Hegemony: Or, How to Unhinge a Liberal-Imperialist

Show them their antithesis

 

[Firstly, the usage of liberal in this context is done with the broadest, ideological definition the word in mind. To some of you, you’ll know this as “Deckersean”. That is to say, not political liberalism, economic or cultural–but the ideology itself that encompasses the three branches below it.] 

 

There is one thing that will make a liberal-imperialist fly into a fury. This is because the ideology itself is built upon the suppression of its existence. That is the liberal antithesis. It comes in many forms, but as soon as it appears, the liberal-imperialist vanguards launch their countermeasures against their existential enemy. The pogroms against their antithesis include but are not limited to, arrogant marginalization, shows of contempt, appeals to authority, discursive bullying, legal sanctioning, Potemkin village construction, selective memory, and outright physical violence. 

 

Liberalism, to its credit, has been by far the most successful of ideologies in their natural attempt to negate their negative. Over the past century, the socialists have wailed about the reabsorption of capitalist values while the clerics grieved the loss of divine virtue and moral behaviour. These examples show that each time a new strand of thought has broken through the iron cage of collective cognition–such as feminism–liberalism has bent itself just enough to accept the newcomer. The unique propensity to absorb seemingly antithetical strands of thought is the homogenous cold-rolled steel armour that protects the dominance of liberalism. 

 

This is hegemony. 

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Bradley Manning and world hegemony

It’s becoming ever-more clear how pervasive the current hegemony is in relation to not simply just politics, but–in a Gramscian sense–civil society itself. 

Recently Human Rights Watch and Amnesty International chose not to designate Bradley Manning as a political prisoner. This is a direct consequence of HRW and AI being reabsorbed into the international-state system through the integration of “approved” NGOs into the UN. (The first of these “approved” NGOs was none other than the Red Cross.) Because HRW and AI are now incorporated into the system, they have concrete interests aligned with that system  and its maintenance. The dominant fraction in that system is the USA and thus the internal enemies of the USA are off-limits to the alleged ‘independent’ civil organisations that are meant to tame and mediate State abuses.

There is a second example, on a smaller–but no less significant–scale that demonstrates the incredible pervasiveness of the current hegemony. The San Francisco Gay Pride parade voted to have Bradley Manning as their Grand Marshal (obviously a ceremonial title seeing as Pvt. Manning is locked away deep in a US military prison). Within a few days the “board of directors” of the parade–which is incidentally headed by a former high-ranking Obama campaign official–overturned the election of Manning. 

What we see here is the amazing ability of the current system to reabsorb even its antagonists. HRW, AI and SF Pride were all created to be institutions in opposition–protest–of the status quo. Instead, all three have been accepted and embedded into the hegemony and now make decisions based upon the interests of the continued dominance of the current system rather than an actual radical agenda.

 

Sad days. 

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Nicos Poulantzas’ theory of the State and the neo-liberal state in the European periphery today

Abstract:

Utilising Poulantzas’ theory of ‘authoritarian statism’, this paper locates the source of the state’s ability to reproduce capitalist relations in the bureaucracy’s control over the lacuna between knowledge and power. The establishment of the lacuna is facilitated by the state’s monopoly over violence and the structurally maintained by the imposition of a bureaucracy as its bridge-master interpreting law. Systemically strengthened, by dethatching it from democratic processes, the bureaucracy more efficiently organises the long-term interests of the dominant fraction of the power bloc. The statutory independence of the European Central Bank (ECB) is an example of bureaucratic-executive melding that is characteristic of Poulantzas’ ‘authoritarian statism’. Because of the relative autonomy gained by being independent, the ECB is able to intervene in domestic Greek politics in order to organise the long-term political interests of international financialised capital. The November 2011 Greek technocratic government headed by Lucas Papademos is the preeminent example of this ability to intervene.

 

 

The financial crises that have afflicted European countries, specifically Portugal, Ireland, Italy, Greece, and Spain, have shaken the foundations of internationalised capital. Furthermore, these crises have questioned the democratic nature of the European states which are enduring them. Particularly in Italy and Greece, the political response to the crises has effectively been a pausing of democratic politics while technocratic governments attempt to pacify bond markets and coordinate international monetary and banking institution bailouts of their respective domestic situations. The result has been austerity packages for both countries that shift the fiscal burden of the bailouts onto the populace.

Necessitating the turn to unelected and provisional technocratic government was, in Italy’s case, increasingly unsustainable yield rates on Italian sovereign debt (Dinmore and Segreti, 2011). For Greece it was the breakdown of the political impetus to implement a large European Union (EU), European Central Bank (ECB), and International Monetary Fund (IMF), collectively known as the troika, negotiated sovereign bailout (Hope, 2011). Both the men appointed to become prime minister in their respective countries share a common background as economists trained in the USA, top bureaucrats in the EU, and connections to the colossal transnational financial firm Goldman Sachs (Rachman, 2011; Foley, 2011). The common heritage of the men indicates that they both are more than capable to represent and develop the long-term interest of international financialised capital as the dominant fraction of the power bloc. Additionally, Italy and Greece are two countries that Nicos Poulantzas identified as entering a stage of capitalism that sharpens the generic elements of political and state crisis and leads to more authoritarian states (Poulantzas, 2000, p.206). 

The final book of the late Poulantzas, State, Power, Socialism (SPS), outlines the conjuncture of the contemporary monopoly dominated phase of capitalism and the interplay of economic, political, ideological and state crises that precipitates a new form of bourgeois state. He terms this new form of bourgeois state “authoritarian statism” (Poulantzas, 2000, p.203). Through SPS, Poulantzas fully details his neo-Marxist theory of the state which derives its characteristics and attributes from the class struggle and specifically the relations of production. This state is “organically present in the generation of class powers” (Poulantzas, 2000, p.45). Because of the connection to the class struggle and its role during the generation of class powers, Poulantzas argues that there can be no general theory of the state—each form is historically determined (2000, p.19). Instead of formulating the state via its instrumentality, as an appendage of society, or as an outgrowth of the economic base in a mechanical manner, Poulantzas formulates the state with “a constitutive role not only in the relations of production and the powers which they realise, but also in the totality of power relations at every level of society (Poulantzas, 2000, p.45).”

This conception of the state is useful in its historical applicability to the currently occurring forms of state in Europe. Moreover, Poulantzas’ focus on political and state crises makes his theory of the state particularly relevant to European states which are currently embattled in economic, political and state crises. In the following, a detailed account of Poulantzas’ theory of the state will be rendered and applied to the situation surrounding the move to a technocratic government in Greece in November, 2011. This exercise will attempt to explain the recent political crisis in Greece as an instance of state crisis where the dominant fraction of the power bloc (international financialised capitalism) took control of the systemically strengthened executive in order to articulate and reproduce the relations of production necessary for its long-term interests. To supplement this analysis, the mode of organisation of the economic apparatus of the state—the central bank—will be investigated. Juxtaposing the political control mechanisms of the Central Bank of Icelandic (CBI) to the European Central Bank (ECB) and its European System of Central Banks (ESCB) will illuminate whose interests each bank serves. The two states and banks have managed the crisis in widely different ways. Of note, the Icelandic institutions have conserved democracy and subsequently, the economy has returned to growth and the unemployment rate decreased from its crisis heights—two outcomes the ECB, ESCB, troika and Greek state have been unable to produce.

The particular necessity for using a neo-Marxist approach is the ineptitude of liberal strands in identifying the structural problems that liberalism, even in its pluralist nature, produces. To apply a specific liberal strand to illustrate a problem within the broad framework of contemporary liberal society may be sufficient to display the problems with some competing liberal strand. However, the self-referencing of any and all strands of liberal thought to the broad liberal framework obfuscates the problems that the totality of liberal thought has constituted upon contemporary society. That is to say, from inside the house one can detect a leak in the ceiling, but only from an outside perspective can a person see that the root cause is not a broken pipe, but rather a missing roof. Adapting theories from neo-Marxists, and other non-liberal camps, will foster a greater perspective when analysing the house that liberalism built.

 

Chapter one: Law, the Executive, and Bureaucracy.

Of course, the most recognisable feature of the state, in any historical form, is its role as the sole creator of law. The modern liberal state is one built upon the preeminence of the law: typically defined by the ‘rule of law’. This is distinctly distinguished from the previous form of absolutist forms of state wherein the sovereign had unlimited discretion to rule over the citizens of the state through fiat. The unbounded nature of the exercising of power inside the previous form of state produced a situation that subjected the populace to the arbitrariness of the autocrat. Liberal reforms, which attempted to place the law above the sovereign, typically signified by a constitution, were meant to preclude this arbitrary aspect from the society because it often produced a certain type of terror. Conceiving of the law in this manner makes a dichotomy readily apparent—one of law/terror. But is a state under the ‘rule of law’ one where terror is precluded?

To answer this question it is instructive to investigate precisely where the power to write law originates. That power is grounded in violence (Poulantzas, 2000, p.79). The power to formulate law proceeds directly from the most basic aspect of the liberal state: a monopoly over the use of violence (Weber, 1946, p.79). While Max Weber’s dictum regarding this aspect of the state is well-ingrained, the power to write law is best demonstrated by the circumstances in which the state acts outside of the law. Through Schmitt we can see that the state of exception proves the existence of the pure power of the state behind the law. In his conception, the order created by a codified law stands not on norms, but rather on a decision—a decision within the competence of the state because of its monopoly over violence (Schmitt, 1985, p.10). The exception is a situation in which the state’s existence is in peril; a time when an extreme emergence dictates action from the state in order to eliminate it. Furthermore, during emergencies, this ability to act must necessarily be unlimited because the normal conditions under which the law operates are no longer present (Schmitt, 1985, p.7). Greece experienced a crisis of similar proportions in the closing stages of 2011.

The discussion of the state of exception is relevant to a discussion of the modern liberal state because of two specific aspects. Firstly, the exceptional circumstance is one where recourse to parliamentary discussion and consensus building is precluded because of the necessity for quick and decisive action. Secondly, as Agamben shows, this method of action has become ever more prominent in the contemporary democratic state (Agamben, 2005, p.2).  Agamben aptly recognises that the normalcy of using exceptional circumstances to govern is directly intertwined with a collapse of parliamentary legislation and a systemic strengthening of executive powers. In a similar vein as Poulantzas, Agamben contends that the subjugation of parliament to the expanded powers of the executive has effectively transformed his native Italy from a parliamentary democracy to an executive government (Agamben, 2005, p.18). The ideological aspect the use of the state of exception and the strengthening of the executive that it facilitates can be found in what circumstances are defined as necessitating executive and extra-legal responses. Agamben, without a Marxist conception, recognises that the hallmark of contemporary politics is a conflation of military and economic emergencies (Agamben, 2005, p.22). Considering the cause of the crises in Italy and Greece, we can see that the circumstances of turmoil in international capital markets and the international organisations that provide the state access to capital outside of the international markets were the main facilitators of an emergency rather than any military exigency.

While the materiality of the power of the state, via its monopoly of violence, is without question, we must now look at what functions the law carries out. The law is firstly always present in the genesis of social order. This is because the law is not simply negative in nature or a set of prohibitions, but because it also performs positive functions; compels action. The dual nature of the law makes it “a constitutive element of the socio-political field (Poulantzas, 2000, p.83).” Furthermore, the dual nature of the law makes it an instrument to shape and mold society to create and maintain a specific kind of civilisation (Gramsci, 2007, p.246).

Behind all of its functions, the law is preeminently the organisation of public violence (Poulantzas, 2000, p.77). Through the public organisation of violence, the law takes up its educative functions—its role to create conformity. The liberal capitalist state is one that thrives on normalcy, repetitiveness and calculability—rationality. To produce these conditions the law fulfills the role of repression. The educative function of the law is to instill within the society the dominant ideology. It accomplishes this by obscuring the political-social realities (Poulantzas, 2000, p.83). In order to obscure those realities it relies on a system of individualisation.

The modern form of liberal-capitalist state law is expressed through an axiomatic system that breaks the connection of each person to his or her class by creating a new division—the most radical one—individualisation (Poulantzas, 2000, p.87). This meshes with the capitalist mode of production in that it requires individual persons to be inserted into the labor process. The dominant ideology in a liberal-capitalist state, which assists in maintaining the rate of exploitation, is one based upon free agents selling their labor. By creating a conception of individuals as individuals rather than members of a class, the law helps to mold the dominated classes in a way that they can best fit into the system.

For Poulantzas the need for an organisation of violence—law—arises from the preeminence of struggles that are based upon exploitation (Pouantzas, 2000, p.79). Both violence and consent are congruent for the state in that they are both used to ensure the continuance of exploitation. The former is materially necessary for molding the latter. Schmitt, recalling Hobbes, stated it in this way, “[n]o form of order, no reasonable legitimacy or legality can exist without protection and obedience” (Schmitt, 2007, p.52).

Returning to the historical instance of the European crises, the ability of an economic crisis to translate itself into a political or state crisis is apparent to Poulantzas. However, the articulation from economic to political does not always occur in chronological lockstep. Instead, as we can see from the Italian and Greek examples, the political crisis can occur prior to an economic crisis, or it can occur after the economic (1976, p.299). In the Italian case the political crisis preceded the economic crisis and in fact anticipated the advent of an economic crisis. The Greek case displays a political crisis that occurred after the economic crisis and even after the intervention of international organisations which were meant to solve the economic crisis. In both of these cases the much-increased role of the executive played a pivotal role in allowing the state to maneuver through the political crisis.

It is necessary to remember that the state has always played a constitutive role in the economy. Through the order of the law, the state defines ownership: both in economic terms and in terms of possession of the means of production. Marx was able to show that transformations in the form of land (a means of production) ownership are correlated to transformation of the state. The change in ownership from large property holders in the feudal stage to small-holding peasants in 18th Century France transformed the French state from absolutist monarchy to the Bonapartist state where the executive consolidated power away from parliament (Marx, 1852, p.62). Similarly, in the modern state, a change in the state’s intervention into the economy requires a transformation of the state itself. The growth of the state’s economic role is related to the transfer of powers from the legislative to the executive (Poulantzas, 2000, p.218).

For Poulantzas, the hegemonic interests of monopoly capital directly determine the need for a strengthened executive. As opposed to the hegemony of competitive capitalism, monopoly capitalism is assisted not by universal laws but rather by specific and particular regulations (2000, p.219). Parliaments, by their nature, can only create law via consensus. Because of this, the law proceeding from parliaments is typical general and serves the broad interests of capital rather than the specific interests of particular fractions. The hegemony of monopoly capital, however, is based upon an increasingly small socio-political foundation (Poulantzas, 2000, p.221). Thus, the tethers of the government to representative democracy must be continually cut for the hegemony of monopoly capital to maintain influence in the state and its apparatuses.

A further transformation of the state under the hegemony of monopoly capitalism is a curtailment of the parliament over the bureaucratic administration of government and its movement towards the executive (Poulantzas, 2000, p.219). The power that resides in the state’s bureaucracy is contained in its function as the apparatus that transforms laws into practices. The distance between theory and practice (logos and praxis) is spanned by the administrative bureaucracy of the state. The law may set down a norm, but it is the concretisation and operationalisation that the bureaucracy completes to transform that norm into rituals, procedures and codified regulations. These material effects of the bureaucracy indicate that it is the main state apparatus that exercises coercive powers (Gramsci, 2007, p.246). Being the site in which the lacuna between law and procedure is exorcised supplies the bureaucracy with enormous powers to stamp its ideology upon the material outcomes of the law code. That control and regulation of the bureaucracy has effectively passed from the parliament to the executive is a phenomenon that cannot be too lightly emphasised. In a situation where emergency situations seemingly occur regularly, necessitating executive action, the ability of the executive to use the bureaucracy while drastically minimising competing claims of influence over it from parliament means that the executive has a more total control over the law. Controlling both sides of the logospraxis gulf supplies the executive with an expanded authority to amend, mold, and shape society.

Bureaucracy, when it spans the structural gap between theory and practice, becomes the state agent of shaping the materiality of those who fall under the law. In order to display how the state has a distinctly material effect on its citizens, investigation of this gap, and the ideology of the apparatus that spans it, is vitally important. This lacuna holds together pure thought—theory—and pure action—practice. It is rather self-evident that the agent that decides upon the material practices and rituals that proceed from the theory of what is right, good and necessary has a crucial role in reproducing its conception of right, good and necessary in the society.

Furthermore, the dichotomy between theory and practice can be displayed as one between knowledge and power. With the state bridging the divide between the two, a split between work of the mind and work of the body is formalised and institutionalised.  As Poulantzas argues, the capitalist state “incarnates intellectual labour as separated from manual labour” (Poulantzas, 2000, p.56). That the state institutes itself as being the authoritative functionary who decides upon and creates the logic-ideology that transforms the theory of right, good and necessary into material form via practices, places it as a relatively autonomous agent with a major constitutive role over the public. Rather than allowing for the distance to be traversed in each instance, by each person, as they decide how an idea should take material form, the state intercedes as the agent who uniformly decides. It is the monopoly over violence that allows the state to stand as a praetorian guard between the people and access to knowledge of the meanings of right, good and necessary. Especially in the state of exception, we can see that the naked power of the state deciding on the definition of “necessary” is the institution of ‘order’. Law, then, is the linguistic organisation of the state’s naked force.

The way that the state accomplishes this task of uniformly deciding how the gap between theory and practice should be spanned is by the institution of a national language and by eliminating other languages (Poulantzas, 2000, p.58). This is the enuciative function on the state. The enunciative function encompasses the state as a cohesive force and the state as the condensation of contradictions—the singularity wherein all parallel levels and arenas of life pass. To better understand the singularity of the state, we must use analogy. Since we are now speaking of the liberal-capitalist state, it is an analogy based upon capitalist relations that will be used. Assumedly, the pervasiveness of capitalist relations will make the analogy clear.

We can look at the state’s negative role as linguist-decisionist between law and practice as a bridge-master who the people must interact with—in the bridge-master’s language—in order to settle disputes. Every time differences in interests begin to crescendo, the monopoly of violence of the state dictates that the two parties involved must seek the law to determine right. The law, by its constitution in language, must be interpreted. This is the task of bridge-master:  to determine the interpretation of theory (right, good and necessary) to the material instances of a dispute. This is always done in the state’s language and inculcates the now individualised-homogenised juridico-political subject-persons with the national language and the proper way of thinking, speaking, and handling problems—the totality of the ideology of rationality in the case of the liberal-capitalist state. The bridge-master is always the bureaucracy, for even after parliament legislates, the bureaucracy, through its administration, operationalises and concretises the laws.

The bridge-master is not an autonomous position, however. The bridge-master is only an instrument for articulating the theory of what is right, good and necessary into material practice. Because of the instrumentality of the position of interpreter of right, good and necessary, it is never an autonomous object but can only be wielded subjectively. The instrumentality also dictates that the bridge-master is in the employ of a pay-master (an owner). Who this pay-master is determines to a large degree the independence of the bridge-master and with what logic-ideology they administer the bridge. When parliament is the pay-master there is more control exercised by the people—through their representatives—over the way the bridge-master performs their task. When parliament as the pay-master of the bureaucracy-administration-bridge-master is replaced by the executive, the bridge-master becomes more unified with its owner and confident in their administration. There is only one person (indeed, only a figurehead) admonishing and articulating the desires of the “state” (that is, the bridge-master’s ultimate boss: the stock-holder citizens, so conceived) to the bridge-master. This solidifies and condenses the logic-ideology of the bridge-master as they are increasingly impregnated with the logic-ideology of a single executive and are cut off from the logic-ideology of a collective decision-making body, such as the parliament. The condensed ideology is passed into the people. As the bridge-master increasingly becomes assured of the correctness of their interpretation because of their understanding and coalescing with the logic-ideology of the individual decision maker bound up in the executive, they reduce, via their managerial-administrative control over the means of violence, the people’s voice and essential democratic liberties.

The relative autonomy that the state has in the enunciative function is increased in that it is controlled more clearly by the logic-ideology of singular ownership vis-à-vis the executive, which is congruent with the logic of ownership inherent in international financialised capital. Here is the moment when the bridge-master is more able to push the logic-ideology of the brand of ownership into the people. It sharpens the people’s logic-ideology as it educates them on a singular logic-ideology rather than on a flexible logic-ideology which attempts to produce the best outcome for all during instances of competing claims (as found in the liberal-competitive capitalist state). The sharpening makes the state more focused, but also makes the language less flexible to competing claims which in turn makes the state more brittle. Through the state fulfilling its enuciative function, with the constitutive relative autonomy that the task requires, the long-term political interests of the fraction of capital which constitutes the hegemonic portion of the power bloc are advanced because the logic-ideology of the relations of production—necessary for the hegemonic fraction to maintain its dominant position—is reproduced in the people through the institutional materiality of the state.

Through this apparatus, the dominant fraction’s interests are organised as the embodiment of national greatness and the bureaucracy is its instrument of organisation (Poulantzas, 2000, p.225). As the parliamentary control over the bureaucracy fades, the bureaucracy’s freedom to articulate state policy makes it a “legitimate creator of social norms” (Poulantzas, 2000, p.227). This situation of a bureaucracy embedded within the executive, with increasingly few ties to the aspect of representative democracy embodied by the parliament, can achieve a significant destruction of democratic liberties and “lays the ground for a possible evolution of power towards Bonapartism” (Poulantzas, 2000, p.231).

            From here it is necessary to look directly at the role of the executive inside the authoritarian statism framework. As the bureaucracy is fused with the executive and takes over the creation of law (particular regulation rather than general universal law) and the formulation of state policy, the executive tends to take on a more personalised form with a single person at the top of the government. However, rather than portraying a Bonapartist isolation and condensation of despotic powers, the executive within authoritarian statism serves as a focal point of the diverse bureaucratic networks (Poulantzas, 2000, p.228). Because of this, it is accurate to describe the executive as seated in the apex of a structure that projects onto them the varied interests into one person. As Poulantzas articulates it, “there is not one president, but several in one” (2000, p.219). The complexity of managing the various interests produces a search for a “charismatic frontman” who can coordinate the direction of both the dominant class and the popular masses (Jessop, 2011, p.50). 

            From this discussion we can see that the state uses its monopoly over violence to install a structural gap between its citizens and access or knowledge of what is right, good and necessary. Through administering this divide, the state has a material effect on its citizens—reproducing the relations of production required of the capitalist mode of production. That materiality is based upon interpretation of the law and inculcation of the populace with the national language in which the law is written. In the contemporary transformations of the capitalist state that Poulantzas identifies as ‘authoritarian statism,’ a bureaucracy increasingly fused to the executive rather than the parliament or democratic control administers the structural lacuna. Because international financialised capital’s hegemony stands upon an ever-decreasing base, the fusion of executive and bureaucracy within the state apparatus is required to organise its long-term interests.

“The relative autonomy of the capitalist state is essential in order for the hegemony of power to be organised over the dominated class” (Poulantzas, 1976, p.311). Throughout his exposition of the theory of the state, Poulantzas emphasises the constitutive role the state has in the economy. Specifying for capitalist states, Poulantzas demonstrates that the liberal-capitalist state maintains a relative autonomy from the economy in accordance with the capitalist means of production (1976, pp.303-304). Poulantzas recognises too that the control of monetary policy, despite being advertised as an apolitical technocratic function, has immense political content (2000, p.179). More importantly, the relatively autonomy—or separation—allows for the state to intervene into the economy. During crisis situations, that autonomy allows state intervention to articulate and organise the long-term interests of capital. The 2011 crisis in Greece, however, was a highly complex crisis of both the state and economy. Because of this circumstance, the hegemony of the dominant bloc of capitalism required an institution independent of the Greek state and its economy. That institution was the European Central Bank (ECB).

             

Chapter Two: European periphery, Neo-liberal reforms and the financial crisis

            Understanding the European single currency project in relation to Greece and Iceland’s position within that context is a crucial element in comprehending their divergent responses to crisis. Iceland is not a member of the union, but has taken steps to facilitate future membership. Greece, however, was accepted into the European Monetary Union (EMU) in 2001. This places both countries in the periphery of the EU project. However, their location in the periphery is not distinctly similar. Greece being inside the EU and Iceland being just outside helps to individuate their relations with the EU and the liberal-capitalist system inherent in the EU project.

The integration of Europe into a single currency zone has been given different objectives based upon the background of the person articulating the objective. Even in its infancy, Callinicos recognised the contradictions inherent in the project. Those on the left thought it would reign in financial speculators and be a counterbalance to global markets, those on the right anticipated it bringing Anglo-Saxon, laissez-faire capitalism to the continent, while others believed it would continue the process of transcending national interests to maintain peace in Europe (Callinicos, 1998, p.70). However, the establishment of a central bank to administer the new currency based upon inflation fighting, monetarist principles set the agenda for the project (Grahl, 1997, p.129). The effect of instituting the new central bank with a monetarist charter was presciently predicted, “to trap the poorer and less competitive EU countries in a hard-money regime which will keep their unemployment rates permanently high” (Callinicos, 1998, p.73). Furthermore, the ECB has applied a single monetary policy across the zone with a focus on the conditions in core countries (Germany, France, Belgium and Netherlands) without fully accounting for the conditions in periphery member states (Lapavitsas, C. et al, 2010, p.5).

In Iceland’s case, the slow steps towards convergence with the EU have meant that the historically highly politicised central bank and banking sector has undergone neo-liberal reforms. In the 1990s, foreign currency controls were removed so that Iceland could enter the European Economic Area (EEA). By 2001, the currency was allowed to float freely and the organisational structure of the central bank was reworked to reflect its European counterparts. Most notably, the central bank went from having a board of three governors—one from each of the major political parties—to a single governor appointed by the government (Carey, 2009, p.6). This was accompanied by a change in the mandate of the central bank to become an inflation fighter, again, in-line with European norms.

By the time the crisis hit, the reforms Iceland had undergone to meet neo-liberal norms, while looking at future implementations of ESCB rules upon admission to the EMU, had given Iceland a central bank that was beginning to look like a typical European central bank. However, unlike the ECB/ESCB system, there are limits to the Central Bank of Iceland’s independence. Firstly, the Icelandic central bank is explicitly owned by the Icelandic state and the minutes of bank board meetings are required to be made public (Article 27). Furthermore, the Minister of Economic Affairs appoints the bank’s governor, while a seven person Supervisory Board is elected by the parliament (Iceland, 2001). This attempts to ensure some level of democratic control over the bank by parliamentary means and by transparency in regards to the people. However, it is apparent with hindsight that these neo-liberal adjustments in the financial sector opened the door to international financialised capital, or what has been alternatively termed by John Perkins, a former insider, as “predator capitalism” (Bhandari, 2013, p.37).

The structure of the Greek central bank is the ESCB. The ECB and ESCB are built on full statutory independence from the political process. Its separation from political control is threefold. Firstly, it is mandated not to take instruction from any institutions of the EU or member states. This also applies to the national central banks that make up the ESCB (Official Journal of the European Union, 2010). Secondly, according to Article 10.4, the meetings of the Governing Council of the bank are to be kept confidential, thus keeping the public in the dark about the decision-making process. Thirdly, the European Council appoints the President, Vice President and Executive Board of the bank. This means that the executive branch of the EU appoints the bank’s boardroom staff that is independent by statute and obliged to keep their proceedings from the public. These three aspects combined make the ECB highly insulated from popular or democratic controls. As Luttwak has described it, the ECB’s independence is so severe that the only accurate historical analogy would be that of the medieval papacy (1997, p.231). Stating the case quite clearly Luttwak says, “[t]his is truly a sovereign power, given irrevocably to an institution headed by a central banker, selected and advised by other central bankers, who are themselves recruited and trained by their predecessors in their respective central banks” (Luttwak, 1999, p.200).

Seemingly responding directly to Luttwak’s critique of the bank’s independence, the ECB declares on its website that its commitment to democratic accountability is demonstrated by the fact it publishes monthly bulletins, “rather than the required quarterly report, and members of the Governing Council deliver numerous speeches to address relevant topics of concern to the public” (ECB, 2013). In light of the tripartite independence guaranteed to the bank through the treaties that founded it, the idea that a monthly report—rather than quarterly—will bring democratic accountability to the bank is immensely derisible.

The neo-liberal reforms that Iceland implemented essentially opened up its banking sector to foreign investment and allowed its banks to operate in other European markets. The reforms had an immediate impact. From 2003 to 2007 the assets of the Icelandic financial sector ballooned from 170% to 880% of GDP (Carey, 2009, p.9). This meant that Iceland’s net external debt was 234% of GDP (Pepinsky, 2012, p.146). The massive boom in banking sector assets provided easy credit to the Icelandic people and subsequently their personal consumption increased to unsustainable heights (Zarrilli, 2011, p.7). The appearance of an Icelandic bubble, however, did not happen unnoticed.

In Greece, the expansion of the financial sector in relation to GDP was not as pronounced. From 2003 to 2007, it rose to 190% from 124% GDP (Lapavitsas, C. et al, 2010, p.38). However, the framework of the EMU, which allows cross border borrowing, mediates the relative size of the Greek financial sector. Looking at the rise of household debt we can see that unsustainable borrowing, facilitated by cheap credit within the Eurozone, was certainly present in the Greek economy leading up to the collapse. Household debt increased from 30% to 60% GDP in Greece from 2003 to 2007 (Lapavitsas, C. et al, 2010, p.19). In both countries, the liberalisation of the financial sector had induced massive growth in banking, and debt. This placed Iceland and Greece as the top two worst OECD countries for international investment at the end of 2007 (Carey, 2009, p.19).

On September 15, 2008, the American financial firm Lehman Brothers filed for chapter 11 bankruptcy (BBC News, 2008). The collapse of the firm signaled the beginning of the global financial crisis that would spread to every country that was integrated in the global market system. In response, the major central banks of the developed world began to use extraordinary measures to pacify markets and patch together the financial system that was crumbling under its own weight. To fully grasp each country’s response, the use of broad economic figures such as GDP growth and unemployment will be used. This is necessary because the response of the two states is not fully incorporated in simply their central bank’s technical responses. At this level of historical abstraction, only trends are discernable.

The metric utilised to evaluate the state’s response in regard to its citizens’ livelihood is unemployment. The unemployment rate in both countries began to rise in the wake of the 2008 crisis. In March 2009 the unemployment rates of both countries were climbing towards 10%. However, the tethers of parliamentary democracy to monetary authorities had not been broken in Iceland as they had been in Greece because of its accession to the ESCB. After early 2009 the unemployment rates diverge sharply, with the rate in Iceland tracking lower to moderate rates (approximately 5%) while Greek unemployment continued climbing to 25% four years after the beginning of the global crisis (Zero Hedge, 2013). The serious surge in unemployment has been accompanied by political crisis, unrest, and the rise of extremist parties in Greece, as well.

The main difference in responses from Greece and Iceland was that Iceland’s political process still maintained control over its economic apparatus—the Central Bank of Iceland. Meanwhile, the political process in Greece, because of the statutory structure of the ESCB, has virtually no control over monetary policy. The political control that Iceland demonstrated coalesced in the “kitchenware revolution” (Zarrilli, 2011, p.9). The unrest led to a change in government and eventually a public referendum on whether or not to pay back the now nationalised banks’ debt. The referendum produced a resounding ‘no’. 93.2% of voters in the referendum refused to pay the debts incurred by banks during the boom (Zarrilli, 2011, p.10).

In Greece, the primary goal of the reaction to the crisis was to save the Euro. The bailout package that the ECB and the troika members offered Greece was laden with austerity and spending cuts that has fueled the ever-ascending unemployment rate in Greece. Implementation of this package had the effect of “turning the Greek state into a straightforward predator agency in the hands of the global financial usury” (Fouskas and Dimoulas, 2012, p.3). The requirements of imposing harsh austerity on the Greek people destroyed the Greek political system. When the domestic political will no longer existed for implementation of the troika bailout package and the Greek state was in a full-blown crisis of legitimacy, the ECB capitalised on its relative autonomy from the Greek state and sent their own man to administer the implementation of the bailout package. In November, 2011 the normal workings of Greek democracy broke down as a uniquely ‘necessary’ situation arose that required a person who was fully aware of the long-term interests of the ECB to guide the political unit of the Greek state and implement ECB dictates. This person was Lucas Papademos.

The work history of Lucas Papademos makes it readily apparent that he had the experience, knowledge and skills to be a representative of the ECB and larger central banking sector. As the head of the Greek central bank from 1994-2002, he was responsible for getting the finances of the Greek state in line with the convergence criteria to join the Euro. After accomplishing that significant task, he was rewarded by the European Council with an appointment as Vice President of the ECB (Independent, 2011). When implementation of the troika’s bailout package came into doubt, the troika turned to someone who they could trust. Papademos was not only fully aware of the long-term goals of the Euro and ECB, but he also understood the ideology behind the implementation of a single currency and spoke the language of international financialised capital.

While the Euro’s future may have been put on more solid ground by the eight-month technocratic government of Papademos, the lives of ordinary Greek citizens were made no better. Unemployment continued to increase, passing the 20% mark during his time in office, and GDP continued to decrease (World Bank, 2011a). As Luttwak predicted, “the EMS can work only if its own priority outranks all other relevant political priorities, i.e. most of politics, and therefore most of democracy” (1999, p.197). Meanwhile in Iceland, the continued connections of parliamentarianism and democracy to the bureaucratic management of monetary policy and wider handling of the financial crisis has seen unemployment remain under 10% throughout and fallen to 5% by mid-2012, the same time that Papademos left office in Greece. Similarly, the Icelandic economy also saw an increase of 3% in its 2011 GDP (World Bank, 2011b).

 

Chapter 3: Applying ‘authoritarian statism’ to Greece and Iceland

To apply the key characteristics of Poulantzas’ ‘authoritarian statism’ to the Greek case, we must look at a few key historical events. Firstly, the severing of parliamentary democratic ties to the bureaucracy of the state. Secondly, the relative autonomy of the agencies and institutions trusted with the solving of the crises and, accordingly, the organisation of the long-term interests of the hegemonic fraction of capital. The third characteristic that should be investigated is the language. In this respect we must look at how the state defines the crisis in terms of ‘necessity’. In all three of these aspects it is apparent that the development of ‘authoritarian statism’ in Greece has facilitated a closer control of the dominant fraction of capital known as international financialised capital. Juxtaposing the organisation of the Greek monetary authorities with the Icelandic monetary authority illuminates substantial differences.

The state’s continued monopoly over violence allows it to write law. That law is then administered by the bureaucracy and forms a mold through which the hegemonic ideology of capitalism is stamped on the people. This occurs because the bureaucracy’s concretisation and operationalisation of the law induces materiality of that law by shaping the actual practices of the public. ‘Authoritarian statism’ demands the loosening of ties of the bureaucracy to parliament and democratic controls. Because the bureaucracy cannot be an independent apparatus, the cutting of ties with parliament is accompanied by a systemic strengthening of the bureaucracy’s ties with the executive branch of government. This produces a more unified and exclusive form of state that facilitates control by an increasingly small minority, which is necessary for international financialised capital to maintain its dominant status within the power bloc.

The rise of rationalised-technocratic administration of monetary policy in the 20th Century occurs concomitantly with the transformation of liberal-capitalist states to ‘authoritarian statism’. By claiming that monetary policy should be left to the experts and is devoid of political content, the dominant fraction is able to place the control of policy under the bureaucracy. Once located in the bureaucracy, amending the ties of the bureaucracy from parliament to the executive presents an ever-smaller portion of the political class the ability to articulate their long-term interests. The ECB/ESCB is the most advanced example of both the bureaucratising of monetary policy and its removal from democratic controls.

The unparalleled independence of the ECB vis-à-vis the EU also provides it with a relative autonomy that allows it to intervene in the political and economic realm of member states. This is most clearly demonstrated by Papademos’ November, 2011 government. The exigencies of the crisis necessitated a person intimately knowledgeable of the long-term interests of the dominant fraction of capital and Papademos’ career as a central banker provided him with the required skill-set. Aligning with Poulantzas’ theory of ‘authoritarian statism’, the political interests of international financialised capital was organised most effectively through the use of extraordinary executive action and particularised bureaucratic regulations—the implementation of the troika bailout package. That these actions were not in the interest of the Greek people is evidenced by the continual increase to unemployment and decrease to GDP domestically.

Contrasting Greece, Iceland’s position outside of the EMU illustrates how economic crises can be handled in a manner that is beneficial to the people, provided there are still political and democratic controls over monetary policy. It is apparent that the neo-liberal reforms of Iceland’s central bank and financial sector exposed Iceland to international financialised capital, which took advantage of the situation. However, when the collapse came, the remaining political controls over the CBI allowed the change in government to determine who was defining what was ‘necessary’. While the international organisations such as the World Bank and IMF attempted to define repayment of nationalised bank debt as necessary for the upkeep of the international financial system, the Icelandic people were able to petition for a referendum and decide themselves if the crisis dictated the response prescribed by the World Bank and IMF. As Perkins notes, Iceland “defied the logic of the World Bank, IMF, and business schools everywhere and now the country of Iceland is back on top” (Bhandari, 2013, p.41).

This is highly divergent from the events in Greece where the embedding of Greek monetary policy inside the ESCB allowed the ECB to determine what was necessary. Returning to ‘authoritarian statism’, we can see how the national language—the determination of what is right, good or necessary—is linked to the bureaucracy and to what level the bureaucracy is beholden to the people through democracy. The ECB/ESCB have been able to eradicate the national language of Greece and have installed the language of international financialised capital in its place. The severity of this problem is witnessed by the ever-increasing unemployment rates in Greece. While the international financial system and Euro—the long-term interests of the dominant fraction of the power bloc—may have been saved by the ECB’s intervention in the Greek state, the life prospects for many ordinary Greeks have evaporated.

Inherently, to speak of an organisation of hegemony of the dominant fraction of capital by the political class smacks conspiratorial. However, the convergence of neo-liberal and orthodox monetarism with the rise of international financialised capital since the inflationary conflagrations of the 1970s seems readily apparent. The inflations of the 1970s and 1980s destroyed many investors’ bond holdings and precipitated a need for them to closely monitor government policies to ensure their non-inflationary nature (Callinicos, 1998, p.77). Thus, unhooking national governments from monetary policy decision making and placing that competence with the ECB, which has been statutorily insulated from democratic pressures, allows the ECB to fulfill the need of international financialised capital for a non-inflationary, hard-currency environment in Europe. Subsequently, the ECB exploits to the fullest the continuing dominant ideology that views the role of technocracy as the “guarantor of growth and well-being” (Poulantzas, 2000, p.169).

This analysis indicates that further research, through the Marxist perspective, should be more aware of the political content inherent in both state—via the monopoly of force— control and “independent” or bureaucratic control of monetary policy through the capitalist central bank structure. Control over monetary policy inside the state system allows for some control democratically, as Iceland shows in regards to its response to the crisis, but the state’s control through the structure of independent central banks that is currently in vogue allows for small fractions to gain influence over it. Thus, the aspect of orthodox-Marxism that emphasises fully-socialised ownership rather than simply statised (that is, the full “withering away of the state” control over monetary policy) should be taken seriously. Even under independent statised monetary control that is democratised, as in the case of Iceland, the negative impacts of being tied into the international state system of liberal-capitalist states occurs as international financialised capital exploits members of that system. Iceland’s more publically beneficial response to the crisis can be explained by the democratic controls over the central bank and monetary policy itself. However, to provide protection from capitalism and its inherent crises, monetary control must be removed from the competence of the liberal-capitalist state itself.

 

Conclusion:

            Poulantzas was very concerned about how the capitalist state is used to reproduce capitalist relations of production and the determination of hegemonic ideology inside that process. It is to his credit that he recognised the preeminent role the bureaucracy plays in reproduction of ideology through institutional materiality. The institutional materiality of the state flows through the bureaucracy by means of administering the lacuna between theory and practice. With the ideation of what is right, good and necessary being placed outside the reach of the people, the bureaucracy’s interpretation of the law becomes a monopoly of knowledge—shielded by its monopoly of violence—that allows it to shape relations between the state and the people and consequently, formats interpersonal behaviour. The outcome of this is the reproduction of capitalist relations in so much as the bureaucracy is owned directly by the capitalist state. The modality of the administration of the lacuna is dependent upon which part of the state effectively owns the bureaucracy.

The central contention of ‘authoritarian statism’ is that the longstanding ability of capitalism to transform the state via the principle of ownership of the bureaucracy and its materiality facilitates capitalism’s capacity to reproduce itself even after changes in the power bloc. Poulantzas observed a transformation of certain states that was occurring because their bureaucracy had become bound to the executive branch of the liberal-capitalist state by cutting its ties to parliamentary democracy. This allowed hegemonic reproduction to be controlled by a fraction of the power bloc that is decreasing in size. The transformation of the state that this entails makes ‘authoritarian statism’ a highly efficient form of state for international financialised capital.

            The development of ‘authoritarian statism’ anticipated the sharpening of economic and political crises in European states. The prescient quality of the analysis is demonstrated in that the states identified as having characteristics of ‘authoritarian statism’ in 1978 became the states (commonly known as the PIIGS) that have been most substantially affected by the financial crises in 21st Century Europe. These crises have precipitated a need for executive action of an exceptional type, which is more easily implemented by states under developed ‘authoritarian statism’. The technocratic government in Greece in 2011 was an historical conjuncture that demonstrates the ability of the transformed state to organise the long-term political interests of the currently dominant fraction of capitalism, international financialised capital.

 

Word count: 7952

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Mali, African colonization and world wars

It’s almost funny to watch the European powers rush into Africa yet again. A century ago they were attempting to civilise the Africans while carrying the ‘white man’s burden’ and getting rich off the natural resources. Today, they are attempting to stop the spread of ‘islamic fundamentalism’ while maintaining control of the world’s biggest uranium deposits. 

The more things change, the more things stay the same.

Western leaders are not just negligent, they’re criminals.

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I have a dream

Was swearing on two bibles a way to flip off the conservatives?

 

Also, I wonder what Martin Luther King would have said about his possessions being so close to Lincoln’s.

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“islamic terrorism”

If the state budget of Yemen is 70% oil profits, is it terrorism or rationality that inspires “al-Qaeda” groups to attack oil [LNG] pipelines in Yemen?

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