Socialism for the 21st Century

Interview with Michael A. Lebowitz

On Monday, May 6th, on the invitation of the Belgrade based Center for Politics of Emancipation (CPE), Michael A. Lebowitz gave a lecture titled “Contested reproduction and the contradictions of socialism.” CPE is an organization dedicated to the promotion of left-wing ideas and analyses and critical activist perspectives and practices regarding the current socio-economic conditions, confronting the prevailing social values and policies of the neoliberal system in the so-called transitional societies.

We talked with Michael about the contemporary crisis and the possibilities of overcoming it, about the experiences and contradictions that characterized the societies of “real socialism” in the 20th century, and also about the possibilities of building a socialist alternative that would not be limited within the boundaries set by similar attempts in the last century.

Originally published in Serbian at Centre for Politics of Emancipation and published in English on LeftEast website.

— Darko Vesić and Aleksandar Stojanović

Darko Vesić and Aleksandar Stojanović (DV and AS): Capitalism has been in crisis for several years now and in response to this crisis the capitalist states began to practice the so-called austerity measures. If we look at the historical dynamics of capitalism in the last half of the century, we can see that they responded to the crisis of the seventies with a package of reforms that are now called “neoliberalism.” Now, if the restoration of growth is what must be carried out as a response to the crisis, we can say that neoliberalism as a response to the crisis of the seventies was successful. Yet, can we say the same of the present day “austerity measures”?

Michael A. Lebowitz
[Photo credit: Uros Abram]

Michael A. Lebowitz (ML): I think that some premises of this question have to be examined. Firstly, we need to recognize that not all Marxists accept that capitalism as a whole is in crisis – as opposed to particular capitals in particular localities. Secondly, if capital is in crisis – in general or in particular, then what was its source?

I begin from Marx’s stress on overaccumulation. Capital has a tendency to accumulate and expand without regard for the antagonistic conditions in which it must function. Marx’s comment was that the fundamental contradiction of developed capital was its tendency for overproduction. In other words, there is a tendency for capital to grow too much; and when that occurs, capital runs into a problem in converting latent surplus value (what it extracts from workers) into real surplus value – in other words, it faces a realization problem. And if capital cannot turn that latent surplus value into profits, then why produce it? So it cuts back on production, which generates unemployment which increases and deepens the problem. Add to that the destruction of what Marx called fictitious capitals (all those values such as stock prices) which have only a tenuous connection to the real underlying economy and which crash dramatically when problems emerge in the real economy. Capital is destroyed in such a crisis within capitalism, and this provides conditions for the renewal of the cycle. Crises, Marx said, are not permanent.

One of the first clear signs of the tendency toward overaccumulation is the increasing intensity of competition among capitals. Capitals compete to make real the profits contained latently in the commodities they bring to the market. All capitals, however, are not equal. The problem of overaccumulation does not bear evenly upon all capitals. The older capitals suffer more than the new emerging and expanding capitals that have contributed principally to overaccumulation.

I think this theory of overaccumulation has been confirmed by experience. The pattern of growing intensity of competition began in the late 1950s. I could see this from my vantage point working as an economic analyst in the electrical products industry in the United States: toward the end of the 1950s, the industry magazines began to be filled with discussions of the problem of European imports of equipment. “Buy American” became a theme in that industry, and I’m certain that it was mirrored in other U.S. industries. The particular circumstances that had existed after World War II and which created the basis for the so-called Golden Age were coming to an end. And that pattern continued with significant additions to productive capital in Europe and Japan. Transnational corporations outside the U.S. were growing much more rapidly. After that impact came the enormous increases in productive capacity occurring in countries such as China, India, Brazil, etc. [i.e., the BRICS].

The effects of overaccumulation have been felt particularly in the United States, the European Union and all the old centers of capital. But is this a crisis of capitalism as a whole? Not if you look at China, India, Brazil and many other new centers of capital. Rather, we see a very significant international restructuring of capitalism occurring [reflected in the shift from the G7 to the G20]. There is certainly a crisis within those old capitalist centers. It is not necessarily a crisis of capitalist corporations because they can move to the new centers where wages are lower and new productive techniques (and old ones with no protection for workers) make production there very profitable. The same companies which produced in the old capitalist centers are in a position to produce increasingly outside and to ship back completed products or semi manufactures for assembly to the old centers.

It is a familiar mistake to identify capitalism simply with capitalism in the old centers. That is something done in particular by analysts in the old centers. However, if we are to analyze the current situation of capitalism, we have to examine world capitalism not a subset. We cannot let one finger stand for ten.

In this context (the context of particular crises), what is the response of capital and capitalist governments in the old centers? Be more competitive. Therefore, destroy trade unions, remove the social safety net, reduce expectations and force people to work harder for less. Also, in order to encourage capital to stay and not abandon those old centers, the policy is to reduce taxes and increase incentive for localized investment.

This is what occurred under neoliberalism. I don’t make, however, a real distinction between neoliberalism and austerity. Both are part of the same response of the old centers. Austerity builds further on the existing neoliberal policy because of the pressure of government deficits which themselves in many ways reflect the initial program of neoliberalism which generated low wages, unemployment and falling production as well as lower taxes on capital and high income earners.

In short, the policy continues. The struggle continues – the struggle against workers in the old centers on the part of capital. Can this policy provide growth? Neoliberalism and austerity theoretically could provide growth for a particular country if only that country were pursuing this policy; it would then gain at the expense of other countries. However, we always have to remember the problem of the fallacy of composition: what is true of one is not necessarily true of all simultaneously. If all countries pursue this same policy, its principal effect will be to worsen the situation. So, why, then, is neoliberalism and austerity advanced as a general policy? Why does international capital which dominates the old centers advocate these policies for all countries? Simply because it is a way to beat down workers in every country.

DV and AS: Some of the possible answers to the current crisis are going toward restoring the Keynesian model of welfare state, in which the rise of taxes and state spending should lead to intensification of economic activity and raise social standard of living. Considering the increasing mobility of capital and that Keynesianism as an economic policy of the welfare state was established only by the pressure of the organized working-class, how should we today interpret the story of the return to the Keynesian model?

ML: The Keynesian model of increasing aggregate demand through government spending worked well as a theory as long as people spent their additional income on products produced in the country engaging in this policy. It was a national solution for national capital. It worked to some extent during the so-called Golden Age because economies were more nationally based. Presumably, that condition could be replicated if it were accompanied by significant protectionism. But under current conditions, if one country alone were to pursue such a policy it would find itself in great trouble because of the effect upon its trade balance and international indebtedness. Some would argue that the Keynesian solution could work if it were undertaken simultaneously by all countries – i.e. international Keynesian or reflationary policy. That might work in terms of the relative position of capitals in the old centers. But it is not likely to be a policy that would be undertaken simultaneously by capital’s new centers. In this respect, it could be a policy that could provide relief in the short term if accompanied by protectionist measures or the equivalent – significant devaluation. Capitalist governments may try such approaches in desperation at the continuation of this particular crisis. But the underlying problem of overaccumulation in its particular effects on the old centers would still be present, and there would always be an incentive for individual countries to break ranks and support continued austerity programs in order to be more competitive or to devalue (again another solution falsified by the fallacy of composition).

“I think that unless workers fight against capital’s assault upon them, capital will succeed as it has in the past.”

In short, I don’t think Keynesian solutions will solve the problem for the countries bearing the brunt of this process of restructuring. So, what are the options? I think that unless workers fight against capital’s assault upon them, capital will succeed as it has in the past. There is a crisis in capital in those centers but not a crisis of capital. A crisis of capital requires a working-class prepared to struggle to put an end to capitalism, and I think a vision of an alternative, socialist model should be embodied in all such struggles.

DV and AS: Today, when we talk about the possibility of building socialism, critics and opponents of this proposal state that the experiences of real socialism, in their opinion, show that all the possibilities of this alternative had been completely exhausted. The fact is that these societies were characterized by many contradictions. On the one hand, they have brought a sudden modernization in a part of the world that would otherwise remain peripheral and for certain parts of the population this meant better standards of living. On the other hand, despite the fact that the governing nomenclature insisted that they were the representatives of the interests of the working-class these societies were seen as profoundly undemocratic. The vanguard party was seen as a tool for the exploitation of a part of the population (the working-class) whose interests it supposedly represented. What are the structural conditions that led to this?

ML: After the success of the Soviet Union in rapid industrialization, the widely accepted assumption (including in Yugoslavia until 1950) was that there was only one model of socialism, and that model needed to be adopted by all countries which proceeded on what was viewed as a socialist path. This model, I suggest, was characterized by vanguard relations of production. Essential to that particular model is the assumption that the vanguard knows all the answers. Only the vanguard (like the orchestra conductor) can see the whole; only the vanguard has the plan as opposed to individual players who have particular parts and no sense of the whole. Accordingly, it is the responsibility of the vanguard to deliver socialism to the underlying people, to bring it a gift by those who know to those who don’t know. But to do that the vanguard must impose the discipline of the orchestra conductor. Direction from above and hierarchy permeates that model rather than a focus upon the development of human capacities, a process which requires initiative and practice from below and, indeed, the ability to engage in spontaneous activity. In my book, Contradictions of “Real Socialism”: the conductor and the conducted, I see this as the fundamental contradiction of what was called “real socialism” – the inability of working people to develop the capacities necessary for a socialist economy in this model. And I suggest that the same results would occur everywhere that this model is adopted – whether the economy is underdeveloped or developed.

If we look at the Soviet Union, where the model emerged, I think it is essential to recognize that nothing was inevitable. There are always choices. For example, Lenin stressed the necessity to build cooperatives in the countryside in 1923. His view was that cooperatives were absolutely essential to build socialism. He died shortly after and very little was done in this direction. In general, I think there is always a choice which faces you when you try to build socialism: it is a choice between ordering things from above versus creating the possibility for people to develop their capacities from below (as is occurring dramatically in the case of the development of communal councils and communes in Venezuela). Of course, there are objective constraints in particular cases. Certainly in the case of the Soviet Union, there was the problem of the Civil War, a destroyed economy and, indeed, a relatively backward economy under the threat of imperialism. In particular, the problem of imperialism made a slow, organic development a luxury. However, I think that a greater sensitivity to the nature of the peasant economy could have avoided the massive destruction which was the result of the collectivization program.

DV and AS: Yugoslavia represents an exception to the attempts of constructing socialism. After the conflict with the Soviet Union, Yugoslavia started its own “road to socialism,” which is characterized by experiments with the market and self-management. Attempts to introduce workers’ self-management are the most interesting from the perspective of those who are trying to build a society not based on the despotism of capital. However, the very mentioning of “self-management” in the post-Yugoslavian region today is met with a certain kind of cynicism. What are the structural conditions that prevented the implementation of self-management as a successful mode of organizing economic activity? How should the contemporary left respond to this kind of objection?

ML: With respect to the Yugoslav experience of market self-management, it is essential to point out the enormous potential of the society based on worker self-management for the development of peoples’ capacities and sense of pride and dignity. However, we also need to be quite clear about the flaw of trying to build socialism without a focus on building a community based upon solidarity. The emphasis in the market self-management model of Yugoslavia upon individual and separate enterprises all attempting to maximize the income of those individual members is not at all a recipe for building socialist society.

As I argued in my book, The Socialist Alternative: real human development, focus upon self-interest fosters characteristics of capitalism not socialism. This is something which Che Guevara recognized in observing the model in Yugoslavia. In 1959 he commented that competition between workers distorted the socialist spirit. And subsequently in his Socialism and Man in Cuba, Che wrote that the pipe dream that socialism can be achieved by relying upon the commodity and upon individual material interest leads you to a dead end, and “it’s hard to figure out just where you took the wrong turn.” I think that describes quite well what happened with market self-management in Yugoslavia but we should be able to recognize now where it took the wrong turn. To recognize what was positive (both in fact and potentially) and what was problematic in the model is essential.

The vision of socialism which emerged as a goal in Venezuela – the concept of socialism as an organic system characterized by (a) social ownership of the means of production, (b) social production organized by workers and (c) production for social needs and purposes (what Chavez called “the elementary socialist triangle”) – can reopen discussion in a way which can appeal to many who are cynical.

DV and AS: Venezuela today is a synonym for “socialism of the 21st century.” It is well known that at some point of your career you participated in an attempt to build socialism in Venezuela. Given that experience, how do you see the possibility of the construction of socialism on the periphery of capitalism in general, that is, in the position in which Serbia finds itself now? How do you see the political path toward that goal, i.e. by which specific means should the socialist politics be lead? And second, how do you see the way in which this system should be built – how it differs from the so-called “really existing socialism” and on what basis can we claim that the new socialism has a chance not to fall into those contradictions into which the “old one” has slipped?

ML: The fact of being on a periphery as such is not sufficient to identify societies. Much of the population of Latin America has an enormous inherited poverty, an enormous human deficit. The effect of neoliberal policies from the 1980s on and the recognition of the role of U.S. imperialism in supporting reproduction of those incredibly unjust societies were important factors in mobilizing masses against the local oligarchies. But the relation of Serbia and other parts of the European periphery is quite different. The weakness of these economies has produced a great impact as a result of capital’s attempt to solve its localized crisis on the backs of workers. Serbia and other countries which experienced attempts at building socialism, though, have something that Latin American countries lack – the memory of desirable elements in the old societies and a sense of justice and fairness which can be a basis upon which to mobilize people. And, that is the starting point in challenging the capitalist assault.

But I think it is important to organize solidly at the base with local committees engaged in local actions much as in the anti-fascist liberation struggles. In Venezuela, one of the most important political and theoretical developments has been the establishment of communal (or neighborhood) councils of roughly 100-200 families in urban areas (and 20 in rural areas), and these councils are what Chavez called “cells of the new socialist state.” To the extent that you empower people at the local level and those institutions become the source of the identification of the needs of people, you build a solidarian society which can strengthen you against repeating history. •

Michael A. Lebowitz is a professor emeritus of economics at Simon Fraser University in British Columbia. He is one of the leading Marxist authors in the world, and has spent a big part of his research on the problem of the possibilities of building a socialist alternative. One of the specific aspects of his work is that he has spent six years (2004-2010) in Venezuela working as a director of the program for Transformative practice and human development in International Center Miranda (CIM) in Caracas, where he had the opportunity to participate in building of “socialism for 21st century.”

Michael A. Lebowitz (1937-2023) has taught Marxian Economics and Comparative Economic Systems at Simon Fraser University in British Columbia since 1965. He was directing the programme in Transformative Practice and Human Development at Centro Internacional Miranda (CIM). His latest book is Between Capitalism and Community (New York: Monthly Review Press 2021). His publications can be found at