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"The Solution to the Crisis of Capitalism Has to Be Political"

16 July 2009

IIRE fellow Claudio Katz interviewed by Fernando Arellano Ortiz

The exit from the systemic crisis of capitalism needs to be political, and "a socialist project can mature in this turbulence."  So says the Argentine economist, philosopher, and sociologist Claudio Katz, who also warns that the "global economic situation is very serious and is going to have to hit bottom, and now we are but in the first moment of crisis."

Katz, a prominent professor at the University of Buenos Aires in the areas of Economics, Philosophy, and Sociology, is both a human rights activist and researcher of the National Council of Scientific and Technical Research (CONICET) of Argentina.  Author of numerous texts interpreting contemporary capitalism, he has focused his studies on the regressive impact of neoliberalism in Latin America.  He participates actively in continent-wide forums that challenge foreign debt.  His book The Future of Socialism won an Honorable Mention Award in the Venezuelan 2005 Libertador Prize for Critical Thought.  He is also a member of the international collective "Economists of the Left" (EDI) and currently serves as an external advisor to the Venezuelan government.

We met in one of the cozy cafes of Buenos Aires, and Professor Katz spoke about the global economic reality, the political process in Latin America, the threat of an eruption of the right in the region, and what he called "the Great Media Inquisition" referring to the manipulation of information and communication by the giant media conglomerates.

First Moment of Capitalist Crisis

FAO: Economic theorists have argued that capitalism's current crisis is systemic and not cyclical, but what is striking is that no solution has been proposed to implement a new model or an alternative capable of replacing the capitalist system.  Do you think that finding a solution to this crisis is more of a political than an economic problem?

Claudio Katz: I think that the big problem is definitely political, because all major economic crises to date have been resolved positively or negatively along political paths, depending on whether or not popular majorities were involved in the process.  This is a very deep crisis that neo-liberals have tried to minimize by blaming "greed," in that way veiling financial speculation.  Also, heterodox economists present the crisis as a failure of regulation.  But this is a crisis of the system, a crisis of capitalism.  And it seems to me that it is a crisis of the capitalist model of the last twenty or twenty-five years, the neoliberal model, whose consequences we are seeing now.  We had two, three decades of the complete neoliberal program: privatizations, deregulation, expansion of the scope of transnational corporations to the former Soviet Union, China, to the whole planet.  And now we see the consequences of this expansion of capital, overproduction, overaccumulation, and the resulting poverty, misery, and unemployment -- which the ILO (International Labor Organization) has predicted shall be very burdensome in the coming years.  So it seems to me we are in the first moment of the crisis, the beginning of the crisis, the debut.

FAO: You mean we're going to have to hit bottom?

Claudio Katz: Yes, we're going to have to hit bottom, and especially the people of Europe and the United States, who are not accustomed -- unlike the Latin Americans -- to such economic disasters.  They will have to process this and it will take a while.  Recall that the latter decades of neoliberalism have weakened trade unions in developed countries, politically and ideologically weakened the left -- the progressive forces in Europe and the United States -- and they will have to reconstruct the experience of social mobilization.  We are beginning to see this, more in Europe than in the United States.  In France, in Greece, in countries where there have been popular mobilizations, their political climate is already changing.  But we are going to have several years of unemployment, poverty, and social exclusion, and we will have to see how people react.

FAO: What is your vision of the socio-economic and political process that is taking place in Latin America?

Claudio Katz: I think the process is different from that in the United States and Europe, and that is especially so because, first, we have already experienced this kind of crisis, not in the '30s, but in the '80s and '90s: this type of financial debacle led to the explosion of poverty, as we have seen in Argentina, Bolivia, Venezuela, Ecuador.  Then, there is already a certain experience of people with this type of neoliberal social disaster.  At the same time, probably -- it is not certain but it is probable -- the economic impact of the crisis won't be as serious as in the developed countries.  Because we have lived through a crash that was quite similar, because the banks were recapitalized and now have portfolios that are a little cleaner, the process will probably not be so traumatic.  But in Latin America it is our political experience that is most important.  It seems to me that what is interesting about our region is that there was resistance to neoliberalism and the resistance moreover had results.  We had uprisings in many countries and have new governments -- Bolivia, Venezuela, Ecuador -- which have changed the agenda of Latin American societies.  In this sense, I believe that the nationalist, radical, and progressive governments of Venezuela, Ecuador, and Bolivia are quite different from those like Lula's, or Kirchner's, which in the final analysis merely restore the dominant power.

FAO: Is it not a fact then that in Latin America the appearance of such governments is a symptom of the reconfiguration of the political subject?

Claudio Katz: Yes.  But there are symptoms, and there are symptoms.  One symptom is that which leads Venezuela to take control over their national resources and decide on nationalizations, measures of income redistribution, regional integration promoting the principles of ALBA, the principles of equitable trade.  And another type is very different: MERCOSUR, UNASUR, policies that restructure in the interests of the giant economic groups dominant in Latin America rather than the genuine interests of popular majorities.  The case of Argentina now is that there have been major changes and transformations, but the distribution of income remains as regressive as, or more regressive than, in the '90s.  The changes that really interest the people are those that improve the living standards of the population and reduce inequality.  And this popular improvement and reduction in inequality is only beginning be seen in some Latin American countries, not across the region.

Slap in the Face of Neoliberalism

FAO: What do you think about the nationalizations the Chávez government is carrying out in Venezuela?

Claudio Katz: Firstly I think they are very promising because it puts an end to the idea that things can be only privatized.  It's like a slap in the face of neoliberalism.  It is the complete reversal of the neoliberal principles that demand that the country's vast natural resources be managed by private groups.  I think what is interesting is the fact that Chávez promised nationalizations and fulfilled the promise.  Overall in Latin America we are accustomed to having something promised and then not done.  And then I think it is a necessity for a country like Venezuela, because it is a country that lacks even a minimally integrated industrial structure.  It totally lacks an industry in the sense that we can talk about in Brazil, Mexico, or Argentina.  Venezuela is a mid-level country, but based on oil wealth and with a rentier culture derived from the exploitation of that wealth.  And the only change possible in a society like that of Venezuela is industrial development done by the state, or not done at all.  The Venezuelan bourgeoisie did not do it in the past and will not do it in the future.  It is a social group that has always lived on the oil revenues, a true parasite, one that is always given to capital flight, waste, consumption, Miami lifestyle, lack of investment, so there could be an industrialization process only if the state takes the reins.  The only danger I see is the cost, how much is paid in compensation to the owners of the nationalized companies, because therein lies a very complicated equation.  If oil prices remain high, then you can handle it.  But if in the coming years oil prices begin to decline, as they have been declining over the past year, it seems to me that the use of the resources of the treasury in compensation to these companies can become problematic, considering that popular management, which Chávez calls workers' control, can be put into practice, nationalizing without state ownership.  I see a problem there, but the process seems very promising.

FAO: Is privatization being done in Argentina going in the same direction as what is being done by Chavez in Venezuela?

Claudio Katz: No.  The government of Cristina Kirchner has adopted some measures of nationalization, for instance, pension funds, which had been privatized and were again taken into state hands, and a set of small companies also went into the orbit of the state.  But first, they are not strategic enterprises, this is the first key difference with Venezuela.  Not only are these non-strategic businesses, but the most striking thing is that, when a nationalization in Venezuela has a direct impact on Argentina, such as the nationalization of the Argentinean firm Techint, Kirchner's government has come to support the claims and criticisms made by the business groups after the nationalization.

Battle against the Right

FAO: Do you think that the political process in Latin America shall continue forward, given the experience of so-called progressive governments, or that, as Fidel Castro said, a counter-offensive of the right may erupt?

Claudio Katz: I think the right is taking the offensive.  And this is seen in the existing international media campaign against Chávez, against Correa, and in the attempt to re-elect Uribe, in the attempt to move Chile to the right with Piñera, what you see in Peru with the government of Alan García, in Mexico with Calderón, and Panama with the recent victory of Martinelli.  That is, the right wing in Latin America retreated a bit, but it still has its strongholds.  The main stronghold, no doubt, is Uribe in Colombia and Calderón in Mexico, and this is maintained.  There is a significant pressure on Argentina, which we saw in the conflict in the countryside last year, to resume the right-wing offensive.  But I would say that the main objectives of the right were not achieved.  The right last year sought to overthrow the government of Evo Morales through a coup and failed, and failed in the attempted secession of the provinces of eastern Bolivia, and also failed in the attempt to defeat electorally both Chávez in Venezuela and Correa in Ecuador.  That is, in the three countries where the political process has advanced furthest, the right has failed to rebuild their power.  In other places the situation is gray.  The right won in Panama but lost in El Salvador where the Farabundo Martí National Liberation Front won the election.  It is a balance, but I think you have to avoid the impression, the idea, that the right is coming back.

FAO: We are almost at the start of the bicentenary of the emancipation of Latin America.  In this bicentennial might we see Spain enthroned again in the hemisphere?

Claudio Katz: No, I think the moment when Spain was again enthroned here was the fifth centenary of the discovery in 1992.  At that time, in the '90s, Spain deployed its investments in the region, buying oil and telecommunications, making powerful inroads.  In contrast, in the past year we have seen the reverse, because the crisis is hitting Spain more severely than any other country with interests outside Europe.  Unemployment and public debt in Spain are at record levels, and the economic, industrial, and financial crisis is probably among the most serious in Europe.  I think this is going to greatly affect Spanish investments in Latin America in the medium term.  We are approaching our bicentenary at a time when a crisis of North American domination is very evident throughout the region -- a crisis of domination in South America, and a policy of closer ties in Central America.  It is as if the continent has been divided into two parts.  The United States reinforced its dominance, its control, over Mexico, the Caribbean, Central America, Colombia, Peru, but lost its ability to influence the Southern Cone.  Do not forget that in the past year the American ambassadors to Venezuela and Bolivia were expelled, and both countries were for twelve months without the heads of diplomatic missions in Washington.  Then, at the meeting in Trinidad and Tobago, one saw an Obama policy of trying to return to the Clinton format, a more diplomatic policy.  And this makes visible the real difficulties the United States has from its economic crisis and the military quagmire it faces in the Middle East.

FAO: Immanuel Wallerstein speaks of the decline of the United States as an empire. . . .

Claudio Katz: I'm rather averse to the idea of the inexorable decline of the U.S. empire.  It can decline and it can restore itself.  It has recovered many times.  I think it is like a philosophy of inevitable victory.  It seems to me to be a story of the predestined succession of ascending and descending powers.  I do not believe the cycle of contemporary history is marked by inevitability.  I think that different outcomes are possible.

Paradox of Capitalism

FAO: Given that the United States is weak on the global stage, does it still have many years to continue to govern as the great global hegemon?

Claudio Katz: The United States is the military power of the whole world.  And it is the protector of all the capitalists in the world.  There is no capitalist country that is willing to, or has the ability to, replace the Pentagon in control of hundreds of military bases around the world.  First, the United States has the NATO, and Europe and Japan both depend on the NATO.  The United States maintains military supremacy, and that is the great instrument of domination which persists.  In economic and financial affairs, the thing is more complex because, paradoxically, the United States is the center of the current crisis, but the refuge of all the capitalists in the world is the U.S. dollar.  Thus there is a paradox: the most threatened country is the refuge, while at the same time the United States remains the country seeking to replenish the IMF while imposing global monetary policy through the Federal Reserve.  We must separate the conjunctural from the medium-term.  The United States is in a very acute crisis, but it still holds the key resources of global geopolitics.

FAO: One sees an ability to influence Latin America by the Spanish right through the FAES Foundation of José María Aznar, the fascist Popular Party, and their spokesmen in the region such as Vargas Llosa, Enrique Krause, Mariano Grondona, Jorge Castañeda.  Can the intervention of these types cause some disturbance for the progressive governments?

Claudio Katz: I would say that the Latin American right is more disruptive than the Spanish.  The Latin American right is more than reactionary and conservative enough, and it has sufficient reserves and resources such as Mariano Grondona, Piñera, Vargas Llosa, and the heirs of Octavio Paz.  The Latin American cultural neo-conservative right has ruled the region for decades, nourished the military governments, and has an elitist, liberal, europensante [accepting European opinion as the only possible truth], Eurocentric world view.

The Great Media Inquisition

FAO: And they have the ability to manipulate the media. . . .

Claudio Katz: Sure, that is the new thing.  They ruled historically through the church, their wealth, their schools, and now they have the means of communication under their control and exercise a despotic influence over them.

FAO: The media today is what the Catholic Church was?

Claudio Katz: They are the Great Inquisition and exert an evil influence.  That's why Chávez's decision to remove the license of RCTV seems to me so healthy and transformative.  I believe that this measure is far more important than any nationalization of a steel company.

FAO: But with that answer the right in countries like Colombia, Peru, or Mexico is going to say that Claudio Katz is a totalitarian type.  How do you respond?

Claudio Katz: They say that because for them a monopolistic group controlling the means of communication is an example of democracy.  This is absolute hypocrisy.  The owners of the media are a handful of people, a tiny group that is not responsible.  It is a paradox: a congressman must be elected, any president, mayor, and governor, as well, but the media, which have a power much stronger and substantial than all the elected officials of any country, no one chooses their owners, they are the pure power of the divine.  They say they compete with each other through changing channels, but the choice is minuscule.  That is, the viewer can choose between CNN and Globovision, but this is not a real option.

FAO: How can the media in Latin America be democratized?

Claudio Katz: Just as any institution can be democratized.  There need not be some special thing about the media compared to any other institution.  We must democratize political life, schools, institutions, armed forces, society, everything.  This is a daily concern, to end discrimination of gender, race, ethnicity.  In Latin America we are changing the Constitutions of many countries to include new rights, to incorporate the neglected rights of indigenous people, youth, children.  That is to say, the development of society is the extension of rights.  The only right that we cannot talk about is the right to communicate.  It wants to be untouched.

FAO: The Brazilian political analyst Emir Sader, current executive secretary of CLACSO, said that, for the media to be democratized, they must necessarily be nationalized.  Do you agree?

Claudio Katz: I think you have to have public ownership, but control of what is seen and said cannot be operated directly by a government because that would lead to totalitarian ways.  There are many experiences in the past 50 or 60 years of public institutions that are independent of government.  The case of the BBC in London is often mentioned.  I have not studied it, I cannot say, but I know that there is, for example, a lot of experience where the key thing is a governing statutory scheme that prevents government manipulation.  We cannot move from media manipulation by capitalist groups to media manipulation by the government.  There must be freedom of information, but also public property.  I believe that the mechanisms of democratic ownership of the media must be discussed.

FAO: Do you have the feeling that Latin America is undergoing a process of political reconfiguration?

Claudio Katz: I have the feeling that it is a long-term process and will face significant obstacles.  It will not be linear.  And we are coming to a point where our battle against the right will be very hard, the right of Uribe, Calderón, and Alan García, of the right-wing military.  The United States maintains its military bases.  We cannot get carried away with the image of Obama as transforming the U.S. relationship with the region.  The Southern Command bases remain intact with a structure of military control across the region, even minimal measures such as closing Guantanamo are not implemented, the embargo on Cuba remains unchanged.  That is to say, the major problems of political sovereignty in our region in the bicentennial are all still on the agenda.

Colombia, a Militarized Society

FAO: How do you analyze the arms race in Colombia in respect to its internal conflict and the direct impact on the economy of that country?

Claudio Katz: The worst thing about Colombia is that this hideous expenditure, this waste of funds on military spending, is not to defend national sovereignty, not a need to defend the country's borders against external aggression, which is the only real justification a nation can have to devote such resources to the war effort.  Only if the country's sovereignty and the lives of its citizens are threatened is this justified.  Colombia is on the eve of the formation of a militarized society to serve the interests of the dominant groups that control the wealth of that country.  I believe there is a tendency toward militarization in Latin America, evident not only in Colombia but also in Brazil where a high percentage is devoted to military spending, to manufacturing submarines, where agreements are signed with France for extremely large investments in the military sector, and at present its military forces are occupying Haiti.  We must take care to criticize the Pentagon, imperialism, the North Americans, but also the military spending in the region that doesn't serve the people's purposes.  We must be very attentive to that and remain vigilant.

FAO: But, for countries that produce weapons, that is an excellent business. . . .

Claudio Katz: They live on that.  War is a necessity of imperialism, a structural necessity, not an option.  If weapons are manufactured, they have to be used.  There is a group of contractors who live directly off this.  The United States and all its military partners: Israel, Colombia, Egypt, Australia.  For the United States it is the need to maintain its military supremacy as a permanent warning to other countries like China, in the sense of a demand to stay quiet, do not dare to challenge.  There is a reproduction of wars and a tendency to endless war, an unequal war, as a permanent form of exercise of supremacy, warning the rest of the world that no one dare defy the imperialist power.  We must fight against that.

FAO: Finally, do you discount the possibility that in this process we will end up with, if not a world war, a series of peripheral conflicts as a strategy to overcome the current systemic crisis of capitalism?

Claudio Katz: Yes, it is possible.  But there is one major difference from the '30s and it is that war is not between powers of the kind such as France against Germany, the United States against Japan.  There is a collective associated imperialism that makes war against peripheral fronts and makes war as a warning to peripheral countries that threaten to rise up.  It seems to me we are going to have many conflicts because imperialism needs them, with or without financial crisis.  The United States finished devastating Iraq, is now preparing to devastate Afghanistan, and is permanently warning Iran of a possible invasion, as it is doing with North Korea.  The crisis accentuated this tendency to war, because it is in the nature of the system, and for this reason the alternatives are so important, such as the World Social Forum, and all the antiwar coalitions around the world.  Various small collectives have arisen and emerged in Europe and in Latin America to resist war, and I think they are going to continue to develop.

The original interview "Entrevista con el economista argentino Claudio Katz: 'La solución a la crisis del capitalismo tiene que ser política'" was published by on 10 July 2009.  Translation by John Mage

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