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Boris Kagarlitsky

The Revolt of the Middle Class


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

Chapter 1. The New Middle Class

The middle class was considered the social norm, but over time the norms

changed. Precisely because the concept of the middle class is diffuse and ambiguous,

it can be used to characterise and interpret the most diverse phenomena. To the degree

that the consumer society of the twentieth century gave way to the information society of the turn of the century, social differentiation was transformed. Traditional middle class of the XX century was in crisis already in late 80s but

a new middle class, linked to technological revolution, started emerging in the 90s.

Neoliberal project would never have reached the point of full-scale implementation had it not been for the technological revolution that began in the 1980s. It allowed to split big factories and geographically remove big concentrations of the working class away from the “centers” of global capitalism – without losing control over production process. The new middle class was a necessary element of this project.

Chapter 2 Standardised Diversity

This chapter deals with the new global culture of the middle class as it was shaped throughout the 1990s. This standartisation includes movies, food, toys, lifestyles. An important tool of cultural standardisation is the computer. From the moment when Microsoft installed Windows as the worldwide operating system, millions of people started using the same programs, recognising the same icons on the screens of their monitors. A single language of symbols is retained even as the programs are translated into dozens of languages. Once the programs have been translated from English into other languages, they are eventually appropriated by millions of users, becoming “theirs”, and being transformed into part of their own culture.

Cultural standardisation is ensured by the markets. One of the demands of neoliberal theory is for an end to protectionism. This means that culture created in, for example, Finland, has to compete “on an equal basis” with American mass culture. The question in this case is not one of quality, but of the capacity of the market, of the number of consumers. However, this new culture reaches “the frontiers of banality” when resistance of “consumers” becomes a problem.

Chapter 3. The End of Arrogance

Technological revolution created its own myths, illusions and superstitions – what Marx called “false consciousness”. Privilege is dressed as “meritocracy” and market winners are seen as rewarded for the best performance. But the crisis of neoliberal model that erupted in 2000-2002 undermined these ideologies. The myth of meritocracy dissolves before one’s eyes, and the “network person” enters into conflict with the “corporate chief”. Class contradictions in a new form reemerge within “information society”. In essence, society is faced with a choice: intellectual property, or information freedom. The reason is simple: the laws of information dissemination contradict the laws of the market. The more capitalism shifts information technology to the forefront, the more the system runs up against processes whose development has a completely different and quite unfamiliar logic. Attempts by the old world to subordinate the new to its logic are doomed in advance. The system faces a crisis of control, new forms of resistance and insubordination emerge. This crisis is getting deeper once stock market goes into depression, companies collapse, debt becomes a major problem both for individuals and for businesses. Attempts to reestablish control through traditional and cyber- policing provoke increasing resistance.

Chapter Four. The Limits of the Model

The position of the middle class is now being undermined by the erosion of the welfare state. Antisystemic threats come from three different sources. Neoliberal model is facing the revolt of the excluded (or “marginal) masses, the working class is coming back with its traditional agenda (becoming again, in the newly industrialized countries, revolutionary rather than reformist). And finally, the middle class (both old and new) is in revolt. The system can’t sustain its own middle class and that means that the middle class becomes frustrated, angry, aggressive. Its young members are joining different radical groups and we see the resurgence of the left alongside with new protest movements coming to the fore.

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

Chapter Five. The Crisis of Neoliberalism

Economic crisis of the system is structural. It is routed in the contradictions of technological change as well as in the basic contradictions of the Neoliberal model itself. That means that this crisis can’t be overcome just by minor “corrections” or will disappear “naturally” with the end of recession. The market cycle is not the cause of the crisis, it just releases the contradictions, which were “dormant” in the earlier years.

Without excessively high profits this system loses stability and to keep it going someone has to be thrown overboard. The question is: who? Economic crisis turns into ideological crisis, delegitimisation of the system in Waden Bello’s words. Neoliberals put a lot of effort into making their measures irreversible, this making the system unreformable at the very moment when reforms were desperately needed by the ruling class itself. Now even if reforms are to happen they will come as a result of mass anti-systemic struggles, shaking the system. This is only one of the possible scenarios, because there is always an alternative possibility: replacing the capitalist system with something different, and hopefully, better.

Chapter 6. The Generation of Seattle

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

Chapter Seven. Archetypes of Resistance

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

All in all, the authors of the nineteenth-century proletarian song were correct. Neither god, nor tsar, nor even a hero will provide any help. People attain their liberation with their own hands. Through their collective efforts.

Chapter 8. The Twilight of Social Democracy

New Labour and Third Way demonstrate that Social Democracy is losing its historic role as a reformist force capable of both changing and saving capitalism. To a certain extend German Social Democracy managed to regain a social role by becoming capable to express an anti-war sentiments of the society. But it isn’t enough for the long run. The far right is coming back as well as the politics of class struggle. Class struggle, or a “clash of fundamentalisms” – those are the only real alternatives for the twenty-first century.

Chapter 9. Networks of solidarity

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

New concept of public enterprise must be worked out – democratic, transparent, consumer-friendly. And a new system of public investment must be linked up with new models of participatory democracy.

Conclusion. Revolt of Revolution?

The middle class is turning against the system, but does this mean a new revolution coming? Or a reactionary uprising of frustrated consumers defending their privileges against the elites as well as against the masses? Much depend on politics. But if the anti-systemic challenges come together (uprising of the excluded, workers’ revolution and the revolt of the middle class), then we see the beginning of the most important social transformation. In any case Neoliberalism is finished. The big question, remaining open, is:

what’s next?

Boris Kagarlitsky

The Revolt of the Middle Class


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

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

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


The circuit has been completed. The masses, to secure their pacification, have been transformed into a middle class. But the elites have destroyed the social compromise. War has been declared, and the middle class, against its will and to its enormous surprise, is again being turned into an ungovernable, mutinous mass of the kind that caused such alarm to bourgeois thinkers in the late nineteenth century.

Chapter 1. The New Middle Class

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

had its origins in late feudal times, when it was understood to comprise the bourgeoisie that occupied an intermediary position between the aristocracy and the “people”. Every new epoch in the history of capitalism has developed its own idea of the middle class. Nevertheless the concept of the middle class, for all its conditional nature, its diffuseness and near-indefinability, has been very important to the bourgeois system. It has served as an expression of the bourgeois idea of order and comfort, of stability and honesty. It represents the “golden mean” of social life, the social norm, the model of well-deserved prosperity. “The middle class is the basis for the stability of society!” sociology textbooks used to maintain categorically. “The middle class is the vital factor upholding democracy!” the political science texts declared in their turn.

A large sector of society strove to be “middle class”. To belong to the middle

class meant to be normal, to meet all the requirements of social life, while conceding nothing to others.

In the mid-twentieth century, the main criterion for membership of the middle

class became consumption. In this respect the Marxist concepts of class, with their basis in property relations and wage payments, were not so much cast off as pushed into the background. Consumer society supplemented them with its own norms, much more conditional in nature but no less real for this fact. The working class was supposed to strive to become middle class. Instead of the freeing of labour, there was freedom of consumption. Meanwhile, it was quite possible to exchange the “shining future”, as promised by the revolutionaries of the nineteenth century, for a modest happiness and well-being in the present – especially since this well-being had not been provided gratis, but had been won honestly in the course of class battles. The middle class was considered the social norm, but over time the norms changed. Precisely because the concept of the middle class is diffuse and ambiguous, it can be used to characterise and interpret the most diverse phenomena. To the degree that the consumer society of the twentieth century gave way to the information society of the turn of the century, social differentiation was transformed. Most of the people whom Western sociology defines as "middle class" are better considered as worker aristocrats, who are still very much dependent on their ability to sell their labour power, and who accordingly in the 1990s have lost out. Even where the real incomes of employees at specific levels haven't fallen, the cutbacks to middle management in both state and private sectors have meant that the usual remedy for mediocre living

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

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

A Cure for Revolution

At the end of the 1980s, the bourgeoisie won a historic victory. It not only managed the solemn exorcism of the “spectre of communism”, but also put an end to a whole era of concessions that had been torn from it by the labour movement and by

social democracy. When the ruling class proclaimed a return on the ideological level

to the original principles of Adam Smith and other prophets of “classical capitalism”,

this signified that the bourgeoisie had overcome its fear of revolution. This fear had provided a subtext to the social and economic policies of the Western elites for at least a century. The fear of revolution had arisen together with the European workers’ movement. The socialist parties of the nineteenth century were radical; they did not demand concessions, but a fundamental reordering of society. The fear increased after the First World War, when the revolution in Russia showed that this reordering was

possible. The Russian Revolution, however, also showed how far the reality of the

new society was from the initial ideal. The revolutionary breakthrough into the “realm

of freedom” turned out to be a far more difficult and prolonged process than the first

generations of socialists had anticipated. The outcome in the Soviet Union, was not

the “realm of freedom”, but the Stalinist gulag. Nevertheless, the Soviet Union played a huge role in democratisation and the development of social reforms in the West. The “Soviet threat” and the Cold War

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

also showed that the communist system was in profound crisis. It was now unable either to ensure rapid growth, or to reform itself, and while relying above all on coercion, it was incapable of applying repression on the former totalitarian scale. From this point it was clear that the “end of communism” was merely a question of time. The Eastern bloc had been hopelessly vanquished in the Cold War, and left- wing ideas had suffered a defeat. The hopes of the radicals had turned out to be illusions. Instead of being the prologue to a great revolution, the events of 1968 had become the starting point for a prolonged, world-wide counteroffensive by the right wing.

In the early 1970s, the World Economic Forum began to meet each year in the Swiss resort centre of Davos. It was here that the Western political and business elite started consultations in order to develop the new project that later received the names of “neoliberalism” and “globalisation”. This project took on its characteristic features over a considerable period, gradually becoming more radical and aggressive. The initial discourse centred mainly on stopping the increase of “social costs”, considered to have gone beyond permissible bounds. At a time when ideologues of the new left still saw the dawn of a new revolution, and when social democrats (including even thinkers such as Jurgen Habermas) were prophesying a continuous expansion of the “social sphere”, the actual rulers were preparing and implementing a complex counter-reformist project of social restoration. It was essential to drive back the advance of the “social sphere”, while at the same time reducing the risk of revolution to a minimum. The idea of a return to the “values of the free market” had long been propagandised by conservative economists, but it had not been taken up in the 1950s and 1960s. The supporters of such notions were perceived by society as “economic romantics”, as ideologues who were hopelessly out of touch with real life and who most importantly, did not understand the needs of the scientific-technical revolution. From the mid-1970s, however, the situation changed rapidly. The ideas of conservative ideologues were suddenly in demand. Market romanticism received a new name, neoliberalism, and was granted official recognition by state officials, international financial institutions, and business leaders. The first attempts at social restoration were made in the mid-1970s in Latin America, and were accompanied by ferocious terror against left organisations, trade unions, and the free-thinking intelligentsia. Although European right-wingers have

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

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

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

So Was There a Spectre?

The culmination of the neoliberal offensive was the collapse of the Soviet Union. The technological revolution posed a challenge to which the Soviet system was in no condition to respond. The defence plants and “closed” research institutes were capable of producing first-rate technologies, at times outstripping Western developments by whole years even after the decadent state halted all financing. But the rigid, ossified system proved incapable of implanting information technologies in everyday life in a massive fashion. By rejecting reforms in the late 1960s, the Soviet bureaucracy doomed itself to dependence on the West. Technological innovations and consumer goods for the population were paid for by exports of oil and gas. The Soviet Union gradually became integrated into the world economy as a raw materials appendage of European capitalism. The ultimate dream of the Soviet elite came to be joining the elite in the West. In Eastern Europe, it was precisely the bureaucratic elite that initiated the change of system.

During the first half of the twentieth century Russia, and then the Soviet Union, had become the symbol of socialist hopes. As the end of the century approached, the neoliberal wave swept across Eastern Europe and the former Soviet republics. The destruction of the welfare state took place here on an unprecedented scale, in some cases putting in question the elementary conditions of civilised existence for the bulk of the population. The downfall of the USSR was accompanied by a global crisis of the left. The international communist movement, which had viewed the Soviet Union as its ideal, ceased to exist. It is significant that the parties to survive were mainly those which from the late 1970s had taken their distance from the “Soviet brother”, earning themselves the sobriquet of Eurocommunists. Those on the left who suffered least in moral and psychological terms were the people who from the first had denied the Soviet Union the right to call itself socialist. But this does not exhaust the question. Even if the socialist character of the Soviet Union was more than doubtful, its revolutionary and socialist origins were obvious. It was this genetic heritage that for many years allowed the Soviet system to feign socialism more or less successfully. All leftists, from social democrats to Trotskyists, suffered moral damage from the defeat of the Soviet Union. Even Eastern European socialists and Marxists, who in the 1970s and 1980s had fought to change the system, were subjected to repression. Their language, slogans and culture were discredited. Meanwhile, for leftists to renounce their traditions and language was suicidal. To stop talking about socialism and to reject the past did not mean to renew the movement, but simply to quit the ideological field of battle, leaving it to the neoliberal propagandists. Numerous high-paid writers have declared that history has come to an end, and that the spectre of revolution has been definitively banished. The spectre, it is argued, should not only be driven out, but also forgotten. It should vanish without trace. The final victory over the Marxist spectre needed to be consolidated by comprehensively purging any vestiges of the socialist tradition and language from public usage. Once deprived of these remnants, the defeated classes would become politically dependent, as though deaf and dumb. Marx wrote that when the proletariat acquires consciousness, it is transformed from a “class in itself” to a “class for itself”. When the class loses this consciousness, it

stands to be turned once again into an unthinking mass, a “workforce” capable only of selling itself cheaply on the labour market. By the end of the 1980s the defeat of the industrial proletariat in Western Europe and the US

was an accomplished political fact. In the case of Eastern Europe one has to talk not about a defeat, but

a catastrophe. The communist system that had held sway for decades had deprived workers of their

capacity for self-organisation. Trotsky observed in the 1930s that the bureaucracy had expropriated the

proletariat politically. As they departed from the scene at the end of the 1980s, the state communist parties left workers without organisation, without ideology and even without their own language.

Race to the Bottom

While the left suffered ideological defeat, the trade unions finished up in crisis. Everything which the labour movement regarded as its historical conquests during the twentieth century was placed in doubt. This did not mean, however, that industrial workers as a social type would disappear from East and West. This was certainly not the task posed for the neoliberal counter-reform, and still less was it the purpose behind the technological revolution. Nevertheless, the relationship of forces between employers and workers in industry has changed radically. We have seen the beginning of what trade union activists call the “race to the bottom”. Each enterprise, each sector and each country is faced with the fact of ruthless competition. The labour

market is becoming global, but only for capital. Shifting from country to country, money seeks out the cheapest workers. For workers in general, there is only one choice: to renounce their social conquests, to reconcile themselves to a fall in their living standards, and to agree to heightened exploitation in the hope that by doing so, they will get to keep their jobs. The participants in the race are workers, but the winner is always capital. Every enterprise that lowers its social costs forces all the others to do the same. States become caught up in the race. If governments in the 1950s and 1960s competed to raise the living standards of their citizens, now they compete just as furiously to lower these standards. This goes ahead with impunity, since the citizens themselves, playing by the new rules, recognise that there

is no alternative.

Not everyone, by any means, takes part in the race to the bottom. If the whole of society had been rapidly and uniformly degraded, the neoliberal model would not have lasted ten months, let alone ten years. In parallel with the social degradation of the traditional industrial proletariat, a new middle class has been rising up. During the early stages, this new middle class has not only been spared from suffering, but has made big gains. The more production becomes diffused, the more people are needed to oversee it. These people are managers, staff members, office workers and systems controllers – members of the middle class. Initially, the vast army of white-collar employees is much easier to control. In these quarters, the ethos is of bureaucratic discipline and of readiness to obey orders. As in any administrative system, the main stimulus is the hope of advancement through service and in line with the demands of the organisation. Collective conflict between workers and employers over questions of wages and job conditions is replaced by individual competition between company employees striving for promotion. The neoliberal counter-reform took place thanks to the support of the middle class. The middle class itself, however, only reached massive dimensions thanks to the social reforms of the mid- twentieth century. In no way is it a product of the market economy, which throughout the entire epoch of “classical” capitalism invariably reproduced the polarisation between rich and poor, bourgeoisie and proletarians. Redistributive programs, diverse forms of social insurance, state investments in education and health, and the growth of government spending on development created the conditions under which the middle class took shape. On the historical level, the middle class is just as much the creation of the welfare state as the proletariat described by Marx was the creation of capitalism. The mass middle layers in Eastern Europe and Latin America are the product of state redistributive policies to an even greater degree than in the West. But if the middle class has not been the gravedigger of the welfare state, it has at any rate provided a massive base of support for the right-wing politicians who have begun a crusade in the name of freeing up the market. The social arithmetic has changed. In the 1940s, redistributive measures created the middle class, putting the squeeze on the rich. By the 1970s, it was a matter of the middle class itself making a contribution to improving the situation of the poor. In hindsight it became clear that it was the middle class that had received most of the benefits of the welfare state. Nevertheless, the same middle class showed an astonishing and at first sight suicidal reluctance to support this system. After consolidating their position in the early 1960s, the middle strata now felt themselves to be independent. They perceived their situation in society as standing to reason, as requiring no justification. In the 1940s and

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

movement. Competition between communities undermined class solidarity. In the final decade of the twentieth century the same model was applied in Europe. Social contradictions are transformed into a question of inter-ethnic relations, and are insoluble as such. In this respect they are just like ethnic problems, since solving them is possible only through social transformation, which is not even up for discussion. “Two nations” was the term used by the radical journalist Benjamin Disraeli when he described the social contrasts of Victorian Britain. But the “two nations” of that time spoke the one language, belonged to the same race, and followed the same religion. In the epoch of globalisation, Disraeli’s words are taking on a new concrete meaning. An ethnic division of labour is taking shape. It is as though the lower social orders are ethnically and culturally “outside society”. Accordingly, their misfortunes, if anyone should chance to notice them, are not perceived as a manifestation of social conflict, but as the result of racial or cultural discrimination. Instead of fighting for the rights of low- paid workers, compassionate liberals seek laws guaranteeing the rights of religious minorities, humane treatment of refugees, and the right of muslim girls to wear the chador during school lessons. Solidarity is replaced by benevolence and religious tolerance.

The New Social Stratification

The illusion has arisen that post-industrial workers are supplanting industrial ones. This is not entirely correct. The reorganisation of industry is in fact creating a significant number of “post- industrial” jobs, but for the ruling class, unlike the intellectuals who discuss the “end of work” and the “beginning of the information epoch”, this is not what is important. The main thing is that a new social structure is taking shape in the countries of the West and on a world scale. Society is disintegrating into a mass of “marginals”; an organised but relatively small working class; and an ever-growing middle class. This social structure seems absolutely secure. The workers are ceasing to be a “dangerous class” for the simple reason that in the vital centres of the system their numbers are becoming few. The workers can no longer seize power in Berlin or Paris, since they do not make up a majority there. The marginals can rise in revolt, but a revolt is not a revolution. A revolt can be put down by the police, and since the marginals are often also foreigners, immigrants and illegals, they can easily be made scapegoats; they can be blamed for all the ills of society, and the extreme right can be sooled onto them. Neofascist parties are again finding themselves in demand, and are receiving financing and access to the mass media. Unlike the situation in the 1920s and 1930s, however, the ruling elite are not about to admit the extreme right to power. Such a situation arises only when the traditional ruling classes are in mortal terror, and see no other means of averting revolution. This time, the elite have overcome their fear. The ultra-nationalist organisations, however, are taking on a new role, as an element of social control. When they terrorise foreigners, they lend support to the established ethno-social order, while preventing cultural antagonisms from expanding into class conflict. Let the leftists and politically correct intelligentsia mobilise to resist the nationalists. So long as this struggle has a fundamentally cultural character, it is not dangerous to the system. Meanwhile the middle class, comprising the majority of Western society, is proclaimed to be the guarantee of stability and the basis for democracy. This middle class is doomed to live and work according to the rules, in exchange for the promise of careers and prosperity.

Chapter 2

Standardised Diversity

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

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

Cultural Integration

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

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

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

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

Cultural Restoration

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

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

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

The Post-Soviet Paradox

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

put an end to the Soviet tradition, the only one this intelligentsia possessed. This fanaticism for destruction (perhaps the last thing to remain alive from all of revolutionary culture) was not only an extremely powerful emotional principle, but also became the intelligentsia’s sole unifying idea, in the process making the appearance of any other creative ideas impossible. It was assumed that the ideals of the free market would automatically give birth to a new culture. Such naïve ideas, however, could arise only in the Soviet population, without experience of the market and hence with no conception that the market, and bourgeois life in general, were hostile to culture as a matter of principle (it was precisely for this reason that all the waves of innovation in Western culture in the nineteenth and twentieth centuries were based in one way or another on anti-bourgeois feeling). The disintegration of Soviet culture also spelt the end for the anti-Soviet opposition in culture. Interest in the underground of the 1970s and 1980s began rapidly to evaporate as these cultural phenomena lost their underground character; this applied also to the “new avant-garde”, with its semi-legal art exhibitions and samizdat novels. It was not that these works of art were bad; on the contrary, many were of high quality. But they had fulfilled a particular cultural-political function, which had disappeared along with the Soviet order. An exception was the rock culture of the 1970s and 1980s, which continued to develop even after being legalised. Here, big money played the same corrupting role as in the West. By the 1990s such rock idols of the 1980s as Andrey Makarevich had been corrupted, and turned into models of snobbism and bourgeois conformism. The heroes of the early 1990s, whether Alisa, DDT or Lyube, also compromised themselves, often losing their capacity for innovation. But they were replaced with striking speed by new faces and new names. In this respect, the picture differs little from that in the world at large. Show business has the ability to commercially appropriate the counter-culture and at the same time to destroy it; the works of Tom Frank provide a brilliant description of this process 1 . But at the same time as the counter-culture loses its heroes, it gives birth to others, whom it will also most likely expend before long. There is a nutrient medium which is capable of reproducing itself, and of spawning ever new creative leaders whose self- affirmation requires them, at least initially, to throw down a challenge both to the official norms and to the “sold-out” and “corrupted” representatives of the previous

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

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

The Frontiers of Banality

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

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

Pokemon versus Cheburashka

In Russia, the pokemon series even aroused political discussions. The first television channel had only to start showing the cartoons for a whole stream of criticism to pour forth in the press. Why did we need all these little monsters flashing onto our screens when our own wonderful heroes, Kolobok, Cheburashka and Yozhik, were in the shade? The first channel was even forced to put a special broadcast to air, defending the pokemons and showing how they were linked to Japanese culture. The upshot, however, was that the series ceased to be shown. Significantly, it was replaced not by Russian cartoon characters, but by Disney ducks and other creatures of American mass culture. The children, of course, reasoned quite differently; they watched both the Russian Cheburashka and the Japanese pokemons with equal delight. In adults, this aroused even greater alarm; the younger generation could not tell good from bad. As it happened, the artistic level of the Soviet cartoon films of the 1970s was far higher, both in the quality of the artwork and in literary terms, than that offered by mass culture in its American or Japanese variant. Meanwhile, it seems that extremely labour-intensive puppet cartoons were produced only in our country. Cheburashka, devised by the children’s author Eduard Uspensky, is in itself interesting, but there is nothing to be said on a literary level for the Japanese product, based on simple comic books.

The chief pokemon, Pikachu, is of course very appealing, and it is no accident that children eagerly buy clothing with his picture on it, and decorate their rooms with his portraits. At times, the creators of the series managed to think up something funny or original, as for example when the pokemons, having lost their masters, stop fighting and sit drinking tea and reflecting on life. The series also features a quasi- Freudian motif; unlike the creators of American cinema villains, the writers of the pokemon series pose the question of why the evil characters became evil. In full accord with the theories of Doctor Freud, it turns out that each of the bad characters suffered some moral trauma in childhood. Mass culture demands that good should always triumph. As a result, the villains of mass culture meet with failure again and again, as many times as episodes about them are produced. This has already become a topic for jokes. Unlike the American characters, however, the negative heroes of the

Japanese cartoon films turn out to be capable of reflection; they recognise themselves as failures, and dream that at least in one episode they might be lucky, and at last begin to evoke pity in the viewer. Much as the creators of the series might try to avoid banality, however, it is ineluctable. Things could not be different, since the Japanese animators have to come up with a mass product, turning out a hundred episodes a year. This does not make for aesthetic subtleties. Unfortunately, it is precisely this mass character that predetermined the victory of pokemon. Only four films were ever made about Cheburashka. The pokemons attacked along a broad front. This included daily cartoons on the television, toys in the shops, T-shirts with pictures of the heroes, and God knows what else. The products of traditional artisans were of better quality and incomparably more refined than those of modern industry, but they were doomed to give way before the onslaught of mass production. The same is happening with cartoon films. The advent of pokemon does not by any means signal the demise of Cheburashka and his friends, since the latter will stir the imagination of children just as in the past. But it is no longer possible to get by without mass production. In this regard, it is worth considering what happened in Finland. Instead of complaining about the offensive by American and Japanese mass culture, the Finns started fighting

it using its own methods. The stories about Mumi-Troll, by the wonderful Swedish-

language writer Tuve Janson, have provided a basis for mass production. This is now

a whole sector of industry, involving books, toys, comics, and children’s clothing.

Mumiland not only competes with Disneyland, but provides children with a quite different experience, since the articles to be found there are quite real – household utensils, an old typewriter, and jars of jam. In essence, the world of Mumi-Troll romanticises the way of life of the middle and working classes in provincial Sweden. Naturally, Mumi-Troll has appeared on the television screen, with the help of the Japanese, who put the character into mass production. The profundity, elegance and beauty of the Scandinavian stories is combined with mass editions and the efficiency of Japanese technology. Janson’s heroes have started speaking not only in their native Swedish and Finnish, but also in English, German and Japanese. No-one need worry about the future of Mumi-Troll. It was easy for the Finns; they never had the possibility of simply shutting themselves off from “alien influences”, and as a result they had to look for serious answers to the challenge posed by the “Americanisation” of mass culture. Aside from

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

The Problems of Standardisation

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

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

respect as well, the situation has become incomparably worse than it was twenty years ago). By no means everyone, however, sees the parallel existence of these two worlds as a problem. So long as the residents of the poor districts raise no political demands, they remain merely a cheap and accessible labour force. This means that the inhabitants of the “prosperous” world receive all their services far more cheaply than their “class brothers” in the West. However for the transnational bourgeoisie to rule effectively, it needs masses that share the same values, but which are far better rooted in the day-to-day life of their own country. In short, it needs the same global middle class. In the late 1980s and the first half of the 1990s the “social project” of transnational capital could be considered brilliantly successful. A new middle class had not simply taken shape on the “periphery”, and had not just assimilated Western culture and values. It had also been educated in a spirit of haughty contempt for the “backward” local masses; for the older generation which was “unable to adapt to the new life”; and for the traditional culture and national history, which had finished up “on the sidelines of the world process”. Rejecting the values of the populist intelligentsia, the new middle class identified itself with the elite, counterposing itself to the “marginals” and “proles”. In Eastern Europe and Latin America this middle class saw itself as the support base for market reforms. It believed implicitly that it had been chosen to carry out historic tasks. The ideology and self-esteem of this social layer rested on a banal principle:

the middle class was a factor for stability. Like a mantra, the politicians repeated the formula: increase the size of the middle class, and society will be more stable. Moreover, the politicians themselves believed this uncritically. The middle class relished its new opportunities, entering into the “world of entertainments”, and despite some prophesies, not experiencing the slightest regret. The members of the class saw their rise as thoroughly deserved, convinced they were the cleverest, the most competent, and the best able to adapt. In short, since these people were the best, they were doomed to succeed, while the failures of the vast majority of their compatriots were seen as natural retribution for their backwardness and incompetence. The supreme expression of this ideology was the slang term “sovok” [this complex pun combines the word “soviet” with the Russian for “dust- pan” – tr.], which filled Russian speech and was invoked to characterise all the features of Soviet life and conduct. that posed obstacles to the attaining of success in

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

Plasticine Man

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

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

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

Chapter 3. The End of Arrogance

Every revolution creates its own myths, and the technological revolution is no exception. The flickering monitors hypnotised people. Enthusiasts predicted the beginning of a new age, opening up boundless possibilities, and most important, guaranteeing general happiness with a minimum of effort. The “new economy”, coming into being in a virtual world, promised to be completely free of the limitations

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


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

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

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

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

represents the loss of valuable time, and time is money. At worst, it is a sign of revolt, of sabotage. It is not surprising that the “network leaders” sooner or later wind up in confrontation with the “corporate chiefs”. The hatred of programmers for Bill Gates is already the stuff of anecdotes, and this is by no means simply the result of envy on the part of relatively unsuccessful people for a luckier colleague, even if this doubtless has a place. Above all, this hatred is a manifestation, on the level of offended consciousness, of a conflict between two principles. Professional people are well aware that their colleagues who make it to the top in business are far from being the best in the profession. Bill Gates resembles the ancient Egyptian priest in one respect:

he justifies his privileges on the basis of “knowledge”. The ancient Egyptian priest, however, had one indisputable advantage over Bill Gates, since he could hide his knowledge from the uninitiated, while Gates cannot. The corporation depends on experts who perform professional work, but are denied the right to control it. The experts become more and more convinced that the people who manage them have no special qualities, and are in no way better than the individuals under their command. The myth of meritocracy dissolves before one’s eyes, and the “network person” enters into conflict with the “corporate chief”.

The Cyber-Lords Versus the Business Guerrillas

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

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


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

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

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

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

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

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

Games with Big Brother

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

of the implanting of information technologies the “sorrowful age of entertainment” (ibid., p. 22). Pekka Himanen, in his book The Hacker Ethic, goes still further. He is convinced that in the information society, the “protestant work ethic” described by Max Weber is giving way to new values, to a “hacker ethic” in which work is no longer a duty and a responsibility, but a joy and a passion. Work is attractive not because it is paid, but because it is interesting. Himanen’s arguments immediately call to mind the prophesies of Marx concerning the abolition of labour in communist society, and its replacement with activity through which the free personality finds self-expression. Linnus Torvalds, the creator of the well-known operating system Linux, has also written that it was the joy of work that provided his main stimulus. When he was devising Linux, he did not expect any reward from the corporations. To the contrary, he risked making large numbers of enemies in those quarters, since a free, generally accessible and open operating system would undermine their business. Nevertheless, Torvalds was correct in anticipating that he would also make large numbers of new friends, and would have the chance to work with colleagues who would join voluntarily in developing the new program. He does not conceal the fact that he also had thoughts of fame, or at least, of his professional reputation. The practical experience of Torvalds serves as direct proof of Himanen’s theoretical postulate. Nevertheless, Himanen himself tips cold water on us; despite the spread of the “hacker ethic”, society is still dominated by the familiar values of the “protestant ethic”:

“Seen in a larger historical context, the continued dominance of the Protestant ethic is not so surprising when we remember that even though our network society differs in many ways from its predecessor, industrial society, its ‘new economy’ does not involve a total break with the capitalism Weber describes; it is merely a new kind of capitalism.” Unfortunately, Weber in this instance needs to defer to Karl Marx, with his strict economic categories. No sooner do we turn to such concepts as profit, wages, capital and hired labour than we find how artificial the distinction between “information” and “industrial” society really is. In real life, the new network structures turn out to be strictly subordinate to the traditional hierarchies, and placed at their service. This is why both Himanen and Castels, describing the triumphant

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

The Crisis of Control

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

bureaucratic state, but could not overthrow either one or the other (especially since throughout the twentieth century its struggle against the one ended, as a rule, in attempts to ally itself with the other). Finally the intellectuals, revolting against bourgeois discipline, looked for support in the “iron talons of the proletariat”, which in turn had been constructed in line with the “iron discipline of the factory”, created by the same capitalism. Hence the numerous personal and creative tragedies of the twentieth century, the heroic attempts at liberation which culminated in a new slavery, and so forth. The new technologies have changed everything. Creative workers have come to be needed by the economy on a massive scale. Capital has sought to control them, since whoever pays the piper must also call the tune. The familiar system of control, however, is crumbling to pieces. On the one hand, people are more and more left to their own devices even in the workplace. On the other hand, every attempt by the employer to restore his or her power turns into an encroachment not only on the “lawful” six or eight hours, but also on the workers’ leisure, on their very being. Marx maintained that the alienation of the personality stemmed from the alienation of workers from the means of production. Unable to control their labour, people were rendered defective in their other relationships as well. It might seem that the new epoch promises a solution to this problem. As Mikhail Delyagin notes, with the advent of the new information technologies “workers carry the key means of production in their own heads, and in the memories of their home computers, connected to the World Wide Web” 3 . In Delyagin’s view, this means that exploitation in the traditional Marxist sense is becoming impossible, its place being taken by “relations of cooperation between the owners of fundamentally different but complementary productive forces.” Accordingly, the “role of compulsion quickly shrinks, since people can be compelled to perform only routine, mechanical work” 4 . What Delyagin sets out here is an ideal corresponding to what ought to be, not to what actually exists. Relations of cooperation provide a perfect match with the logic of information technologies, but the problem is that this logic is in insoluble contradiction with the fundamental principles of capitalism. Since it is capitalist

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


4 Ibid.

relations that form the basis of modern society, it is these that triumph, distorting the development of information technologies and turning entertainment into a curse. Is compulsion impossible? Why should it be? The capitalist practice of exercising compulsion through money also differed from the accustomed violence; the worker was forced to do the boss’s bidding quite voluntarily, and even without the whip of the overseer. Compulsion through hunger and the stimulus of the dollar do nothing to aid the development of creative labour, but they do not make it impossible in principle. They simply render it defective and inferior, and at times agonising as well. Paradoxically, Delyagin himself writes very expressively of this when he takes up particular questions (in this case, the organisation of scientific research). From the very moment when the corporations and the foundations they established took over the administration of science, research degenerated into “the process first of seeking out, and then, to use a Soviet term, of appropriating specific funding. The researchers are forced to strive not so much to discover and interpret new phenomena, as to draw up their accounts in line with the ideas and sometimes prejudices of particular representatives of each specific grant donor. In the process, qualitative leaps in the development of human thought become an institutional impossibility, since grants, for thoroughly objective commercial reasons, are offered only for advances that are guaranteed, and hence in most cases insignificant. The grants are not meant to fund discoveries, but only to refine existing knowledge” 5 . At the same time as limitless opportunities to seek out the truth might seem to have opened up before people, society is surrendering to the forces of the market even the limited creative freedom it has possessed since the origins of academic science. University autonomy and freedom of research, together with other conquests of the enlightenment, are vanishing into the past. Creative freedom, the same writer states implacably, is inconceivable in an epoch when “significant numbers of scholars work to the orders of various commercial or political forces. This situation forces them willingly or unwillingly to adjust not only their conclusions, recommendations and methods of analysis, but also their initial observations to the demands of the client, as clearly defined in advance. Or else, they are forced to adjust to conventional ideological prejudices. From the point of view of its baneful impact on the intellectual

outcome, this latter is even worse, since the self-censorship of the creative worker is harsher and more effective than the usual censor” 6 . The moral agonies associated with such contradictions are no less horrifying than those suffered by a slave beneath the whip of an overseer. The traditional exploitation of workers’ labour is replaced by the total exploitation of their personalities. In other words, a situation arises in which there is nowhere to flee, since the creative process is not limited either by time or place. Subordinating it to the will of another, the individual no longer sacrifices a few hours of his or her “indispensable work time”, but his or her very ego. Instead of overcoming alienation, we make it all- embracing and all-permeating. The corporations find themselves in an ambiguous position. They need the creative personality – that is, they need workers who are capable not just of carrying out orders, but of giving free play to their fantasies, of formulating non-standard ideas. What is vitally necessary to them, however, is that these ideas should be of advantage exclusively to the corporation, that the behaviour of the workers should remain within the bounds set out in advance by the corporate elite. The American sociologist Nick Dyer-Witheford describes cyberspace as “an area of contradictions, in which capital’s development is both opposed and spurred by alternative initiatives.” In this sense, the information revolution is in its own way duplicating the fate of the industrial revolution; while aiding the development of capitalism, it simultaneously creates a new hired worker capable of entering into conflict with the system. It may be said that capitalism is once again failing to carry out its promises. The world of unlimited creative opportunities is turning into a system of routine procedures. “To create and operate computer systems, commerce had to summon the whole new strata of labor power, ranging from computer scientists and software engineers, through programmers and technicians, to computer-literate line and office workers, and ultimately to whole populations relegated to tedious, mundane jobs yet required to be sufficiently computer literate to function in a system of on-line services and electronic goods. As this virtual proletariat emerges, there also appears a tension between the potential interest and abundance it sees in its

technological environment, and the actual banality of cybernetic control and commodification” 7 . The Russian sociologist Alla Glinchikova also writes of a “crisis of control” which “post-industrial” corporations have to confront. Every new twist of the technological revolution creates in the elites a sense that the problem of effectively administering “post-industrial” workers will finally be solved, but instead, the problem merely becomes worse. From being a means of serving business, global communications are turning in pluralistic fashion into channels for the propagation of dissent. From being an “ideal medium for market transactions”, information links and network contacts are being transformed into a medium in which a new anti-market solidarity is taking shape, and new relations of equality are coming into being. For the corporate elite, however, the “light-mindedness” and “irresponsibility” of workers who break the corporate rules is a no less serious problem than direct resistance. Such spontaneous manifestations of human unpredictability are far more difficult to foresee, and it is not always clear how they can be punished. The corporations are unable to resolve a fundamental contradiction. Creativity cannot be simply an object of administration. It requires a certain freedom, and this freedom is fraught with the danger that people will unexpectedly go beyond the bounds of the permitted. Someone will write a program different from the one ordered, or will use expensive equipment for unplanned experiments. They will prefer playing computer

games to working on their e-mail. They will illegally copy for their friends software that has been paid for by the corporation. They will transfer money to the wrong account. The employer cannot rely totally on the self-control of the worker, but neither can the use of compulsion be effective. The system is torn between the poles of anarchy and totalitarian control. An embodiment of the first has been the revolt of the younger generation which did not begin in Seattle in November 1999 (it began far earlier), but which manifested itself there. The second has been embodied in the attempts to install a new police state in the US since the terrorist acts of 11 September


7 Nick Dyer-Witheford. Cyber-Marx: Cycles and Circuits of Struggle in High-Technology Capitalism. Urbana and Chicago, University of Illinois Press, 1999, p. 123.

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

Great Plans

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

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

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

The Technological Skyscraper

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

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

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


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

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

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


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

coincide with the overall dynamic, and which have the effect of correcting it. In the 1930s the great British economist John Maynard Keynes urged the state to take on an “anti-cyclical” function; when a slump began, the government should spend as much extra money as possible, and so create demand. In the epoch of the “new economy”, the same result was achieved spontaneously through massive investments in technological innovations. The only problem is that this cannot be continued indefinitely. The situation is like cultivating virgin soil; so long as there is land enough for everyone, and so long as it can be ploughed up and harvests obtained without any particular thought being given to fertiliser, growth will continue, and competition will remain minimal. The numerous firms that arose in the “new sector”

barely impeded one another. There was room for everyone. Accordingly, investments

in such enterprises were perceived as absolutely reliable, and highly profitable. The NASDAQ crisis was not merely a “correction” of stock-market prices. It was a symptom of the fact that the limits of the new market had been reached, and that from now on the “new economy” would live by the same laws as the old one. A second factor in the “economic miracle” of the 1990s was credit and stock-

market inflation. From the point of view of the neoliberal economists, the only

sources of inflation were state budget deficits and the printing of paper money by the government (the first of which, they considered, automatically gave rise to the second). In reality, the growth of share prices and increases in the indebtedness of

companies and individuals are also a form of inflation. It is simply that this inflation is pumped up by the private sector, and is not expressed in a prompt fall in the exchange rate of the currency. As a rule, cash does not figure here, and the state can therefore avoid printing unsecured banknotes. For a time, goods and services continue flowing to the consumer, although there is nothing with which to pay for them. As with our

MMM tickets and GKO bonds, the sale of shares allows participants in the market to

solve the problem of cash flow up to a certain limit, though in reality everyone is living above their means. In essence, what we have here is deferred inflation, just like the deferred demand that accumulated in the Soviet system. The soaring prices for shares in computer firms represented no more than a redistribution; funds left other sectors and went there. In essence, traditional industry was paying to support high technology. But the “new economy” in its turn was supporting the economic growth that everyone needed. The shares of industrial companies also rose in price. Up to a point, everyone was satisfied.

This, however, could continue only so long as the actual possibilities of growth in the new sectors were not exhausted. At a certain moment it was discovered that people had been living beyond their means for years. The time had come for them to pay their bills.

Our Burdensome Debts

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

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

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


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

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

The Unsleeping Eye

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

instrumentalities simultaneously seek the adoption of laws that would allow them, quite openly, to read and listen to things not addressed to them. State hacking is becoming normal practice, while the very same governments declare that draconian measures are needed to banish hacking from society. Since 11 September 2001 the position of the government bureaus that intercept our e-mails, read our faxes and listen to our conversations has been dramatically simplified. The American legislation is being hurriedly adapted to the increasing demands of the security services. These services, in turn, are demanding additional budget allocations to allow them to carry out ever-greater tasks. Parkinson’s famous law operates here in the most direct fashion. The bureaucracy multiplies as if by cell division. There is no reason to suppose that it is especially important to Big Brother that he should know everything about you, down to the smallest details. It is simply that the new technology assumes the erection of ever new structures, with their budgets, staffs, and chiefs.

Meanwhile, the electronic surveillance systems, for all their sophistication, defer in their effectiveness to everyday informers. The latter, unlike employees in other areas, are not threatened by staff cuts associated with technical innovations. Back in the Cold War years, American intelligence was famous for wasting millions of dollars in an unsuccessful effort to find out, through electronic means, the calibre of a new Soviet cannon. The despairing Americans turned to the British, who took a simpler approach: they broke a lock during the night, measured the calibre with the help of a ruler, and then in place of the broken lock installed a precise copy, at a cost of $80. The approach of the French, however, was simpler still: their representative in West Berlin phoned a Soviet colleague and asked the calibre of the weapon. The Soviet official replied that the cannon was not secret, and invited the Frenchman to a picnic, where he showed him the tank and plied him with vodka at great length. During the Iraq war of 2003 high-tech weapons and electronic surveillance, contrary to the US military propaganda, also failed to perform. Missiles missed targets by hundreds of miles ending up in the neighbouring countries. Many of “targets” reportedly hit happened to be primitive card-board models. Antiaircraft complexes supplied with the most advanced “fiend-or-foe identification systems” successfully destroyed friendly jets. The effectiveness of electronic surveillance is not great, but when combined with conventional methods, it yields the results demanded of it. This is particularly

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

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

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

The “Postindustrial” Revolution

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

own laws. Pride is being replaced by resentment and anger. Before our eyes, the conditions are ripening for a new social conflict, which could turn out to be no less dramatic than the class struggle of the twentieth century. Will it perhaps be the offended techno-elite, not the industrial proletariat, that finally becomes the grave-digger of capitalism?

Chapter Four. The Limits of the Model

By the mid-1990s the neoliberal reform had culminated in full-scale success. Ideologically and in programmatic terms, it was sealed in the form of the “Washington consensus”, shared by practically all the governments of the world and by the overwhelming majority of “serious” economists. In the press and in academic publications, the term “the narrow corridor of possibilities” began appearing. This meant that whoever was in power, whatever they had promised during the elections, and whatever ideas they were guided by, the economic policies of any government were strictly defined by the framework, outlined in advance, of the neoliberal “corridor” – privatisation, deregulation, cuts to social spending, and the liberalisation of foreign trade. The only allowable discussion was on the question of how quickly progress should be made along the path sketched out earlier. The direction of movement was no longer discussed. Except for a few pariah states, the whole world accepted the new rules of the game. Not only bourgeois political parties, but also their social democratic opponents acknowledged that there was not and could not be any alternative. Unanimity triumphed not only among the politicians, but to a substantial degree among the intellectuals as well. From being the impassioned prophets of a looming tempest, the opponents of the system were transformed into something between court jesters and village idiots. Meanwhile, the tempest was indeed looming, and the less we were supposed to talk about it, the more serious its signs became.

Antisystemic Threats

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

point to acknowledge this. The new threats, however, were perfectly real, and by the late 1990s were making their presence felt.

The first threat to the new order was the revolt of the “marginals”. The ideologues and practitioners of the counter-reformation of course recognised that such

a development was possible and even inevitable, but they were quite incapable of

foreseeing that the revolt might take on really serious dimensions. It was only the terrorist acts of 11 September 2001 in New York and Washington that forced the entire world to start talking about the threat of a “new barbarism”. Just as the scale of the problems had earlier been underestimated, after

the September tragedy they came to be exaggerated. Talk of a “new threat” and “extremism” became an ideological fashion, a justification for state policy. It is

ironical that as a panacea the authors of the official reports and leading articles urged

a continuation of the same neoliberal course and a broadening of the “middle classes”. The inability of the official ideologues to analyse the real causes of the sickness, and to propose effective remedies, is not hard to explain: the system cannot admit that it is itself the main source of the problem. To the degree that destitution seizes hold of an ever greater mass of people, the social base for all forms of extremism grows as well. Ideologically, the protest takes the shape of endless versions of fundamentalism. Its adherents are not only followers of political islam, convinced that with the help of the internet and of terrorist self-sacrifice they can return the world to the ideal state in which it found itself somewhere between the seventh and ninth centuries. The fundamentalists are all those who, protesting against the injustice of the new order, seek intellectual, political and moral salvation in recollections of a “golden age”, a “pure islam”, “national greatness”, or “communist law and order”. This “golden age” has nothing in common with real history. It is nothing more than a utopia projected back into the past. Initially, such movements struck the ideologues as rather amusing. The glossy journals were delighted to publish snapshots of demented old women marching through the streets of Moscow with portraits of Stalin, and related horrifying stories of muslims trying to cover women in the chador. These images were intended to strengthen the system by providing graphic evidence of the futility of protest. Reasonable and progressive people, even if they still had doubts, were nevertheless supposed to recognise the advantages of liberal Western civilisation.

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

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

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

the “periphery” of the system. This, however, did not prevent it from shaking the world.

Now finally a serious threat has arisen where it was least of all expected. On the political horizon looms the global revolt of the middle classes. The efforts of the elites over many years to found a new middle class have borne fruit. Even in the most backward countries, this category of people are now present in massive numbers. But the larger the middle class becomes, the greater the difficulties of satisfying it, and the more resources go on maintaining its lifestyle. The ideological and social inertia of the system is such that the numbers of the middle class have everywhere, and long since, exceeded the economic needs and capabilities of capitalist society. On the other hand, the promises of neoliberalism have not been fulfilled. The new middle class was promised not simply consumption, like its precursors of the 1960s, but also a fuller, more interesting life, and limitless opportunities for growth. Meanwhile, another prospect has appeared on the horizon:

the inevitable stagnation of the system, a stagnation exacerbated by the exhaustion of the potential of the current stage of the technological revolution. In many ways, the position of the new middle class of the early twenty-first century replicates what happened to the intellectuals of the 1960s. After the Second World War, Fordian production and the consumer society created the conditions for transforming the intellectuals into a mass stratum. Millions of people began receiving higher education. Against a background of universal literacy and of the rapidly growing university system, the need for experts even in ancient Roman history and classical German philosophy, not to speak of specialities closer to everyday life, took on massive dimensions. Nevertheless, it was also clear by the 1960s that however much the education system expanded, there were objective limits to this growth. As the growth ended, it became clear that the chances of personal success for educated young people were also diminishing. The best jobs were already taken, and new ones were not being created. Meanwhile, the system displayed an extraordinary inertia, continuing to educate more and more people whose prospects were increasingly less enchanting. The impossibility of enjoying a successful career is not in itself a tragedy; people may find meaning in their lives through the pursuit of quite different values (of the kind proclaimed, for example, by the hippy movement and other subcultures of the 1960s). The problem, however, is that the system demands that people orient

themselves to a career and to personal success, while at the same time blocking or restricting the path to it. It is precisely this contradiction that gives rise to protest. One outcome was the enormous student revolt of 1968, with the intellectuals in revolt, barricades in the streets of Paris, and the emergence of a whole generation of young people for whom left radical ideas became a natural response to the self- evident injustice of the world.

Memories of the 1960s

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

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

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

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

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

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

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

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

The New Insurgents

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

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

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

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

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

Returning to the “soil”

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

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

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

completely from its roots. It simply does not have the money to do this. Its members can shift more or less freely about the world in search of work, but they cannot move their property as freely. The paradox is that the more they achieve, the more they are tied to a single spot. People who have nothing except knowledge are light on their feet. But a house they have built and a tree they have planted, a job they have won with difficulty, and simply the relations they have built up over years with colleagues and neighbours all have the effect of anchoring them to the “soil”. Ultimately, for all the standardisation, the way of life of the middle class is by no means uniform around the globe. The middle class, after all, not only consumes, but also creates its own culture (for which the entrepreneurial elite, naturally, has neither the time nor the desire). Therefore, every international fashion takes on its local characteristics, every global trend has its own local “stars”, and a general style becomes overgrown with its own peculiar variations. It is these “little distinctions”, to use Tarantino’s expression, that make up the plot of culture. In the countries of the “periphery”, the middle class can enjoy all the advantages of modern civilisation, but unlike the elites, it cannot wall itself off from the majority who are denied the chance to partake of this civilisation. Advertisements for elite housing in Moscow promise the buyers homes where they can mix “only with people from the same circles” (the servants do not count). Precisely similar advertisements can be found in Johannesburg or Mexico City. The middle class cannot allow itself the luxury of dividing itself off from its fellow citizens with the same wall. This is not just because of the cost of elite housing, a cost it cannot afford. It is also a matter of the social function of the middle class. Someone has to fill the space between the “elite” and the “masses”. Otherwise, society would simply cease to exist.

So long as the system is developing successfully, the middle class is able to play the role of a connecting link, a sort of interpreter between the transnational elite and society. Under conditions of crisis, however, the roles change. Then it is the middle class that is ready to call the elites to account on behalf of society, taking on itself the task of expressing, formulating and generalising the demands of the masses who until recently were “speechless”. Social injustice becomes a personal problem, and the thought of the oppressed and downtrodden prevents the middle class from sleeping at nights.

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

in the late 1960s. In Russia, this gap began opening up in 1998, the year that demonstrated what the promises of the elites were worth. In Latin America, the crisis is unfolding before our eyes. In sum, the social changes that began in the 1980s with the global triumph of neoliberal capitalism are still far from complete. The most interesting and dramatic period still lies ahead.

Chapter Five. The Crisis of Neoliberalism

The first years of the new century did not bear out the hopes of the global elites. As often happens, pompous ceremonies were followed by major setbacks. A warning should have been provided by the Asian crisis of 1997-98, whose consequences were overcome only through the spending of vast sums. The ideologues and journalists, however, reassured the world with references to the peculiarities of the “new economy” which had triumphed in the late twentieth century in the US and Western Europe. According to this theory, we have entered a new phase of history in which the main factor of development becomes the capacity for innovation that is said to be an organic quality of Western culture. The Asian countries, which were oriented toward industrial production, were simply incapable of becoming part of this marvellous new world. “Globalisation” became not just the slogan of the day, but also the justification for all sorts of outrages occurring before the eyes of literally everyone. Opponents of the system were declared to be dinosaurs and Luddites, resisting technological progress. Everything would have been wonderful, had the new onset of the crisis not occurred precisely where the dominant theory said it could not happen as a matter of principle: in the most advanced country, America, and in the most advanced area of the economy, the information sector.

Finances and Computers

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

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

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

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

The Crisis of Desynchronisation If the speed at which information is transmitted has risen dramatically, this does not mean that the processes which this information is supposed to describe have speeded up at the same rate. Moreover, the speed and mechanisms of decision-making did not change radically in the 1990s. In a certain sense, the abundance of information that has become available thanks to the new technologies has even created new problems. If the speed of transmission and the volumes of data transferred are constantly growing, while the changes in production are occurring more slowly, the growing gap is being filled with pseudo-information – with “noise”. The technical means that were originally developed in order to expedite management have themselves become the source of problems. In March 2001 the Financial Times published a survey which reported that company mangers were overloaded with work. As the newspaper notes, “the average American office worker now spends almost half his or her day dealing with messages arriving by telephone or electronic mail.” Worse still, a significant part of this work is totally pointless: “Sixty per cent of the white collar workers surveyed felt overwhelmed by the daily flood of information pouring down on them.” As a result, they are being found to suffer from “information fatigue syndrome” and “attention deficit “, while the really valuable messages are lost in the mass of the secondary and unnecessary 8 . Ultimately, the quality of management is declining. The cause has nothing to do with the introduction of new technologies as such, but with the fact that their development has been divorced from the requirements of the real economy. The information channels have become excessive compared to the volume of meaningful information engendered by our social existence. Mobile financial capital has been best able to exploit the advantages of the new technologies, which is not surprising, since it is the main customer for the new developments in the high-tech sector. The problem, however, is that the faster finance capital has circulated, the greater has been the gap between stock market speculations and the processes occurring in the real sector.” Production requires time. After the initial investments are made, time is needed for the additional means of production to come into play. Buildings must first be constructed before equipment can be bought and installed, and only then can workers be hired. Goods for

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

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

The End of High Profits

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

Market cycles are subject to the same laws as profits. As new sectors and markets arise, their own cycles take shape within them, and these may not coincide with the cycles of the “old” sectors and markets. Hence in Eastern Europe the transition to capitalism was accompanied by a prolonged depression, which shifted to economic growth only toward the end of the 1990s, when the potential for growth in the West was already becoming exhausted. This was especially evident in the case of Russia, where productive output started growing only in 1999-2000, after the Asian industrial crisis had already shown that the period of world expansion was drawing to a close.

For capitalism, the unevenness of growth between sectors and countries is both a factor of growth and a factor of destabilization. In the open wold economy of the 1990s, the United States became a sort of magnet attracting capital from the entire world. This was less the result of the exceptional dynamism of the American economy, as celebrated in popular journalism, as of the unique position occupied by the US in the world system. Not only did the US constitute the largest market, but the US dollar was also the world currency. The more open the economies of other countries, the greater was the flow of foreign capital to the US. The greater the American market for capital, the more attractive it was to investors. Drawing capital out of other parts of the world, the US destabilized the situation there, but at the same time the growth of the US economy was a sort of shock-absorber that prevented a world depression. “This astonishing flow of foreign capital, two or three billion dollars a year for the last few years, helped ensure economic growth,” notes Doug Henwood. “It ensured the growth of market rates, and allowed American consumers to live beyond their means.” Under the conditions of the “open economy”, the depression in the countries of Eastern Europe and of several countries of the Third World simply aided the outflow of funds, in the process bolstering the growth in the US. “The flight of capital from Russia brought a pile of money to the US, and the same can be said of Asia, Latin America, Eastern Europe and of the countries of the former Soviet Union in general. All of them did their bit to aid the rise of the US stock market. The greater the problems throughout the world, the better things were for the American ruling class.” In the same way as the “emerging markets” of Eastern Europe and the Third World pumped in additional capital to support the growth in the US and to some degree in the European Union, the rapid development of the new information sectors

in the West supported and prolonged the general growth. From this, the theoreticians of the “information society” promptly drew the absurd conclusion that the technological revolution guaranteed us continuous growth. In reality, the “information economy” was subject to the same market cycles as the traditional economy, but in this case, these cycles were acting in delayed fashion. Once the possibilities for expansion in these areas were exhausted, however, the “new economy” itself became the decisive factor precipitating a slump. The increase in profits also had another cause, a completely traditional one:

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

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

The Oil Crisis

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

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

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

The Riddle of the American Middle Class

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

accessible, and also by the general market conjuncture. Meanwhile, the financial corporations themselves pursued a consistent policy intended to draw growing masses of the population within their service zones. By the late 1990s the American middle class was thoroughly entangled in debt. Since this occurred against a background of general growth in the economy, the rise of indebtedness did not in itself evoke alarm so long as it was accompanied by a growth of money incomes. Meanwhile, it was by no means of fundamental importance whether incomes rose more rapidly than indebtedness or more slowly. If they rose more slowly, this still allowed the positive dynamic to be maintained to a certain point. If they rose more rapidly, this led in practice not to a fall in indebtedness but to an even greater rise, since the growth of incomes allowed increases in borrowing capacity. The historian Robert Brenner has described what was happening ironically as “private Keynesianism”. In the past, the state had supported the economy by “pumping up demand” with the help of government programs. Now, private banks were doing the same, handing out credit to right and left. From the point of view of neoliberal theory this was thoroughly acceptable. The growth of the state budget deficit was seen by the ideologues as the only source of inflation. By contrast, private debt in whatever quantities, and whatever its social significance, was regarded simply as the private business of debtor and creditor, with no macroeconomic impact. Beginning in the first half of the 1980s, when the neoliberal model triumphed definitively in the US, debt – whether private, state or corporate – began growing at a furious pace. During the period of the Clinton “expansion”, the increase in debt accelerated still further. Consumer debt exceeded one and a half trillion dollars. In 2000, overall mortgage debt outstanding topped $6.8 trillion, after more than doubling during the 1990s. Meanwhile, private indebtedness in the US continued to exceed the state debt, which by 2000 amounted to $5.62 trillion. The state debt kept growing despite the favourable conjuncture and the budget surplus. In 2001 the total of private and corporate debt reached $13.5 trillion 9 . The growth of the stock-market pyramid was thus accompanied by a similar growth in the debt pyramid. These two processes support one another, and are one another’s mirror images. Both pyramids consist of fictitious capital in two of its different forms. Just as shares cannot be sold in large quantities without provoking an

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

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

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

inflation. But the financial capital that now holds sway in practically all areas of life cannot allow this.


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

Becoming a second or alternative world currency unit, the euro was recognised as equalising the chances of competitors by infecting the European economy with all the

illnesses suffered by the economy of the US. The population instinctively sensed the danger and put up resistance, but naturally, the politicians and the mainstream press put this down to “conservatism”, and to the emotional and cultural attachment of Europeans to their old national currencies. The euro project was as ambitious as it was adventurist, and most importantly,

it was very badly thought out. In the late 1990s, the European Union imposed on all

the countries common rules that were supposed to lower inflation to a uniform level of less than 3 per cent. In the best Soviet traditions, this took on the character of a one-off campaign in which the countries rushed to report on time the results they had achieved. The trouble was that a uniform level of inflation was impossible without equalising the other parameters of economic development, and this had not occurred.

Quite the reverse; in the absence of redistributive policies, market disproportions have

a tendency to grow. Although the European Union implemented some redistributive

measures, in line with its general neoliberal ideology it put its stake on the anarchy of the market. This undermined the chances of the euro having a stable long-term future. The new currency turned out to be not so much a symbol of European integration as a source of problems. It either fell, devaluing the savings transferred to it, or else began rising just as unrestrainedly, undermining the business of exporters.What occurred in the unified financial space was not convergence but divergence, since each state had its own conception of what should be done with the common currency. With the help of administrative and political pressure, inflation was momentarily lowered everywhere. Then it began growing with even greater strength in those countries which had artificially lowered it for the sake of entering the euro zone. Only now, inflation was no longer a problem of one or another particular country, but a destabilizing factor for the whole European project. The country that finished up in the most paradoxical position was Germany, since it was the German elites that had made considerable efforts to impose generally binding laws on all Europeans. By 2002 it had become clear that these laws were far from ideal for Germany itself. If the Greeks and Portuguese had managed by hook or by crook to keep inflation to the levels planned in advance, the German inflation rate was clearly out of control.

The liberal ideologues who had dreamt up the project of the euro were convinced that inflation arose exclusively from government spending, and that there