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Reforms and the System Question

by Leo Mayer Saturday, Nov. 10, 2007 at 9:11 AM

According to Marxist perspectives, capitalism develops with crises and ruptures. Possibilities of revolutionary social upheavals open up in these crises. The old wisdom of the Fordist age that cars cannot buy cars has lost all value to the elites.


Although globalization and neoliberal upheavals have undermined the economic ground from reformism, left reformist positions enjoy enormous popularity

By Leo Mayer

[This article published in: Marxistische Blatter, 10/7/2007 is translated from the German on the World Wide Web,]


- In Rostock/Heiligendamm in June 2007, tens of thousands demonstrated, blockaded and debated. With members of Christian groups, the global justice movement, unions, leftist organizations and parties, the protest united against a world order represented by the heads of government of the G7/G8. Anti-capitalist positions and positions critical of capitalism could be found in all the groups.

At the same time, over 20,000 employees at Telecom went on strike. They protested the deterioration of their working conditions and the existential insecurity connected with the purging. Positions critical of capitalism found growing acceptance.

These are two examples of the increasing insight that social problems cannot be solved within and with capitalism. Another just, solidarity and peaceful world presses. However no possibility for overcoming this capitalist system is seen. No way out and no realistic alternative appears. Everything seems blocked.

The necessity of a radical capitalism criticism and the search for fundamental alternatives grow. The problems cannot be solved in capitalism. At the same time, the urgency of immediate reforms to improve the living situation and expand democratic freedoms and social controls on scientific-technical development grows. The fast-paced development of productive forces and globalization bring these into an ever-stronger conflict with their capitalist shell and strengthen the tendency to shatter capitalism, a prerequisite for the transition to socialism. The destructive tendencies in the development of productive forces cause ever-greater catastrophes and even endanger the existence of the human species.

Although globalization and neoliberal upheavals have undermined the economic ground from reformism, left reformist positions enjoy enormous popularity.


Under different terms, nearly all leftist forces support a policy of progressive reforms as an alternative and means of overcoming neoliberalism. This policy is described as a “policy change,” “a new social idea” or a “turn to democratic and social progress.” Despite great common interests in the direction and substance of reform policy, the goals of reform policy are different. Even independent of the goals, there are different answers to the questions what political possibilities for reforms exist in today’s capitalism and what coalitions can be forged for a reform policy.

Three positions can be identified:

1. Returning to the welfare state of the 1970s through reforms;

2. Taming and civilizing unbridled global capitalism by means of reforms;

3. Reforms as part of a strategy to open a way to socialism.

With this last conception, reforms are connected with the struggle over hegemony, building a counter-power and gaining the majority for the struggle around a socialist society. The struggle for reforms must contribute to improving the living situations of large parts of the population, expanding democratic freedoms and changing the outlooks on life, expectations and conduct of the broad masses. Actors should be transformed in the struggle around changes. Reforms must aim at changing conditions: the economic basis, the institutional superstructure and the culture.

In a long-lasting battle over structural reforms, the power of capital and the effect of capital logic should be checked. Positions in society and the state should gradually be filled by progressive forces. This battle still rages within capitalism. According to Marxist perspectives, capitalism develops with crises and ruptures. Possibilities of revolutionary social upheavals open up in these crises and transitional phases. Still these possibilities can only become reality to the extent that an organized social and political force exists that consciously uses these possibilities. In the struggle over reforms, progressive forces develop their competence for political action and prepare themselves for the “possibilities.”

In this conception, the progressive tendencies of social development could be promoted with reforms. The “continuous upheaval of production and the continual shattering of all social conditions” characterize capitalism. “All rusty conditions with their entourage of time-honored ideas and notions are dissolved. All new ideas become outdated before they can ossify.” This description of the existential conditions of capitalism by Marx in the Manifesto is now shown concretely to us through the social upheavals allied with global neoliberal capitalism. While saving the old and presumably “secure” in this time of upheaval is obvious, progressive reforms should prepare for the new and not preserve the old. Seeking the starting-points for progressive changes is vital in the disintegrations of the old caused by neoliberalism – as for example the working conditions, traditions, customs and gender relations, in a word the whole way of life and working methods.

This presupposes a careful analysis of the development of capitalist ways of production. This challenge cannot be solved without a contemporary Marxism.


- The struggle over reforms must be waged in a radically changed world:

- Command socialism has disappeared,

- Capitalism has spread unrivalled over the globe,

- “Permanent war” was the normal state to maintain the present imperialist world order,

- The traditional working class movement as a union, cultural and political movement no longer exists.

In the question about reforms in global capitalism, the experiences of the last years show us that enforcing progressive reforms no longer succeeds and that the actions and activities of social movements had no visible effects on the political decisions of the rulers.

- Despite a worldwide movement against war, war was waged against Iraq. The next wars are prepared.

- In the German Bundestag (lower house), two-thirds of the members of parliament decide against the will of two-thirds of the population in all important questions;

- Most struggles were lost despite massive mobilization in different European countries to defend social rights and labor rights, against privatization of public property and social security systems and against the deregulation of the labor market. In the best case, the speed of neoliberal restructuring was reduced. Even successes like the rejection of the European Union constitution in the referendums in France and the Netherlands or the resistance to the EU guideline on deregulating dock work were only breathers.

- In Germany, the IGM union lost a strike in 2003 over the 35-hour week in East Germany for the first time in 50 years. This was the prelude to an across-the-board attack to roll back the 35 hour week, make working hours totally flexible and lower wages. A strategic defeat was inflicted on the unions with the defeat of ver.di in the battle against Telecom’s division plans.

- Although labor productivity today has increased more strongly than ever, the produced surplus in social wealth is withdrawn from the mechanism of redistribution. The global profit-priority in the finance markets and orientation in the world market cause transnational capital to oppose all investment in society since it is considered an unacceptable withdrawal of resources needed for the fight for survival on the world market.

- In this way, the gulf grows between poor and rich. The gigantic mass of capital seeking investment around the globe is constantly nourished.

The old wisdom of the Fordist age that cars cannot buy cars has lost all value for dominant corporations in Germany and the economic elites determining policy. For corporations, the production location has become the exclusive cost factor. The more successfully this cost factor is minimized, the greater the chances of forcing down other rivals on other markets in order to grow where the demand stagnates.

Thus growing and intensifying poverty and commodification/flexibilization of workers are functional structural elements of this model oriented in the world market.

These developments lead to the conclusion that the logic or mode of regualtion of today’s global capitalism is incompatible with social and democratic concessions and reforms.


Social rights, shorter working hours, higher wages etc. must always be gained through struggle against employers – sometimes through harsh distribution conflicts. When gained, they could be built into the regulation model or the logic of postwar capitalism. In the ensuing conflicts, they were starting-points for more improvements. These improvements and reforms were elements of the regulation model of the capitalism of the postwar era. The welfare state regulation had a social-political aspect (security in emergency cases) and an economic function: increasing real wages as productivity increases and assuring mass income in weak economic periods. In success and old age, demand and capital exploitation on the domestic market are promoted and stabilized.

A connection existed between greater productivity and social progress based on dynamic economic growth, stronger domestic market orientation, a state sector and state social regulation. This connection did not arise automatically but was enforced and mediated through the union struggle and the system competition with the socialist countries.

The union movement could always gain social concessions from capital with struggle and a political orientation within the capitalist system. A whole structure of the collective bargaining system, social systems, social legislation and industrial relations law etc. were developed into an institutional assurance of this class compromise deactivating class conflicts.

The class compromise was based on a logic involving the promotion of Germany as an industrial location (with domestic possibilities of profitable production) and foreign investments in gaining new markets and sales chances. The export built on this encouraged the creation of industrial jobs and strengthened the influence of unions.

Customs barriers were higher than today. Limits were set to exports. Capital traffic was strongly regulated. Therefore a state’s ability to join foreign investment with meaningful economic conditions regarding employment and growth was greater than today.

The freedom of goods traffic was much more limited than it is today on account of much higher transportation and communication costs. At that time employees in industrial countries were threatened far less with an outsourcing option.

However a very specific historical constellation – marked by inner economic conditions and outward system competition – made possible the welfare state class compromise. Both aspects no longer apply today.


The time of system competition was not only a temporary interruption from imperialist antagonism waged with military means. A global structural change occurred under the pressure of system competition and in its shadows. Structures of a transnational capitalism formed with transnational corporations and financing groups as their core. The earlier connection between increased productivity and social progress broke down with the development of the world market into the standardized field of capitalist competition, with the formation of transnational corporations as a structure-determining capital relation (multinationals worldwide determine the conditions of production, trade, investments, technology and consumer habits), with the effect of global profits and the primacy of global competitiveness. The political necessity for concessions also ended with the ending of system competition.

The logic or mode of competition of today’s global capitalism is incompatible with social and democratic concessions and reforms. Every cent, every minute of reduced working time must prevail against the employer and against the “logic” of global capitalism. Social compromises contradict a logic that aims at profit maximization through lower global costs and even accepts the destruction of Germany as an industrial location.

This does not mean no concessions can be wrestled from capital or that social concessions cannot be gained through struggle in some cases. This is really a question of relative strength. Still these concessions are completely foreign to the model of today’s capitalism. They cannot be integrated any more in the mode of regulating global capitalism. They are a foreign body that is repelled as quickly as possible. Therefore concessions and achievements attained through struggle are not a basis for further struggles any more but are immediately exposed to constant attacks of capital. This rollback is crucial for neoliberal capitalism.


According to the principle that a specific economy implies a specific politics – one is the existential condition of the other -, global capitalism and neoliberalism stipulate each other. Political rule rests on economic rule and originates from economic rule. Neoliberalism is not a policy preferred by the rulers that can be voted in or out of office according to the political situation but an inner necessity of global capitalism in the present time. There can be no stable “coexistence” between the neoliberal logic of global competitiveness on one side and welfare state measures in politics on the other side.

The contradiction between the two planes is solved in favor of the rule structure of the economy. If substantial reforms – in property relations – fail, the logic of the economy will strangle its counterpart in politics and society. Under these conditions, state policy has the task of making the location attractive for the comparative international advantage of transnational capital – through flexibility and lowering the costs of workers, weakening unions, reducing the tax burden and ecological conditions etc.

Variants are obviously possible in historically defined spectrums – dependent on the class struggle and the orientation of the ruling classes in view of international competition and rivalry. When Keynesian reformers claim “relative independence” from state and society over against the economic structure and the combination of the capitalist economy and socially organized society, they repress the core problem of every socialist strategy that alternative reforms can only prevail in the struggle against international capital and must include encroachments in the economic structures and property relations.

A transnational block was involved from the beginning in the neoliberal anti-social offensive that uses transnational structures and institutions to overthrow national, political, economic and social structures. By building and extending supra-national regulatory institutions (governmental institutions like the IMF, WB, WTO, G7, NATO and EU and transnational non-governmental organizations like the European Round Table of Industrialists ERT, Transatlantic Busi8ness Dialogue, International Trade Board etc and through the power of multinationals and finance markets), the neoliberal structural policy is enforced over against the states. The neoliberal hegemony is secured on a transnational plane even toward states that want to break with neoliberalism.

In contrast to the New Deal or the situation after the end of the Second World War, there is no support for a reform-oriented policy or a “new social contract” from capital interests that tend more to the domestic market, state interventionism and social regulation. A worldwide hegemony of transnational finance capital exists that does not want to retreat from the enforced liberalization and globalization of the finance markets and the world economy that urges removing all obstacles and barriers to the free worldwide circulation of capital. This hegemony is ready to unscrupulously use all means to attain these goals – from growing internal pressure and repression to permanent outward war and a new colonialism.

The dilemma of alternative reform policy appears in an exemplary way in the position of Michael Brie, a theoretician of the PDS (Party of Democratic Socialists) and the Rosa Luxemburg foundation. On one hand, he declares that there can be no “lasting balance” between capital exploitation interests and the interests of society and that a social-democratic strategy encounters the strongest system-immanent limits in neoliberalism “unlike Fordist welfare state capitalism” [Michael Brie, Die Linke (The Left)-was kann sie wollen?, Supplement of the journal Sozialismus 3/2006, p.39]. Nevertheless he is convinced that “the possibilities for such a balance are not exhausted.” He wants to use these possibilities with the help of a social-democratic reform policy that according to his definition is not intent on overcoming the dominant property- and power relations. He assumes the neoliberal economic structure of the economy can be broken and tamed with the help of a social-democratic regulation. Thus a long-term coexistence of the neoliberal economy and social society is possible. According to this thesis, the left in this phase could gather strength to overcome neoliberalism.

Still the theme can only be conflict in a “zero-sum-game” and not balance. What neoliberal capital wins, the people handed over to it today lose. Conversely, a socially cushioned neoliberalism is not an alternative given the depth of the contradictions, destructions caused by neoliberal globalization and the interests of the forces dominating the neoliberal block. The neoliberal block – and social democracy is also included here – presses to a radicalization of the neoliberal reorganization that is unavoidably joined with the transition to coercion and authoritarian means and structures.

The system-immanent possibilities for democratic and social reforms are largely exhausted. The philosopher Ralf Dahrendorf describes the situation as follows: “There are times in which social conflicts and their academic discussion had a fundamental or constitutional character. That was the case in the 18th century and at the end of the 20th century. In such times the rules of the game in society are up for discussion.” (PDS-press release Nr.20/2005, p.12).


Does this mean that we abandon the struggle for reforms – for full employment, social security and joint determination – since these can not prevail anyway? Not at all!

Despite neoliberal propaganda and neoliberal upheaval for decades, the welfare state still has a very high importance for the majority of people. The struggle for reforms can be tied to this mass consciousness and the ideas of social democracy. This involves seeking ways to transform this reformist consciousness into anti-capitalist consciousness.

Secondly, social conflicts and the struggle over reforms in today’s capitalism has a fundamental character in that social and democratic reforms are closely connected with the necessity of fundamental structural anti-monopolist rearrangements and a radical democratization of the state economy and society. However this also means the basic idea of “system breach,” the necessity of a socialist revolution of existing property- and power-relations has to be brought in all demands and struggles for reforms. The specific contribution of Marxists is to orient the struggles for reforms in a revolutionary process for overcoming capitalism: in this struggle against the roots of the capitalist social order, not against the consequences.

The task of the DKP (German Communist Party) and other Marxist forces lies in raising more radical demands than the othe4r parts of the social and political left and elaborating political strategies to implement the reform program and the demand of necessary struggles. To the non-parliamentary battle and strengthening the organization of the working class movement and social movements, the Marxist left must contribute the knowledge that a political change is not possible without encroachments in the monopolist rights of property and control. Capitalism must be overcome since it cannot solve any of the problems of working people and has become the obstacle to the development of humanity.

Whoever would carry out reforms of this kind must recognize firstly that Germany has to first break from the alliance of global capitalism and secondly that this separation cannot occur without changing existing international regulations and dependencies. Thus a socialist reform policy has the task of urging international controls that check the power of international capital on the national economy and simultaneously delay the exodus-option – capital flight, job outsourcing, currency speculation etc.

This may be a tremendous challenge in a country like Germany. The German economy has the greatest “degree of openness” among big industrial countries. Export and import of goods and services amount to 75 percent of the total gross domestic product. The interlocking with the global finance market even goes beyond this. In 2004, Germany’s securities transactions with foreign countries amounted to over 12 trillion euro, six times the gross domestic product (see isw-report Nr.66, p.49).

The internationalization of trade and finances is only one new reality. The news of the last weeks makes clear how conglomerates advance the transnationalization of production by building global networks of development and production.

The internationalization of property relations goes hand in hand with this. “Goodbye Germany, hello DAX” was the Frankfurter Allgemeine newspaper’s title for its study of the great businesses on the German stock exchange (1/18/2006). For 20 businesses, more than 40 percent of their capital stock is in foreign control. With two exceptions, foreign sales are over 50 percent and even over 70 percent for more than half. With nearly all of them, more than half of the workforce is employed abroad.

Two things are clear. Europe’s change is on the agenda with this kind of reform program since these reforms can not be realized in only one country. The struggle against the EU-guideline on dock work, resistance against the EU-service guideline, resistance against the EU-constitution, the social forum movement and formation of the Party of the European Left are beginnings in developing border-crossing consensus.

In any case, a positive fascinating vision for a change of course – for “another world” – arose from the social contradictions caused by neoliberalism, from the broad discussion of leftist forces and from the social struggles. They did not originate on the Greens table. The left and the anti-neoliberal reform block could become hegemonial when they take up the interests and hopes of working people, youth, unemployed, pensioners and socially excluded and give a perspective for their private and professional life, with an alternative social and political project.

Social dislocations and contradictions do not lead automatically to protest, resistance and struggle for alternatives. Whether the contradictions lead to resignation and adjustment or to protest, resistance and struggle for alternatives depends on the interpretation of the contradictions. One of the special challenges for the DKP and the Marxist left altogether lies here.

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