towards the bottom.

The primary reflex of the bourgeois hegemony under such dire conditions is to escalate racism and xenophobia. However, along with this initial response, one should expect to witness the acceleration of the political transformation of this region according to the “new” tendencies of imperialism and the increasing rivalry among imperialist powers. New divisions and conflicts on ethnic and religious grounds are knocking on the door once more. We can observe this state of affairs most evidently in Turkey.

Turkish economy experienced a heavy crisis in 2001. Indeed, Turkey has experienced deeper and more frequent crises as neoliberal recipes were adopted fully during 1990s and the economic submission to EU imperialism had been completed with the Customs Union Agreement. The crisis of 2001 was the most disastrous, yet the current crisis has already exceeded it in many aspects. Table-III presents some indicators pointing to the damage caused by the crisis so far.

Table-III: Some indicators on the influence of the crisis on Turkish economy

(*) First 6 months.

(**) Unemployment rates for 2001-2003 are based on old population projections, while those for 2004-2009 are based on the new projections.

Source: Turkish Statistical Institute

The impacts of the global crisis have started to aggravate profoundly after October 2008. After this date, unemployment crawled to a historically high level, i.e. an official rate of 16.1 percent in February 2009 [4], and the capacity utilization rate in manufacturing industry fell to again its historically lowest level, i.e. to 64.7 percent on the same month. Despite the heavy blow received by the real economy, as there have not been alarming signs of a “financial collapse” as it happened in 2001 crisis, the Justice and Development Party (AKP) government shamelessly made efforts to underrate the effects of the crisis.

Although there has not been a financial collapse unlike 2001, and although the banking sector has reduced its risks after the previous crisis, the indebtedness of the non-financial corporations to foreign creditors has grown by leaps and bounds during 2002-2008, i.e. during AKP’s term of office. Therefore, the external borrowing requirements of Turkish economy have continued to increase rapidly in this period. Even though the banking sector does not carry risks as grave as those in 2001, such risks have only been shifted to the balance sheets of private corporations. Table-IV presents some statistics on the foreign exchange position of non-financial corporations.

Table-IV: Foreign exchange assets and liabilities of non-financial corporations (million U.S. dollars)

Source: Central Bank of the Republic of Turkey, Financial Stability Report, May 2009.

Another implication of this issue is the increasing importance and intensity of the integration between Turkish monopoly capital with imperialist financial capital. This point declares itself especially in two aspects: First, the largest wave of privatizations has been launched by AKP during 2002-2008, which made the benefits available to conglomerates formed by Turkish and foreign monopolies (see figure-I for the increase in privatizations after 2003). Secondly, as the monopolies in Turkey have become annexed to foreign monopolies further, they have started to be engaged in the subcontracting network of foreign corporations, especially in the regions under the U.S. occupation.

The further intertwining of the Turkish capitalist class with imperialist capital has a crucial political implication. As this merger devastated the industrial and agricultural infrastructure of Turkish economy, the ties of Turkish bourgeoisie with the Republic of Turkey as a political entity have declined to a level that is probably the weakest within the whole history of the country. As the concentration of capital in services and trade advances further, as the capitalist class in Turkey gets more and more integrated with foreign monopolies and becomes part of their subcontracting networks, Turkish bourgeoisie has become the militant supporter of the imperialist transition plan, which would ultimately undermine the presence of the country as a political unit.

Furthermore, as the transitivity between political sphere and the realm of capital accumulation increases, Turkey has become a country that can be manipulated by imperialism way more easily. Table-V presents an example of such manipulation and what we mean by the “increasing transitivity” between politics and accumulation processes. The table compares the period between October 2008 and February 2009 and the period between October 2007 and February 2008 in terms of capital flows. We should recall that the impacts of the global crisis intensified especially after October 2008.

Table-V: Capital flows to Turkey; Oct. 2007-Feb. 2008 v. Oct. 2008-Feb. 2009 (millions of dollars)(*)

(*)”Minus” means capital outflow and external deficit, whereas “minus” in reserves means “reserve accumulation” and “plus” means decline in reserves.

Source: Compiled by Boratav, Korkut, “Ekonomik Bunalım, Finansal Kriz”, www.sol.org.tr, 26.04.2009.

Let me quote the author, who provides a very clear picture about the mechanism at work:

“The bill of the crisis in the first five months as reflected in the table above is the following: Net inflow of 21.2 billion dollars worth foreign capital in the same period of the previous year turned into a net outflow of 12.7 billion dollars. This implies a ‘reversal’ in terms of the flow of foreign funds, which points to a heavy external shock that amounts to 5.1 percent of 2007 national income.

“However, let us look at the sum of all capital movements, including foreign, domestic and informal flows: in the fist five months, on top of 12.7 billion dollars of net outflow due to foreigners, the outflow of 1.9 billion dollars of (formal) capital outflow due to native bourgeoisie is added. But, this ‘haemorrhage’ due to foreign and native capitalists was compensated more than enough by the inflow of 14.9 billion dollars of informal capital. This mysterious ‘external fund’ have recorded net inflows every month, thereby capital movements after October 2008 could still remain positive (311 million dollars). (...) The crucial point here is, this informal capital inflow of 14.9 billion dollars prevented financial markets to be caught by the crisis. (...)” [5]

AKP government, still supported especially by U.S imperialism, could manage to obtain initiative before the big capitalist groups of Turkey, probably at an extent that could not be achieved by any other bourgeois party ever before, by making use of this transitivity between the political sphere and capital accumulation. The reactionary AKP employs this force to its own benefit in two dimensions: firstly, by operationalizing the communal networks of the religious sects as a source of “primitive accumulation” and of course by pillaging public funds, AKP created and strengthened its own capital bases. Secondly, by making use of the “special connections” it has with U.S. imperialism, AKP succeeded in creating new markets and opportunities for the bulk of monopolies.

As the crisis unfolds, the second dynamic mentioned above has run dry. Yet, the control over public funds and the connections with the government has also become even more important, which provides AKP with the opportunity to establish coalitions with various monopolies. The same monopolies that seem to be in conflict with the government one day could take a U-turn the other day as they expect AKP to get new rabbits out of the hat.

But, there is a determinant of all these relations, i.e. imperialism. In the middle of a region, whose map is still in the phase of re-drawing, which have been the stage of wars and occupations, i.e. in the middle of the U.S. imperialism’s infamous Greater Middle East, there lies Turkey, with all its complex socio-political dynamics. In order to realize its design extending from Central Asia to the Balkans, even Central Europe, the U.S. imperialism needs to shape Turkey as an entity completely in compliance with its military and political endeavors. To this end, Turkey needs to be submitted more to the darkness of religious reactionism, because, for instance, “Islamic” rather than “secular” Turkey would be much more functional. The transformation of the Turkish state according to the moderate Islam design is a reflection of this requirement.

Moreover, the procedure envisages the intervention of Turkey to the conflicts in the region, of which she is a part herself, in accordance with the U.S. interests. The efforts to establish a patronage relationship between the pro-American Kurdish state to be established in Northern Iraq and Turkey is an example as such. Such a patronage relation would push the Kurdish people in Turkey to the lap of Barzani, hence the U.S. In return, the capitalist class of Turkey hopes to get a greater share from Iraqi oil and more subcontracting work in construction business.

The crisis calls out another factor that adducts the disaster of Turkey. The country has become a teritorry where the rivalry between the U.S. and EU is intensified. As the participation rate of 43.1% to the last European Parliament election in June proved, EU institutions and the EU itself have rapidly been losing legitimacy and plausibility over masses. Furthermore, the European imperialists also took a heavy blow with the crisis. All of these developments point to one requirement for EU: it has to become more proactive in international politics. Turkey, which has become a country totally in conformity with the U.S. vision about the region constitutes a problem for EU, which seeks a revised stance in international affairs. The transformation of Turkey more in line with the needs of Europe, especially “Europe of Germany and France” is also important regarding EU’s policies towards the Middle East as well as towards Russia and the Caucasus. But EU imperialism is not trying to ain grounds on an empty space; the space is already occupied by the U.S., even more with the coming of the Obama administration. Hence, it is inevitable that the crisis accelerates the process, which renders Turkey the stage of the hustle between these two imperialist powers.

The picture described so far is depressing, that is for sure. That is why we call it as a “disaster”. Yet, we know that revoultionary leaps can and must take place under such depressing conditions.

Turkey is a capitalist country with a large working class, despite the fact that the working class of Turkey does not get on the stage of politics for a long time. But the current crisis may mark a period in which the class reflexes of toiling masses are revitalized. It is also possible that new forms of organization and struggle could emerge on this basis.

There are also opportunities that might be utilized so as to deal blows to the legitimacy of bourgeois hegemony. Despite the gains achieved by imperialism in Turkey in the past few years, the possibility of an anti-imperialist upsurge in search of independence and liberation is still valid. As Turkey becomes a stage of the competition between imperialist powers, this procedure may create gaps that can serve to the favor of anti-imperialist struggle, despite all destructive impacts of the same issue.

Imperialism and AKP government have come a long way in rendering the society more reactionary. Yet, the conflict between reactionism and the pro-enlightenment stance has not been resolved completely. A sensitivity among large sections of the society about secularism and republicanism still exits. This sphere also might serve as a revolutionary opportunity by connecting wider masses to adopt the idea that the only viable alternative is a socialist republic.

Turkey is on the brink of a disaster. So far, the crisis has intensified and adducted this disaster even more. But, it also increased the opportunities for a revolutionary upsurge as well. The working class of Turkey is the only force who can manage to stop this disaster; it is the only force capable of breaking all ties with imperialism completely and it is the only force which can build a new, socialist, republic in Turkey.