Why it is not the crisis of capitalism

There has recently been an avalanche of articles and books about the ¨crisis of capitalism” predicting its demise or depassement. For those old enough to remember the 1990s, there is a strange similarity with the then literature arguing that the Hegelian end of history has arrived. The latter literature was proven wrong. The former, I believe, is factually wrong and misdiagnoses the problem.

The facts show not the crisis, but on the contrary, the greatest strength of capitalism ever, both in terms of its geographical span and the expansion to the areas (like leisure time, or social media) where it has created entirely new markets and commodified things that historically were never objects of transaction.

Geographically, capitalism is now the dominant (or even the only) mode of production all over the world whether in Sweden where the private sector employs more than 70% the labor force, the United States where it employs 85% or in China where the (capitalistically-organized) private sector produces 80% of the value added.[1] This was obviously not the case before the fall of communism in Eastern Europe and Russia, nor before China embarked on what is euphemistically called “transformation” but was in reality replacement of socialism by capitalist relations of productions.

In addition, thanks to globalization and technological revolutions, a number od new, hitherto non-existent markets have been created: a huge market for personal data, rental markets for own cars and homes (neither of which was capital until Uber, Lyft, Airbnb etc. were created), market for housing of self-employed individuals (which did not exist before WeWork) and a number of other markets such as those for taking care of the elderly, of children, or pets, market for cooking and delivery of food, market for shopping chores etc.

The social importance of these new markets is that they create new capital, and by placing a price on things that had none before transform mere goods (use-value) into commodities (exchange value). This capitalist expansion is not fundamentally different from the expansion of capitalism in the 18th and 19th century Europe, the one discussed both by Adam Smith and Karl Marx. Once new markets are created, there is a shadow value placed on all these goods or activities. This does not mean that we would all immediately run to rent our homes or drive our cars as taxis, but it means that we are aware of the financial loss that we make by not doing so. For many of us, once the price is right (whether because our circumstances change or the relative price increases), we shall join the new markets and thus reinforce them.

These new markets are fragmented, in the sense that they seldom requite a sustained full-day of work. Thus commodification goes together with gig economy. In a gig economy we are both suppliers of services (we can deliver pizza in the afternoons), and purchasers of many services that used to be non-monetized (the already mentioned: cleaning, cooking, nursing). This in turn makes it possible for individuals to satisfy all their needs on  the market and in the longer term raises big issues such as the usefulness and survival of the family.

But if capitalism has spread so much in all directions, why do we speak of its crisis? Because the malaise which is limited to rich Western countries is supposed to afflict the entire world. But this is not the case. And the reason why this is not the case is because the Western malaise is the product of uneven distribution of the gains from globalization, an outcome not dissimilar to what happened in the 19th century globalization when the gains were however disproportionally reaped by the Europeans.

When this new bout of globalization began, it was politically “sold” in the West, especially as it came on the heels of “the end of history”, on the premise that it will benefit disproportionately rich countries and their populations. The outcome was the opposite. It benefited especially Asia, populous countries like China, India, Vietnam, Indonesia. It is the gap between the expectations entertained by the Western middle classes and their low income growth, as well as their slide in the global income position, that fuels dissatisfaction with globalization. This is wrongly diagnosed as dissatisfaction with capitalism.

There is also another issue. The expansion of market-like approach to societies in all (or almost all) of their activities, which is indeed a feature of advanced capitalism, has also transformed politics into a business activity. In principle, politics, no more than our leisure time, was not regarded as an area of market transaction. But both have become so. This has made politics more corrupt. It is now considered like any other activity, where even if one does not engage in explicit corruption during his political tenure, one uses the connections and knowledge acquired in politics to make money afterwards. That type of commodification has created widespread cynicism and disenchantment with mainstream politics and politicians.

Thus the crisis is not of capitalism per se, but is the crisis brought about by the uneven effects of globalization and by capitalist expansion to the areas that were traditionally not considered apt for commercialization. In other words, capitalism has become too powerful and has in some cases come into collision with strongly held beliefs. It will either continue with its conquest of more, yet non-commercialized, spheres, or it would have to be controlled and its ”field of action” reduced to what it used to be.   

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[1] World Bank data, quoted in Capitalism, Alone, Chapter 3.

Dining with Stalin

When I was recently in St Petersburg, I bought in one of the very nice bookstores that seem to dot the downtown Petersburg, a book by Vladimir Nevezhin entitled (in a somewhat  free translation) “Dining with Stalin” (or at “Stalin’s Dining Table”). The book is almost 400 pages long, and is an empirical and often detailed review of 47 large banquets given by Stalin between 1935 and 1949 at the Kremlin (no banquets were given during the War). It is based on original sources  (e.g., invitations, list of guests), Stalin's and Molotov's archives, contemporary newspaper reports, and memoirs published by numerous more or less well-known attendees. (The copy I bought is published in 2019; I do not know if it is different from the version from 2011.)

The book is easy to read, even if one’s Russian (like mine) is far from impeccable. It is not well-written though. It reads like a dissertation. It is part of a large research project on Russia’s 20^th century history (volume 50 of that project) with often unnecessary repetitions of many details. It is structured in a very formal way—which, given that the banquets were also formally very similar, leads the author to say many times the same or similar things. It has a tunnel-like focus on banquets alone. While this is an advantage for those who are interested in the number of invitees per banquet and the lay out of the tables, it is a clear disadvantage when banquets, especially in the late 1930s at the peak of The Great Terror, are not considered within their political and human context. Thus, only once we learn that guests noticed Stalin’s unusually good mood which the author ascribes to the fact that he must have felt that that evening’s banquet provided a respite from a long day of Moscow Trials which were going on simultaneously. But we are not told a word about whose trial went on that day, nor what happened. (Information is easily available because the dates of both banquets and the trials are well-known.)

Despite these defects, the book is full of interesting and even important details. Moreover, it allows one to reflect on the people and the times. Banquets, hosted in various reception rooms of the Kremlin, included between 500 and 2000 people and were sumptuous affairs, especially if contrasted with generalized penury of meat, fresh fruit and vegetables that often was the case in  Moscow and even more so in the provinces. All produce and drinks however were Soviet-made. Compared to their equivalents organized by Hitler and his lieutenants and studied by Fabrice d’Almeda in The High Society in the Third Reich, Soviet banquets were more monotonous, less extravagant, and more modest. They were also more business-like in not (generally) including family members.  

There were, of course,  two groups of people at the banquets. The first, the hosts, are fairly invariant: it is the Politburo and top government officials, or more generally Stalin and the leadership (“stalinskaya komanda”). The guests are various groups of people. Many of the banquets were done after the May 1 or the  Day of the October Revolution (November 7) military parades and thus included mostly the Army and the Navy. There were also banquets for the New Year’s Day and for the Days of the Republics which were organized in Moscow in the 1930s showcasing artistic and cultural heritage of various federal republics (from the Ukraine to Tajikistan). 

There were several special banquets for the pilots that in the 1930s achieved some notable successes for the Soviet aerospace, including flying to the North Pole, saving sailors stuck in the icy northern desert, and flying long-range non-stop flights to North America. These banquets seemed to put Stalin in an exceptionally good mood because he treated pilots with special consideration, allowing them liberties that very few were granted, including having his toast twice interrupted by the same pilot, at two different banquets. At times, there were unusual scenes that in a more bourgeois Western settings  would have been unimaginable—as when Stalin invited the pilots to the leadership table and then began to hug and kiss each of them, which in turn led the entire Politburo to do likewise. With a dozen of pilots and more than a dozen of members of the leadership that implied perhaps as many as 150 or even 200 hugs and kisses. An almost California-like therapy of free hugs. 

            But there were more macabre scenes as well since the leadership, even if  the core was stable (Stalin, Molotov, Kaganovich, Kalinin, Voroshilov, and to some extent Mikoyan, Andreev and Zhdanov) included also the people who were, at various times, later purged and executed. For example (p. 158), “From June 1937 to April 1938, almost to his arrest, Kosior sat five times at that [leadership] table….In August 1938 Kosior’s wife was shot. And then he was arrested himself. He was taken to the higher level of punishment [probably torture]”. Overall, out of 21 people (excluding Stalin) who sat at the leadership table in 1937 and 1938, eight were shot and two killed themselves (p. 162). Thus almost half of the convives to that supreme table were killed by the main host. Not a usual occurrence. 

Nevezhin discusses at length the fate of Yezhov, who practically out of nowhere became the head of NKVD and proceeded to preside over the most bloody period of The Great Terror only to gradually have his wings clipped (ironically, appointed to be the commissar of river transport), be eased out of the positions of authority, and finally removed and executed (to be replaced by Beria). 

            One can only imagine what was the atmosphere around the main table in those days when Yezhov and NKVD could arrest (and were encouraged to do so) practically anybody and had two standing members of the Politburo executed (there was not enough time to go through the process of their formal demotion). We of course do not know what the conversations around the table were, but do have written evidence of various ministers (commissars) bitterly complaining to Stalin that Yezhov’s campaign of indiscriminate arrest and murder decimated their ministries and often took away the best people. They thus in their turn collected “kompromat” on Yezhov and his people in the same way that NKVD was collecting compromising documents on their collaborators. (In addition, having your collaborators thrown into jail was often a prelude to having yourself being subjected to interrogation and arrest; thus trying to defend them was also a preemptive self-defense.)

            Stalin appeared there as an arbiter since formally investigations were conducted by NKVD, so he could decide, God-like, to either forgive some of those investigated or to let the process continue, ending in most cases in executions, or in suicides. The latter is what Sergo Ordzonokidze, perhaps the least unlikeable of the Stalin’s komanda, was eventually pushed to do, as his fellow Georgian in this cat and mouse game, arrested first Sergo's closest collaborators (in the ministry of the heavy industry), then his brother and his wife, leaving Ordzonokidze only two options: to wait for his own arrest and probable torture, or to kill himself. 

            Molotov and Kalinin had also their wives arrested, and we know from Molotov’s conversations with Felix Chuev (that episode however is not described in Nevezhin’s book) that Molotov, while attending regularly meetings of the top leadership and seeing Stalin frequently in private, never once raised the issue of his wife. Molotov, as we know ex post, was probably right in doing so: her chances of being freed were greater if he said nothing that if he had asked for her release. This was the kind of perverse calculations that the court members had to engage in.

            The number of extraordinary episodes detailed in the book is huge. We learn about several State Jazz Orchestras that were often invited to perform at the New Year’s parties although Stalin did not appreciate jazz. Since every ministry competed with every other in having own musical orchestra, even NKVD under Beria created its own, professionally quite well-regarded one. I suppose NKVD had the means to make proposition attractive to the best musicians.

Nevezhin gives excerpts from Bukharin’s extravagant panegyrics to Stalin, published in “Izvestiya” when he was its editor: descriptions of the enthusiasm and happiness that enveloped all the guests when Stalin and his komanda would show up. Nevezhin does not tell us if Bukharin was really present at the banquets, or simply wrote what was expected of him. If he was present, as seems to have been the case, he must have sat at journalists’ place or journalists’ table. And it must have been galling to him, and truly impossible to describe, how a person who wrote “The Economic Theory of the Leisure Class”, and was Stalin’s equal, and even his conspirator in intra-leadership struggles must have felt writing such nauseating panegyrics.

  We know that personal lives of Stalin and his komanda were very barren. According to Stalin’s daughter he had only one interest: politics. They too. Banquets were a way of making such lives ever slightly less barren, but banquets  too, remained just ersatz oases in the lives full of office work, intrigue, fear and hate.