6
LIBERAL CAPITALISM, CONNIVING CAPITALISM
("Crony") AND LUMPEN DEVELOPMENT
What are the immediate answers?
The case of Egypt
Samir Amin
A." Liberal " Capitalism or conniving
capitalism ?
Liberal capitalism (or neoliberal) proposed and imposed as without
alternatives is based on seven principles considered as valid for all societies
in the globalized world.
1.
The economy must be managed by
private companies because they only behave normally as actors subject to the
requirements of the transparent competition , moreover
beneficial to society, it ensures economic growth based on the rational
allocation of resources and fair remuneration of all factors of production -
capital, labor and natural resources. Accordingly if there are assets owned by the
state, unfortunate legacy of "socialism" (productive
enterprises, financial institutions, urban land or agricultural land), they
should be privatized.
2.
The labor market must be liberalized,
fixing compulsory
minimum wage (and a fortiori a sliding scale for the latter) should be removed.
Labor law must be reduced to the
minimum standards to ensure the morality of human relations between employer
and employee . Trade union rights limited and controlled for this
purpose. The wage hierarchy result of individual and free negotiations between
employees and employers s must be
accepted, as well as the sharing of net national income between labor income
and capital income as a result.
3.
Services called social - education,
health, or the supply of water and electricity, housing, transport and
communications - when they were in the past provided by public agencies (state
and local authorities ) should also be privatized as much as possible, their
cost must be borne by the individuals who are the beneficiaries and not covered
by the tax.
4. The tax function should be the
minimum necessary to cover only sovereign functions (public order, national
defense in particular), the tax rate must remain relatively moderate, not
discourage private initiative and to guarantee their reward.
5.
Credit management should be
undertaken by private interests, allowing the free encounter between supply and
demand of credits to form itself in a rational monetary and financial market.
6.
Public budgets must be designed to be
balanced without deficit other than circumstantial and conjunctural. If a country suffers from a structural deficit
inherited from a past that we want to deny his inheritance, the government must
commit to reforms that reduce the scale as quickly as possible. Meanwhile the
deficit must be covered by the borrowing on the private capital market,
domestic or foreign.
7.The six principles are
considered to be implemented not only in all the
nations of the globalized world, but also in international relations, regional
(for example the EU) or global. Private foreign capital must be free to move
and be treated on an equal footing with local private capital.
These principles together constitute the "market
fundamentalism". I shall recall here the inconsistency of the assumptions and the lack of compliance of the scheme with reality. Very briefly the
proof by logical reasoning that the free play of market widespread, even in the
extravagant (not according to reality) assumption that the existence of a
competition called transparent would produce a balance between supply and demand
(in addition socially optimal), has never been made. Instead logical reasoning
leads to the conclusion that the system moves from imbalance to imbalance never
arriving to balance. Successive imbalances in question are produced because
this theory (which defines the conventional economics) excludes from its scope
of investigation the conflicts of social and
national interests .Moreover, these assumptions describe an imaginary world that has nothing to do with the contemporary system that really exists,
which is that of a capitalism of generalized,financialized, and globalized
monopolies. This system is not viable and its ongoing implosion shows that. I
refer here to my writings on this radical critique of the system in question
and the economic theory which legitimizes it.
Implemented globally the principles of liberalism do not produce
anything in the outskirts of the "south" else than a connivance
capitalism (crony
capitalism ), hinged on a
comprador state, as opposed to the national state embarked on a path of
sustainable economic and social development. This form of capitalism (and there
is no other possible) therefore produces no development, but a
lumpen-development. The
example of Egypt, considered in what
follows, provides a good example.
B. Connivance capitalism, comprador state and lumpen
development: The case of Egypt (1970-2012)
Successive Egyptian governments since Sadat 'access to Presidency (1970)
have so far implemented with all diligence all principles proposed by the liberal fundamentalism. What has resulted has been the subject of serious and accurate analysis
with definite conclusions, as follows:
1.
The Nasserist project to build a
national developmentalist state had produced a model of state capitalism that
Sadat pledged to dismantle, as he told his U.S. interlocutors ("I want to
send to the devil Nasserism, the socialism and all this nonsense and I need
your support to achieve that”, a support which was obviously given
without restriction). Assets owned by the state - industrial, financial and
commercial, agricultural land and urban or desert land - have been
"sold". To whom? To businessmen in collusion, close to the power system
: Senior army officers, officials, rich merchants returned from their
exile in the Gulf countries equipped with beautiful fortunes (in addition to
the political and financial support of the Muslim Brotherhood).But also to "Arabs" of the Gulf countries and foreign US and European companies.
At what price ? At ridiculous prices, incommensurate with the real
value of assets.
It is in this way that has been built the new "owning"
Egyptian and foreign class that fully deserves the qualification of capitalist
collusion/crony (rasmalia
al mahassib, Egyptian term to designate it and understood by
all).Some notes:
a. property granted to the "army" transformed the character of
the responsibilities it already exercised in certain segments of the productive
system ("the army factories") that the army managed as state
institution. These powers of management became those of private owners. In
addition to privatization in the race the most powerful officers also
"acquired" the property of many other state-owned assets:
commercial businesses, suburban and urban land and housing estates in
particular.
b. The opinion describes these Egyptian practices of
"corruption" (fasad) located in the field of morality, making the
assumption that justice worthy of the name could fight it successfully. Much of
the left itself makes the distinction between this condemnable corrupt capitalism and an acceptable and desirable productive capitalism. Only a small minority understands that when
the principles of "liberalism" are
accepted as the basis for any policy called "realistic"
capitalism in the periphery of the system can't be different. There is no bourgeoisie
building itself on its own initiative as the World Bank wants us to believe. There
is a comprador state active behind the creation of these colossal fortunes.
c. The fortunes of
Egyptian and foreign were formed through the acquisition of existing assets without adding
productive capacities other than negligible. The "capital inflows" (Arab and other), moreover modest,
fall within this framework. The operation ended with the establishment of
private monopoly groups that now dominate the Egyptian economy. It is far from healthy and transparent competition liberal discourse trumpeted to them. Moreover,
the greater part of these colossal fortunes consists of real
estates: Holiday villages ("Marina")
on the shores of the Mediterranean and the Red Sea, new neighborhoods closed,
guarded (at Latin American fashion - previously unknown in Egypt), desert
terrain in principle intended for agricultural development. These properties are
retained by their owners who speculate on resale after the State has provided
staggering costs of infrastructure that give them real value (and these costs
have obviously not been included into the sale price of the land).
2. The monopoly
power of the new capitalism of complicity has been systematically reinforced by
the almost exclusive access of these new billionaires to bank credit (including
for the "purchase" of the assets in question) at the expense of
lending to small and medium producers.
3. These monopolistic positions have also been reinforced by massive
subsidies from the state, for example, granted for the consumption of oil,
natural gas and electricity by industries that had been privatized (cement,
iron metallurgy and the aluminum, textiles and others). But the "free market" has allowed these companies to raise their prices to adjust to those of competing
imports. The logic of public subsidy which compensated for lower prices by the
state sector is broken in favor of super profits of private monopolies.
4. Real wages for the vast majority of unskilled and medium qualifications
deteriorated by the effect of the laws of the free labor market and the fierce
repression of collective action and trade unions. They are now
located at rates much lower than they are in other countries of the South,
whose per capita GDP is comparable. Super profits of private monopolies and
poverty go hand in hand and result in the continued widening of
inequality in income distribution.
5. Inequality
has been reinforced consistently by a tax system which denied the principle of
progressive taxation. This low tax for the rich and corporations, praised by
the World Bank for its alleged virtue to support investment resulted simply
into super-profits.
6. Throughout
these policies implemented by the state, comprador/crony capitalism does not
produce by itself but a low growth (less than 3%) and hence the continued growth of unemployment. When the rate was a little better, it was out of the expansion of extractive industries (oil
and gas), associated with a conjuncture of better prices, the growth in fees
from the Suez Canal, tourism and
remittances from migrant workers.
7.These policies have also made
it impossible to reduce the public deficit and the external trade balance. They
have led to the continuing deterioration of the value of the Egyptian pound,
and imposed growing public debt. This gave the opportunity to the IMF to impose
ever greater respect for the principles of liberalism.
C. Immediate responses
These answers have not been imagined by the author of these lines. I
merely collected them from the various components of the movement - left and
center national democratic forces, trade unions, various youth and women
organizations etc. .Considerable work and of quality was conducted for more
than a year by activists responsible for the formulation of
a common program to meet the immediate requirements. Their formulations
(repeated here) have already been published, among others by our colleague Ahmad El Naggar. The salient points are:
1.
Transfer operations of public assets
should be subject to systematic revision. Specific studies - equivalent to
good audits - are available for many of these transactions and prices
corresponding to the real value of these assets calculated. Given that the "buyers" of these assets have not paid these prices, the
property acquired assets must be transferred by law after an audit ordered by
the court to state corporations whose shareholder is equal to the difference
between the actual value of the assets and that paid by buyers. The principle
is applicable to all these buyers be it Egyptian, Arab and foreign.
2.
The law should establish minimum
wages, amounting to LE 1200 per month (155 Euro at rate of exchange in effect,
the equivalent purchasing power of 400 Euros). This rate is lower than it is in
many countries whose GDP per capita is similar to that of Egypt. The minimum
wage must be associated with a sliding scale and unions responsible for
monitoring its implementation. It will apply to all activities of public and
private sectors.
Given that the beneficiaries of the freedom of prices, private sectors
that dominate the Egyptian economy have already chosen to locate their prices
closer to those of competing imports, the measure can be implemented and will reduce
margins of monopolies profit without destroying the viability of the industries. This adjustment
does not threaten the balance of public accounts, taking
into account savings and new tax legislation as proposed later in the paper.
The proposals made by the movements concerned will be strengthened by
the adoption of the maximum wage : 15 times the minimum wage.
3.
Workers' rights - conditions of
employment and loss of employment, working conditions, health insurance /
unemployment / retirement - should be discussed in a major tripartite
consultation (unions, employers, government). Independent unions formed through
the struggles of the past decade should be legally recognized as the right to
strike (always "illegal" in the current legislation).
A "survival benefit" must be established for the unemployed,
the amount and conditions of access and funding of which should be subject to
negotiation between the unions and the state.
4. Subsidies granted by the
colossal budget to private monopolies should be abolished. Again the specific
studies conducted in these areas show that the abolition of these benefits does
not affect the profitability of the activities involved, but only reduce their
monopoly rents.
5.
New tax legislation should be
implemented based on progressive taxation of individuals. The rate of taxation
of profits of enterprises employing more
than 20 workers should be raised to 25%. Tax exemptions granted with extreme
generosity to Arab and foreign monopolies should be abolished. Taxation of
small and medium enterprises, often heavier now (!)should be revised downward. The proposed rate for
the upper brackets of personal income - 35% - also remains low in international
comparison.
6.
A precise calculation was conducted
which shows that all the measures proposed in paragraphs 4 and 5 can not only
remove the current State budget deficit (2009-2010) but also provide a surplus.
This will be used to increase public spending on education, health, popular
housing subsidy.. The reconstruction of a public social sector in these areas
does not impose discriminatory measures against private activities of a similar
nature.
7.The credit must be placed
under the control of the Central Bank. Extravagant facilities granted to monopolies should be abolished
in favor of the expansion of credit to small businesses in action or that could be created in this perspective. Specific
studies have been conducted in the areas concerned, craft, industrial, transport and service. The
demonstration has been made that the candidates to take initiatives in the
direction of creating business and employments exist (particularly among
unemployed graduates).
8.Programs offered by the
components of the movement remains less clear with regard to the peasant
question. The reason is that the movement of resistance to the expropriation of small farmers accelerated
since the current policies of "modernization" of the World Bank were
adopted remains fragmented and never went out of the village concerned -
especially because of the fierce repression to which it is submitted and the
non-recognition of its legality.
The current claim of the movement - mainly urban, admittedly - is simply
passing laws making it harder for the eviction of tenants unable to pay excess
rents charged on them and the expropriation of indebted smallholders.. In
particular, it advocates a return to a law fixing the maximum rent (they were
later freed by the successive laws revising the agrarian reform).
But it should go further. Progressive organizations of agronomists have
produced concrete projects and argued for ensuring the development of the small
peasantry. Improved irrigation methods (drip etc.), choice of rich and
intensive cultures (vegetables and fruits), remove of the upstream monopoly control of inputs by suppliers, remove of the downstream monopoly
power through the creation of marketing cooperative associated with consumer cooperatives. But it remains to establish an enhanced
communication between these organizations of agronomists and agricultural
smallholders involved. Legalization of organizations of farmers, their
federation at the provincial and national levels should facilitate progress in
this direction.
9.The action program set out in
paragraphs above would certainly initiate a resumption of healthy and
sustainable economic growth. The argument advanced by liberal critics - that
would ruin any hope of new entries of capital from external sources - do not
hold. The experience of Egypt and other countries, particularly
in Africa, who have agreed to comply fully with the requirements of liberalism
and renounced to develop by themselves a project of authentic development shows
that these countries do not “ attract" foreign capital
despite their uncontrolled opening (precisely because of it).Foreign capital
will simply then conduct raid operations on the resources of the countries
concerned, supported by the state and collusion of comprador capitalism .On the other end emerging countries who actively implement a
national development project do offer
real opportunities to foreign investment
that accept to engage in these national projects, and accept the constraints imposed on them by the
state as well as the adjustment of profits at
reasonable rates.
10.The government in Cairo, composed exclusively of Muslim Brotherhood chosen
by the President Morsi has immediately
declared its unconditional adherence to all the principles of liberalism, and taken measures to accelerate
their implementation, and deployed to
this end all means of repression inherited from the former regime. The state and comprador capitalism connivance continue ! Popular consciousness that there is no change is
growing as evidenced of the success of popular demonstrations on 12 and 19
October. The movement continues! The people say in the streets : “the
revolution has not changed the regime, but it has changed the people”.
11.The program of immediate
demands which I have traced the dominant lines here only concerns the economic
and social challenge. Of course, the movement also discusses its political sides: the draft constitution, the democratic and social rights, the required
" citizens state" ( Dawla al muwatana) contrasting with the proposed
theocratic state (Dawla al
Gamaa al islamiya).These
issues have not been addressed here.
(Prepared by Samir Amin in October 2012)
Aucun commentaire:
Enregistrer un commentaire