The Waste Land.Soviet and Post-Soviet Critical Political Economy (Four Essays on Critique of ‘Market-Centric’ Model of Economic Theory,

‘Classic’ Theory of Exploitation, Socialism and Russian ‘Jurassic’ Capitalism)1

Aleksandr Buzgalin and Andrey Kolganov2

Translated by Renfrey Clarke (with some paragraphs, added in “Russian English’ of the authors)

SummaryAuthors argue, that critical reactualisation of classic political economy and Marx’s

method in particular is more adequate for the examining of the XXI century economy, then [neo]positivist and postmodernist approaches. Such analysis open space for critique of the “market-centric” model of economic theory and proving the existence of post-market economic relations, which are, according the authors hypothesis, more adequate for the new world of creative work and knowledge-based society.

Texts consists from 4 eassays: “Market-Centric” Model of Economic Theory must Remain in the Past

(Market and State in Knowledge-based Economy); The Exploitation of the XXI Century: From ‘Classic’ Surplus Value towards

Intellectual Rent (Exploitation of Creative Activity and Appropriation by Capital of Universal Cultural Wealth);

Russia’s “Jurassic Capitalism”(Deformations of Market and Property relations in Post-Soviet Russia);

Socialism-21 as Transformation of the “Realm of Necessity” toward the “Realm of Freedom” (“Real Socialism” and Socialism-XXI: Material Preconditions, Nature, Social Forces of Transformation).

Key wordspolitical economy, Market, “market-centric” model, post-market relations,

exploitation of creative activity, knowledge-based economy, global capital, ‘real socialism’, socialism-XXI, Russian Economy.

1 This is draft variant of the manuscript; authors are very sorry, but some paragraphs are not well-added and footnotes are made according to ‘Russian’ standards, different from international ones.2 Aleksandr Buzgalin is a professor in the Economics Faculty at Moscow State University, and chief editor of the journal Alternatives. e-mail: buzgalin@mail.ruAndrey Kolganov is head of the Laboratory for the Study of the Market Economy in the Economics Faculty at Moscow State University.e-mail: onaglo@mail.ruA.Buzgalin and A.Kolganov are the authors of more than 20 books and more than 200 articles in different spheres of Marxist theory, including: ‘Bloody October in Moscow’ (Moscow, 1993, translated into English); ‘Theory of Socio-Economic Transformations’ (Moscow, 2003, translated into Chinees); ‘Socialism of the XXI century’. Moscow, 1995, translated into and Spanish and Japanese): ‘Global Capital’ (Moscow, 2004, 2007; in Russian); ‘Limits of Capital’ (Moscow, 2009) and so on.

Interlude

This text – may be too long for an article, and appearing for the first time in English – is a substantially revised synopsis of dozens of articles and several books which the authors have published over the years in Russian, and which partly for this reason, have been largely inaccessible to foreign readers. The work is not simply a presentation of our writings. Rather, it represents an appeal for dialogue on behalf of a group of scholars who have been working for decades in Russia and who have received considerable recognition in this country. If the members of our group have been isolated from the international scholarly community, this is not solely due to the language barrier; it also reflects the peripheral character of Russia and the non-mainstream nature of our school.

The authors do not assume responsibility for speaking on behalf of the entire school of post-Soviet critical Marxism. But we do provide characterisations of the concepts – new, in our opinion – which we have developed in recent years. In a sense, this text may be considered a synopsis of post-doctoral dissertations written by scholars who have already been professors for twenty years.

We are not by any means presenting all the new concepts we have developed. The point of this work is simply to show that when renewed in a critical spirit, classic works of the political economy are able to provide meaningful answers to the challenges of a new epoch. In particular, we contend that “market-centric” economic theory is obsolete, and has little to offer research into late global capitalism. We show that a renewed variant of classical political economy can explain the causes of the crisis, the nature of money and capital, and the place and role of the human individual in the economic life of the twenty-first century.

In the field of social theory, discontent has steadily ripened over the past two decades with the monopoly exercised by right-wing liberal ideas and paradigms. Not even two years after the demise of the USSR, the guru of postmodernism Jacques Derrida delivered a sensational lecture on the “non-disappearance-relevance-presence of the spectre of Marx as… a reality.” This was the first swallow. Disappointment with narrowly pragmatic positivist studies and with all-deconstructing postmodernism has grown, both among scholars and among thoughtful people in general. In Berlin and Paris, in Moscow and Beijing, students form associations for the study of Capital. More and more perceptibly, the preconditions are accumulating, and the search for alternatives is beginning….

Turning to the field of political economy as a traditionally important element of Marxist theory as a whole, we would like to emphasise above all a number of general methodological premises which characterise the works of members of the post-Soviet school of critical Marxism in general and of the authors of this text in particular. With some reservations, we describe this tendency as “critical classical political economy” (or simply “critical political economy”), thus drawing a distinction between it and the dogmatic version of Marxism that prevailed in our country during the twentieth century.

Essay I.The ‘Market-Centric’ Model of Economic Theory Must Remain in the Past

1.1 Introductory methodological remarks

These premises include, in the first place, the already-noted priority assigned to the renewed dialectical method. In our view, this method allows us to most productively study the contradictions in the development of different economic systems, while devising systems of categories which reflect them adequately. As a result, we seek above all to make robust characterisations of the contradictions of social and economic relations, rather than modelling the functional dependencies of various economic parameters. From our point of view the fact that one cannot obtain quantitative empirical characterisations of an object of study, or test the empirical truthfulness of a model constructed on this basis, does not provide cause for failing to examine socio-economic processes. Instead of modelling quantitative interrelationships, it is necessary here to abstract various principles which govern practical activity as a sphere of public activism for social subjects. Meanwhile, the criterion for the truthfulness of these abstractions, combined into a system of categories, is the possibility of productively changing social practice on the basis of understanding the principles revealed through this method3.

We also position ourselves as scholars consistently applying the principle of concrete historicism. This means in particular that the object of study of political economy is above all concrete economic systems: little-studied pre-bourgeois systems based on the natural economy and personal dependency (Asiatic despotism, slavery, serfdom); the now-dominant market-capitalist system, which is founded on material dependency and has been researched best; and a hypothetical post-market, post-capitalist system which presupposes the free development of individuality4. From this premise, which is almost self-evident to Marxists but which they rarely use as a tool in their work, there flow consequences which are far from obvious: each of the economic categories has its own specific historical content, conditioned by the place which this category occupies in the historically concrete system of productive relations.

Hence, value in this case will not be the universal measure of wealth, but merely one of the categories which describe the system of relations of commodity production, and which have no content outside of this system. The value of a product in a natural economy (that is, in a pre-market system) and of a universal good in a world of culture (a post-market system) will be of a completely different nature. The same applies to capital, and so forth. And there is another important consequence: the socio-economic type of the personality, values and motives of an individual will differ

3 For example, the theoretical proof (from the point of view of so poorly quantifiable a criterion as progress toward the free, rounded development of the human personality) that the socially determined working day had a progressive character compared with a working day of indefinite length served as one of the bases for the popular struggle for the eight-hour working day. After many decades of parliamentary and extra-parliamentary struggle, this became the norm in many countries. The same can be said of a system of collective agreements, universal secondary education, and similar gains which Marxism more than a hundred years ago maintained were needed.4 The latter does not negate the existence, as well, of the general historical categories of political economy. Among these are such classical categories as forces of production, productive relations, labour, and so on.

qualitatively (1) in different economic systems, and (2) for people who personify different productive relations within a particular system. Hence in a system based on personal dependency the owner will strive to maximise not his or her profits, but the number of his or her slaves or serfs. Within the framework of the commodity-capitalist system, the owner of a commodity is interested above all in a certain use value (an extreme case here would be that of a shopaholic); the owner of money, in savings (the wealthy miser); the owner of capital, in risky activity which brings in the maximum profit; and the hired worker in the maximising of wages, in social reforms and/or in socialist revolutions, more than ten of which occurred in the twentieth century alone.

Following on from our teachers (adherents of critical Marxism in the USSR) and from colleagues abroad, we develop these classical positions of Marx, half-forgotten by most Marxist economists, in accordance with the new methodological parameters that were set forward earlier, and which are conditioned by the peculiarities of the present epoch. This amounts to placing emphasis on the study of the non-linear, multi-scenario socio-economic transformations of the modern epoch. We recall that for political economy this means taking up the challenges above all of studying the processes of the non-linear genesis and decline of economic systems; of transitional productive relations; and especially significant under these conditions, of retroactive determinations (of the active and, in the case of a number of phenomena pertaining to transformations, decisive influence of socio-political processes and of culture on productive relations, and of the type of productive relations on the type of technological progress or regression).

The methodological emphases set out here have allowed the authors to formulate what are, in our view, several important positions. These describe the new content of commodities, of money, and of capital that is characteristic of these categories under conditions where the global hegemony of capital is taking on a socio-economic form typical of the decline of capitalism. These considerations, of course, are far from having any claim to be the Capital of the twenty-first century5, and they are and have been advanced not only by the authors of these lines, but also by numerous colleagues and predecessors in Russia and especially, abroad. Nevertheless, these studies provide the basis for a number of important theoretical hypotheses which also have practical significance. In particular, they allowed the authors to show, as early as 2001-2004, why and how a world financial crisis might result from making a priority of developing virtual, fictitious capital as the form taken on by money under the conditions of global hegemony pointed to earlier (Buzgalin and Kolganov, 2004; Buzgalin and Kolganov, 2009).

Taking account of the extreme brevity of this text, we shall dwell only on some of the transformations undergone by the commodity as the original and universal form of what it is now thought proper to call the market economy; on an analysis of the reasons for the rise and dominance in modern conditions of the “market-centric” model of economic theory; and on the question of the genesis of post-market relations.

1.2. The ‘market-centricity’ of modern economic theory, and the problems involved in overcoming it

5 There is a well-know critique of Marxist by K. Popper, that they did not wrote ‘Das Kapital’ of the modern époque.

Especially in neoclassical economic theory, but partly in Marxist economic theory as well, the market and value are widely viewed as extra-historical phenomena, making up a sort of universal mechanism for the efficient allocation of resources. In the framework of neoclassicism the market is seen as socially neutral, and as fitting the “natural” quality of human beings as egoists. Analytical Marxism and many currents close to it regard the market as a kind of abstraction of a system of relations in which objective and automatic accounting of expenditures is performed, and an optimal distribution of resources among areas of activity takes place.

As a result, most theoretical economists in their everyday work reduce the economy as a whole to the market6. This goes unnoticed, and at the same time is not questioned (as will be shown later, there is no paradox here). Of course, if you ask a scholar well versed in Marxism whether the concepts of the economy and the market are identical, he or she will most likely recall that they are not. After thinking a little more, our scholar will perhaps even add (flushed with insight into the secrets of the economic and economic-philosophical manuscripts of Karl Marx) that the market-capitalist system is, for all that, the most developed form of “economic social formation”. But if no-one poses this question….

The reader will probably have guessed already that the authors must sooner or later make use of the analogy with Ptolemy’s geocentric model of the universe. So let us think: why, until the period from the fifteenth to the seventeenth centuries (and in Russia, for most of the illiterate population, right up until the early twentieth century), did the geocentric model remain absolutely dominant? Because its opponents were burned at the stake? Yes, that is true too, but the answer to the question lies on another plane: for the feudal order, based on the natural economy and on serfdom, hierarchical class “politics” and a dogmatically religious spiritual life, any other theory of cosmology would have been (1) unnecessary, and (2) dangerous. The danger would have lain in the threat of theoretical criticism of the established world system, with this criticism, as a rule, heralding practical changes to the latter. The practice of that epoch, which demanded a localised, closed-off traditional life, bound to the village community, the estate and the parish, and moving within the cycles of nature, turned the (false) Ptolemaic model into an essential and sufficient theoretical premise for the world of the time, while making the (correct) system of Copernicus, Galileo and Bruno unnecessary and dangerous. But the heliocentric theory, science, and truth proved necessary for a different practice – the practice involved in the destruction of the secluded feudal socio-economic space, of cyclical socio-economic time, and of totalitarian-dogmatic ideology.

An analogy, of course, is not the same as proof, but it is perfectly able to serve as a prologue to proof and an illustration of it.

In principle, a similar situation can be observed in economic theory today. The twenty-first century is repeating (though in many ways, as farce) the situation of the century before last, when the market-bourgeois system enjoyed what seemed to be

6 There are, however, exceptions. Apart from Marxism and other socialist currents, other trends in economic thought recognise the presence of non-market relations – and not only as “market failures” (this is just a classic example of “market-centrism”, of which more later), but as independent phenomena. These other trends include the historicist school; classical institutionalism (Galbraith’s distinguishing of the planned subsystem of capitalism, at least, is worth noting here [Galbraith, 1967]; and some works on neoinstitutionalism, comparativistics and the economics of development. Most of these still dance to the tune of market economics, viewing the others either as varieties of the latter, as exceptions, or as undeveloped transitional forms. While most of these “heresies” are at present deemed tolerable, they lie on the remote periphery both of theoretical work and of teaching.

universal and eternal hegemony. At that time, anything except “market-centric” economic theory had to be excluded as unnecessary and dangerous if final victory was to be attained; now, other views are considered unnecessary and dangerous for reasons of the system’s self-preservation.

In the first place, any other theory is unnecessary for economic subjects that are intertwined in practice (and not just ideologically) with the market system (that is, which are uncritically subordinated to commodity and money fetishism, and so forth). For practical purposes the economic life of these subjects is reduced to a choice of decisions for which the criterion is the maximisation of monetary wealth and its derivatives in the short or long term; accordingly, these economic subjects need a science that is precisely construed for these practical ends. “Market-centric” theory is able in principle to cope with these tasks.

Secondly, these subjects are shielded by this theory from any extraneous, dangerously critical postulates and questions that point to the existence of other, non-market worlds. It “proves” theoretically (as the church fathers once did in defending the arguments of Ptolemy) that there is not and has never been any other world (the theory stubbornly “forgets” non-market production, distribution and consumption, treating them as simply dead, and hence all the more unknowable), and nor will there ever be. Amen.

Finally, any theoretical school which argues that the market is not the sole possible mode of existence is dangerous above all because it reveals:

the historical nature of the market economy as a system which arose at a certain point and which, like all historical systems, is destined at a certain point to be transformed into a different economic system (which, if we follow the letter and spirit of Marxism, may constitute the basis for the post-economic “realm of freedom”);

the real contradictions of the market-capitalist economy, which make for the possibility and necessity of its decline;

the difference between the visible mechanisms through which the market economy functions, and the essential characteristics of the commodity relations and capital which underlie these mechanisms. These characteristics are concealed behind mutant forms much as good make-up and fashionable clothes conceal a woman’s real age and appearance;

the fresh shoots and primal elements of real non-market (including post-market) relations in the world economy;

theoretical models explaining how, why and by whose agency the birth of new relations, preparing the way for the replacement of the market and capital, can and will come about.

Since such theoretical constructs are dangerous, from the point of view of adherents of the market-centric model they must be ignored or dismissed as marginal (which is not without a certain basis – five hundred years ago Copernicus and Galileo were indeed marginal). If this is impossible, then they must be declared false.

Administrative-political pressures and the silencing of dissidence are outside the bounds of this text, but the question of whether theories which are not market-centric are a priori false can and should fall within our subject matter.

Our use of the term a priori is no accident; there are in fact no proofs, beyond attempts at a critique of the Marxist theory of commodities and capital. Nor, properly speaking, has anyone tried to prove that (1) there were no pre-market relations governing the production, distribution and consumption of resources; that (2) post-

market relations do not exist today; or that (3) the latter cannot come to dominate in future.

This does not spare us the need to demonstrate theses 1-3. We shall not set out the evidence for the first thesis in this text, but will begin analysing the question of the post-market economy by noting an elementary relationship: as the contradictions of the classical developed market economy have grown more acute (with the First World War, the Great Depression, and so forth), the concept of “market failures” has appeared in economic science and even in its mainstream. This concept refers to those economic functions which the market cannot carry out, or which it carries out at the cost of grave losses to society, humanity and nature. These functions are “economic” in the broad sense of the word, but extend outside the framework of reducing the economy to the exchanging of goods and money – which conventional economics is forced to do in this case, though [NB!] without acknowledging it. Meanwhile, to the extent that losses to humanity and nature are conceded (these are non-market parameters, even though disguised behind the term “externalities”), contraband goods are again smuggled into economic theory.

For the present, we shall not delve into the question of which relations are involved in these “failures”, or how and why. (The term “failures” is itself extremely dubious, pointing directly to the “market-centricity” of conventional economics: everything which is not a market is a failure. How similar this is to the religious world-view, in which everyone who is not a Christian is a heathen, or everyone who is not a Muslim is an infidel! In each case, the people involved are seen as no more than “failures” of Christianity or Islam). Here we shall set out to demonstrate another relationship, which for us is of fundamental importance: if (1) “market failures” have appeared in practice on a massive scale (and accordingly, have been described in mainstream theoretical works and even in textbooks) only under the conditions of the “late”, developed market (as Marxists, we would speak of capitalism, but in this context that is not so important); if (2) they carry out functions which the market cannot fulfil effectively; and if (3) these “failures” are located as a rule in the areas most important for humanity’s transition to a new quality of development (education, basic science, the environment, global problems, and the development of human qualities), then we can reasonably suggest that in all these cases we are dealing not with pre-market but with post-market relations, able to solve those crucial socio-economic problems which the market and capital cannot.

We shall now attempt to provide at least a brief list of the areas of the modern global neo-economy in which, alongside the commodity relations which are dominant as before, fresh shoots of post-market relations are also appearing. These areas include the following:

the diverse system of state economic functions. These redistribute from 30 to 50 per cent of GDP and have a fundamental influence on the way of life, on environmental, humanitarian and social problems, on the quality of growth, and on much else;

the non-market impact on the economy of large corporations, including the manipulation of needs and of consumers; a partial regulating effect on prices; and much else7;

7 The Tsagolov school of political economy termed this phenomenon “partial planning” [Tsagolov, 1973]. The specific mechanisms through which this effect operates are set forward, in particular, in the book by N. Klayn No Logo [Klyan, 2003].

the formation of what in many respects are non-market enclaves of economic life within large corporations (especially transnational corporations whose volumes of production are comparable with the GDPs of middle-ranking states;

the development of socially responsible business, oriented to non-market as well as market criteria;

the activity of the “economy of solidarity”, including in particular that of “social” enterprises which function on a not-for-profit basis, and which employ as much as 10 per cent of the labour force of the European Union;

the economic life of civil society (including the internal social and economic activity of NGOs, social movements and so forth, oriented toward non-commercial goals and values);

the system of regulation of the economy by social (non-commercial) organisations, organs of local self-government, and so forth;

economic processes in the field of the production, distribution and use of generally accessible goods that are state or collective property (the non-commercial sector of production, distribution and use of generally accessible goods that are not private property in the areas of education, child-raising, health care, culture, the use of natural resources, and so forth).

We note also such key aspects as the development of non-market values and of stimuli to activity, cooperation and collaboration (not only competition) as mechanisms for improving the outcomes of labour (some of these have come to be called “social capital”); the self-motivation of creative labour; the expansion of unalienated social relations in the field of joint creative activity (free working associations of scholars, of teachers, and of activists in social networks); new phenomenon of wikinomics [Tapscott and Williams, 2006], copy-left and so on forms; and other important components of economic life in the epoch of the rise of post-industrial society (the epoch of the scientific-technical revolution). No less interesting is the question of how to assess the socio-economic (humanitarian-economic, environmental-economic) effectiveness of self-management, using as the criterion the free, harmonious development of the personality in dialogue with society and nature, not just monetary returns compared with outlays8.

This is a very incomplete list of the most important areas. They are extremely varied in character, and may conceal relations that are either progressive or regressive from the point of view of such criteria as the free and rounded development of human beings and the overcoming of social alienation. But even this incomplete list shows that post-market relations exist, and that they are far broader and more profound than the impact of the state on the economy.

Here, a substantial qualification is required: incontestably, modern economic theory recognises the existence of these phenomena. But in the first place, it treats them as “market failures”, that is, it (a) proceeds from the market as the sole effective economic system, and as a result (b) points both openly and implicitly to a need to restrict these areas as much as possible. Secondly, it seeks to depict the economy of these areas (the “economy of the social sector”, and so forth) as having a sort of second-rate market quality, reducing its content to market-like forms and portraying these forms with the help of partially-modified traditional market models, drastically narrowing and thus distorting the content of the processes and relations at work in the economic area of public benefits.

8 For a more detailed treatment see [Politicheskaya ekonomiya sotsializma, 2003].

We shall now “forget” the full diversity of these post-market relations in order to address the area which, for good reason, is most often analysed – the socio-economic activity of the state.

The socio-economic activity of the state: a view through the prism of critical political economy

It should be stressed that rejecting the market-centric paradigm makes it possible to show that the socio-economic activity of the state is one of the transitional forms alluded to. These forms include the embryos of post-market relations, and in particular, of a conscious, directly social means for the coordination, regulation of the proportions, and distribution (allocation) of resources9.

We are prepared to argue that unless market-centric concepts are rejected, it is now impossible to set forward an integral model of the economic functions of the state in a developed market economy. Any textbook of conventional economics will treat the system of economic functions of the state in much less comprehensive and systematic fashion than is permitted by placing the accent on the presence of post-market relations. Compare how the “failures” of the market are depicted in these textbooks with the way this can be done using the approach described above. In a new edition of a textbook on the theory of socio-economic transformations [Buzgalin, Kolganov, 2003] we have set forward such an approach, and here we shall note only a few of its main elements. As the basis for systematising these elements, we employ the key parameters of the structure of the economic system as distinguished earlier (and which also rest on a non-marketcentric approach).

Hence, the relations of coordination (we recall that the natural, commodity and planned economies are varieties of these relations) presuppose that the state carries out definite functions (later, we shall provide a brief list of these functions) in shaping not just the frameworks and rules of financial transfers, but also the proportions in the economy, the norms of quality and the rules of price formation. According to all these parameters, the state has a definite role in a modern market economy. This role consists of (1) determining the rules and mechanisms governing market agents across a broad range of interactions, from the rules of trade to antimonopoly legislation (this is among the sub-types of the state’s more diverse function of regulating institutions); (2) the direct (state orders, investments and purchases, aimed for example at developing the military-industrial complex, basic science, aerospace programs, and so forth) and (3) indirect (tax or tariff benefits, cheap credits and other mechanisms of structural policy) regulation of proportions; (4) norms governing the quality of almost all types of agricultural and food products, along with norms for the safety of domestic appliances, and so forth; (5) state regulation of prices and of the rules of price formation (usual for many types of prices and charges, not only for the products and services of natural monopolies); and much else besides. Function (1) is generally recognised by mainstream economics, while (2) and (3) are topics of discussion, and (4) and (5) are in most cases forgotten.

The relations of appropriation and the whole complex of property relations which shape the modern economy presuppose the enforcing of the functions of the state that relate to the formation and safeguarding of property rights (this is the field

9 For an account of the difference in content between the planned mode of association between producers and consumers and the bureaucratically transformed variant of the latter, see A.V. Buzgalin, Protivorechiya samoupravleniya v planovoy ekonomike. Moscow, 1988.

of neoinstitutionalism, relating mainly to the generally recognised “market” functions of the state). Less widely recognised is the fact that the state also redistributes part of the entitlements of the private property-owner for the benefit of society, limiting these entitlements and providing additional economic powers to the latter. Examples include sanctions against failure to make proper use of arable land and other natural resources, and restrictions on the use made of objects of cultural value. The above fact is spelt out in specialised studies, but is not taken into account in theoretical works. Meanwhile, there is a need for political and economic research into state property as a particular area of economic relations, and not simply as a “market failure”. We stress that this form of property includes not just state business corporations, but also establishments in the areas of education, health care, culture, sport and administration, as well as land, the subsoil, objects of cultural value, and so forth. Relations in this sector have a transitional character, and include non-market parameters. Consequently, the form of state property may conceal a category of new economic relations that appear when and where the state acts not as a special “super-capital”, but as a genuine representative of overall national interests. Distinguishing these economic interests and their real content as a discrete economic question, and not just as the latest “failure”, is also impossible without rejecting “market-centricity”. Along with a great deal else, it calls for a study of the actions of the state in aiding the democratisation of property relations (for example, the ESOP plans in the US and Western Europe).

The category of social parameters of the economy comprises a broad stratum of relations concerned with the deliberate regulation of (1) labour relations, the relations between labour and capital (from social norms to tripartite collective agreements), and also (2) employment (not just unemployment benefits, but structural policy and the stimulation of employment in the modern sectors, along with participation in social labour). Also in this category are (3) post-market mechanisms of distribution, mediated by the state, such as the free and generally accessible distribution of numerous benefits (for example, free secondary education and in many countries such as the Federal Republic of Germany, to some degree higher education as well); social transfers; a socially guaranteed minimum wage; progressive limits on super-high incomes; and so forth.

Still more diverse are the functions of the state in the field of regulating the relations of reproduction and functioning of the economy. Here, in particular, we find the whole range of functions of the state in regulating the macroeconomic dynamic (growth and so forth) of the system of finance and credit, along with much else. We shall not go into details here, since this is not the subject of the present text.

Many of the mechanisms noted above (but not all, and not in systematic fashion) are of course well known and described in conventional economics. They are all without exception familiar to any practising economist, but conventional economics “forgets” some of them, which do not fit into its theories. In this case, however, it is worth putting the accent elsewhere: in all these instances, the concrete economic functions of the state conceal a further layer of economic reality – the relations involved in the conscious regulation of economic processes on an all-national (or regional, or international) scale.

This is why for decades, both in Russia and in the world at large, the argument has not been about whether we needed a strong state – the latter could be a Pinochet-style fascist dictatorship, defending the model of the Chicago Boys – but about whether or not to develop new post-market relations in the economy. It is no accident that liberals argue so heatedly against the implementing by the state of selective anti-

cyclical regulation, against the developing of social transfers, and against the free distribution of social benefits. In all of this they sense implicitly the threat posed to the power of the market and capital by the emerging shoots of new social and economic relations10.

On top of this, we should recall that post-market relations are in no way to be reduced to the economic functions of the state.

Here, to the extent of our powers, we shall draw the logical conclusion. A modern capitalist economy is marked by the development of state and social regulation – deliberate, centralised, and in many respects planned – and of environmental, social, and humanitarian norms. It sees an increased role for non-commercial organisations, for social property in the whole diversity of its forms, and for the transfer to public (non-private, non-commercial) bodies of a range of property rights even relating to enterprises in the market sector (controls, limitations and so forth placed in the hands of the state, of trade unions and of non-government organisations). Further, modern capitalism witnesses the production, distribution and use of public goods, including of a resource that is extremely important for post-industrial society – that is, cultural assets, fundamental knowledge, basic “human capacities”. If all these phenomena amount to “market failures” (this is the term used by neoclassicism – we would say “of the market and capital”), then….

The proper conclusion is that these phenomena can and should be considered fresh shoots of post-market and post-capitalist relations. We shall restate our argument: these phenomena cannot be assigned to the category of pre-market, pre-capitalist (slave-owning, feudal) economic manifestations. They have taken on massive proportions, and have presented a problem for theorists, mainly at the stage of late capitalism and the developed market; they constitute areas in which the market is no longer effective from the point of view of new social, humanitarian and environmental criteria. Consequently, they are more developed and progressive than the market from the point of view of the above-mentioned new criteria, becoming increasingly relevant with the advance toward post-industrial society. In sum, they are post-market relations.

For this reason, we argue that in today’s world economy there are transitional forms that lead toward post-market, post-capitalist relations in the fields of coordination, property, the distribution of income, reproduction, motivation and so forth. To understand these mechanisms objectively, it is essential to reject market-centric paradigms of economic theory; otherwise, all these growing and developing forms, to which the future belongs, will remain on the periphery of theory and will be treated as exceptions to the “rules”, despite being transitional to post-market relations and representing the new mainstream of social and economic development11.

10 These functions of the state are qualitatively different from the traditional ones, emphasised by conventional economics, of the state as an institution providing voluntary (non-economic) support to the functioning of the market and of capitalist economic management (through defending property rights, regulating monetary circulation, and so forth). The distinction implied here is far from being a mere theoretical construct. Here we find the line which divides market liberals from supporters of a broader social and historical view of economic life. The former set out in every way possible to limit the role of the state to non-economic functions connected with establishing the conditions for development of the market, while the latter (some of them without even acknowledging this theoretically, like Molière’s hero who does not know he has been speaking prose) seek to emphasise the new post-market economic relations that have been realised with the help of the state, but which are not reducible to state activity. Orienting toward these economists are, in particular, the dirigistes, the post-Keynesians, certain Marxists, and other scholars who explain the need to expand the functions of the state to include ensuring a more effective development of the market.

It would, however, be wrong to suppose that present-day global society has travelled far along the path that is witnessing the genesis of post-market relations. The trends that point toward the emergence of a new qualitative state of society are merely opening the way for themselves, and the twenty-first century will most likely be a period of transition, of the non-linear genesis of the “realm of freedom”. Meanwhile, humanity in the immediate future will remain as before within the framework of the capitalist system, but of a capitalist system that has already passed through a number of stages of its self-negation, and which is undergoing a drawn-out, contradictory decline, marked at present by the global hegemony of corporate capital.

Here we would like to emphasise the natural correlation, in time and space, of two processes: the self-negation of capital, and the decline of the realm of economic necessity as a whole. The self-negation of capitalism and that of the “realm of necessity” are not just coincident processes but indivisibly united ones, since capital is both an important form of the world of alienation and at present, the form which is most highly developed and hence most powerful.

A substantially changed system of relations of commodity production is becoming the most important component of the capitalism of the new century.

1.3. The total corporative-network market: the decline of capitalism gives birth to a new type of commodity relations

Proceeding by the twists of its “negation of the negation” evolutionary spiral (commodity production as the genesis of capital – developed industrial capitalism – imperialism and the subsequent stages of decline), capital in the late twentieth and early twenty-first centuries has begun the process of restoring the comprehensive power, undermined during the period of social reformism, of the market as the dominant form for the coordinating and allocating of resources. This restoration, however, is proceeding on a new basis – that of information technologies, of the achievements of the preceding evolution of capital, of the crisis of “real socialism”, and of globalisation…. The restoration thus has a new content, and the modern epoch is witnessing the “restoration” of the comprehensive dominance not just of the capitalist market, but of some new variety of the latter.

The corporate capital of the epoch of globalisation is substantially altering all the basic features of commodity relations, setting in train the creation of a total market. On an empirical level the total market was already clearly observable in the late twentieth century, when neoliberal ideology and practice were already nudging the boundaries of so-called “market fundamentalism”, considered a basic threat to the “open society” even by such an adept of the rule of capital as George Soros [Soros, 1998], who after the financial crashes of the late 1990s published a book with the neo-Stalinist title The Crisis of Global Capitalism. The most important new qualitative

11 Here we shall draw some conclusions from our analysis of the now-dominant market-centric paradigm. As we set out to show earlier, this paradigm did not appear by chance and is by no means harmless. Though holding sway until now in economic theory, it is gradually outliving itself and is becoming less and less fruitful in theoretical terms. This paradigm (1) makes it substantially harder to understand the real laws of historical development of economic systems; (2) conceals from view a broad range of relationships that are pre-market or transitional to the market, but which still survive and propagate themselves; (3) is restricted to inadequate formulations, treating emergent post-market relations exclusively as “failures of the market”; (4) promotes a teleological, normative approach to the problems of the transformations in the Russian economy and other economies of transition; and finally (5), is dangerous in its warlike, imperialist thirst for general and complete dominance.

feature of the market was the completing of the transition, begun in the epoch of monopoly capital and described by dozens of scholars from V.I. Lenin [Lenin, 1963] onward, to a market dominated not by the consumer, but by a force which imposes a particular system of needs on the consumer – that is to say, by corporate capital. The latter consciously manipulates the other agents of the market, whether households or petty producers.

In today’s total market, the main change to the social division of labour is linked to the development of global communications and of information technology. In place of a mobile, flexible structure consisting of individual producers and the ties between them, we find a viscous, amorphous structure that emerges from the superimposing and competition of different networks. In this way, a sort of total market of networks arises, with the place of separate competing firms taken by shapeless interpenetrating webs. Importantly, these webs in most cases operate either in fields outside of material production, or in borderline areas – that is, in various sorts of financial, information, energy, transport, mass media and similar systems12.

To employ a few analogies, this market can be compared with an array of powerful webs or fields of attraction, whose centres of formation (“spiders”, or generators of the fields) are large blocs of corporate capital, agents of globalisation (these will be discussed in more detail later), and above all, transnational corporations. This is how the total corporate-network market, the market of webs, takes on its form.

The socio-economic nature of the “fields of dependency” generated by large blocs of corporate capital lies in the multiplication of the effect of “partial planning” (created by every monopoly capital and known since the late nineteenth and early twentieth centuries)13, on the basis (1) of the development of the socialisation of production to the point where a new, “network” system of the division and integration of labour takes shape on a global scale; of the dismantling of the achievements of social reformism and of the transformation of corporate networks into quasi-states, which (2) extend their control and regulation (“partial planning”) not only to the parameters of the market (prices, volumes of sales/purchases and so forth), but also (3) to the socio-institutional parameters of economic life (to what we would call the “rules of the game”), transforming themselves alongside the state into sources for the formation and support of the institutional milieu; (4) of the application of methods of socio-psychological pressure with the help of the mass media and so forth, with the aim of creating a social atmosphere in which the “field” of their power can be expanded as easily and effectively as possible (the formation of norms of passive social behaviour on the part of consumers, clients, and “professionals”, for example);

12 In their key features they differ fundamentally from the main agents of the market in earlier times – that is, the industrial links bound up with the social division of labour. This is for the reason that (1) they are associated with the genesis of post-industrial technologies; (2) they are mobile, amorphous, and only weakly connected to any particular “place” in the sectoral, territorial or other scheme of things; (3) they are potentially, and in a number of cases (as with the internet and so forth) actually, worldwide and open-ordered; (4) they are of indeterminate scale, and constantly change their dimensions, growing and pulsating…. The list can easily be continued. Closest to the corporate-network market in their technological nature are so-called network enterprises, in which a single system of information and standards combines thousands of links into a unified chain of production, operating “just in time” and for a specific purchaser. Of the sources known to the authors, the ones that reveal the nature of the network society most fully and precisely are the works of Manuel Castels [Castels,1996]. 13 The theory of “partial planning” was developed by a number of scholars at Moscow State University.

and (5) of the use of old methods of direct coercion in relation to third parties, to the extent of “paving over” entire states.

Moreover, it can be concluded that to the degree to which the total corporate-network market develops, the largest capitalist corporation-networks break free from their social restrictions. No longer subject to control by the state, by trade unions or by other institutions of civil society, they breach the “rules of the game”, destroying the achievements of the social-reformist period.

At the same time, the contradiction within the total market comes to the surface. This market arises as the cumulative sum of the “fields of dependency” that regulate the actions of the corporate structures. Meanwhile, when taken as a whole the conflict between the corporate structures and their mutual interaction amount to a spontaneous process that is not under any control, either from the corporations or from the state. The parameters of this process are set above all by the spontaneous development of the financial markets and by global processes.

The above creates the appearance that a free and equal market has been restored. But this appearance conceals the quite different essence of the total market – that is, of a market whose form is that of influence-trading and whose content is that of the corporate networks. In this winner-take-all system, the one who prevails in competition is not the one whose quality is higher and prices lower, but whose “dependency field generator” is more powerful.

It is only natural that amid the decline of the “realm of economic necessity”, and with the global problems created by this process growing increasingly acute, neomarketisation cannot help but lead to fundamental contradictions. Of these, the most important reproduces the antagonism of the epoch of imperialism at a new stage, and involves first the need for a solution – conscious, and proceeding from the interests of the socium in general (meaning both nature, and humanity as a generic essence) – to a complex of global problems that have grown substantially deeper compared to the beginning of the century. The second element of the contradiction is the fact that this system as a whole is able, at best, merely to stave off the problems for a time, while exacerbating them in the long term.

No less profound are the contradictions between the market on one hand, and the emerging creatosphere (sphere of creative activity, its actors and results) on the other.

1.4. The decline of the “realm of necessity” and the genesis of the creatosphere: the contradictions and limitations of the market system

Not only the development of post-market economic relations, but also qualitative changes in the bases of material production – the transition, as Marx put it, to a society located “on the other side” of the latter – place substantial limits on the development of commodity relations. This situation negates the very foundations of the development of the market, however we might interpret them, whether in the spirit of conventional economics (as the world of the mass production of limited but standardised resources, while the wants of the economic human being are unlimited) or within the framework of the Marxist paradigm (production by solitary producers under the conditions of the social division of labour).

In any case, we are concerned with the development of a new quality of social activity. As we showed in a series of publications noted earlier, this quality consists of growth in the share and role of creative activity, lying “on the other side” of material production, and using and creating unlimited “resources” – knowledge and other

cultural phenomena that can only be de-objectified, never consumed. This is a world in which the “pie” of goods subject to “consumption” (here one might say “assimilation”) is infinite. Moreover, the nature of this “pie”, the world of culture or creatosphere, is such that it grows and develops to the extent that it is “eaten”. The more “eaters”, and the more voraciously they eat, the more “pies” there are – such is the fundamental law of this world. The reason, we repeat, is simple: creative activity is not the consumption of limited material resources, but the de-objectifying of cultural phenomena, for example, knowledge. If Einstein eats the “pie” of knowledge “baked” by Newton, the sum quantity of knowledge increases. The “pie” has grown bigger.

This is merely a simplified illustration of the qualitative changes that occur during the development of creative activity, lying “on the other side” of material production. Now we shall examine this question more rigorously.

The market economy presupposes an exchange of equivalents, with mutual alienation of the results of labour. The development of collective creativity brings to light a strange phenomenon in which the process of collaborating and exchanging activity can see you receive the product of the labour of your counter-agent, without in the process losing your own product. The exchanging of such goods or even of information products (but not of commodities!) leads to a situation in which, as it were, you multiply the result while entering into a dialogue with your counter-agent or with the value that he or she has created. Meanwhile, you are not consuming; you are not doing away either with the material bearer, or with the value itself (for example, you can read the same book many times, while using the knowledge it contains for the most diverse types of activity).

Such an exchange of activity becomes a natural law of the world that lies on the other side of material production. Instead of equivalent (on average) exchange there is a new phenomenon, the distribution of costs. The wider the circle of individuals interested in using a particular cultural phenomenon for de-objectification, the lower the cost to each of creating it, taking into account the expenses involved in circulating the material bearers. (49) For example, the costs of creating a new computer program might be distributed equally among all its users. The greater the number of these users, the less the program costs each of them (taking into account the cost of the bearer).

This negates one of the fundamental laws of the market, the law of value. In the field of the phenomenon, conventional economics also derives the relationship that the greater the demand, the higher is the price. The world of collective creativity (the creatosphere) is characterised by a different connection: the greater the number of users interested in de-objectifying the cultural phenomenon you have created, the lower the specific cost which each user has to meet for its creation.

The contrast between the value-assessments of the market world and of the world of cultural values is obvious. In the market world an increase in demand for a product results in an increase in its price. In the world of cultural values, an increase in the value of a product leads to its cost price to the user falling, ultimately approaching zero.

We shall continue our analysis of some of the laws which characterise the opposition between commodity production and the emerging creatosphere, in particular, the opposition between the mechanisms involved in the market alienation of commodities and the objectification/de-objectification of the world of culture.

Let us turn to the more or less particular law that characterises the contradiction in the development of private property and of competition in the world

of the creatosphere. At first glance this connection might seem rather questionable, but it is readily deduced from the preceding analysis. It can be formulated briefly in the following terms: the more complete and fully developed the system of private property rights to a cultural good (for example, a new technology), the less the possibility of competition in that particular market.

Supposing (to take an extreme case) that the right of private property applying to a commodity which is a cultural good is eternal (just as with any other commodity; in the conditions of the classical market, once you have bought a commodity you become its owner “forever”), we receive an absolute monopoly, completely denying all competition. The reverse is also true: absolutely free competition in the market for cultural goods is possible only when private property in the latter is completely absent. In other words, attempts to develop the market in the world of the creatosphere are subject to an innate limitation: the more complete the development of one attribute of the modern market (private property), the less the development of another (competition), and vice versa. We stress that the interrelation has a measured character; it is both a qualitative and quantitative opposition. This makes it possible in practice to find a certain compromise: “a little” private property (for example, a patent for five years), and “a little” competition (after the patent expires).

In highly conditional fashion (as is generally the case with graphic illustrations of complex laws), the connections involved can be depicted using the following graph, where points A,B, and C represent the restriction on the rights of private property (for example, the duration of a patent) over various periods (for example, five, ten or fifteen years).

О A B C

The contradictory interrelationship indicated here shows once again that private property and competition represent external restrictions on the development of the creatosphere.

Developing this judgment, we are also able to deduce a more general law: the degree of development of market mechanisms (and more broadly, of mechanisms based on alienation) for the organisation and motivation of activity gradually diminishes (here once again we are concerned with the unity of qualitative and quantitative characteristics) to the degree of the advance from reproductive to creative labour.

This connection is also relatively easy to illustrate using empirical materials. Since the market atmosphere is generally dominant in the modern world, even today

Degree of specification of property rights (duration of patent)

Degree of development of competition

the orientation to profits, along with the role of market stimuli and competitive principles, is greater in mass production than in applied science, and greater in applied than in fundamental science. Meanwhile, social restrictions and the role played by the state, by creative collectives, and by non-monetary stimuli are less. The same can be said of the connections between mass production, show business and genuine art; between technical training, professional education, and the formation of a free, harmoniously developing personality; and so forth.

As earlier, and again in highly conditional fashion, we can illustrate the relationships involved with the help of a graph:

О A B C

Again with a degree of conditionality, we may suppose that mass production, as well as show business and other areas of the artistic world that require limited creative effort from those who work in them, will be located in the sector 0 – A. In the sector A – B will be found applied science, professional education, design, the decorative and applied arts, and so forth. In the sector B – C will be fundamental science, education and culture aimed at the harmonious development of the personality, and so forth.

Also among the laws of the “decline” of the market is the non-linear exclusion of the qualities of the “rational economic individual”, as the creatosphere expands along with the social relations and personality type that correspond to it. (50)

As in the two previous cases, we can suggest as a graphic illustration a simple curve which shows the diminishing role of utilitarian needs (from level X to level Y, but not lower than Z, the level of rational consumption) as the creative content of activity develops.

X_ _ _ _ Y_ _ _ _ _ _ _ _

Degree of development of creative principles in vital activity

Role of the market and of other forms of alienation in the life of society and the individual

Degree of development of creative principles in the activity of society and the individual

Role in the life of society and the individual of utilitarian needs, motives and values

Z_ _ _ _ _ _ _ _ _ _ _ _ _

О A B C

It is significant that the dominance of the total market and of other forms of alienation may substantially modify this connection, leading to a situation in which creative activity carried out in the world of alienation is merely one of the determinants of human behaviour.

These are a few commentaries on the opposition between the world of the creatosphere and the total market. We shall now sum up some of the results of our analysis.

Earlier, we sought in the first place to criticise the “market-centric” paradigm that now dominates economic theory, on the basis that this paradigm is not just restricted in theoretical terms, but is also uncreative, acting as a brake on research into the most important processes of the modern-day economy, including questions of the historical limits of the market and of the genesis of post-market relations. Secondly, we set out to show the main changes which the system of relations of commodity production has undergone in the conditions of today’s late capitalism, and thirdly, we tried to reveal the contradictions between the market and the emerging creatosphere. In the process, we sought to the extent of our abilities to advance the thesis of the productiveness of the historical-genetic dialectical method, directing attention to the contradictions involved in the decline of “old” systems and the genesis of “new” ones for studying the relations of the modern economy – the economy of the period of total hegemony of corporate capital, which is also seeing the birth of an economy based on knowledge.

We should stress that in showing earlier how our method “works”, we used as an example an analysis of the original and general form of the capitalist economic system – that is, commodity relations. In a number of our publications we have also showed how this methodology makes it possible to reveal the new character of money and the reasons for its transformation into virtual, fictitious finance capital. Further, we show how the relations between property-owner and worker change as capital takes on a corporate and labour a creative form. Also revealed in these publications are changes to the social and class structure that are conditioned by this new reality, and in addition, we show how the preconditions are emerging for a new society. These questions, however, are beyond the scope of the present work.

Essay II.The Exploitation of the XXI Century: From ‘Classic’ Surplus

Value towards Intellectual Rent (Exploitation of Creative Activity and Appropriation by Capital of Universal Cultural Wealth)

Let us begin with a preliminary note: the system of relations of capitalist exploitation in today’s world is expanding into substantially different spheres. In some of them the classic capitalist exploitation of the industrial labour of the proletariat remains, while in others these relations are modified by the relations of private social redistribution of wealth (the socially guaranteed minimum, and progressive income tax). In yet others, relations of exploitation of creative activity that in many ways are quite new are taking shape.

2.1. The Capital of the Twenty-First Century as the “Negation” of the Previous Evolution of Capitalism: Relations of Exploitation

Before reviewing the most modern forms of exploitation, which presuppose the subordination of creative activity to capital, we should stress that modern global capitalism is a complex system involving all the basic “layers” of interaction between hired labour and capital, taken in their modern spatial reality, that characterise the historical evolution of the capitalist mode of production. To put it more simply, the modern “geography” (socio-spatial being) of the world capitalist system is also simultaneously a living history of capitalism, from semi-feudal preindustrial forms in the system’s most backward enclaves, through the “classical” exploitation of industrial workers in industrial enterprises, to highly specific forms of the subordination to capital of the creative activity of programmers and teachers...14

If we view the process as global, we can distinguish a number of features, easily identified empirically and theoretically, which will serve as the starting-point for our analysis.

Firstly, the world still contains many hundreds of millions of people who are engaged primarily in manual (preindustrial) or early industrial labour, and who are the objects of semi-feudal, semi-capitalist exploitation in forms very close to those described by Friedrich Engels in The Condition of the Working Class in England; by Karl Marx in the concluding chapters of the first volume of Capital, which deal with the history of capitalist accumulation ; by V.I. Lenin in The Development of Capitalism in Russia; and... in certain relatively realistic twenty-first century soap operas on Russian television.

Secondly, from the end of the twentieth century, and particularly in the twenty-first, the stratum of classical hired industrial workers has become more massive than ever. In the world as a whole, their numbers amount to more than a billion people, or if we consider the economy of China to be mainly state-capitalist, more than 1.5 billion. The quantity of labour that creates surplus value in classic capitalist fashion is now immense; in the world as a whole the volume of hired industrial labour is now greater (even in per capita terms) than in any previous epoch, and so is its productivity.

14 Here and subsequently the author bases himself on the classical Marxist theory of surplus value, described in the I volume of Karl Marx “Capital” [Marx, 1972]

Thirdly, substantial numbers of workers in the so-called services area, now viewed as the post-industrial sphere, are engaged in productive labour. Even from the point of view of classical Marxist theory their work creates value, and consequently, surplus value. These people include all those who are employed in areas that directly maintain the functioning and reproduction of the productive forces, including labour power. Accordingly, the areas in which value is created (from the point of view of classical Marxist theory!) include not only that part of trade where the process of producing material goods in the broad sense is continued, but also that part of the services sector which is analogous to it in its nature and functional role.

Consequently, within the services sector an area can be distinguished in which value is created and hired labour is performed – that is, an area in which surplus value is created. This is the part of the services sector that involves services that are essential links in the reproduction of labour power, including modern, highly qualified labour power (we shall return later to the question of the reproduction of so-called human capital).

Clearly, a large proportion of trade in the means of production and in non-simulative consumer goods should be assigned to this area, along with much of the area of the services sector that creates non-simulative goods. In the latter case, this can and should include large numbers of enterprises in the food industry, everyday repairs and related services, recreation and so forth.

Here we shall not try to estimate precisely the number of people in the world economy who are employed in this way, but it must be significant – of the order of half those working in the international services sector, that is, around a billion people. It should be stressed that most of them are engaged in the specific form of manual work, of early and late-industrial productive labour, creating value and surplus value.

Hence no fewer than half of the world’s workers are now employed in the traditional areas of productive labour, those that create surplus value in the classical fashion. Taking into account the capital value accumulated over centuries, this production creates the mass of wealth that not only allows modern reproduction to go ahead, but also provides certain foundations for the growth of a false sector that is parasitic on it, though not on it alone.

To sum up: modern-day capitalism is characterised by the retention of “classic” relations of capitalist exploitation. Accordingly, we can draw the conclusion that the first “layer” of the subordination of labour to modern global capital is the “restoration” of the classical relations of formal and real subordination of labour to capital (partly limited by the preceding period of social reformism), and correspondingly, the extraction of absolute and relative surplus value. It will be recalled that nowadays, despite the contraction of industrial production and the more complex social structures that are characteristic of the developed countries, in the world as a whole the scale of the exploitation of manual and industrial hired labour is greater than in any preceding period.

Nor should it be forgotten that the neoliberal stage of late capitalism is also characterised by the restoring, as a persistent tendency in most countries (including in the developed world, as for example the US), of a relative and in certain periods also absolute impoverishment of the proletariat. In the US, for instance, average real hourly wage rates declined between the mid-1970s and the early 1990s. The gap between high and low-paid groups increased; the difference between the remuneration of top managers (this is now a form of receipt of surplus value, rather

than payment for labour power as a commodity) and the majority of hired workers almost doubled.

The second “layer” in the relations of total subjection of labour to capital is associated with the “dialectical negation” (critical succession) which under modern conditions occurs in the relations between labour and capital – relations that are characteristic of the next historical stage (and at the same time, logical level) in the evolution of late capitalism. Here we find new aspects of exploitation and of the subordination of labour to capital, aspects that characterise the first stage of the undermining of the foundations of capitalism, the stage of monopolistic capitalism or imperialism. “Preserved” from this historic-logical stage in the evolution of late capitalism we find, in particular, a multilevel hierarchy for the redistribution of surplus value to the advantage (1) of developed countries; (2) of monopolistic combinations of these countries (monopoly [super]profits) involving a dual, triple or greater burden of exploitation for hired workers in developing countries; and (3) of finance capital. The author has written earlier on the nature of this redistribution that occurs under the influence of the “fields of dependency” (“market power”) created by large corporate capital, and as a result of the rule of virtual fictitious capital15. [3]

Preserved from the next historic-logical stage in the evolution of late capitalism – social reformism – we find (though in somewhat truncated form) a complex system, characteristic of the developed countries, of limits to exploitation in the narrow sense of the word. These limits range from restrictions on the length of the working day, week and so forth, to a progressive income tax and various forms of social security. Also present are “corrections” to the mechanisms of formal and real subordination of labour, from worker protection laws to workforce participation in ownership and management. This is the third “layer” in the modern relations of subordination of labour to capital.

The neoliberal period, however, has not only cut back the gains made in the preceding stage, but has also undermined the mechanisms through which these gains were achieved. The roles played by various associations of workers have been weakened and reduced under the pressure of neomarketisation, and together with the “privatisation” of people’s social existence, this is destroying the basis for resistance to the growth of exploitation.

At this level of research, the most interesting question from the point of view of the Marxist theory of exploitation is that of the apparent change in the nature of capital and of the “overcoming” of the exploitation of hired labour through the setting up of numerous pension funds and the like. These institutions combine the savings of hired workers and, it might seem, turn these workers into a collective capitalist. This achievement of the “universal prosperity state” has now been substantially transformed, but its basic elements have not yet vanished into history, and so need to be analysed.

As noted earlier, the thesis of the diffusion of capital and the birth of “postcapitalism” achieved wide currency in the second half of the last century. In the view of this writer the conclusion that the world has undergone a transition to “postcapitalism”, based on arguments about the disappearance of capital as

15 These mechanisms were described, with reference to the conditions of the early twentieth century, by V.I. Lenin [Lenin, 1963] and R. Luxemburg [Luxemburg, 1951]. The modern form of these phenomena, characteristic of the period of globalisation, is set forward in the works of S. Amin [Amin, 2003] and many others.

accumulated surplus value and its transformation into the savings of citizens, is fundamentally untrue, at any rate from the point of view of the Marxist theory of surplus value. This is not because we deny the role of pension funds and other forms of savings used for capitalisation; their role is unquestionably great, though not decisive in terms of the global economy.

The point, however, lies elsewhere. Under a non-capitalist system of social appropriation, pension funds and similar institutions (medical insurance, savings funds for the education of children, and so forth)16 could accumulate primarily the surplus product of society, which at present is quite large and which should be used to prolong people’s productive lives, to allow the rational use of free time, and to maintain those who cannot yet work or are no longer able to do so.

Under capitalism things are more complex. “Classical” capitalism, which featured child labour, short life-spans and so forth, did not foresee including these costs in the necessary product of the worker. Technological progress during the last century created a need, at least in developed countries, to make a shift to workers of a different type. The providing of technical and higher education to a significant sector of workers became a condition for the accumulation of capital. In parallel with this, increasing the length and stability of people’s lives was now necessary for ensuring the reproduction of the labour power of “professionals”. Other factors as well, such as organised struggles by workers and other popular layers, competition with the “world system of socialism”, and ultimately the shift to social reformism, propelled events in the same direction. The result was that during the twentieth century a part of these costs was incorporated in the price of labour power, while another part became a deduction from surplus value that was redistributed (under pressure from forces opposed to capital) to the advantage of working people.

In a number of countries the crisis of social reformism and of the “society of the two-thirds”, involving the partial curtailment of social benefits, has led to this spending as a whole being cut. Or, it has brought a change in the proportions, with a relatively greater share of expenses being met out of workers’ savings; in a number of countries, social spending has also declined in absolute terms. It has also led to these savings being concentrated in private funds; that is, it has brought about the privatisation by capital of part of the necessary product and of the social surplus product used for social and humanitarian ends. This privatisation has also become the real content of the process which assumes the guise of ... the diffusion of capitalism.

Also to be taken into account is the fact that to a significant extent, the savings involved are made by hired workers whose wages, from the point of view of Marxism, are paid out of surplus value (and more broadly, from the surplus product having the form of value) stemming from the labour of workers in material production and the creatosphere. The hired workers receiving incomes in this category include all those in the “false” sector. In a similar situation are all higher managers, to the degree to which their incomes are derived from surplus value (profits), and merely assume the form of payment for work performed17.

While still on this level of investigation, we can thus establish that in the modern global economy one of the main sources of income and of capital formation remains “classical” surplus value, created by the productive labour of hired

16 We shall demonstrate shortly, while analysing the new quality of workers under conditions of the hegemony of corporate capital, why this quality is associated with a sharp increase in the role played by such funds.17 The authors were unable to find relevant statistics, but according to accounts by foreign colleagues, in developed countries this is no less than half of the labour power of the individuals concerned.

workers. Later, it will be shown that the universal wealth having the form of value and arising out of intellectual labour in the creatosphere is becoming another such source.

These sources, however, are transformed into investments and into the personal consumption of the complex system of classes and intermediate layers of capitalist society (including the corporate hierarchy, “professionals”, and so forth – more will be said later about the structure and social nature of these layers – that mediate the complex system of false forms.

One of these forms is the camouflaged appropriation of profit (including in material production) that is disguised as the salaries and other income of higher managers and “professionals”.

Another form, scarcely less important, is the redistribution of part of the surplus value created in the world (including part of the “salary payments” of higher staff and “professionals”) to the advantage of the false sector. This redistribution proceeds via two main channels: investments of the accumulation funds of firms in the false sector (to cite just one example, before the world crisis corporations in the non-financial sector in the US received as much as half of their profits from investments in financial speculation), and the directing into the same sector of personal savings whose source is surplus value and intellectual rent.

In addition, late capitalism (especially in the period of neoliberalism) features the privatisation by corporate capital of the part of the necessary social product (the cost of labour power) which is saved for the reproduction of highly qualified workers. This part is also used for the reproduction of capital, including for investments in the false sector.

Finally, a complex system of redistribution is characteristic of income that is obtained from such sources as intellectual rent (it will be recalled that this comprises the profits of corporations that own intellectual “capital”, and part of the income of intellectual workers). Part of the savings from this income also becomes a source of the reproduction of capital, including that of the false sector.

Further, the resources of the false sector, just like profits from material production and wealth from the creatosphere that has the form of value, are transformed directly and indirectly (through savings from “salaries”) into sources of the formation of new capital value.

These processes show how the camouflaging of the process of exploitation occurs, and how the objective appearance is created that capital as such (the private property of a physical person who engages a hired worker) has disappeared; all that is present, in this version of things, is savings which have been derived from the incomes of workers, and which are used by “professionals” for the expanded reproduction of the economy.

Most interesting from the point of view of this study, however, is the fourth “layer” of the subordination of labour – the new relations of exploitation that are coming into being at the present stage of late capitalism. These are the relations of exploitation of creative activity and of the subjection to corporate capital of the person as an individual human being, and not simply as labour power.

Modern-day capital is far from being comprised solely of classical industrial output; it also includes the sphere of creative activity, in which the “creative class” is engaged. It is here that new forms of capitalist exploitation are arising, since as will be shown later, modern capital appropriates part of the wealth that comes into being through universal creative labour. The areas in whose activity creative components play a significant role (recall that we have termed these areas the

creatosphere) now include a broad range of the sectors of social reproduction. Among them are education and training in all their diversity, health care, technical and scientific creativity, the recreation of nature and society, the productive elements of managerial work, art, and so forth. In all these areas labour is productive, but by general human criteria rather than essentially capitalist ones, since it serves the reproduction and development of the human species irrespective of the social system.

Marxist theory takes the well-known position that this universal creative labour does not create value, but that it gives rise to a genuine (non-simulative) social wealth, which in a totally market-dominated setting acquires a sort of “envelope” of value. For creative labour this value-form is false, but the social wealth itself is real, productive, and lies at the basis of reproduction of the material and cultural goods appropriated by modern capital. Moreover, under the conditions of private ownership of the results of creative activity this wealth is acquired by capital, to a large degree free of charge, in the form of so-called “intellectual rent”, which under late capitalism is the main form of income from such activity.

Here we shall refer to a relatively well-known, empirically established phenomenon: a lesser portion of intellectual rent comprises a sort of “addition” (over and above the value of labour power), which is hidden in the wages of the hired intellectual worker; meanwhile, the greater portion is appropriated by the owner of the “creative corporation” that employs hired creative labour. A further part of this rent is appropriated by creative workers whose labour is not hired, but here as well a significant portion of this rental income is reinvested (mediated through the form of savings) in capitalist reproduction. Alongside classical surplus value, intellectual rent thus becomes a basic source of the profits of modern capital.

Consequently, the modern system of exploitation presupposes a counterpoint, a contradictory and by no means always organic integration of four historico-logical “layers” (sub-systems of productive relations) of the exploitation of labour by capital:

1) The “classical” system of relations of production (by hired labour) and of appropriation (by capital) of “normal” surplus value;

2) The relations of production and appropriation of monopoly (super)profits and financial profits;

3) The relations, ended by neoliberalism and reproduced in curtailed and deformed shape, of redistribution of a part of surplus value, and of the “diffusion” of capital;

4) The relations of exploitation that pertain to creative activity and to the appropriation of intellectual rent, along with other components of the total hegemony of capital, and in particular of exploitation, that are specific to the current stage.

This study will address the latter question, after first making another preliminary digression and examining the issues involved from the point of view of neoclassical economic theory.

2.2. The Exploitation of Creative Activity: Its Specific Nature, Content and Forms

We shall begin by noting that within the framework of the classical Marxist category-field, and from the point of view of content, the appropriation of surplus value and the exploitation of hired workers (“exploitation” here is in the narrow sense, viewed solely as the relations that govern its appropriation) are also negated by the development of the creatosphere. In Marxist theory, the phenomenon of exploitation is associated with the fact that the process of production leads to the creating of commodities whose value exceeds the combined total of the cost of the labour power

expended in making them, plus the value of the means of production transferred to these commodities. This difference also constitutes surplus value, the result of the exploitation of the hired worker, since from the point of view of Marxism all newly created value has its origin in labour (in addition, labour by virtue of its dual character transfers the value of the means of production to the final commodity).

If, however, we cross to the world “on the other side” of material production properly considered, then as has repeatedly been noted, the result of activity is not in this case a commodity to be alienated and sold on the market, but an active process and the self-development of the worker that occurs in this process, plus a cultural value. These results are not in principle alienated from the worker, and alienation can only affect the material bearer of the cultural value.

The practice of late capitalism shows, however, that the creative worker is still the object of exploitation. In any case, it is empirically obvious that the use of creative labour as hired labour in creative corporations brings the owners of these firms profits out of all proportion to the incomes of even the highest-paid workers who are not among the owners and top managers.

What is the secret behind this gap?We shall leave to one side the answers yielded by theories of the factors of

production and marginal productivity. According to these theories everything is simple: the “normal” capital which Bill Gates invests (we recall that he began by investing a few hundred thousand dollars in his business, and is now the owner of more than a hundred billion) is several thousand times more efficient than the “intellectual capital” of even the most talented programmer who “invests” his or her creative abilities in Gates’s business (these abilities were “created” through the spending of a similar sum of hundreds of thousands of dollars on many years of education), and who during his or her lifetime receives at most a few tens of millions.

In this case we are interested in the Marxist categorical field, and here, naturally, we need to turn to Marxist methodology and in particular, to the method of proceeding from the abstract to the concrete, revealing the system of relations through which the owner of capital is able to appropriate the value that results from the labour of the creative worker.

We shall begin with a relationship between creator and capital in which the form of hired labour is preserved. In direct terms, the process looks very much the same as if the labour power of the subject of reproductive work were being purchased. Nevertheless, the essence of this relationship is substantially altered; the owner of capital no longer buys labour power, but the creative potential of a human being. There are some important distinctions here, about which we wrote earlier, so a summary will be provided (digressing from the content of the subordinate relationship of labour to capital) in order to allow an understanding of exploitation in the narrow sense of the word. We shall examine the key differences between the creator as the “object” (in inverted commas, since in the case of creativity he or she is the creative subject) of exploitation, and the “normal” hired worker as the subject of reproductive labour.

In the first place, human creative potential is a commodity which is always subject to dual ownership. It is inalienable from its “bearer”, who does not lose it even when it is sold to someone else. Moreover, in the process of consumption of this commodity its consumer value grows. Unlike labour power, which after being bought is consumed by capital, exhausting the worker physically and morally, the creative potential of a human being engaged in the process of activity (and hence of exploitation) increases, and this is one of the main results of creativity.

Secondly, and as is well known, the creative process operates not just in working time, but also in the worker’s free time. This is why capital strives to acquire the human being, with all his or her personal qualities, for the whole time of his or her vital activity, along with all the products of his or her personal self-realisation. From this, in particular, stems the interest which the owner of capital has in securing a long-term (in extreme cases, lifelong) contract with the creator.

Thirdly, capital in acquiring creative human capacities is obliged to pay the cost of reproducing this particular commodity. Alongside the traditional components of the value of labour power (the means of maintaining the worker and his or her family), this includes the whole totality of the costs of educating the creative worker and improving his or her qualifications (or providing retraining for a new profession); of the acquisition and constant use of cultural values; of the recreation of the individual; and of ensuring a healthy way of life, so that the worker lives longer. In addition, this value also includes certain social guarantees, providing the creator with “the right to make mistakes” (freedom from having to suffer if his or her creativity does not yield commercial results, since as we recall, in creativity a negative result is also a result). Through this we can show in theoretical terms the reasons behind a phenomenon which empirically is very familiar: human creative capacities are an expensive commodity.

At the same time, creative activity in and of itself acts as a stimulus to its existence. Financial motivations in this case are something external; hence the possibility for capital of parasitising the internal motivation of the creative worker, receiving part of the worker’s creative potential free of charge, without paying for the stimuli which the worker provides for himself or herself through engaging in creation.

Fourthly, the earlier-mentioned property of creative activity of yielding results that are unforeseen (and in some cases quite negative) means that the owner of capital buys a “pig in a poke” – that is, acquires what is precisely a potential, undefined either qualitatively or quantitatively. What capital purchases is not an ability, fixed qualitatively and quantitatively, to create a certain value (with this fixation taking the form of an hourly rate or even piece-rate payment), but a fundamentally undetermined potential; capital thus pays for the level of this potential, and not for the costs of labour or for the quantity of production (or volume of services) created through this labour.

Accordingly, the price of this commodity (unlike labour power as a commodity) also depends less on the volume and quality of the commodity produced by the given worker than on the way society and the market assess the qualitative parameters of this worker. The social, non-market assessment that we make here (for example, through the regard we pay to an educational diploma, a university degree, or prestige among colleagues in the case of scholars) is greater to the extent that the subject of the activity is engaged in authentic creative activity in the field of the creatosphere (science, art and education). The strictly market-based assessment is more important to the extent that we are concerned with the labour of professionals in the false sector (corporate management, finances, mass culture, professional sport). What has been noted here helps in particular to account for the possibility that the price of the creative worker will deviate massively from the actual cost of reproducing his or her creative qualities (as we know, the market for simulacra as a whole values a pop star or a lucky rain-maker hundreds of times more highly than a Nobel prize-winning scientist, not to speak of a rural schoolteacher).

Finally, and this is especially important, in the case we have examined we encounter the dual nature of the object of exploitation of creative activity, and this is

the direct result of the dual nature of creativity itself. It will be recalled that creativity is at once a profoundly individual activity carried out by a particular subject, and also a general labour, a collaboration, a dialogue open in space and time between the creative worker and his or her colleagues, forerunners and successors, with all those whose cultural outcomes he or she has de-objectified in his or her activity and with those who will de-objectify the results of his or her labours. The creators of a new theory in physics are not only its immediate authors, but also their teachers, and their students, and Pythagoras, and Einstein. This is how new music is composed, or a “pedagogical poem” is created, embodied in the lives of pupils.

From this there flows a conclusion of fundamental importance: in each individual case in which creative activity takes place, capital exploits not only the particular, individual subject of that activity, but also the entire world of culture, and all of the human species whose cultural potential it indirectly appropriates. The mediating principle in this case is the process of dialogue that occurs between the creative worker whom capital employs, and the entire world of the creatosphere.

We shall return later to this thesis, which is important for what is to follow; here, an intermediate conclusion will be drawn: the creator as an “object” of exploitation is substantially different from the “normal” hired worker, who is the subject of reproductive labour.

This, of course, goes nowhere near exhausting the differentia specifica of the phenomenon examined here. Most important are the differences between the content of the exploitation of creative activity and the content with which we Marxists are familiar from Capital.

As was shown earlier, creative activity in terms of its content is the product of the common activity of co-creators interacting in a process of unalienated dialogue, and not of the abstract labour of isolated producers. Having this character, creative activity does not create value, but a universal social wealth. In circumstances where commodity relations of production dominate – and especially, in the context of the “total market” – this content meanwhile takes on a false form, receiving a value-assessment of indeterminate size.

It is important to note that this value-assessment (the price of a creative product, transformed into private [intellectual] property) can only be tied indirectly to the expenditure of labour by the creator, and may not bear any relation to it whatever. This expenditure is not in any case subject to measurement, even in hours; time that is spent in creative activity is not work time, but free time.

In the case of the exploitation of creative labour, therefore, surplus value is neither created nor appropriated. What happens is something else: the creation of universal (unalienated) cultural wealth by the worker-creator (and indirectly, by the whole world of culture) and the appropriation of this wealth by corporate capital, that is, by alienated material wealth personified. What capital appropriates in this process is not the unpaid work time of the creator, but his or her free time, since it is during this time that the above-mentioned wealth comes into being. This is the exploitation of the free time of the creator, and hence, as was noted earlier, of his or her vital activity (free time is precisely the time in which people live, that is, carry out their self-realisation).

The most important peculiarity in this case, however, is the duality not only of the object, but also of the content of the relationship of exploitation of creative activity. The paradox of exploitation in the sphere of (co)creativity lies in the fact that if we proceed from the laws of the creatosphere, even the creative worker himself or herself has no basis for appropriating the value-assessment of all the cultural wealth

which he or she brings into being. Under the laws of the creatosphere a cultural value in economic terms (that is, as a resource which is used exclusively by a single party, and brings income exclusively to that party) belongs not to its creator, but to the entire world of humanity and to every member of the human species. This author has already argued repeatedly that the world of the creatosphere is characterised by “the ownership by each of everything”. A cultural value is the result of a process of co-creation, performed through a cultural dialogue between a particular creator and his or her direct and indirect colleagues. In the strict sense of the word, therefore, the exploitation of creative activity is not only the exploitation of a particular creative worker, but also the exploitation by capital of the entire creatosphere, the appropriation free of charge of all the cultural values that have been de-objectified by a particular creative worker, employed by a corporation, in the process of creating a commercial innovation for this corporation. Moreover, since capital is not only the totality of individual enterprises, but also the concrete-universal aspects of capitalism, we can thus speak of the exploitation by capitalism in its totality of the human creatosphere in all its spatial and temporal wealth (getting ahead of ourselves a little, we might say: to the creatosphere must be added its alter ego, the earth’s biosphere).

This latter helps ensure the substantial differences between the exploitation of creative activity and “normal” capitalist exploitation.

Hence, in the case of appropriation by a particular capitalist (for example, Henry Ford) of the surplus value created by the reproductive work of some totality of hired labour (let us say, the workforce at an automobile plant), the quantitative aspects of the problem of ending exploitation can be resolved relatively simply – through taking away the surplus value from the capitalist involved, and handing it over to the enterprise workforce. On the national level, this problem can be solved through nationalisation (provided the state, in economic and political terms, represents the interests of the workers). Hence the socialisation (nationalisation) of the means of production has been and remains a key question of [industrial] socialism as the negation of [industrial] capitalism.

With creative activity everything is far more complex. In this case, the alternative to capitalist exploitation cannot be the transfer of ownership of the result of activity to the creator himself or herself (whether the creator is individual or collective is immaterial here), since this result is no more than the “final stage” of an unending common process of co-creation. The ending of the exploitation of (universal) creative activity can therefore only be the ending of (private) ownership of cultural values (intellectual property), and the latter can be realised only as the ending of the relations of alienation and appropriation (in their economic sense) in the world of the creatosphere, through the rejection in this world of property as a specific institution.

To reject (private) intellectual property is not, however, to reject relations of objectification and de-objectification, or the applying of the author’s name to the result of creative activity; the work of science or art that arises from the exertions of creator N. can bear whatever name its author gives it, and will still become a cultural phenomenon with which the other subjects of co-creation will thenceforth engage in dialogue. These relations are of the same character as the process through which a new star or planet, discovered by an astronomer, is named and included in a star atlas.

From this, we can draw an important conclusion: putting an end to the exploitation of (universal) creative activity and accordingly, of (private) ownership of cultural values (intellectual property) is thus an authentically communist process, a vital component of the process of transforming the “realm of necessity” into the

“realm of freedom”, and not just of capitalism into socialism. In this sense, the question is not one of socialism, even postindustrial, but of communism.

Accordingly, ending the exploitation of (universal) creative activity cannot take the form merely of socialisation within the framework of an individual enterprise or even of nationalisation. This is an authentically communist process in which a transition takes place to other “rules of the game”, for which a new social space-time of vital activity has to be created.

As such, this process is by definition open and international, and instances of it are extremely common in today’s world. For example, the question of rejecting (private) intellectual property has been placed on the agendas of international social movements and networks (the network of supporters of free programming provision, etc.); of parties (“pirates”) and of non-government organisations. Some of the most interesting of today’s international projects are being constructed on these principles – Wikinomics, anarchonomics, gift-economics, the “open access” model, social networks, and so forth.

Such are the characteristics, in terms of content, of the exploitation of universal creative activity. It is important to note that this content falls within the parameters not only of the capitalist system of productive relations (in which a qualitative characteristic of this process is the appropriation by capital of the active personal qualities of the human individual), but also in the spatial-temporal transformation of the “realm of necessity” into the “realm of freedom”. It is only here, in the category-field of studying the leap into the world of the creatosphere that lies beyond material production in the proper sense, that it becomes possible to fully and adequately define the content of the exploitation of creativity by capital.

The specific traits of the exploitation of creative activity outlined above do not, however, touch as yet on the other aspect of this dual process: the exploitation by a particular aggregation of corporate capital of a particular creative worker (whether individual or collective is again unimportant). From a qualitative point of view the existence of this exploitation is beyond question; we showed earlier the main mechanisms through which the creator and of his or her vital activity are subordinated to corporate capital. Moreover, since creative activity is never just a shared labour but also an individual one, the question arises of ending this aspect of exploitation as well. From the point of view of content, the main lines along which this question can be resolved are relatively clear: the place of capital has to be taken by a free association of creative workers (in the present text, the specific forms to be taken by this organisation will not be explored).

Examining the forms of exploitation of creative activity requires differentiating between two aspects: the forms of the relationship of exploitation by capital of the hired creative worker, and the forms of appropriation of the results of the exploitation of creative activity.

Strange as it might seem, the differences in the case of the first aspect are not particularly significant. In most cases, the creative worker employed by a corporation remains in form a hired worker, with whom an agreement is concluded and who under its terms receives a negotiated salary and (in the case of a socially “progressive” business), a social packet and certain work rights. If we look at the most typical creative workers (teachers in private schools, medical staff in private hospitals, programmers and staff of the research departments of firms), it turns out that there are differences between a hired creative worker and a “normal” worker (engaged in reproductive labour), but that as a rule these differences are not fundamental. The hired creative workers tend to be better-paid, are more often on long-term contracts,

and are subject to forms of management closer to “personnel relations” or analogous models; their labour is more autonomous, with the process less harshly determined by capital, and more attention is devoted to improving their qualifications. The list of differences is well-known, and is reiterated frequently in works on management issues in creative corporations.

Despite this, the relations of subjection of labour to capital, including even formal subjection, are undergoing significant changes in this case. In parallel with hired work, relations are developing in which the creative worker becomes a free agent in form and/or content; no longer subordinate to capital, he or she becomes a member of the so-called free professions.

The question of the form in which the results of the exploitation of creative activity are appropriated is much more complex, since here the changes are fundamental. To depict them, we need also to try to adequately reflect the quantitative side of the exploitation of creative activity.

2.3. The Exploitation of Creative Activity: Quantitative Aspects

From the quantitative point of view as well, the situation here is also fundamentally different from the one found in classical capitalism. Marx’s formula of exploitation, which is based on dividing the labour time of a hired worker into necessary labour (the time during which he or she creates value equal to the cost of his or her labour power) and surplus labour (the time taken to create the surplus value which is appropriated by capital) no longer operates here, since as was noted earlier, the universal cultural wealth that is appropriated by capital is created during the worker’s free time. What is happening here? Two different qualitative parameters are involved. One is the cost of reproduction of human creative qualities under the capitalist system. The other is the value-assessment (this is a transferred false form) of the universal cultural wealth created by the exploited creator and (NB!) by the whole preceding world of culture with which the given creative worker engaged in dialogue during the process of his or her activity.

To define this relationship more precisely in terms of its application to the conditions of capitalist production, it should be noted that from the total income from the realisation of creative wealth (Wcr), the following sums must be deducted:

The cost of compensating for the creative resources purchased by the capitalist (Ccr; unlike the elements of “normal” constant capital, their value is not transferred to the final product, since they do not have value, but only a value-assessment);

The cost of acquiring the creative qualities of the human individual (Hcr); The value that is newly created in the course of the “normal” capitalist

production that accompanies creative activity (the wages V of the “normal” workers and the surplus value M that is created by them), and the value (C) represented by the “normal” material expenditure that is transferred to the end product.

The remaining total is the value-assessment of the part of the universal cultural wealth, arising out of the labour of the creative worker and of the whole world of culture, that is appropriated by the owners of the corporation (Wmcr). It becomes the profit which capital receives from exploiting the creative worker and (once again NB!) the whole world of culture.

(This last remark is of fundamental importance. We repeat: when capital makes use of creative factors, it always exploits not just the individual worker, but also the entire world of culture. The reason, it will be recalled, lies in the fact that the creative worker who is exploited by capital receives a substantial part of the “resources” essential to his or her creativity free of charge from society. The range of

these resources is extraordinarily wide, from general theoretical knowledge to exhibits of artworks in museums to natural beauties that stimulate the worker’s creative insight. The results of this go to capital. It will be recalled also that the cost of the information purchased by capital figures among the expenses which capital incurs).

In this case, the relationship between Wmcr and the cost of reproduction of the creative worker (the remaining cultural goods were de-objectified free of charge by the creative worker and/or made up part of the capitalist outlays) will represent the measure of the exploitation by a given, specific capital not only of its creative workers, but also of the entire world of culture (Wmcr’).

As simple formulae, these relationships can be expressed as follows:

Wcr = Wmcr + Hcr + Ccr + (C + V + M)

Accordingly,

Wmcr = Wcr – (C + V + M) – Hcr – Ccr

The degree of exploitation is given by:

Wmcr’ = Wmcr/Hcr

The similarity between the designations (Wmcr and M, Wmcr’ and M’) should not, as has already been explained, conceal the differences in content between the formula for the exploitation of creative labour and the formula of Marx.

In the first place, this is the difference between surplus value as the result of “normal” capitalist production and the value-assessment of universal cultural wealth, appropriated by the owners of a corporation which makes use of creative resources (the author has not yet found a brief categorical designation for this phenomenon).

Secondly, when capital makes use of creative activity there is always a dual object of exploitation: the particular creative worker, and also the entire creatosphere.

The duality of the process of exploitation of the creatosphere and of its subject presents a problem: if the universal cultural wealth appropriated by the owners of a corporation that makes use of creative resources arises not just from the labour of a specific creator, how is it possible to arrive at a quantitative expression for the exploitation of a specific hired creative worker?

As the author showed earlier, there can only be one answer to this question: it is not possible.

A quantitative expression of this measure in terms of value-based (capitalist) parameters is impossible because the “contribution” to this wealth made by a particular creative worker and by all his or her predecessors and colleagues in co-creation cannot be expressed quantitatively. In the world of the creatosphere there cannot, as a matter of principle, be a quantitative expression of the of the relationship of the expenditure of labour of the participants in cultural dialogue, the process of co-creation. Under market forms of organisation of this process the given expression is still more impossible since the creative worker (and hence capital) use the basic goods of the creatosphere free of charge.

Meanwhile, combining the first and second consequences allows us to draw an outwardly paradoxical conclusion: if we are to examine the question of the exploitation of a creative worker solely from the quantitative point of view (that is, from the point of view of the volume of income in value terms which he or she

receives), the liberation of creative labour from subjection to capital does not change anything especially in the position of this subject. In principle, the creative worker will receive funds from society no greater than those needed for the reproduction of his or her human qualities. Since many of the goods in this case will come free of charge (education, health care, access to information), it might even be supposed that the actual value-equivalent for the creative worker might be less than under capitalism.

Here, however, there are various “nuances”. In the first place, and as already noted, an inevitable outcome of the capitalist market system is a large divergence between the price of a creative worker and the cost of reproducing his or her potential. Through the hegemony of corporate capital such divergences are “established” in such a way that the price of the workers who are most closely enmeshed with capital, and who serve its hegemony by participating in the reproduction of the false sector (workers in such areas as finance, corporate management, the media, mass culture, professional sport and so forth) greatly exceeds the cost of reproducing their human qualities. Conversely, workers in generally accessible areas of the creatosphere (teachers in state schools, social workers and so on) have a price on the market for simulacra substantially below the cost of reproducing their human qualities (in the US, for example, a schoolteacher in a Black ghetto does not get paid enough to put his or her children through Harvard).

Secondly, it is only in developed countries that capital pays creative workers at a level close to the cost of reproducing their human qualities and creative potential (and as we have seen, this is by no means always true even there). Most of the world’s rank-and-file subjects of generally accessible creative activity (activity that is crucially important from the point of view of developing the creatosphere and consequently, the universal criteria of progress) receive funds from capital that are less than they should get even according to the laws of capital. The world’s rank-and-file intelligentsia are undervalued by capital, while a circle of “professionals” is overvalued. In this way, modern global capital sets up an internal contradiction in the social stratum of hired creative workers. The former are closest in their professional role (as subjects of authentic creatosphere activity, and not of work in the false sector) to the world of the “realm of freedom”, and are undervalued by capital even according to the standards of capitalism; simply from this point of view they have an interest in ending the global hegemony of capital. The latter, who carry out the tasks of directly “creating” the hegemony of capital through their employment in the false sector (that is, the sector which supplants and disfigures the creatosphere), and whom capital overpays, are objective foes of ending this hegemony.

Thirdly, from a fundamental point of view the quantitative, value-related aspect of the exploitation of the creative hired worker must for him or her be the least important. The value of being of homo creator is objectively defined by the degree of freedom of his or her activity, and from this point of view the transforming of the conditions of creative activity and of its space and time into an object of exploitation and a function of capital (particular pains have been taken by the author to describe the “layers” of subordination to capital of the vital activity of creative workers) is the most profound basis for the antagonism between global capital and the creative human being. This basis is all the more important for the fact that capital also introduces elements of personal dependency to this relationship, subordinating to itself, as we have already said, the “divine soul” of the human individual, and turning him or her into a slave. But here, too, there are “details”. For the “professionals” who serve the hegemony of capital this slavery is sweet, since it keeps them privileged,

pampered and seemingly (here we see the world of simulacra!) equal to capital in their role. Meanwhile, we should not forget that under capitalism the position of every subject of creative activity is dual; on the one hand such people are creators yearning for freedom in their vital activity, while on the other hand they are owners of “human capital”, sellers of creative potential with an interest in getting a good price for their commodities. Subjectively, therefore, the creator may be both an opponent of the hegemony of capital, and a supporter of its retention.

This subjective contradictoriness is superimposed on the earlier-mentioned objective contradiction in the nature of the hired creative worker, forming a complex spectrum of concrete socio-political biases in a social layer usually described in a generalised way as “intelligentsia”.

Before continuing our analysis, and moving on to review specific forms of the process of appropriating the results of the exploitation of creative activity, we shall allow ourselves a small clarification. It relates to the profit obtained by a corporation that makes use of creative resources. It is readily understood that within the framework of Marxist methodology this profit can be presented as a false form (from the point of view of Marxism any profit is a false form) of the sum of surplus value and of the value-assessment of universal cultural wealth, appropriated by the owners of a corporation that employs creative resources:

Pcr = f{M + Wmcr}

Since in the overwhelming majority of cases such aggregations of corporate capital are capable of generating “fields of dependency” (they possess “market power”) and derive a certain income (Pmp) from this, while also (as a result of the process of financialisation, which draws practically all corporations into the orbit of virtual fictitious capital) deriving a certain financial profit (we shall designate this Pf), this formula takes on a somewhat more complex appearance:

Pcr = f{M + Wmcr} + Pmp + Pf.

We can now start to examine such a specific form of appropriation of the results of the exploitation of creative activity as intellectual rent.

2.4. Intellectual Rent: the Questions of Appropriation and Use

As noted earlier, the income obtained by the owner of capital who employs creative resources is analogous in form to rental income, which is adequately reflected both in practice and in economic theory [Zizek, 2009]. Both supporters of neoclassicism and many Marxists in recent decades have stressed especially that this income is intellectual rent, defined in superficial fashion as income obtained from ownership of a product that arises out of creative (in present-day market terminology, intellectual) activity. The neo-classicists, in line with their methodology, do not for the most part pose questions about the nature of this rent, but about its quantitative determination. The Marxists referred to are limited by a way of posing the nature of this new form of capitalist exploitation which is correct, but inadequate in its content. Meanwhile, the key question is not of the form, but of the nature of the relations which lie concealed behind the form of intellectual rent. As will be shown later, behind this form lies a relationship that sharply differentiates this form from, say, that of natural rent.

Let us begin, however, with the resemblance in terms of form. The defining as rents of income from rights of ownership over creative resources is not accidental. Here, a veiled analogy is drawn with any other general resource – land, oil, gas – which is held as private property. A resource in itself is a social good, and hence if this resource (land, oil) acquires the form of private property, the income from its use is qualified not only by Marxism but also by mainstream economic theory and (what is especially important) by economic practice not as profit but as rent.

Acknowledged here, in somewhat obscure form, is the fact that by its nature a cultural value (“intellectual product”) is a social and not a private good. If this social good is turned into private property, what this allows its owner to obtain is not profit but rent. Usually, this rent is described as intellectual, and subsequently, as a rule, this term will be used here. More correct, however, would be to call it cultural or creatosphere rent.

It is amusing to note that in this case the positive view of this phenomenon is all but precisely true: from the Marxist point of view as well, the income we are concerned with has to be categorised as rent in terms of its form. Universal cultural wealth only becomes a source of monetary income to the degree to which it acquires the form of (private) property. The income in this case has to take on the form of rent, just as occurs with land in the case of absolute rent, a phenomenon which Marx describes correctly in Capital. Just as absolute rent is no more than an obstacle inherited from the past (feudal landholding) which impedes the development of capitalism in agriculture, an aggregate of artificial barriers to the development of production and an additional burden on the consumer of the production involved, intellectual rent is an artificial hindrance to the development of activity in the creatosphere. In this particular text, however, this thesis will not be demonstrated or even developed.

Outwardly, intellectual and “normal” (for example, natural) rents appear similar; the transforming of a social good (a cultural phenomenon or a natural resource) into an object of private property and market (capitalist) use is a precondition for the forming and appropriating of rental income. But the sources of this rental income are different.

In its essence, intellectual rent is the product of activity (universal creative labour), which gives rise to wealth whose appropriation yields rent. It has as its basis a value-assessment of the labour that created the cultural value. Natural rent does not possess this basis. Natural wealth is not created by human labour (in this case we are leaving out of account the costs of geological exploration and so forth – they are part of capitalist expenses and are not related to rental income). Hence natural rent by virtue of its source has a false social value, which presupposes the redistribution of abstract social labour.

One more important remark: under the conditions of the market economy intellectual rent is the source not only for recouping the costs of acquiring the paid creative resources and (super)profits obtained by a creative corporation, but also the source of the income received by the creator employed by this corporation as a hired worker. It does not, however, follow from this that the worker-creator is a parasite on society, analogous to the recipient of feudal rent. To the contrary, he or she is a creator of social wealth which in its useful effect exceeds many times over what society spends on creating the conditions for his or her reproduction. At the core of the problem here is not the practical relationship, but how the income obtained by the creator is categorised theoretically under the conditions of capitalism. The socio-economic form of the latter is also responsible for creating all the inversions

associated with the rental nature of the income of the “intellectual”. Outside the market and capital, the problem is resolved quite differently: society determines the incomes of the subjects of creative activity just as, for example, occurs in a public university, in a school, or in a temporary creative collective which has received a public grant. But again, this is not the topic of the present text.

Returning to the question of how the exploitation of creative activity is to be expressed in quantitative terms, and introducing the parameter of intellectual rent to the formulae adduced earlier (we shall call this new parameter Rcr, since as noted earlier, the rent involved is more properly described as cultural or as belonging to the creatosphere), we can set forward the earlier-defined positions using the simple formula:

Rcr = Wmcr + Hcr + Ccr

or: Wmcr = Rcr – Hcr – Ccr

The formula for the gross income of a corporation, expressed using the factor of intellectual rent, takes the form:

Wcr = Rcr + (C + V + M)

At first glance, the conclusion that intellectual rent is the source of the wages paid to the creative worker (we stress – not paid for the labour of the creative worker, but for his or her potential) casts a certain doubt on the conclusion, drawn by our predecessors and reaffirmed here, concerning the parasitic nature of intellectual rent. This, however, is merely at first glance. The essence of the matter is that the very relationship which lends the form of cost to social wealth (which does not have a cost at all), and which transfers this wealth not to each member of society who is capable of de-objectifying it (“ownership by each of everything”), but to certain private owners, is parasitic. The fact that these private owners include the direct creator of this wealth does not change this essence; under the laws of the creatosphere the creator does not work for the sake of reward, but receives from society or its representatives (a creative association, the state, an NGO) free benefits and a socially guaranteed income that ensures the reproduction of his or her human qualities.

This coin, however, also has another side.The appropriation free of charge by market agents and above all, by creative

corporations of part of the goods of the world of culture (the results of the preceding development of science and culture, the fruits of generally accessible education and fundamental science) poses the problem of the demarcation and interaction of the two worlds – the free and generally accessible world of culture, and the world of the market, paid for and restricted by private property – as a fundamental theoretical and practical question of the period of transformation of the “realm of necessity” into the “realm of freedom”, of “late” capitalism into “early” communism.

In this text, we shall limit ourselves merely to posing this problem. For “mainstream” economic science there is no problem here at all; free goods

are created using the money of market agents (corporations, hired workers) who pay taxes and make sacrifices, and these goods are appropriated free of charge on the basis of general availability or of government norms. Private goods are created by

market agents and are appropriated by them on a paid basis. The different nature of the goods, restricted or unrestricted, is conditioned by the different modes of their appropriation.

For a Marxist, as we set out to show earlier, this situation conceals the fundamental question of the exploitation by capital of the world of the creatosphere – the appropriation by capital, either free of charge or partially paid for, of the cultural values (“creative resources”) of humanity.

The existence of this exploitation also allows us to pose a hypothesis concerning the transitional forms of its partial ending – a sort of “acculturation” of capitalism. If we proceed from the fact that (1) capital in its commercial activity appropriates without payment the social goods of the creatosphere, as a way of increasing profits (using a portrait of Mozart on a box of sweets, for example, might allow more sweets to be sold for a higher price than if the box carried some more usual picture), and that (2) this additional income is a particular form of rent (in this case, we shall call it cultural), then the conclusion follows logically: this rent, like any other, should be taken from the capitalist and given to the owner. Since the owner of culture is everyone (this is demonstrated within the framework of the Marxist paradigm), then rent from the use of cultural phenomena by capital should be used for the development of the area in which every phenomenon belongs to every subject, that is, the creatosphere. To simplify, business should pay no less for using a portrait of Mozart in an advertisement than for using a photograph of a model, and the money which the firm makes from using the public goods of culture should go into international funds for the development of the creatosphere.

This suggestion violates a fundamental principle of market economics: public goods, since they are public, are available equally free of charge to everyone. Here, we suggest “excommunicating” the commercial sector from what people create free of charge. An analogy in this case might be with museums, libraries, internet sites and so forth that are free only to certain categories of citizens (let us say, cultural workers). The same is proposed in the given case, only the principle behind the discrimination becomes that of where, and for what purpose, the cultural phenomenon is employed. If it is for the production of objects of private property, then the goods of the creatosphere should be paid for. If it is for the production of generally accessible objects, then the goods should be free. Certain cultural phenomena might be banned altogether from commercial use.

How this might be done technically, how much business entrepreneurs should pay and to whom, how the cultural goods that are to be paid for should be demarcated from those available for use free of charge (as, for example, language or the rules of arithmetic) is a task for a subsequent theoretical and practical excursion, which could be no less lengthy and complex than the one separating the hypotheses of Tsiolkovsky from the first sputnik and the space flight of Gagarin. As the first steps one might suggest the creation of international expert commissions charged with “patenting” public cultural goods, with determining the parameters for the commercial use of artworks, and so forth. These parameters might range from prohibition to the payment of rents into international funds for the support of the arts, on the basis of a model such as the ban on the use for commercial showings of video recordings sold for viewing by private citizens. A mechanism of control (remember, this would extend only to commercial firms) might also be organised by analogy with the controls on the use of patented intellectual products. These forms would be imperfect, like any palliative measures aimed at shaping transitional relations while remaining within the bounds of the capitalist system and the “realm of necessity”.

Digressing briefly, we should note that similar decisions are possible in the area of “ecologising” capitalism, using natural rents for the benefit of all humanity.

As global environmental problems become more acute, nature (and particularly, land) is being transformed into a universal cultural value, a “social good”. This suggests that it should be generally accessible, as an element of the creatosphere subject to de-objectification. In this respect, private property can only act as a mutant form, of its very nature impeding the use of the natural world as a cultural phenomenon – a value open and available to everyone.

Here, it is particularly appropriate to note: since the natural resources of planet Earth were created by the natural development of the biosphere, then we may regard the thesis of the universal ownership by humanity of natural resources as proven (here, we are discounting for a time the factor of human activity, which has increased – as in the case, say, of agricultural land in developed countries – or lowered the productivity of these resources). We stress: it is not particular firms, states or even international organisations that are the owners, but humanity. How and to whom humanity entrusts the realisation of its general interests here is a secondary matter, though a very important one.

The fact that ownership of natural resources is universal means that rent from the use of all these resources (or more precisely, those put to commercial use) should be appropriated by humanity for the purpose of solving global problems: ensuring that all citizens in every country have a socially guaranteed minimum living standard, while global environmental, social, humanitarian and other programs are implemented. Here, it should be stressed, none of the principles of capitalism is violated. Humanity, as the owner of the Earth (the biosphere), receives the product which the Earth has “created” (for the moment, we are staying within the framework of the theory of the factors of production) – that is, rent.

Let us return, however, to the question of intellectual rent, and completing this analysis, examine the question of exploitation in the world of the creatosphere under circumstances in which the (private) owner of a cultural value (this is not the case with creative “dispersed manufacturing”) is the creator himself or herself. Here, it turns out, the question of the exploitation of the world of the creatosphere can also be applied to the subject involved. While we cannot in this case speak of the exploitation of the creative worker by a third person, the creatosphere is exploited by the creative worker as a private owner. In appropriating the value-assessment of the cultural value which he or she creates in collaboration with the whole world of the creatosphere, the creator-owner acts as an exploiter of humanity. If (private) intellectual property is renounced, that is, if all the components of the creatosphere are socialised (turned into a free, generally available public resource), the creator-owner stands to lose the significant part of his or her wealth that has the form of value. In this case, no-one takes away his or her cultural wealth; what is taken away, as from all others, is the right to transform this cultural wealth into money. It is intellectual rent that is expropriated.

We thus arrive at a theoretical derivation of something familiar in empirical terms: the duality of the creator-owner in the capitalist world. This duality is different both from the internal contradiction in the position of the hired creative worker, and from the position of the “normal” petty bourgeois. Since we have already had a good deal to say about the hired creative worker, we shall comment briefly on a second instance. At a minimum, the independently working creator differs from the subject of reproductive activity who is the owner both of his or her means of production and of the products of his or her labour (a “normal” petty bourgeois, for example a farmer) in

that the creator appropriates free of charge publicly-available cultural goods, and receives as income money that does not represent new value which he or she has created, but a value-assessment of the universal wealth which he or she (along with − NB! – his or her co-authors in open dialogue and co-creation) has brought into being. Under conditions of the hegemony of private property relations over “intellectual” products, this value-assessment takes on the form of rent. Unlike the “normal” petty bourgeois, the independently working creator is also a subject of the exploitation of the world of culture, and of every one of us.

Essay III.Russia’s “Jurassic Capitalism” (Deformations of Market and Property relations in Post-Soviet

Russia)

To all appearances, the Russian economic system in the past decade has had a market character. Many economists, especially those close to prime ministerial and presidential circles, are no longer mindful of the transformational character of the social and economic processes under way. The incomplete nature of the transformations, and the particular character of the system which is coming into being, are not especially popular themes for critical-minded economists either; these economists prefer to speak of the inadequacy of the neoliberal model of the market and of capitalism to the national and cultural peculiarities of Russian civilisation [Kul’kov, 2009; Osipov, 2005]. Western writers as a rule emphasise the uniqueness of Russian capitalism18, but again link this to the nature of the “Russian bear”, only this time with a minus instead of a plus: the unfree market is said to serve Russian civilisation poorly, while Russia is said to lack the main attributes for a civilised existence, the most important requirement for which is supposedly the market. The only exceptions here are a few works, of which the book by David Kotz and Fred Weir is especially notable [Kotz D. and Weir F., 2007].

The authors of the present text, meanwhile, aim to show that from a theoretical point of view Russia’s economic system over the past decade has had a highly individual character. This character is defined by (1) the retention and aggravation of many negative features of the Soviet economic model, features multiplied by (2) the impacts of the 1990s “shock therapy” model of economic transformation, historically regressive and inadequate to post-Soviet conditions, and (3) consolidated by a particular type of reproduction based on raw materials dependency and the economic and political power of oligarchic groups integrated with an authoritarian state. In many ways, this situation was the result of a sort of negative convergence19 which saw the worst features of the bureaucratically planned and liberal-market economies combined in the economy of post-Soviet Russia. Overall, this system can be seen as a mutation of the present-day model of late capitalism20, or in figurative terms, as a caricature of this system, in which many of its problems and contradictions are grotesquely hypertrophied.

Since the turn of the century Russia has seen the gradual stabilisation of a highly individual social system that might for brevity be described as “Jurassic

18 A name that has come to be applied to this peculiarity is “Kremlin capitalism” (see, for example, an article by Marshall I. Goldwin in the Moscow Times, 22 September 2006).19 The term “negative convergence” appeared in the 1970s when Robert Heilbroner, Herbert Marcuse, Jürgen Habermas and others put the view that the interaction and struggle between two world-systems leads to a situation in which they mainly finish up borrowing not the best of one another’s features (as the well-known Soviet dissident Andrey Sakharov hoped), but the worst. In post-Soviet Russia these ideas have been further developed by Oleg Smolin [Smolin, 2001].20 In using the term “late capitalism” we rest on works by Ernest Mandel and Fredric Jameson [Mandel, 1972; Jameson, 2000].The authors of the present article have devoted numerous texts to the question of the Russian model as a mutation of late capitalism, including sections of our works [Buzgalin and Kolganov, 2004, 2009].

capitalism” – a system in which the main seat of political and economic power, as explained earlier, is clan-corporate groupings which combine remnants of the Soviet administrative-command system; elements resembling feudal rule; and features of the late-capitalist corporation. These clan-corporate groupings, like the dinosaurs of the Jurassic period, are increasingly subjugating all other inhabitants of this “park”.

What is the social and economic anatomy of this system? In addressing this question, we put our stress on Marxist research methodology, and in particular on the method applied by Karl Marx in Capital and developed by Soviet political economists [Dzarasov, 2004], as well as by the authors of these lines in the more recent period21.

In the present brief text, which amounts to a revised synopsis of the joint research we have presented in a series of publications over the last few decades, we dwell only on three aspects: the peculiarities of the mode of coordination (the market and its regulation); the nature of the relations between property and power in the context of clan-corporate groups integrated with the state; and the causes that underlie the extensive type of macroeconomic dynamic present in Russia. We set out to show that in each case Russia displays not just the specific characteristics, but also a caricature or parody, of many dangerous trends in the neoliberal model of the global economy.

We do this while noting that the methodology of this work will be unfamiliar to readers who are used to a neoclassical, mathematical depiction of these functional dependencies, based on statistical data. In our case the role of the “microscope”, allowing us to examine things that are invisible to writers who are not armed with a scientific methodology, is played by scholarly generalisations that rest on an extensive range of works on the Russian economy by the authors and their colleagues who have devoted several decades to constructive criticism of the Jurassic Period of Russian capitalism22.

3.1. The Russian market. Those who win are not the best runners, but the best sack-racers.

Once the system of coordination based mainly on bureaucratic planning had been destroyed in Russia, it was replaced with a complex set of coordinating measures aimed at ensuring the distribution or allocation of resources and the maintaining of proportionality.

The powerful inertia of the past led in the first place to the retention of certain elements of bureaucratic planning. The result was a curious transitional variant of state regulation in a capitalist setting, with the heterogeneous elements making up the transitional relations also deformed in character..

The tendencies to parochialism and inter-departmental jealousy that had characterised the USSR spawned a powerful separatism, that gave rise to a polycentric system of local bureaucratic regulation. The bureaucratic nature of this regulation led to its becoming self-contained, to the point where an almost complete rift existed between the regulatory subsystems (bureaucratic grouplets of diverse origin, feuding with one another) and the survival interests of the economic system as

21 One of the sections of our above-mentioned work Predely kapitala attempts to substantiate this thesis.22 See in particular [Glazyev, 2010; Grinberg, 2006; Dzarasov, 2005; Ryazanov, 2009; Yaremenko, 2001].

a whole. Influence-trading and planning deals developed into comprehensive corruption, making broad use of the mechanisms of direct and indirect coercion.

Secondly, pre-market forms of coordination began developing vigorously (we shall return later to their characteristics).

Thirdly, the market arose from the outset as a system fundamentally subject to non-market or only semi-market forms, like the market within feudal society. The market in Russia thus exists in deformed shape; relations with the state and criminal gangs are more important for producers than the general conjuncture.

The main results of this “salad” are to be seen in deformations of the various types of market relations, from the primitive and semi-feudal to the most modern. Dominating the picture, meanwhile, are undeveloped, deformed variants of the late market. Each of these variants is characterised by powerful monopolies, state regulation, the intensive impact of the global hegemony of capital, and so forth.

Because of this situation, one of the most important elements in the area of coordination (allocation of resources) within the transformational economy is an unusually large role played by the mechanisms of corporate-monopolistic regulation (these mechanisms are also deformed by comparison with their classic manifestations in the countries of developed capitalism). It is in fact monopolism, resting on the strength of the corporate-bureaucratic groups, that now holds sway in Russia and the other post-Soviet countries, and not the abstract-mythical “economic freedom” that has supposedly replaced bureaucratic planning.

In transformational societies, the freedom available to owners of commodities is more or less illusory. The actions of such people are dictated by nomenklatura corporations no less than they were by bureaucratic planning in the past, though now as in the past this dictation varies substantially (earlier, for example, we saw the difference between the “weak” planning in Hungary from the late 1960s and the “strong” planning in the USSR in the 1950s; now, the distinction is between the “weak” authority of the monopolies in retail trade and the “strong” authority seen in such “factory cities” as Magnitogorsk or Cherepovets).

This mechanism of local corporate regulation is well known in economic theory. In neoclassical economics it is described as “market power”. In the classical institutionalism of Galbraith it is “the planning system” which corporations form around themselves, creating a diffuse space in which they influence consumers and suppliers through advertising and a host of other channels [Galbraith, 1967]. In neo-institutionalism it is known as unequal “bargaining power”23. To Marxists it is local, partially polycentric regulation of the economy by large corporations. These positions were developed by Friedrich Engels in his later works, by Lenin in his writings, and in the 1960s, in the works of critical-minded Soviet scholars who introduced the concept of “incomplete, monopolistic planning” [Tsagolov, 1973]. In the USSR, where such local regulation also took place alongside central planning, this phenomenon was termed “vegetative control”, by analogy with the distinction between the central and vegetative nervous systems in the human body [Kornai, 1980]. In the early days of the reforms writers stressed the role of these mechanisms, showing how they differed qualitatively both from economic planning and regulation, and also from market self-regulation. It will be recalled that in this case, particular

23 Perhaps the best analysis of market power known to the authors, and even the best analysis of the market as a mechanism for the reproduction of power in Russia, is based on neo-institutional theory and is to be found in the works of A.N. Oleynik [Oleinik, 2008, 2011].

institutions within economic systems for certain reasons (such as high concentrations of production and/or capital, corporate power and so on), acquire the ability to consciously influence (though on a limited and local scale) the production parameters of suppliers and consumers (volume, quality and structure); of the market (the production prices of contracted firms, and the expansion of sales through marketing); of social life, and so forth.

The mechanism of local corporate regulation differs from economic planning in its subjects, objects, aims and content. With economic planning, the subject is the state as the representative of society, as opposed to the corporation in isolation; the object is the national economy, not merely a part (locus) of the market or production. The aims are to serve all-national as opposed to corporate interests, and so forth. But regulation by large corporations also differs in terms of its content from the market mechanism of self-regulation.

Moreover, this mechanism is also distinct from the familiar model of oligopolistic competition, since in the first place it includes the possibility of consciously influencing not only the price, but also a multitude of other parameters of the contracted agents that fall within the “field of dependency” created by a corporation. This field, like a magnetic field, acts on the content, structure, and volume of the requirements of those who consume the products of a particular corporation; on the technologies employed by the corporation’s suppliers (and again, by its customers); on the production programs of those who cooperate with the corporation; on the strategies of development of formations that come under its influence; on the dynamics, volumes and structures of purchases and sales, and so forth. Market prices in this case, it follows, are far from being the sole parameter, and are not the main one.

Secondly, the corporation obtains the potential (“power”) to exert this regulating influence not just as a result of the monopolisation of a particular sector of the market. Under modern conditions roles almost as great are played by financial control, by control over information flows, by integration with the state apparatus on various levels, and by personal ties with key proprietors, top managers and insiders (often the same individuals).

Under the conditions of developed market economies these phenomena are not especially apparent. They are known, and are examined in particular works (not as a rule economic ones), but do not obviously play an important role. Nevertheless, can there be any readers of this article who have never refreshed themselves with a weak solution of orthophosphoric acid and burnt sugar, not even realising that they are marionettes of the corporation that impresses on them the idea that everything will go better if they drink that underwear-dissolving liquid, Coca-Cola....

In Russia, amid our “Jurassic capitalism”, the fields of dependency created by our corporate monsters are brutally visible. Within the Russian economy a mechanism of local, polycentric corporate regulation has arisen, and it is this that forms the main parameter determining the allocation of resources. Here, decisions by the largest corporate structures dictate needs (demand) and the structure of production, not the other way round as posited by the free-market model. The result in post-Soviet Russia is that the demand-limited (market) economy is transformed into a corporate-determined one.

If we compare market competition to a race, and the competition between the Russian dinosaurs to a sack race (there are such comic events in our country), then victory in the latter case goes not to the one who is the best runner, but to the one who runs best in a sack. So too with the allocation of resources in Russia; the winners here

are not the corporations whose goods have the best relationship of price and quality, but the ones that are better able to manipulate consumers and to exploit raw materials and other state resources on advantageous terms, while possessing better mechanisms of financial control, access to inside information, power to bribe managers, (16) and other such levers and attributes for taking part in the “sack race” of the Russian market.

To continue: the local corporate regulation that is present in any late-capitalist economy is not only more widespread in Russia, but is also developing primarily (though not exclusively) in deformed shape. The main deformities are as follows.

In the first place, the subject of local regulation is not as a rule personified capital that has reached a certain level of development, but a fragment or fragments of a former state pyramid (hence the dominance in Russia of raw materials corporations and others that have grown up on the basis of the “giants of socialist industry”).

Secondly, and as a consequence, the main power of these corporations consists less in their massive concentrations of capital (even though this capital is being accumulated extremely vigorously) than in their access to various resources that range from closeness to the state feed-trough to the monopoly use of natural riches. Hence the association between this mechanism and what Western economists term “rent-seeking”. The influence possessed by large Russian firms can thus be defined as a contradictory union of corporate capitalist control and vegetative regulation surviving from the “economy of shortages”, though the shortages now are increasingly of state resources of credit and finance.

Thirdly, as a result of this content and under the impact of other methods of coordination, and also because of the generally diffuse atmosphere surrounding the institutions involved, the methods of local corporate-bureaucratic regulation amount to a deformation of “civilised” corporate action. These methods involve the widespread exploitation both of pre-bourgeois mechanisms (from extra-economic subjugation right up to the direct use of violence by organised criminal gangs) and also of mechanisms based on integration with highly bureaucratised state regulation.

The various manifestations of the dominant role played in the Russian economy by this mechanism are well known. To the degree to which the mechanism operates, for example, the economy “resists” radical market reforms; either these are sabotaged, or the reformers are “removed”. In Russia, therefore, finances, the system of proportions, the dynamic of prices (the “scissors” effect, in which the prices received for agricultural produce fall increasingly short of the costs of the inputs needed for its production; of labour power; and of consumer goods), and so forth fall under the definitive sway of pseudo-state and pseudo-private corporations.

This is not just an oligopolistic market. It is a market regulated to a definitive degree by non-market rivalry between distinct corporate-bureaucratic structures – “dinosaurs” of capitalism, so to speak, beneath whose feet all other citizens wander about and on whom these monsters pitilessly trample, even while the “dinosaurs” themselves, it is true, are in a state close to extinction. It is the colliding of the power of these “dinosaurs” and of their regulating influences, not the effect of a unified centre (as in the past) or of the “invisible hand of the market” (which in a transformational economy is clearly not present) that determines the real system of coordination in a transformational economy of the crisis type.

As a result, the genesis of the market is also being accompanied by the development, unexpected for an industrial economy in the early twenty-first century, of pre-bourgeois modes of coordination. These include the already-described rent-seeking mechanisms; various forms of violence, from the purely criminal (protection

rackets and so on) to the legally sanctioned (the wars in Chechnya and elsewhere); ever more widely developed forms of vassalage (in the “shadow” economy) and patronage (in the spirit of late feudalism with its hierarchy of centralised authority and with the market developing in its pores); and also trends in the direction of the natural economy. These latter trends are evident, for example, in the low level of commodity production in agriculture and the large role played by production on personal allotments (dachas); in the development of substitute production within large enterprises; in limits placed on the export of production beyond the boundaries of particular regions, and so forth.

The development of pre-bourgeois forms of coordination arises above all from factors linked to the inversion of socio-economic time and to transformational instability. These factors include the persistence and even revitalisation of natural-economy ties that previously were “suppressed” by central planning, and which the modern market now does not accommodate to the required degree. A second factor consists in the fact that while the shock reforms destroyed plan-based ties, they were incapable of creating market ones. To fill the vacuum of modern forms of coordination that resulted, antediluvian ones were dragged in; in place of the deficit of goods, a sort of “deficit of the market” appeared. Thirdly, the deformed market as it has arisen is itself reproducing pre-bourgeois modes of coordination. The latter will consequently be stronger on the whole than the inertial force remaining from the crisis development of earlier tendencies, and efforts to implement new neoliberal reforms will intensify the newly-emerged deformations of the market.

A relationship that is traditional for “mainstream” economic theory has thus been reversed, and this reversal, confirmed by twenty years of development of the Russian economy, now has the force of a natural law: the more actively the state seeks to implant “free competition” and tries to enact antimonopoly regulation, the greater the development in Russia of (1) relations of local corporate regulation, and also pre-bourgeois forms; (2) extra-economic coercion (rent-seeking and associated corruption, crime and so forth); and (3) the threat of new waves of “naturalisation” and barter trade within the economy.

As a result of this, the transformation of the Russian economy cannot be characterised in simple terms as a process of transition to the market. Under certain circumstances maintaining development at the present stage of transformation can bring about a situation in which neither the market nor the plan, but corporate regulation (reinforced by the inertia of centralised bureaucratic regulation and pre-bourgeois modes of coordination) will remain as the key determinant of the mode of coordination (allocation of resources).

3.2. The Owners of Russia: the Anatomy of the “Dinosaurs”

3.2.1. Property Relations and Rights: the Peculiarities of Russia

Academic writings on the Russian economy state repeatedly that it is characterised by processes of constant qualitative change in the form, rights and institutions of property ownership, and by redivision of property holdings. All this is said to occur within a general setting of weakness and contradictoriness of the institutional system (diffusion of institutions). Accordingly, property rights in our society are weakly specified compared with the situation under such stable systems as late capitalism and “real socialism”.

When property rights are not extensively spelt out, or in extremely contradictory fashion, the transactional costs stemming from these causes can be so great as to hold back growth or even bring about a fall in output (if other circumstances are equal, such a decline will be more severe the more weakly property rights are specified).

It is extremely difficult to calculate statistics for the scale of the transactional costs that result from weakly specified property rights in particular countries and under particular conditions. But it is simple enough to suggest that these costs will be high under a system in which every business entrepreneur (as for example in Russia) has to maintain powerful formations of security guards (they are often racketeers), and in which the overall number of these exceeds the numbers of police. These costs will also be high under a system where no-one pays any attention to the Constitution in everyday life, and where many of the guarantees set out in it have long since become empty verbiage, while laws (for example, the budget) are systematically violated by everyone beginning with presidents and prime ministers. Under such a system, indeed, transactional costs cannot fail to be comparable with those of production. Moreover, practice tells us that in Russia any relatively large transaction, from a few tens of millions to hundreds of millions of dollars, becomes a problem due to appeals if not to the minister then to the governor, and is not without mortal risk for its participants.

The instability of institutions and the resulting low level of confidence; the weak and constantly changing specification of property rights; and the way these processes are conditioned by qualitative transformational shifts allow us to suggest a robust correspondence between the depth of the transformation and the size of the transformational costs: the latter are higher, the more profound the changes. This relationship, moreover, is intensified by the crisis, whenever and wherever it might strike, of transformational economies.

A distinguishing feature of the Russian economy is the constant redistribution of property and property rights beneath the decisive influence of local corporate regulation (the “competition” of corporations) and of non-economic factors (the struggle of groupings within state structures, corruption, and so forth).

As a consequence, the forms of property that are set down juridically in transitional societies are inadequate to their real economic content, to the degree to which the above-noted processes take place.

Significant numbers of enterprises (joint stock companies) that are formally considered to have been privatised are in fact mixed property, either because the state has an important shareholding, or because a significant portion of the share capital is in the hands of enterprise workers.

In practice, large packets of shares in the hands of the state are rarely used as a tool for real state control over enterprise activity. More often, state intervention takes the form of intervention by particular functionaries or groups of them in pursuit of personal interests, trying to gain advantage from the taking of specific decisions – for example, on the sale of state shareholdings.

At the same time, the advent of new external owners has been accompanied by their establishing of closer relations with top managers, which has allowed the latter to increase the proportion of shares they hold (or else the managers have strenuously bought up shares in a struggle with outside claimants to property). It should also be noted that among shareholders, the proportion, who are not outside institutional investors but actual physical outsiders (15-20%) has increased noticeably, although real control is concentrated in the hands of insiders [Dzarasov and Novozhenov,

2005]. This reflects the peculiarities of Russia’s clan-corporate system, in which nominal owners, in relations of personal partnership with the real owners, are widely used to control property.

The real content of practically all forms of property in Russia’s transformational economy is the corporate-capitalist alienation of workers from the means of production. The actual owners (institutions that concentrate in their hands a large proportion of the property rights, above all the rights to appropriate it and to direct its functioning) of the transformational economy are nomenklatura-capitalist (clan-capitalist) corporate groups (more detail on this later).

These structures represent deformations of late corporate capital, since capitalist relations here are altered by other, more archaic relations. Within corporate groups old and new economic systems (of production, trade, financing and so forth) are transformed. These groups (1) presuppose the use not only of economic (capitalist), but also of extra-economic (bureaucratic and so forth) coercion against labour, and the presence of relations of pre-bourgeois (mafia-feudal) structurisation and subordination. As a rule, they arise (2) on the basis either of a transformation of the political and economic power of the “nomenklatura” into property rights, or through the legalisation of the “shadow” sector, and retain the features of these forebears. They are organised (3) as closed bureaucratic clan-corporate structures (the “command economy” in miniature).

Attempts are often made to reduce the above-described processes of the transformation of property relations to the exclusive formula of “the development of private property”, while also propagandising the recurrent myth that the former state property was distributed free of charge among the population and the workers in the enterprises. If this conclusion can be drawn, it is on the sole condition that an analysis of the real distribution of property rights is rejected, and that an appeal is made only to a few legislative acts and to analysis of the forms and not the content of the property relations. In many cases, the practice of referring only to analyses of the form of property has also underlain calls for privatisation to be accelerated. Authors who analyse the transformational economy more diligently have rejected this approach.

It follows that the underlying process at work in the Russian economy is a dual one through which the relations of property are being transformed. This process has involved the disintegration of the state-bureaucratic system of property relations and its liquidation through extra-economic means; the legalisation of criminal property; and the spontaneous growth of private property on the basis of the primary accumulation of capital. There is also a parallel transformation of this formally private or mixed property into nomenklatura (clan)-private property. The first tendency was dominant during the 1990s, while the second has characterised the years since. The latter tendency is giving rise to extremely barbaric, reactionary forms of alienation of workers from objects of property, from labour, and from its product, while obstructing the use of workers’ proprietary motivation. The effect is to counteract the development both of the socialisation of property, and the development of the petty private property of working people.

We may conclude that the Russian economy is characterised by a process through which the principles and features of the totalitarian-statised property of the past are being integrated with various deformations of the tendency to the corporatisation of property that is inherent to late capitalism, and also by the recreation of pre-bourgeois forms of coercion and dependency. To one degree or

another these processes are characteristic of all transformational economies, but in Russia they have become obviously dominant.

An alternative to the existing path of transformation of state-bureaucratic property would involve creating the kind of system for distributing property rights, and the kind of property owners, that would aid in setting transformational economies on a trajectory of “outstripping development”. This would require liberating the innovative potential of the majority of qualified workers in the areas of high technology, science, education and other sectors that define the economy of the twenty-first century. But such a course is impossible unless workers benefit from a substantial redistribution to their advantage of property rights, and above all, of rights to participate in management, control and other creative functions. Positive outcomes here also require the use of natural and cultural resources as universally accessible national assets. Unfortunately, the now-dominant models of transformation redistribute property rights to the advantage of the earlier-mentioned structures which are least of all interested in stimulating the development of workers’ creative potential.

3.2.2. Clan-Corporate Groups: Their Structure and Channels of Power

As was shown earlier, the decisive power in the Russian economy lies with large nomenklatura (clan)-corporate groups. In the overall volume of Russian industrial production in the decade from the year 2000, the 100 largest Russian companies accounted for approximately 60 per cent, and in the crucial sectors of raw materials and finance their dominance was absolute.

Once shares in state enterprises had been privatised, struggles continued for the redistribution of control over the privatised property. The legal cover devised for these struggles often concealed methods that were less than fully lawful, or completely criminal. Additional share issues were made, with minority shareholders excluded from participating. Debt levels were increased artificially, to be followed by the transfer of debts. Companies were subjected to fake reorganisation, and shareholder registers were manipulated so as to banish “undesirables” from taking part in decision-making. Bankruptcy procedures were exploited; firms were either driven to bankruptcy in collusion with their management, or bankruptcy procedures were initiated over insignificant debts as a way of bringing in managers subject to outside control.

Taking advantage of the shortcomings of the legal system, contending groups used contradictory judicial rulings to create what amounted to dual power within enterprises. There would be two general meetings, two boards of directors, two general directors, dual registers of shareholders – right up to alternative issues of additional shares. Often, these conflicts would be settled through the armed seizure of enterprises.

The process of redistributing shareholder capital has been accompanied by a trend toward the consolidation of property ownership.

The ownership structure of many large corporations has an extremely opaque character. The controlling group usually consists of a few partners who make up a clan, tightly bound together by its members’ personal relations. Controlling rights are skilfully dispersed among affiliated entities (including offshore firms, nominal owners, private individuals, and so forth) that act as minority shareholders. Often, a whole chain of offshore firms is constructed, in such a way that the real owners do not

figure in any register of shareholders. The hired directors run the enterprise on orders delivered by the real owners on a personal, “confidential” basis.

Meanwhile, the state does not always monitor even large operations involving shareholder property. Even antimonopoly organs charged with examining such deals do not always have the relevant information.

The control exercised by clan groups over corporations rests on monopolisation in the first instance of financial flows and information. In this regard, both major owners and top managers of a corporation will resort on a large scale to actions that harm the development of their own firm. Such actions might include setting out to control only the financial flows and export operations of a company, with complete disregard for the development of its productive base. An enterprise might be divided up without justification, in order to isolate its most profitable assets or the ones critical to its existence. Other actions might include selling off or leasing assets to the company’s detriment; deliberately concluding disadvantageous contracts with affiliated companies; refusing to carry out strategic tasks; using share packets solely for speculation; using a controlling packet of shares as security for credit, and so forth.

Of course, all these methods are employed without the consent of the minority shareholders, who also are completely excluded from participating in the dividing-up of the corporation’s profits. To escape control both from minority shareholders and from the state, monopolising the appropriation of profits and paying neither dividends nor taxes, the clans that control large corporations make a practice of moving income and large parts of the company’s general liquid resources abroad. Profits are reinvested outside Russia’s borders (in the guise of foreign credits − it is no accident that one of the largest foreign investors in Russia is Cyprus), and as a rule the management of most of a corporation’s financial flows is organised from abroad. Meanwhile, corresponding “transparent” accountancy documents, fully in line with national or international standards (for the placing of securities abroad, for instance) are issued simultaneously, classic examples of double-entry bookkeeping. Needless to say, no amnesty for exported capital can now change the established order.

This situation, which also exists in the largest state corporations, would be impossible to sustain in the long run without the close integration of the interests of big business with those of the state functionaries whose job it is to monitor the areas concerned. In practice, significant numbers of the officials in the relevant state bodies are supported by big capital. There is also an intensive rotation of personnel between big business and the civil service, broadly affecting even members of the government. A peculiarity of Russia is the fact that for business in our country corruption is not simply a matter of renting a particular official, but represents part of the cost of access to the market or to particular assets. In Russia a state functionary usually acts in practice as one of the partners in a clan group, participating in the division of income, including income from illegal financial flows concealed with his or her help.

The origin of the formations described here is fairly obvious. The semi-breakup of the hierarchical pyramid of state-bureaucratic property led to the appearance of a series of semi-ruined mini-pyramids, formed largely on the basis of the earlier so-called “closed departmental systems”, which became simply “clans”. Subsequently, the endogenous and exogenous development of corporate-monopolistic capital together with the inertia of the old system and the rapid development of pre-bourgeois forms (“princedoms” and “dukedoms” with their vassalage, semi-serfdom, and so on) intensified the process of formation of the clan-corporate groups. But the latter, as a result of the general causes of transformational instability, will always

remain amorphous and fragile, suspended precariously in a state of semi-genesis and semi-disintegration.

Here we shall note the typical components of such a system (see figure 1).

Figure 1. Structure of a clan-corporate groupLobbying within state structuresMass media Mass mediaCriminal “roofs”State-oligarchic nomenklaturaFinancial-industrial eliteEnterprise managementWorkers and residents

At the bottom are the ordinary workers of a few dozen enterprises, in most cases privatised. These people are not so much in the position of hired workers as of semi-dependent “children” within this paternalist structure. They are objects of pre-bourgeois subjection and exploitation which exists in the most diverse forms, from the non-payment of wages (which turns hired labour into slave labour) to control by the corporation over the functioning of the social infrastructure, with the result that the worker-resident is bound to the city-enterprise in the same way that serfs were bound to the land. Meanwhile, elements of the bureaucratic paternalism of the “socialist” past also persist.

On the second “storey” of these structures is the enterprise management. This is characterised by retention of the already-noted traditions of “Soviet paternalism” in its exercise of the considerable authority enjoyed by proprietors. At the same time, and in contradictory fashion, the management wields the mechanisms of power that link the survivals of the administrative-command system with early elements of corporate-capitalist administration and exploitation, while also employing elements of pre-bourgeois coercion (up to and including the use of criminal methods for pressuring organised workers and trade unions).

Still higher up will be a holding company, a large bank, and the corporation as such, where the real owners of the group will also be located. As a rule these owners will comprise three types: ex-nomenklatura figures; former (or present-day) mafiosi; and more rarely, professionals who have risen from the “lower ranks”.

This system expedites interaction with the fourth level of the hierarchy – corrupt (or “lobbied”) representatives of various legislative, executive and judicial state structures on the federal, regional and municipal levels − and also with the mass media.

Operating on the edge of these structures is a system of “roofs” – that is, protection rackets – along with small and medium-sized private intermediary businesses integrated with organised criminal groups. These will include a few private trading and brokerage firms (in practice, simply parasitical), and sometimes one or two small banks as well. Unlike small businesses in “civilised” economies, which as a rule are dependent on corporations and are exploited by them (a situation of unequal symbiosis), in the transformational economy small and middle businesses of this type (there are other small businesses that are relatively independent) are established by the bosses of the corporations for the purpose of siphoning off resources from these large

structures (which as a rule are in a difficult economic situation) into the pockets of their owners. No attempt is even made to cover the costs (wage payments, for example) or to pay the taxes of the structure as a whole, and this qualitatively increases the personal incomes of the structure’s elite.

The main rights of ownership over this system as a whole are concentrated in the hands of a narrow circle of people centred within the administration of enterprises, the management of banks and lobbying structures, and also including the actual owners of private daughter firms. We stress: what is involved here is real property rights, economic power, and not simply shareholdings, though the latter are also important.

What are the main mechanisms of social and economic power within these corporate structures?

The most obvious, though not the most important, consists of property in shares. To exercise real control, it is often enough for a group to own 10-15 per cent of the shares of the firms involved, provided that (1) the remaining shares are dispersed among numerous small owners who are incapable of coordinated action; (2) the owners of these 10-15 per cent, by contrast, are united in their entrepreneurial activity (make up a “clan”); and (3) these owners have their hands on other threads of economic power and control.

Who are the people who today possess such consolidated packets of shares in most former state enterprises? In Russia, according to expert assessments, the typical picture is as follows. From 10 to 20 per cent of the shares may be held by the state (in so-called “state corporations” this proportion is of course greater – as much as 51 per cent and more. But as in the case of private bodies, real power over these assets lies with private individuals, with bureaucrats representing the state, top managers and other insiders. In the initial period of privatisation personnel of the enterprises had received as much as two-thirds of the shareholding capital, but already by 1998 these people retained less than 40 per cent of the total. At present, by and large, no more than 10-20 per cent of shares are in the hands of workers, and taking Russian legislation into account, this means that these shareholdings are not consolidated. Moreover, and as noted earlier, the workers in Russian enterprises in most cases remain passive; they are not combined in associations (the trade unions, as a rule, refrain of their own accord from involving themselves in questions of property), and are incapable of united action as property owners and still more, as entrepreneurs. In the overwhelming majority of cases enterprise employees entrust their basic property rights to the higher management of the enterprises for which they work.

By contrast, the largest shareholders and top managers (insiders) make up a consolidated structure united by decades-long traditions of common subordination and joint caste life (a lower-level “nomenklatura”). In the late 1990s these people possessed as many as 15 per cent of the shares, and now as a rule hold controlling packets (in most cases far less than 51 per cent is enough to ensure this).

A second vital mechanism of control by the clan elites is administrative power. In the circumstances of Russia, with its age-old traditions of submission to authority, the administrative power of higher management plays one of the key roles in forming durable clan structures. This power is combined with such specific phenomena as the retention by enterprise management of control over the housing fund, social infrastructure, and so forth (departmental apartments, kindergartens, clinics, and so on).

This, however, is only the power that enterprise administration possesses in relation to workers. There is also the administrative control that state structures

(including regional structures, and especially, governors and their “teams”) exercise over enterprises. Survivals of the command economy (the “planning deal”, bureaucratic paternalism, and so forth), together with the chaotic present-day bureaucratic impact of a multitude of different departments on the market and on the process of redistributing property, mean that the state bureaucrat becomes if not a “father”, then at least an influential “uncle” in relation to the enterprise director.

Advantageous credits and tax concessions; the position of the judiciary; the benevolent or fault-finding attitude of inspectors of various types; to at least a minimal degree, state orders (for the giant defence sector these are still extremely important); high export tariffs or, on the other hand, protective import duties; direct subsidies (for example, to miners), and so forth, all make the administrative authorities (central and regional governments) extremely important, despite the apparent collapse of the “administrative-command system”.

The most important mechanism of economic power is financial control. Throughout recent decades most Russian enterprises have been in a state of permanent and acute financial crisis. Money is short for the payment of wages, and for meeting raw materials and energy bills, not to speak of funds being available for investment. A constant crisis of reciprocal non-payments, along with a need to beg credits at any cost from the state and/or banks, has become the rule. Under these conditions, a chain of financial dependency operates.

At the very lowest level is the worker, who may or may not get paid his or her wages (this depends directly on management). At a higher level is the dependency of management on the banking system. Will a bank provide credit or will it not, and if it does, on what terms? The administration may also use the services of a bank (usually through “dummy” companies) to “spin” money meant for paying workers and contractors. For two or three months, sometimes even six, managers will seek to increase the initial sum through short-term trading or hard currency operations, most of them speculative. A proportion of these additional funds will go to the enterprise, but by way of the bank, a substantial part will finish up with the clan bosses.

Still higher up are state organs, from the petty bureaucrats of the regional administration all the way up to the president and parliament. All these organs distribute and redistribute various state resources and benefits. We should add to this the highly active influence of the Ministry of State Property on the process of privatisation; of the foreign trade bodies on the conditions affecting export and import deals; of the presidential administration on tax concessions; and of parliament on the apportioning of budget funds. The result is an extremely complex system of financial interconnections between enterprises, banks and various federal, republican and regional state organs.

Nor should we forget such a mechanism of economic power as personal ties. They crown this whole pyramid of dependency, combining together, like wolves in a pack, the elites of the enterprises, banks, commercial structures and state organs. These personal ties are stronger for the fact that the overwhelming majority of members of the clan elites came from one or another group of the earlier nomenklatura (the sum of these features of the clan-corporate groups makes it possible to apply to them the English-language term patronage machine).

Finally, closeness to the “shadow” structures of the criminal underworld lends these constructs a special solidity and a genuine “clan” shape. It is necessary to recall that the criminal economy of the past − until the late 1980s almost all private business in the USSR was semi-legal, and as a result closely tied to criminal elements – was one of the main sources for the rise of private business. Today, state and former state

enterprises always have private firms attached to them, to expedite the transfer of funds from the corporations into the pockets of their real owners. Taking this phenomenon into account, it should be recognised that most corporate structures have at least incidental ties to the criminal economy. Moreover, in a country with fickle legislation, constantly changing government personnel, and a high degree of top-level corruption, lobbying in and of itself has the character of partially or directly illegal activity (often, though somewhat imprecisely, described as mafia activity).

The result is that all these structures are drawn reciprocally into activity that is more or less dubious from a legal point of view. This does not necessarily include rackets, contract killings, blackmail, extortion or bribery (though in Russia all these exist in abundance). It may consist “merely” of delaying the payment of wages and of “spinning” the money involved through commercial organisations; of providing cheap credit in exchange for support during an election campaign; or of other moves whose effect is to bind the clan elites with mutual guarantees.

Within the property structure, the presence of “shadow” or frankly criminal capital is also quite apparent. Control over a number of Russian enterprises producing raw materials and metals is nominally exercised by a large number of perfectly respectable firms that own small packets of shares in these corporations. But on more careful examination it turns out that these firms are no more than intermediaries, acting through a chain of other intermediary firms on behalf of a few companies of unknown origins, registered in offshore zones. The policies these companies implement are coordinated to an astonishing degree. If we reflect, moreover, that the process of dividing up the shareholder capital of (for example) aluminium plants has seen the killing of large numbers of associated entrepreneurs and plant managers, the suggestion that the controlling firms are criminal in nature becomes highly persuasive.

Finally, the clan-corporate structures provide the foundation for the system not only of economic, but also of political power. In this case, however, the relationship is not simple. Most clans support several political blocs and parties at the same time, and most parties rest simultaneously on a number of clans. A highly involved confluence of interests thus arises, one that is relatively remote (though not absolutely divorced) from the ideological and programmatic profiles of various parties.

This makes it possible to regard the relationship between Russian clan-corporate groups and developed-country transnational corporations in various ways. Of course, comparing the far-from-edifying picture above with the description of a transnational corporation in an American textbook yields a one-sided result: the only things in common are a few superficial traits. But an analysis of intra-corporate relationships in the US performed by a number of North American researchers shows that there is nonetheless a resemblance. Further evidence of the real (as opposed to the official, nominal) relationships and distribution of power within corporations is to be had from depictions in such sources (considered dubious in the academic milieu) as artistic literature and the cinema. The resemblance between the Russian clan-corporate group and the Western corporation, though, is not akin to the relationship between a portrait and the original, but to that between a real phenomenon and a caricature. The latter grotesquely exaggerates all the faults and vices of the original.

Let us now return to the realities of Russia, and consider how the economic relationships described earlier are reproduced.

Essay IV.Socialism-21 as Transformation of the “Realm of Necessity”

toward the “Realm of Freedom” (“Real Socialism” and Socialism-XXI: Material Preconditions, Nature,

Social Forces of Transformation)

The main goal of this text is to give a brief description of the theoretical foundations for the elaboration of the new forms assumed by left movements in the epoch of the global hegemony of capital.

4.1. Historicism and Dialectic Reloaded. One More Time on The Methodology of Socio-Economic Research (in place of an introduction)

The most contentious methodological question of our time is the relationship between the systematic dialectical materialist method on the one hand, and on the other, the positivism that is traditional for present-day social research and the post-modernism that flows from it.

In our view, the dialectical method is as before entirely adequate for researching the strategic, qualitative shifts undergone by modern society in general, and in particular, by socialism as a material and intellectual phenomenon. As is well known, the dialectical method is based on:

research into social processes through their dialectical contradictions, as the only way to understand their essence and the development of their forms;

a recognition of the historicism of social systems and similar phenomena;

the possibility of subjecting them to theoretical and practical criticism, and the need to do this;

the need to replace them, with the help of an understanding of the laws of development of the particular social subject (equipped with theory and with organized social force).

All these familiar elements of the dialectical method will be used in our brief paper as essential instruments for elaborating the conception being discussed.

Under present circumstances, the development of the systematic dialectical materialist method cannot follow the path of integration with “omnivorous” post-modernism. What is required is dialogue with the now-prevalent methods. This latter signifies a recognition of the validity of each of the methods in its field of research, and their dialectical, contradictory interrelationship, proceeding from the legitimacy of bracketing together the realities which these methods are used to research. Post-modernism, for example, is adequate for describing the forms of society and social consciousness that predominate in contemporary reality, forms which are alienated from human beings and which are based on a crisis of earlier institutions, ideologies and so forth. However, this method is absolutely inadequate for studying the possibility of overcoming these distorted forms, of overcoming this alienation, or for transforming this alienated world (naturally, these transformations proceed from objective tendencies to progress in the world).

4.2. The Material Preconditions for the Birth of a New Society: Negation of the Whole World of Alienation, not only Capitalism

Within the context of this problem, overcoming two limited approaches to the analysis of such preconditions takes on fundamental importance. Analyses of the society of the future as “anti-capitalism” (Stalinism) and as a reformed capitalism have both outlived their usefulness. At the same time, both these approaches contain positive aspects. Capitalism needs to be done away with through the unity of a qualitative, revolutionary negation (of exploitation and so forth), and of succession (of material and intellectual culture).

The new approach, which has made its effects felt in full measure during the second half of the twentieth century, and which can be discerned in the manuscripts of Marx, presupposes an analysis of the new society not only as post-capitalist, but also as characterized by the abolition of the whole world of alienation (“prehistory”, “the realm of economic necessity”). Capitalism in general, and present-day post-classical capitalism in particular, can in this case be seen only as the highest phase of development of the “realm of necessity”. From this stems a conclusion which is rarely stressed even by modern Marxism: the left is faced with the task of doing away (through the methods of reform or revolution) not only with capitalism, but also with the whole society of alienation, and with all the forms and mechanisms of alienation.

4.2.1. The Preconditions for a New Society

The preconditions for such a new society (the “realm of freedom”, the post-economic world, “communism”), extend far beyond the processes of the socialization of production and the development of the class of hired workers. The minimum requirements include:

the shift to the predominance of creative activity and post-industrial technologies; the creation of a world of culture, and the consigning of material production to a secondary level; and the shift to a dialogue with nature and to a “noosphere” type of development;

the development of various forms of association of workers and citizens; the development of the capacities of workers and citizens for social creativity, and of their experience of transforming the prevalent social relations (their experience in the struggle for their rights, for self-organization and so forth, for the development of their “social muscle”);

the accumulation and mastering by working people of the wealth of human culture, without which creative activity in general and social creativity in particular are impossible (this thesis, which was already stressed by Lenin, has only a very pale reflection in present-day Marxism, which often forgets this question).

The key parameter and measure of development of the new society is ceasing to be the replacement of private by state ownership, and is becoming the process of association (the self-organization of citizens and their self-management), and their social creativity in the whole diversity of its forms (from innovations by a trade union activist or teacher, through the activity of mass democratic organizations, to the revolutionary transformation of society). Associated social creativity is thus the only real way in which the “realm of necessity” and alienation as a general form of existence can be dialectically negated.

First, it is necessary to overcome the hegemony of corporate capital, whose power permeates all spheres of individual and social activity, shaping a

particular type of technological progress and a particular mode of organization of economic life, political authority, ideology, child-raising and education, culture and so forth. This hegemony synthesizes all the most modern and developed mechanisms of alienation:

the power of the market, transformed into “market fundamentalism”; monetary fetishism – the hyper-realized threat of the crisis of virtually

fictitious financial capital, dominating over production; private property – the “privatization” of all economic and social life

by the elites of global capital; capitalist exploitation of wage-labor – the expropriation of all human

qualities by corporate elites through the use of a broad range of legitimate and illegitimate institutional and spiritual forms of coercion;

democracy – to the “political technologists”, this means the production of votes (in favor of the required party or leader) through various technological procedures, using the electorate as “raw material”;

pluralist spiritual life – the manipulation of popular consciousness through dominant mass culture in an atmosphere of the psychology of individualism, etc.

The social basis for the reproduction of the many-sided hegemony of corporate capital is conformism (subordination to the dominant “rules” and institutions of social life as “natural”). Conformism is typical of the workers, customers and “clients” of corporations. Consumer society and the cultivation of the utilitarian values fostered by mass culture are vital mechanisms helping to spread this power and conformism.

The only form of social energy which workers are able to use to overcome this hegemonism is the energy of their united, common activity (social creativity). Here, it is not only economic and political struggle that is important. The crucial means of destroying consumerism and mass culture is the development of genuine cultural values and their mastering by the masses. Consequently, the main tasks of the left include aiding the accumulation of the potential for social creativity and the progress of genuine culture.

Secondly, it is necessary to meet the challenge of social problems, setting forward realistic proposals for solving them – something which cannot be achieved by present-day world capital (in a certain sense it can be said that the need to solve global problems is the main “negative” precondition for communism). From this flows the need for an alliance between the left movement and organizations struggling to solve global problems; the socialist movement cannot count on success unless it transforms these organizations into its most important allies. How this can be achieved is a special question about which more will be said later.

Thirdly, the task of overcoming the old world of alienation in the context of globalization (or, it might better be said, the global hegemony of corporate capital) must be tackled as an international goal, that is, one for all humanity. It is already clear that this will not take the form of a simultaneous world revolution. It is just as clear that the strategy of trying to achieve a breakthrough in the course of which corporate capital breaks at its “weak link” inevitably leads to the degeneration of the first attempts at making isolated progress toward the new society. The task, consequently, is as follows: developing and at the same time achieving agreement on the implementation of a single and interrelated (but not uniform) strategy of creating networks of social movements and socialist (communist) organizations on the international level (it should be noted that the authors formulated this idea, on the

basis of many well-known Marxist works, some ten years before the appearance of the anti-globalist movement).

These aspects, briefly formulated above, will be used as essential hypotheses for the formulation of (1) the main features of the social forces of liberation, and (2) the new role of mass democratic movements and “post-party” forms of the political organization of the left forces.

4.3. Socialism

4.3.1. Socialism as the Process of Non-Linear Transformation of the "Realm of Necessity" into the "Realm of Freedom"

Taking this general approach to the question of the preconditions for the society of the future (communism) and of the tasks which this society has to resolve, socialism may be interpreted not as the first phase of communism and not as "socialized" ("Swedish" and so on) capitalism, but as an integral (having a single nature), international, non-linear and contradictory process of transformation of the world of economic necessity and alienation into the "realm of freedom".

This process goes forward along three interconnected paths: the development of the first shoots of the new society in distorted and

transitional forms (that is, forms combining elements of the "old" and "new") within the framework of contemporary postclassical (late) capitalism (for example, social and environmental regulation and restriction of the market, social welfare guarantees, etc.).

the activity of mass democratic and socialist movements, which constitute the direct motive forces of the socialist transformations, in carrying through reforms and revolutions and developing the initial elements of the new society (in a certain sense these organizations and the people who are active in them become oases of the future in the world of alienation);

the fostering of the relations of the new society in countries (should these appear), where popular-democratic and socialist revolutions have already created the institutional preconditions for realizing the simplest relations of communist society (naturally, alongside the heritage of the past, which remains powerful and withers only gradually).

It is only within the unity of these three mutually interconnected processes that the progressive development of socialism is possible. The degradation and/or degeneration ("mutation") of any of them leads to the stagnation and/or crisis of the whole process. Hence the successful development of the first shoots of socialism (or as used to be said, the "victory" of socialism) in particular countries is possible only in unstable transitional forms, and only to the degree that capitalism is socialized and humanized (in the "citadels" of this society, reformism and not conservatism dominates), and that the power and influence of mass left-democratic organizations grows on an international scale. Socialism, consequently, appears as a non-linear process encompassing the victories and defeats of numerous revolutions and counterrevolutions, social reforms and counter-reforms, and proceeding as an international, integral world process. The role of the mass democratic movements as one of the three interconnected paths of the genesis of socialism cannot be overestimated in this context.

As well as stressing the continuity and transitional character of socialism, this characterization makes it possible to advance a relatively simple criterion for the

"socialistness" of the system. Socialism should ensure a higher degree of economic efficiency and of the free, harmonious development of the individual than capitalism, even "postclassical" capitalism.

This approach provides an objective basis (criterion) for making an assessment of the Soviet system in terms of the objective process of transformation of the “realm of necessity” into the “realm of freedom”.

4.3.2. The Soviet System as "Mutant Socialism"

The objective preconditions for, and the initial steps of the socialist transformations linked with the undermining of the relations of alienation at the end of the second millennium and at the beginning of the XXI century were substantially changed as a result of the deep internal crisis and later, collapse of the initial (mutant) shoots of socialism in the USSR and the countries of Eastern Europe.

The reason here was the very nature of this "socialism". The essence of the former system might be summed up briefly as "mutant socialism" (by this is understood the historical dead-end represented by this variant of the social system located at the beginning of the worldwide period of transition from capitalism to communism. This social system went beyond the framework of capitalism, but did not form a stable model serving as the basis for a subsequent movement to communism).

This new “socialist” world, which appeared as a consequence of the worldwide tendency to the socialization of national economies, and as a product of the profound contradictions of imperialism which emerged during the First World War, proved sickly and deformed (mutant) from birth. This system should be characterized as "mutant" not by comparison with an abstract theoretical ideal, but by comparison with the real tendency to socialization outlined in part 1.

The reasons for the mutant nature of this "socialism" (and along with this, the reasons for the rise and historically rapid defeat of the system) are not limited to the factors traditionally noted by researchers, such as Russia's low level of industrial development, the small numbers of workers, and so forth. The essence of the problem lies deeper - in what has been called the "trap of the twentieth century". The world as a whole was ready (by virtue of the depth of the contradictions involved) to destroy the existing system (particularly where it was really rotten), but it was not ready for the conscious creation of a qualitatively new society through the social creativity of the masses. Stalinist “construction” from above could not achieve this. The potential for social creativity (the experience and strength of self-organization, the level of culture, the development of grass-roots democracy, etc.) was too low to allow the growth of pure forms of the “realm of freedom”.

As a result of this historical "trap of the twentieth century", there appeared various palliative forms for resolving the contradiction between the need to make changes to the world imperialist system and the inadequate potential of the reformist forces. One of these forms was mutant socialism. The worldwide tendency to socialization (the conscious regulating of social development, its orientation toward the free development of the personality, social justice, collectivism and the mass striving of the workers to establish a new society - in Soviet parlance, "enthusiasm") appeared in the world for the first time on a mass scale, but took the form of bureaucratic mutants (the command economy, the suppression of personal rights and freedoms, universal statization, "levelling" and so forth).

It can therefore be said that the main achievements of our Soviet past were not economic growth or state property, but the genuine elements that appeared of the

social creativity of the masses. We suffered from an extremely intense contradiction between Stalinism (as a bureaucratic mutation of socialism) and the social creativity of the masses – that is, pure socialism, the so-called enthusiasm of the millions of people, mainly young, who with their own hands created new cities, factories, poems, theories, new forms of social organization (for the most part unknown in the West) in the spheres of production, communal life, education, sport and so on, which are and will be examples of the potential of social creativity.

In some respects our mutant socialism can be compared with the period of Renaissance, which saw the first attempt, in inadequate conditions, to move to capitalism. Italy was a country beset by the inquisition, by bloody civil wars, by the immoral behaviour of the popes, and so on. The capitalist stirrings of the period were finally defeated by feudalism. Nevertheless, the Renaissance for us represents a period of early and magnificent striving to liberate the personality from feudal oppression. For future generations, perhaps, the Soviet system will be the world of Mayakovsky, of Gagarin, of the enthusiasm of millions of people, and not pre-eminently the world of the GULAG, though we must remember this as well.

3.3. Stages in the Genesis of Socialism in the 20th and 21st Centuries

Even though the USSR collapsed, socialism as an integral (having a single nature), international, non-linear and contradictory process of transformation of the world of economic necessity and alienation into the “realm of freedom” did not come to an end. The epoch of the genesis of socialism that began in 1917 is continuing. The dialectical method, with its stress on analyzing the contradictory logical and historical interrelationships within reality, shows that through the process of dialectical negation the stages of historical evolution can become elements of the structure of the present system. The history of the modern epoch shows us that in the course of its development, socialism passes at a minimum through three stages that will be outlined here. Analyzing these stages can help us define the main elements of the internal structure of the modern socialist movement.

The first stage is linked with the possibility of beginning socialist transformations under the conditions of monopoly capitalism, that is, of a developed industrial state. The contradictions of this stage of capitalism have led to a series of socialist and national liberation revolutions, led by the industrial proletariat and its parties. But for a number of objective reasons these revolutions have culminated in the birth of a mutant socialism.

This type of social and political struggle for socialism belongs to the past. But at the same time, many of its features can be reproduced dialectically on a new stage, in the Third World, where the contradictions of capitalism and the preconditions for socialism are in some respects similar. Accordingly, the consequences can also be similar, and if the forces of the left in these countries come to power and fail to draw conclusions from the lessons of the past, we may be presented with new models of mutant socialism. What these lessons of the past amount to, we shall discuss later.

The second stage, marked by the crisis of the world capitalist economy during the first half of the twentieth century (the great depression, fascism, and the Second World War), has been associated with the impact of the new preconditions of socialism, and above all with the objective need for the socialization and humanization (and not merely state regulation) of the market economy and capitalism as a whole. The responses to this challenge of the twentieth century have included social democratic reforms and the transition to the "society of the two-thirds" in the

developed countries following the collapse first of the efforts to resolve these contradictions by means of fascization rather than socialization, and then the collapse of the colonial system. As is now generally accepted, this road to a new society also finished up in an impasse because of a decline of social creativity (enthusiasm) among the population (or, if you want, an exhaustion of the spirit of 1968); the collapse of mutant socialism; and because of globalization, along with other consequences of the new wave of the technological revolution and of the new forms of late capitalism inspired by it.

The third stage is associated with the situation outlined above. Postclassical capitalism has reacted to this situation with a rebirth of the tradition of liberalism, along with the simultaneous strengthening of the power of the largest international corporations and institutions (the International Monetary Fund, NATO and so forth). This has in fact been an irrational reaction, employing the achievements of the scientific-technical revolution primarily in the transactional (fictitious) sector (finances, management and so forth), and yielding only insignificant progress even in the field of the growth of consumption, not to speak of culture.

Mutant socialism has made a number of efforts at self-reform. "Perestroika", with its attempts to carry through a transition to a model of "humane" and "democratic" socialism with the help of reforms from above (a sort of "bureaucratic reform of bureaucratic power") proved a failure, since the decay of the system had proceeded so far by the late 1980s that the potential for social creativity had perished all but definitively.

The lessons of this stage are not so obvious, but we can propose as a hypothesis that social democracy (and its alter ego, the old forms of “real socialism”) cannot itself lead either to the “realm of freedom” or even to a stable “improvement” (socialization) of capitalism. We need new forms of social creativity and global resistance to capitalist globalization, forms adequate to the new system of technological, economic and socio-political relations of late capitalism. Whether the modern anti-globalist movement can or will play this role in the future is a crucial question for us, and a big challenge.

4.3.4. Socialism and the Market

Might it be, however, that the model of market socialism, old and well-known but never realized in practice, can help us to solve the contradictions of the previous stages of socialist evolution?

As is widely understood, to interpret socialism as a variety of the market system is to ignore in practice the fact that the market represents a set of commodity-productive relations which give rise to the corresponding mechanisms of alienation (in particular, to commodity fetishism and competition) and to a particular personality type (the egoistic homo economicus), and which by force of its internal contradictions develops into capitalism. Moreover, in the early twenty-first century the market as a ruling system cannot exist without the whole totality of attributes characteristic of "late capitalism" (in particular, the giant superstructure of the transactional sector, consisting of exchanges, banks and so forth, which consumes as much as half of the available resources). On the other hand, "non-market" socialism until now has existed either as a bureaucratic "economy of shortages", or as the theoretical construct of a virtual system of relations of democratic planning and self-management.

Resolving this dilemma is possible through a dynamic analysis of socialism as a process of transition to communism, that is, to a society "on the other side" of both

material production and the market. Consequently, socialism is characterized by the process of the withering away of the market (or more precisely, of the economic forms and mechanisms characteristic of "late capitalism"), as more efficient and progressive (in the economic, social, environmental and other senses) post-market relations of management, cost accounting etc. are developed. The distorted and transitional forms of these relations are derived in many ways from the practice both of capitalism and of "socialism"; a minimal task is to cleanse these forms of such deformations).

4.4. The Social Base and Forces of Socialist Transformations

4.4.1. The Social Structure of the Contemporary World Community

Developments since the later years of the twentieth century have significantly altered the social structure of the contemporary world community.

The class of hired workers in the developed countries no longer consists mainly of the industrial proletariat, but of workers in the sphere of services (where there is a great deal of manual and primitive industrial labor), and in the transactional (fictitious) sector. In the developing countries, meanwhile, industrial labor predominates, manual labor remains a massive phenomenon, and in many areas, pre-economic forms of exploitation have not been eliminated.

In exactly the same way, the bourgeois class has been extensively changed by the process of mutual "diffusion" between this layer and the higher layers of white- collar workers. On the other hand, a further concentration of real economic and political power is occurring in the hands of a narrow circle of the corporate capitalist elite, the so-called “nomenklatura of global capital”.

As a result of the above-mentioned changes, the earlier thesis which identifies the industrial proletariat as the only consistently revolutionary force with an interest in the transformation of society now requires correction. To understand the basic features of the modern social structure, we must take into the account not only the “sunset” of late capitalism, but also a more general process: the beginning of the transition from the "realm of necessity" to the "realm of freedom".

The fundamental shifts described above are bringing about a situation in which the "classic" contradiction between hired labor and capital is developing (without being eliminated) into a new social-class contradiction of post-classic capitalism.

At one pole of this contradiction is international corporate-organized capital (the “nomenklatura of global capital”).

At the other pole of the contradiction are those workers (representing hired and free labor) who are capable in practical terms of resisting this power. Such workers are the subjects of social creativity, capable of self-organization, of self-defense, and of the purposeful creation of new social relations in economic, political and cultural life.

As a result, society is not divided simply into owners of capital and hired workers. Another division is arising, cutting across the traditional class pyramid as if diagonally. This is an extremely mobile boundary - the contradiction between conformists (from the milieu both of the owners and of the "slaves" of corporate capital), and those who are capable of joint social creativity.

The conclusion can readily be drawn that the division of society into conformists and social creators is conditioned at a fundamental level by the

contradiction between the hegemony of corporate capital (the highest present-day form of alienation) and social creativity. This division, which is described here in a somewhat conditional manner, can be illustrated by a scheme (set out below, and naturally, considerably simpler than the actual relationships) which illustrates the "superimposition" and interconditionality between the socio-class divisions of society (in which the poles are capitalists and hired workers, with a multitude of "layers" in between), and the socio-creative divisions (the distinction between conformists and subjects of social creativity).

The stress on the internal contradictions within the milieu of the workers and on the "diffusion" of the bourgeois class, on the questions of internationalization and globalization, requires a critical reappraisal of previous concepts of the historical mission of the working class.

The Social Structure of Modern Post-Classical Capitalism

CONFORMISTS (Subjects of Hegemonism)

--------------------------------------------------------------------------------The corporative-capitalist elite (the subject of the hegemonism of corporate capital) --------------------------------------------------------------------------------The middle bourgeoisie, higher managers, the "elite"intelligentsia and other individuals directly "realising"the hegemonism of corporative capital --------------------------------------------------------------------------------The petty bourgeoisie, farmers--------------------------------------------------------------------------------Senior white-collar workers in the transactional sector--------------------------------------------------------------------------------Subjects of free creative labor --------------------------------------------------------------------------------Associated workers/co-owners SUBJECTS OF------------------------------------------------------ ASSOCIATEDHired workers engaged in creative SOCIAL labor (including the "rank and CREATIVITYfile intelligentsia")--------------------------------------------------------------------------------Hired workers engaged in reproductive industrial or manual labor--------------------------------------------------------------------------------Workers bound not only by economicbut also by extra-economic compulsion, patriarchal traditions etc.-------------------------------------------------------------------------------Paupers, lumpens etc.--------------------------------------------------------------------------------

CONFORMISTS (Objects of hegemonism)

4.4.2. Social Creativity, Free Association and Mass Democratic Movements

As was stated above, the social creativity of the masses is the main alternative to the world of alienation. After a very brief analysis of the social forces of liberation,

we now can and should concretize the subject of social creativity. In the language of philosophy, we can say that it is the subject of the transformation of alienated relations into the forms of practical liberation, of positive freedom (not only freedom from, but also freedom to change the world according to its laws of development).

On a more practical level of definition, we can conclude that this force should be:

a critical force, which is oriented toward the dialectical negation of all forms of alienation (not solely, but primarily, the modern forms of capitalist hegemony and exploitation);

a constructive force, which has both the potential for and experience of the positive creation of new social relations;

a cultural force, which has the intellectual potential (that is, the capacity to apply in practice the main decisions of human culture) to create new social relations;

a force which has the potential and experience of self-organization.

Only such social organization can respond adequately to the challenges of the modern epoch of the “sunset of real freedom” and the global hegemony of corporate capital.

The material basis for this new type of social organization is being created through the development of “network society”, where the system of informal, non-hierarchical grass-roots interconnections between people can be created from below.

The form of this organization is being determined through the socialization of both production and human relations, that is, the model of free working association (the objective necessity and opportunity for which was shown by Karl Marx through his analysis of the contradictions of alienation in its capitalist form). This association involves:

the voluntary and free integration of personalities (not of alienated social actors who operate only via alienated social forms such as “capitalist”, “wage labour”, “customer”, and so on);

integration on the basis of their practical activity (work), not money or formal bureaucratic status. This activity is mainly voluntary (unpaid) work, motivated by the practical interests of the members (clean water or the defence of human rights…);

an open union, which changes its forms and configurations whenever the real activity and interests of the participants changes. For such an association, real unity of interests and common work is more important than formal unity of the program and existing bureaucratic structures (apparatus).

This is, of course, a theoretical construct. But if we analyze the practice of the so-called “new social movements” (see the writings of F. Houtart, A. Scott, M. Supalak, Ageton, and so on, we find many features similar to those mentioned above. Here, we shall compare the material basis of social creativity and the existential principles of the subject of social creativity, including (1) the principles of free association and (2) the features of new social movements [see table 1].

Table 1.

1 2Network structure of

material basisnetwork forms of organization

Essence of social creativity and free association as the nature and form of existence of the “realm of freedom”

their cultural nature, oriented toward the elimination of different forms of alienation

Form of free association of individuals

location in civil society and inter-class structure

Voluntary integration of people on the basis of their common practical interests

Based on the common interests of members

Self-management and self-organization as principles of formation of the subject of social creativity

Grass-roots democracy

Integration of voluntary work

Mobilization on a voluntary basis

Open union with flexible forms

Open creation from below of movement structures with unstable forms

The similarity here is no accident. The goals and principles of organization of new social movements are inspired by the objective process of the birth of the “realm of freedom”, or more precisely, by the contradictions of late capitalism (the global hegemony of capital), which as their alternative inevitably require and create the social creativity of the population and forms of free association.

At the same time, these two phenomena have a very important difference that is linked to the internal contradictions of new social movements. Even though the goals and principles of organization of the new social movements are directly interconnected with “post-alienated” relations, the movements’ real strategies and the means for their realization are (mainly) reformist, and are far from being oriented toward the practical (that is, also political) destruction of the relations of alienation, which now take the form of the hegemony of global capital. Without the dialectical negation of these relations, a real alternative movement is impossible.

In this case, the so-called old social movements (labour, socialist, communist, and so on) are more adequate to the task of ensuring the revolutionary negation of the past and of leaping beyond the “realm of necessity”. On the other hand (and here we find the internal contradiction of the “old social movements”), their origins, nature and forms of organization mean that they are more anti-capitalist (that is, oriented to the economic and political struggle between classes) than post-capitalist, and are relatively remote from the ideals of the “realm of freedom” (voluntary association of individuals based on the integration of social labour, i.e., post-economic and post-political union).

In some respects, we can state that the future struggle for progress toward the “realm of freedom” will dialectically negate (and at the same time integrate) features of the anti-capitalist and “new” social movements. How this will occur, and the forms that will be thrown up, has until now been an open question. Nevertheless, some trends are appearing in practice, and these suggest to us the forms which the alternative movements are likely to take:

cooperation via network structures between different types of movement on the basis of new principles, involving different forms and methods of struggle for the realization of common strategic tasks (for example, the struggle against capitalist globalization) instead of formal unity of the forces within one or another form and program (communist, social democratic or other organization);

radicalization of the movements via a common practical critique of the global hegemony of capital (using the forms of political struggle against the subjects of alienation, for example, against the “global players”, as in Seattle, Prague, Genoa and so forth);

integration of the new social movements with democratic left political forces on the basis of grass-roots democracy, and the transformation of the old parties into new “post-party” forms of the left, more akin to the forms of free association than to “classical” political parties.

4.4.3. Grass-Roots Democracy and Post-party Forms of Organization of the Left

Interpreting socialism as a transitional process whose main "energizing potential" is the social creativity associated with it makes possible a further confirmation of the thesis of the dying away of political forms (in particular, of parties, of the state, and in general of the principle of representative democracy), and the development of grass-roots democracy and self-management as trends characteristic of all three currents of socialism (socialist-oriented reforms in the "countries of capital", socialist movements, and socialist societies). The basis for this process is not only the development of social creativity, but also deeper changes in the material basis of our lives – the genesis of post-industrial and post-economic forms, i.e. of the preconditions for the “realm of freedom”.

The elements of grass-roots democracy as an adequate (that is, transitional from political to post-political) form of social creativity include:

the full and consistent realization of all internationally recognized human rights and freedoms (freedom of speech, conscience and association, the right to form political and social organizations, etc.);

the general development of productive (to differing degrees depending on the property forms in particular enterprises) and territorial self-management as basic forms of association of the population;

the transforming of mass democratic organizations and movements into fully valid subjects of the process of regulating economic and social life;

the formation of a legislative power according to the principle of representation by deputies from base-level associations (organs of self-management), with an imperative mandate (the right of recall, replacement and so on); subordination of the executive (the government) to the legislative power; the election of an independent judicial authority without the involvement of presidential or analogous institutions;

creation of post-party forms through the activity of political parties (representing the dying classes) through mass democratic organizations, organs of self-management, and so forth.

The main features of the post-party forms of organization of the left are now apparent only as more or less feasible tendencies abstracted from the practice of certain successful left organizations, and also as conclusions based on a theoretical view of the future free association. Hence the main principles of such post-party

organizations can be seen as prolongations of the main features of social creativity, in its implications for the political sphere (it should be kept in mind that these are only theses and hypotheses):

activity in and via mass social movements (post-party organization mainly as an adjunct to the social movements, which it radicalizes and advances, but not, for the most part, as a vanguard of the class);

all of the main functions of post-party organizations can be realized only on the basis of self-organization of the population, not via a bureaucratic apparatus or through money;

“personalization” of activity and responsibility. Social creativity is a form of activity which has a definite author; for post-party organizations, talents rather than money or power will be the main “deficit” item (compare with “human qualities” as the main form of capital in the twenty-first century);

self-management as the main form of internal organization.As is already becoming apparent, the main functions of a post-party

organization can include: assistance with the growth, strengthening and integration of the new

social movements as the main form of struggle not only against alienation and the hegemony of capital, but also against conformism and the passive, petty-bourgeois life of the population as “puppets” of global capital;

radicalization of the new social movements; elimination of the influence on them of global capital, and creation of the basis for the transformation of these movements into one of the main forms of the future grass-roots democracy;

assistance in the development of independent culture and education as one of the main forms (together with practical social activity) of the struggle against ideological manipulation and spiritual alienation;

helping advance the development of the theory of social transformation toward the “realm of freedom”.

* * *At present, we are of course seeing only the first stages in the genesis

of new social movements and of post-party forms of political (to some degree, post-political) struggle. Especially in the Second and Third Worlds, we can expect to remain for many decades in a situation where “old” forms of social (class) struggle and traditional forms of the left parties will be of absolute importance for the struggle against capital. But the globalization of capital, the deepening of global problems, and the internalizing of resistance are creating new challenges, and only new forms of our struggle and organizations will allow an adequate response to these challenges of the new epoch.

* * *

These theses have already been the topic of wide debate in the pages of the journal Alternatives. All of them arise from a single key premise: the new society is coming into being as the antithesis of the whole epoch of alienation, which at the end of its lifespan is giving birth to the means for its negation – associated social creativity. All the remaining theses are the result of the dialectical development of the initial premise using the method of proceeding from the abstract to the concrete, together with the constant juxtaposition of theoretical conclusions and practice, and resting on an understanding of the fact that this process is dialectical and non-linear,

developing via contradictions as the dialectical negation of negation, preserving all the achievements of the past.

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