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G. The Frankfurt School: Fascism and Abandonment of the Law of Value
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G. The Frankfurt School: Fascism and Abandonment of the Law of Value

One apparent solution is to remove more and more of the cost side of the ledger from the market altogether, with the taxpayers absorbing operating costs and rendering capital more profitable. The overall process, behind the state's oscillating policies of responding to over- and under-accumulation, is a greater and greater involvement, and the movement of ever larger portions of the economy from the realm of the market to the realm of state administration.

Theoretically, there is no limit. The state can continue to solve crises of over- and under-accumulation by shifting costs and revenues from the market to the political sphere indefinitely, until the final result is a privately owned corporate economy in the same position relative to the working and taxpaying population as the ruling class in the Asiatic mode. The role of commodity exchange and realization in the market will steadily decline until the capitalists are the state, and the economy is a single giant, slave-operated latifundium. Owners of the corporate economy operate directly through the state, as in feudalism or Asiatic mode, to exploit population at large through entirely political means.

Some members of the Frankfurt school saw fascism as an attempt to do just that. According to Horkheimer and Adorno, Neumann, and Pollock, Nazism reflected an evolution in which capitalists increasingly acted through the state. They speculated that such a society might, in future, altogether abandon commodity production and the law of value. At some point, in that scenario, the market would be superseded by state administration, and the capitalists would extract a surplus from labor directly through the state. When that point was reached, the market would have been completely transformed into a state-owned and state-managed economy, and the capitalists would no longer be capitalists. Instead, they would be owners of the state economy by virtue of their control of the state.

Frederick Pollock described this phenomenon as the disappearance, with "the autonomous market," of the "so-called economic laws": "The replacement of the economic means by the political means as the last guarantee for the reproduction of economic life changes the character of the whole historical period. It signifies the transition from a predominantly economic to an essentially political era."51

Unfortunately for the capitalist ruling class, this possibility is largely theoretical. The stability of all government rests, in the last resort, on public consent. And while the degree to which public opinion can be shaped by the ideological hegemony of a ruling class is indeed remarkable, there are limits in practice to the ability of legitimizing ideology to achieve popular acquiescence.

There are also absolute physical limits. Crises of inputs like transportation and energy would, in all likelihood, be even more acute under post-capitalism. Allocating them entirely by political means, instead of only partially, would simply remove the rationalizing function of market prices altogether. The example of the Soviet economy is instructive. It largely removed the law of value as a consideration in allocating inputs to the economy. Nevertheless, the inherent irrationalities resulting from ignoring the law of value led to ever greater wastage of inputs, and to ever greater inputs to achieve the same results. The state planners had no way of even knowing how many resources they were wasting, because there was no basis for rational economic calculation. The final result was collapse.

Finally, there are political constraints from outside. Even in the event of the post-capitalist class society feared by the Frankfurt School, such a system would surely reach physical limits of expansion short of total military and political control of the planet. Had Nazi Germany succeeded in defeating the Allies militarily and pushing Soviet forces out of European Russia, it is still unlikely that Hitler would have been able to maintain permanent control of subject populations from the English Channel to the Urals. It is still less likely that a post-capitalist America and its developed world allies, regardless of their degree of military and technical superiority, could hold on to the entire world.

And despite Orwell's cynicism, it is unlikely that America's fellow nuclear powers would act as enablers of global empire, or that the great powers would undertake a tacit obligation not to challenge each others fundamental interests. It is much more likely that the major nuclear powers, Russia and China, would promote their own interests by challenging American/Western dominion, and encouraging defection and insurgency in the Third World.

What’s more, Orwell's speculation on the motives of the Inner Party in Oceania is psychologically incredible. It is unlikely if nothing else that any ruling class would be able to maintain the internal cohesion and morale to behave with the ruthlessness necessary, in the long run, to control a hostile world. While the ruling elite no doubt attracts more than its share of sociopaths, ruling classes as a whole cannot maintain stable rule with no legitimizing ideology besides conscious self-interest or the love of power for its own sake.


H. Global Political Crisis of Imperialism

To some extent, as we saw above, a neoliberal policy in the Third World is a solution to both the accumulation crisis and excess of democracy in the First World. The class struggle is transferred from the First to the Third World, and the Third World is used as a base of attack on first. Transnational corporations write off old investments in the First World, use decaying industry there as a cash cow to support new and more profitable investment in the Third World.

As with other aspects of the neoliberal reaction, however, there are built in limits. Neoliberal policies in the Third World contain the seeds of a global political crisis. This is almost certain to be an acute crisis in the medium term. But even in the short term, the dangers to the global capitalist order are very real.

At some point, the effects of neoliberalism (and especially the jacked-up version of the Uruguay Round) are likely to cause political unrest in so many countries of the Third World, and the emergence of so many more populist or national figures like Chavez and Lula, that a coordinated movement among several such countries will emerge.

If several significant TW countries staged a surprise, coordinated repudiation of their national debts, and withdrew from the Bretton Woods agencies, the effects on the neoliberal system would be devastating.

It's interesting that we've seen a near-collapse of central power in Argentina, with the emergence of a variety of grass-roots economic and political organs of self-government; and anti-neoliberal populist regimes in Brazil and Venezuela--all in just a couple years' time. As the impacts of the Uruguay Round and other neoliberal policies make themselves felt in the Third and Fourth world, with the resulting political unrest and emergence of populist and nationalist movements, we can expect more and more such defections. At some point, such countries are likely to stop negotiating with the IMF individually, and attempt a joint action of some kind.

Imagine if several significant Third World countries made such a coordinated withdrawal from the Bretton Woods institutions, and repudiated their international debts. They could combine this with other genuinely free market reforms, like abrogating the intellectual property and industrial property provisions of GATT, so that native-owned competition might emerge to Western corporations, and be allowed to adopt modern production technology without restraint. If the domestic power of feudal oligarchies was broken in these countries, and with it their collusion with Western agribusiness, the land could be deeded to the actual peasant cultivators or agricultural laborers. A number of countries might enter into an accord to legalize mutual banks, LETS, and all other voluntary credit or money systems--and possibly organize a state asset-backed currency of some sort for trade between themselves, as an alternative to dependence on the dollar. They might announce a policy, finally, of ceasing to subsidize from state revenues the infrastructure projects on which Western capital depended to be profitable in their countries: that would mean all electricity, transportation, etc., services would be paid for by western firms on a cost basis. Rather than "privatizing" state enterprises by auctioning them off to kleptocrats and TNCs, they might transform them into either producers' or consumers' cooperatives--at least as genuine a form of privatization as the looting commonly practiced, but one that never seems to be adopted in Jeffrey Sachs' version of "free market" reform.

If this seems overly fanciful, consider Brazil's recent proposal for a free trade area among the G-20 group of developing nations--without the imprimatur of the Usual Suspects. The purpose, said Brazil's president, was "to fully exploit the potential among us, which does not depend on the concessions of the rich countries...."52

Such a movement might even coordinate with the OPEC countries or China in adopting the Euro as a medium for international trade--the equivalent of a monetary atom bomb on the U.S.

If any one country undertook such measures, the CIA would probably begin immediate destabilization attempts, as it did with Allende's Chile or Chavez's Venezuela; but if several countries made such a withdrawal from the world corporate system simultaneously, pledged each other mutual support, and appealed for support to the people of the rest of the world, it might be more than the U.S. could handle. This latter would include mobilizing popular discontent against non-supportive regimes throughout the Third and Fourth worlds, promoting defaults and withdrawals by even more countries, and radical opposition within the core of the Empire itself.

With the serious political divisions between international capital, such a movement might even attract the support of a great power rival to the U.S. The Europeans, Russians or Chinese would be quite likely to ignore any U.S. attempt to impose trade sanctions. Any would-be rival "Eurasian bloc" of such powers might, indeed, welcome the movement as a form of strategic leverage, the same way the USSR welcomed the old nonaligned movement.




1. James O’Connor, Accumulation Crisis (Oxford: Basil Blackwell Ltd, 1984) 97.

2. Ibid. 8.

3. See material from James O’Connor, The Fiscal Crisis of the State (New York: St. Martin’s Press, 1973),in Chapter Six above.

4. O’Connor, Fiscal Crisis 8.

5. "Head to Head: M6 Toll Road," BBC News, December 9, 2003 Captured December 10, 2003

6. "World Oil Supplies Running Out Faster than Expected," Oil and Gas Journal, August 12, 2002. See also George Monbiot, "Bottom of the Barrel," the Guardian, 2nd December 2003 ; Colin J. Campbell and Jean H. Laherrère, "The End of Cheap Oil," Scientific American, March 1998. Captured May 15, 2004.

7. Warren Johnson, Muddling Toward Frugality (San Francisco: Sierra Club Books, 1978).

8. Ivan Illich, Tools for Conviviality (New York: Harper & Row, 1973).

9. Kaveh Pourvand, private email, October 29, 2003.

10. O’Connor, Fiscal Crisis of the State 9.

11. Jürgen Habermas, Legitimation Crisis. Trans. by Thomas McCarthy (United Kingdom: Polity Press, 1973, 1976) 61, 68.

12. Robert Shea and Robert Anton Wilson, The Illuminatus! Trilogy (New York: Dell Publishing Co., Inc., 1975) 388.

13. Ibid. 498.

14. Paul Goodman, Like a Conquered Province (New York: Vintage Books, 1965) 357 (published under single cover with People or Personnel).

15. Paul Goodman, People or Personnel (New York: Vintage Books, 1963) 83-4 (published under single cover with Like a Conquered Province).

16. Ibid. 113.

17. Ursula LeGuin, The Dispossessed (New York: Harper Paperbacks, 1974) 305-6.

18. Paul Goodman, The Community of Scholars (New York: Vintage Books, 1964) 213 (published under single cover with Compulsory Miseducation).

19. Goodman, People or Personnel 70.

20. Habermas, Legitimation Crisis 36.

21. Ibid. 68.

22. Ibid. 81.

23. Richard K. Moore, "Escaping the Matrix," Whole Earth (Summer 2000) 53.

24. Samuel P. Huntington, Michael J. Crozier, Joji Watanuki. The Crisis of Democracy. Report on the Governability of Democracies to the Trilateral Commission: Triangle Paper 8 (New York: New York University Press, 1975).105-6.

25. Ibid. 92.

26. Ibid. 7-8.

27. Ibid. 113-5.

28. Ibid. 7-8.

29. Ibid. 74-6.

30. Ibid. 113-5.

31. Frank Morales, "U.S. Military Civil Disturbance Planning: The War at Home" Covert Action Quarterly 69, Spring-Summer 2000, Captured April 15, 2001. The last quote is from Donald Goldberg and Indy Badhwar, "Blueprint for Tyranny," Penthouse Magazine August 1985.

32. Harry C. Boyte, The Backyard Revolution: Understanding the New Citizen Movement (Philadelphia: Temple University Press, 1980) 226n.

33. Ibid. 13-6, along with notes on 225-9.

34. Ibid. 225-6n.

35. David M. Gordon. Fat and Mean: The Corporate Squeeze of Working Americans and the Myth of Management Downsizing (New York: The Free Press, 1996).

36. Guy Pauker, Military Implications of a Possible World Order Crisis in the 1980s R-2003-AF (Santa Monica: Rand Corporation, November 1977); Pauker, Sources of Instability in Developing Countries P-5029 (Santa Monica: Rand Corporation, June 1973).

37. O’Connor, Accumulation Crisis 1-2.

38. Moore, "Escaping the Matrix" 56.

39. Ibid. 57; See also Sam Smith, "How You Became the Enemy,” (Progressive Review 1997). captured April 15, 2001.

40. Diane Cecilia Weber, "Warrior Cops: The Ominous Growth of Paramilitarism in American Police Departments" Cato Briefing Paper No. 50, 26 August 1999. Captured April 15, 2001.

41. Alfonso Chardy, "Reagan Aides and the 'Secret' Government" Miami Herald 5 July 1987 Captured April 15, 2001; see also Diana Reynolds, "The Rise of the National Security State: FEMA and the NSC" Covert Action Information Bulletin #33 (Winter 1990). Reproduced by The Public Eye Captured April 15, 2001.

42. Morales, "U.S. Military Civil Disturbance Planning"; Paul Rosenberg, The Empire Strikes Back: Police Repression of Protest From Seattle to L.A. L.A. Independent Media Center (August 13 2000) Captured April 15, 2001; Alexander Cockburn, "The Jackboot State: The War Came Home and We're Losing It" Counterpunch (May 10 2000) Captured April 15, 2001.

43. "US Army Intel Units Spying on Activists" Intelligence Newsletter #381 (April 5, 2000) captured March 27, 2001.

44. Jim Redden, "Police State Targets the Left" The Zoh Show: Newsbytes (May 2, 2000) Captured March 25, 2001; Jim Redden, Snitch Culture: How Citizens are Turned into the Eyes and Ears of the State (Venice, Calif.: Feral House, 2000).

45. See Rosenberg, The Empire Strikes Back.

46. Ibid.

47. Moore, "Escaping the Matrix" 57.

48. O’Connor, Accumulation Crisis 58.

49. Ibid. 225.

50. RKM, "about those torture photos…" Cyberjournal, May 19, 2004.'811'&batch='16'&lists='cj' Captured August 8, 2004. Richard K. Moore invites comments on these views; he can be reached by email at

51. Pollock, "State Capitalism," Studies in Philosophy and Social Science, IX, No. 3 (1941); Franz Neumann, Behemoth (1942); Adorno and Horkheimer, Dialectic of Enlightenment (1944). All cited in Michael Harrington, The Twilight of Capitalism (Simon and Schuster, 1976) 216-18.

52. "Brazil proposes creation of G-20 free trade area," December 13, 2003 2003-12-13 11:13:39 Captured December 14, 2003.