Prof.Dr.

Vera Vratuša (retired) 1

Republic of Serbia
Belgrade University
Faculty of Philosophy
Department of sociology

THE CRISIS OF 2008: PARADIGMS OF INTERPRETING AND STRATEGIES OF

OVERCOMING

- published in:
SERBIAN ACADEMY OF SCIENCES AND ARTS DEPARTMENT OF SOCIAL SCIENCES
Economic Sciences Committee E C O N O M I C S C I E N C E S C O L L E C T I O N Book
XIV ECONOMIC CRISIS: ORIGINS AND OUTCOMES. Proceedings of the Conference
CRISIS: ORIGINS AND OUTCOMES held at SASA on April 20, 2010 Accepted for
Publication at the 10th Session of the Department of Social Sciences of the Serbian Academy of
Sciences and Arts, held on December 14th, 2010 after being reviewed by Corresponding
Member Časlav Ocić, University Professors Oskar Kovač, Mlađen Kovačević, Ljubomir
Madžar, Blagoje Babić, Milovan Mitrović, Đorđe Popov and Rajko Bukvić. E d i t o r
Academician ČASLAV OCIĆ, B E L G R A D E 2018.
https://dais.sanu.ac.rs/bitstream/id/43143/bitstream_43143.pdf

abstract: The paper contains an analysis of three basic theoretical and methodological
approaches to explaining and understanding causes of the 2008 crisis and its consequences, as
well as the analysis of three main types of practical and political strategies of getting out of crisis
– neo-Smithism, neo-Keynesism and neo-Marxism.
The main finding of this paper is that the ideological conflict of the partisans of these three
paradigmatic approaches presents an expression of class struggle to preserve, reform or abolish
existing globally predominating social relations of capital accumulation in a systemic crisis.
keywords: neo-Smithism, neo-Keynesism, neo-Marxism, systemic crisis of capital accumulation

1 Causes of the 2008 crisis

1.1 Starting from 1970s until recently, neo-Smithean advocates of free operation of market laws,
deregulation and privatization have assured us that "invisible hand" ensures that competitive
pursuing of selfish individual interests without state interference external to economy
automatically provides maximum benefit for all through optimization and balancing the total
product and total demand. According to neo – Smithean doctrine, which became again dominant
from the begining of 1980’s, external activity of different state regulatory bodies only disturbs
1
vera.veritas@gmail.com; https://f-bg.academia.edu/veravratusa.
automatic functioning of financial markets since such interventions just send distorted
information to autonomous individual actors on financial markets and unjustifiably redistributes
risks. Friedman’s writings (Friedman, 1970; 2002) inspired monetarist policies for stimulating
economic growth through state deregulation , privatisation and lowering of all taxes and tarrifs
worldwide. When someone would remind the partisans of the neo-liberal theoretical and
methodological paradigm of examples of depression in the near and distant past, they have
always had a soothing response that the Great Depression like the one from 1930ties can not be
repeated.

When the crisis still manifested itself in the form that announces even greater depression than the
one that erupted to the surface in 1929, the advocates of neo-Smithean or neo-liberal paradigm
had to begin to speak if not about the causes, then at least about the most visible external
circumstances and consequences of the crisis. They began to talk about the financial crisis in the
meaning of sudden loss of a large part of value of financial institutions and forms of ownership,
such as commercial banks, savings banks, insurance companies, savings, insurances, mortgages,
corporate stocks and national currencies. In March 2009, Stephen Schwartzman thus noted that
about 45% of global wealth was destroyed in less than a year and a half (News.com.au: 2009).
Neo-Smitheans concluded that the market is temporarily disrupted because people were living
beyond their means. Economic difficulties present according to them just the way that the market
corrects itself.

It is important to notice that the tendency among neo--liberals to personify market and to
celebrate "invisible hand" of free competition among the private owners of goods, in fact
conceals the personal union between the owners of control stock packages of transnational
corporations and banks with the highest officials of state power, which in fact permanently
regulates market in the direction of oligopolistic concentration and centralization of capital in the
hands of a few and the wage slavery of majority.

1.2. When insatiable demand of large capital for profits through speculative redistribution of
income obtained from the resale of already-made goods and services (or those still planned) at
the beginning of the XXI century has 35 times exceeded real GDP of the entire world (Morin:
2006), while ever more expensive loans, decline of public expenditure, the closure of old and not
opening of new jobs further decreased the payment capable demand, it has come back once more
the time for the advocates of the neo-Keynesian paradigm to offer their explanation of the crisis.
Nobel laureate economist Paul Krugman (Krugman: 1999) has in the midst of financial crisis in
Asia in late 1990s predicted a series of depressions based on the "shortcomings on the side of
economic demand." Krugman, however, did not explain the systemic causes of this lack of
demand. Krugman has just repeatedly expressed his opinion that Alan Greenspan and Phil
Gramm were two individuals most responsible for causing the crisis as they repeatedly left the
financial markets, investment banks and financial derivatives unregulated, abrogating
precautionary measures that were introduced in 1930’s during the Depression that prevented
commercial banks, investment banks and insurance companies to join together (Krugman: 2008).
Neo-Keynesian Krugman did not observe the fact that neo-Smithean Greenspan also applied
measures stimulating aggregate demand, only with the difference that the deficitary financing of
major public investments and war economy through increased government debt, was replaced by
boosting aggregate demand through increased borrowing of businesses and citizens.

The neo-liberal privatization of the Keynesian mechanism of the aggregate demand maintenance
on the basis of the so-called welfare state investment in the public sector and its replacement
with the mechanism promoting easily accessible consumer credit, is not primarily a result of
good or bad decisions of neo-Smitheans, but forced move within the framework of capitalist
mode of production. As in any previous systemic crisis of capital accumulation, decrease in the
rate of profit on capital invested in the production creates increase in the unrealised surplus value
that can not be any more spent productively with profit. Thus, the large investment trusts and
holdings necessarily turn themselves to non-productive investment of huge sums of money in the
real estate market, speculation with fluctuating exchange rates of foreign currencies, in the hedge
funds and other short-term financial derivatives derived from really already created or still not
created surplus value ("credit Default Swaps "," leveraging "...). The greater degree of this
„financialization can only to postpone the exploding of the „baloon“ of speculative unproductive
investments, but it can not ot prevent it.

Sooner or later it becomes obvious that despite the high prices of shares in the financial markets,
the relevant companies operate without profit, although they submit false reports about the high
profits (eg World.com) in order to construct speculative profits without having to produce
(Arruda: 2009). "Bubbles" inflated by speculative purchases for example of IT companies’
stocks or of real estate in the hope that they would be soon resold at a higher price, and not
because of income that they would generate, necessarily explode in the end. In circumstances
where the parent holding company so speculatively invest financial surpluses exclusively in risky
derivatives, income and dividends on shares of companies that operate in the real economy
(infrastructure, transport, industry, agriculture) are outflowing as a whole for the repayment of
interest on debts. As soon as because of this ’speculative splurge’ there comes about an
interruption in inflow of earnings and dividends, the companies become insolvent and have no
opportunity to take new credits to refinance the old debt and to be able to invest in new
production. Such bad corporate and bank structure has created a deflationary spiral in the U.S.
alredy in 1920’s as Galbraith noted in his book The Great Crash of 1929 (Galbraith: 1997, xii).

About eighty years after the Great Crash, corporate speculators the Enron, Worldcom and a
dozen other major companies and financiers such as LTCM. Bera Stearns Bank, Lehman
Brothers, Merrill Lynch, have ruined the respective companies, eliminating jobs, life savings,
health insurances, pensions and shelter of thousands of people (Parenti: 2009), while filling up
their private pockets. Not material values such as trust were lost once again since issuers of
derivatives once again fail to pay face value to financial notes holders.

1.3. Political and social economists of neo-Marxist orientation point out that already in the
nineteenth century, Karl Marx managed in Das Kapital and many of the preparatory works, to
rise above mere dealing with external description of the external circumstances and
consequences of cyclical economic crises of his predecessors. Immanent cause of ever deeper
cyclical imbalance between supply and demand of goods and services on the market, Marx found
in the internal contradictions of capitalist relations of life reproduction themselves. It is a
structural contradiction between the potentially limitless possibilities for development of social
productive forces of work through the division of labor and progress of technology, on the one
hand and the limited aims of the capitalist way of reproduction of life - like the private
appropriation of socially produced surplus value, on the other. This contradiciton simultaneo-
usly and unadjustibly reproduces chronic tendency to hyper-production and hyper-financial
accumulation, on the one hand, and insufficient purchasing capable demand, on the other side.
Mode of production in which private owners of large capital are forcing employees to work ever
more for ever less, is always in danger of breaking down. For the purpose of maximizing profits,
major capital invests all its inventiveness in finding ways to absolutely and / or relatively reduce
the wages. However, to achieve profits, big capital also needs somebody who is going to buy
manufactured goods and services. This somebody, however, is just becoming ever less
numerous, as workers who produced piles of goods and services for the market, receive ever
lower real wages and ever more often lose their jobs as "redundant", ie becoming ever less able
to buy produced goods and services.
Concrete explanation of the causes of the latest hiperaccumulation of capital 2008. crisis, neo-
Marxists usually start with reminder that in late 1960 it came to attrition of extra-economic
momentum that the mass destruction of capital and people made "superfluous" by the Great
Depression of the end of 1920’s provided to the accumulation of capital. Transnational capital
led by a faction having the seat in the USA acquired after often unfriendly also forceful
overtakings, the welth which equals or goes over the value of BNP of many countreis. Since the
beggining of the 1970s, it began to use the privilege of having control over the national currency
which is imposed as an international reserve currency, for printing dollars without gold backing
in order to finance imperial wars like the one in Vietnam. Soon the privately controlled central
banks in other imperialist countries have also increased issuance of money without coverage in
real economy. The financial oligarchy provided permanent inflow of its own gein by obliging the
corresponding states to return their borrowed money from the budget gathered out of the taxes
collected from all citizens. The world market was soon overfluded by virtual money which could
not have been cashed in for the vaue which it allegedly presented. Arround the year 1970, at the
turning point of the fourth long economic cycle after the industrial revolution of the 18. century,
thare came to the satuatin of the mass consumption of the electronic apparates and automobiles
on the oil propulsion.
The prediction of this crisis was stimulated but not also explained by the Soviet politicl
economist Kondratjev. He had already in the first quareter od the twentiest century statisticaly
documented that during the 19th century there came two times to exchnge of the phases of
expansion, turnign point, stagnation and recession (1790-1815-1849, 1850-1873-1895). The
crisis of nineteen seventies has predicted the French political economist Ernest Mandel (1964,
1980), and thus renewed interest in Kondrathev. Since the first signs of accumulation of
inventories, bank managements begin to bombard the population receiving ever smaller and less
secure real income, with irresistibly tempting advertisement calls to take new loans at low
repayment interest rates. The population, however, is not simply careless and does not simply
succumb to advertisements while it increases its debt over its capacity of repayment. On the
contrary, population is forced to take loans because of its low average earnings which are not
sufficient to cover the costs of education, housing and health treatment. The owners of the banks
are ensuring themselves against the loss of unsecured loans, through "innovative" reselling of
their future financial claims as long as there exist speculative investors who hope to resell in their
turn the purchased subprime derivatives even more expensively. At a certain point the financial
oligarchy abruptly withdraws its placements and raises interest rates on debt, causing mass
bankruptcy of individuals, companies and economies of entire countries like Brazil, Mexico,
Russia, South Korea, Argentine. Dramatically reduced rates of industrial production affect the
gross national product to cease to be sufficient to repay increased interests on debt, while nothing
remains for new investments. Indebted countries, companies and individuals fall into debt
bondage although they typically pay the principal several times over. Debtors are forced to take
new loans under adverse conditions and blackmails in order to pay off old debts. Parasitic
creditors of the mortgage debt through the forced debt repayment procedures nominally devalue
the real wealth and in fact are grabing it over from the dispossesed debtors.

Neo-marxist political and social economists point out in addition to debt slavery alsto to two
other mechanisms ensuring superprofits to transnational corporate and financial capital, and
through this also mechanismes of simultaneous destruction of purchasing capable demand. The
first mechanism is the outflow and migration of capital in the direction of the areas with cheaper
labor and raw material and without laws on environmental protection from pollution. The second
mechanism is import of qualified and cheap labor power willing to work more for less. Such
mechanisms of the production costs’ reduction led on the one hand to de-industrialization and
disproportionate expansion of the service sector in the center of the world capitalist system. Rich
countries have also become dependent on imports of products of mass consumption from
countries with low cost labor force, so that their deficits in foreign trade grew. Total external
debt of the United States has thus jumped from less than 2 trillion U.S. $ in 1980 to more than 5
trillion U.S. $ in 2007, of which half goes to the strongest economies of Asia (Bullard: 2008). In
the exact opposition to the cruel inforcement of debt payment procedures in heavily indebted
countries, former and current colonies and half colonies, the U.S. financial oligarchy has no
plans to pay its own debt, but as a hegemonic military power, either unilaterally or in alliance
with other members of NATO association for the imperial condominium, in the last decade of
the twentieth century intensified a series of wars to grab control of raw materials and energy
sources from the people on whose territory these resources are located. On the other hand, the
"dirty" industries transferred to countries on the periphery of the world capitalist economy with
several times cheaper labor power for the same work and with no legislation enforcing the
protection of the environment, accelerated depletion of unrenewable natural resources and raised
the level of pollution of land, water and air , bringing into question the very survival of life on
the planet. Experts from the underdeveloped countries, emphasize that an important cause of the
food crisis and huneger is the policy of subsidizing and protecting domestic agricultural
production in rich countries, while simultaneo-usly imposing import liberalization of agricultural
products to poor countries that were previously self-sufficient, transforming them into the
countries dependent on imported food (Focus on the South: 2009).

Capitalist mode of production according to the advocates of neo-Marxist paradigm, therefore,

through its driving principle of infinite accumulation оf capital and cancerous exponential
growth, structurally reproduces insatiable appetite for realisation of easy profits and
covetousness of individuals as it rewards with extra profit the most unscrupulous speculators
while disposessing majority. Тhose capitalists who might be more inclined to more careful acting
on the market, as well as to moraliying call of neoKeynesians to social responsibility, would risk
to lose their share in the market to their competitors who more skillfully manipulate with public
expectations and conscience, for example, on the brands of new companies of information
technology.

2 Analysis of undertaken practical measures and suggestions of alternative measures

2.1. The only way out of crisis, according to advocates of neo-Smithean paradigm, ideological
representatives of transnational financial oligarchy and dependent compradore local bourgeoisie,
is to allow prices and wages to spontaneously settle on corrected level based on market laws of
supply and demand. All those who are not able to regularly pay for their debts should go
bankrupt. Neo-Smitheans are nevertheless reluctantly prepared to accept the presence of state or
even the nationalization of private companies temporarely, only so long as it is necessary to
improve national and global finance. After implementation of measures strictly targeting
individuals, enterprises and sectors hit by crisis the most, the state should step down. Neo-
Smitheans could also worn neo-Keynesians that permanent stimulation of demand in the
conditions of globalised economy, will just increase imports and not domestic production, or
make easier paying of the debt of households and companies instead of investment in new
production.

2.2. Neo-Keynesians, ideological representatives of the national bourgeoisie, who tend to resist
transnational oligopolies and preserve elements of national sovereignty, however, advocate for
state intervention measures similar to those introduced in 1930s under the influence of writings
of John Mainard Keynes (1933; 2007). These state interventionist measure were abandoned in
late 1970s due to high rates of inflation and simultaneous stagnation which these measures
provoked. They believe that the nation-state should continue to regulate, supervise, redistribute
national product and organize massive public works in order to stimulate effective aggregate
demand which according to them determins the level of production and the level of employment.

Neo-Keynesian critics of the first applied measures of rescuing the existing financial system
point to the need for managers of the largest banks and companies to be obliged in the future to
make "transparent" account of their business. In the absence of such obligation free public
money has been hailed as some kind of return for past services of corruping investment in the
election campaigns of the parliamentary parties. Such addign of the significunt percentage of the
bruto national product to the state debt which all tex obligants repay, according to the critics,
only increases the preasure on the rise of interest rates.

Critics, therefore, propose that instead for the socialization of losses of large private owners the
public resources be used for stimulation of the real economy, helping small family businesses
and medium-sized enterprises, and the renewal of economic life of local communities (Arruda:
2009), supporting from the bottom-up homeowners to repay mortgage debt and the unemployed
to find work in order to increase the payment capable demand of the population (Sirota: 2008),
and for investment in alternative sources of energy (Dispatch: 6/11/2009), infrastructure, public
services and health care. Critics also insist on putting central banks under the control of
respective state parliaments, eliminating the neo-liberal myth that central banks are independent
institutions, when they actually are in private hands. Through measures of nationalization and a
permanent expropriation of banks without their return to private hands when the crisis has
passed, "money masters" would be permanently revoked the monopoly of printing paper money
on a basis of just a partial or completely absent coverage in the actual and available deposits,
while their ability to continue to secure parasitic income from interest on public debt would be
abolished as well (Griffin: 1994). At the international level, critics of the existing financial
system propose progressive taxation of stock transaction that would fall at the expense of
speculators. The new model of development should be based on the pattern of conscious
reduction of spending оn growth for the elites and the planned growth of spending within the
limits of natural and intergenerational sustainability for the oppressed and excluded majority
(Arruda: 2009).

Advocates of participatory economy (Albert: 2003, 2006) as Wilpert (2009) have also offered
concrete model of the best forms of institutions that better organized society should implement
when trying to achieve the ideals of the French revolution of liberty, equality and social justice-
solidarity, adding to them ecological sustainability (through the use of renewable energy
sources), but without the errors of socialism of the twentieth century.

On the extra-European continents social theorists of neo-Keynesian and social democratic

orientations have in the nineteen nineties excelled in an effort to operationalize the request to
permanently increase the level of fairness and fuller participation of the entire population of a
country in the enjoyment of social services. Ravi Batra in this way refuses neoliberal assumption
that savings of capitalists realized through reduction of taxation stimulate common good through
investments, This premise according to Batra presents in fact an excuse for permission that
inequality continues to exist. Instead of this premise, Batra recommends the raising of the
income of the people with the aim to increase its standard, but in a balanced and sustainable way,
in harmony with nature, other people and other forms of life.(Batra: 1989, Gross National
Happiness official site; Maturana: 1996).

Just distribution is not only seen as a tool to obtain mateiral welfare, but also to obtain the
possibility for all to develop their personality to the fullest. This is the constitutive part of
practical theory PROUT- Progressive Utilization Theory [Batra 1989].

Advocates of the Gross National Happiness (GNH) are searching in the similar direction for
development alternatives, taking into account biological discovery that we are “human beings
animals dependent on love in all age categories” [Maturana 1996]. The approach of GNH
negates the alienating neoliberal myth on scarcity, on greedy, aggressive and competitive nature
of human animal, on fight for survival and natural selection, likewise on inescapable prevalence
of ego domination over and above ecological friendliness of the homo sapiens.

BNS index which is implemented in Butan contains indicators which cover nine aspects of
family and social life> 1. Living standard – it reltes to all material needs and real economy; 2.
Good management- participation in power of decision making in the managing of economy and
development; the relationship of the state, social economy and private economy; 3. education for
all; 4. health for all ; 5. ecological sustainability – capability of the given ecological system to
return to original state after it has been altered by human action; 6. Cultural diversity; 7. Vitality
of local community; 8. equilibrated use of time; 9. psychic and spiritual welfare [Gross National
Happiness official site]

Common to all neo-Keynesian models of optimal institutional reform elaborated to the last detail
is the assumption that they are compatible with the Weberian ideal type of capitalism of a
peaceful realization of gain in the market. Authors of these models, however, do not explain how
is it possible to develop in a critical mass of people new forms of systemic thinking that
integrates different perspectives, if in their everyday way of life prevale violent exploitative and
oppressive relationships of "real capitalism" that reproduce the prevailing forms of thinking
characteristic of capitalism, ie. individualism, atomizam, instrumental reductionist rationalism.

Credibility of the neo-Keynesian reform proposals reduces the fact that the advocates of various
shades of social democracy in the period that preceded the explosive manifestation of systemic
crisis, compromised themeselves by continuing neo-Smithean deregulation and privatization
policies whenever they would come to power. Where the Social Democrats are still in power,
they apply "anti crisis packages" which are very similar to analogous packages of conservative
parties – opening of new credit lines for large and medium-sized companies and strategic
investments, or exemption from taxes, but they fail to implement redistribution of income to the
benefit of the poorer sections of society which they promised during the election campaign.
It is indicative (Walden: 2009) that among the main advocates of the global Social democracy
and the „restoration of a public purpose and high ideals in the international economy" are among
other Soros, who funded the "opening" of the former societies of „real socialism“ and Sachs,
implementer of "shock therapy" in these societiest, that is the main supporters of the two key
neo-Smithean programs whose aplication led to a drastic reduction of industrial production and
increasing poverty in the affected societies. A former neo--liberals converted into the global
social democrats are now proposing to achieve "good governance", "morality", "responsibility",
reducing poverty and environmentally sustainable development through such an "alliance" of
state and market institutions that would simultaneously provide benefits of market and tame its
excesses in global and not as up to now only in the national scope of the of individual welfare
states.

Newly formed global social democrats lose from their sight that those capitalists who may want
to do business more carefully on the market in line with the fashionable moralizing reference to
social responsibility, would risk losing market share to their competitors. A greater degree of
monitoring of the "financialisation" or speculative investment of capital that can not be profitably
invested in production, can only delay the moment of "balloon" rupture and the manifestation of
the crisis of capital hiperaccumulation, but can not prevent them.

Advocates of global social democracy and transnational capital have a common fear that the
world is going through a period od deglobalization and protectionism (The Washington Post:
2009). The increasing number of nations that seek to use local natural and human resources to
raise life standards and cultural level of the wide layers of the population, like Venezuela since
the arrival of Chavez to power, the transnational corporate and financial oligarchy is interpreting
as hostility toward investors and demonizes them as "risk Security "(Chesterman, Byers: 1999).
Transnational capital is concerned as well about a wave of mass strikes, protests and street riots
of ever less employed (The Times: 2009 b) and ever more poore population, disgruntled by the
transfer of entire burden of the crisis just on its own shoulders. The concern of transnational
capital increases fact that the wave of discontent and rebellion is not confined to Eastern Europe,
but has spread to Western Europe as well (Forbes: 2009). Western security agencies and mass
media owned by transnational capital are obviously concerned that the actual crisis might cause
social unrest of such proportions that would endanger the very preservation of the capitalist
mode of production. About this testifies the fact that starting from 26. of February 2009. to
regular daily informing of the US President on the collected intelligence data is attached a
special supplement with economic intelligence data, in accordance with the CIA estimate that the
global financial crisis poses a serious danger to international stability (The Washington Post:
2009 b). Similarly, in March 2009 a British brain trust Economist Intelligence Unit published a
special report titled "Recruiting people for the barricades" (EIU: 2009/03).

2.3. Advocates of a new materialist and dialectic paradigm are composed of relatively small
number of the highly educated members of petty bourgeoisie who have consciously decided to
(try to) move themselves into the only class position that contains the universal liberation
potentials, the class standpoint of the modern wage slaves who can realize their particular
interest in self-emancipation only if they at the same time achieve the liberation of entire
mankind from class division of labor and private property as its legal expression. Neo-marxists
argue that aggregate production and consumption can equilibrate neither neo-Smithean free
operation of market laws of supply and demand, nor neo-Keynesian public or private debt
stimulating aggregate demand. The free market really does not exist anywhere except as an ideal
type theoretical construct, while a real market competition leads to creation of monopolies and
oligopolies that control access to investment capital. Neo-Keynesian stimulating of aggregate
demand, however, lawfully bumps into the structural systemic boundary of contradictory
capitalist mode of production which is reproducing a lack of aggregate demand.
Neo-Maxist critics of the measures applied so far in order to get out from the current hyper-
accumulation of capital crisis, advocate getting out from the very system of the capitalist
relations of commodity-monetary production for the market and private profit which continually
reproduce such crises.

Neo-Marxists demonstrate that the former neo--liberals converted into the global social
democrats are still primarily interested in the unhindered movement of transnational capital
across the globe in search of extra profits. Suggestions of implementation of technocratic
measures to regulate global markets have been exacted by the catastrophic proportions of social
disintegration and destruction of the natural environment that the global accumulation of capital
raised, increasing the risk of social revolution.

Socially and environmentally devastating manner in which the forced and speaded up
privatization was carried out and continues to be implemented in Serbia, transforming Serbia into
the indebted semicolonial market for imported goods with nearly destroyed domestic industrial
production and dispossesed, deprived, impoverished and unemployed population (Vratuša:
2010), for example, is not an exception but rather the lawful product of the contradictions of all
the variants of capitalist mode of production targeting the private profit and the accumulation of
unpaid surplus labor. Deliberately induced massive bankruptcies by sudden withdrawal of
capital, increase in the price of credit, conclusion of the adverse contracts, the introduction of
economic sanctions, bombing and corrupting state officials in order to purchase so destructed
companies at the lowest possible prices, and even that not with cash, but through the sale of
existing supplies, equipment and loans raised on the basis of mortgage debt of the privatized
companies, have only made evident the fact that capital is not a thing, the technology or money,
but a social relationship in which direct producers are deprived of direct access to the conditions
and means of reproduction of life.

Neo-Marxists warn that neo-Keynesian measures like budget deficit making state investment
interventions or nationalizations of banks (such as banks in Britain during the prime minister
Brown), have limited interest to provide stabilization and renewal of legitimization of
discredited private oligopolistic control of the means of production by transnational capital, the
very capital which makes possible exploitative private appropriation of socially produced surplus
value, causing cyclic hiperaccumulation crises and socially induced environmental and social
disasters. Neo-Marxists are therefore advocating to prevent the re-privatization of the proceeds
of neo-Keynesian socialization of getting out of the crisis costs which crisis the private capital
caused in the first place.

From the history of previous systemic hyperaccumulation crises is known after all that the social
democracy in Germany and Italy, through its alignment on the side of big capital against
radicalised trade union and political associations of workers after the October Revolution and
during systemic crises of the 1920s and 1930s contributed to rise of fascism and Nazism to
power. Similar trends of strengthening of the conservative, chauvinist-racist and authoritarian-
populist mass movements are again visible all over Europe and the world. These tendencies warn
of the danger that the main means of restarting the flywheel of the accumulation of capital in the
case of the current crisis becomes once again the mass war destruction of production means and
producers who have become "superfluous" from the standpoint of the private appropriation of
profit.

Neo-Marxists still consider that political association and organization of revolutionary forces to
conduct a qualitative transformation of dominant social relations, presents the condition not only
for the getting out of the current crisis, but for free, equal and solidary future development of
each individual’s potentials. Burdened by the inheritance of insufficient success or failure of the
first wave of socialist revolutions, neo-Marxsts are still searching for the operationalization of
the anti-capitalist strategy, which involves the abolition of control of large private capital, state
bureaucracy and technocracy over the process of decision-making through the involvement of all
adult citizens, the associated producers and consumers, in the process of making the key
decisions on the use of means of production in social ownership at all levels of decision making
in the various forms of participatory, direct and representative democracy.

The main proposal of the neo-Marxist left, therefore, is to use the current systemic accumulation
of capital crisis as an opportunity for the realization of anti-capitalist and self-management
alternatives. This requires inter alia that in the absence of a sufficient number of organic
intellectuals in Gramsci's terms, a highly educated population of the petty-bourgeois class
backgrounds in higher percentage than it has been the case so far, leaves the role of the
ideological representatives of the big bourgeoisie within the current class alliance of the block in
power. Internal difficulty of putting such education gained in conditions of class division of labor
in the service of the emancipation of the oppressed and exploited, in the history of the
revolutionary movement so far was a tendency to preserve the class division of labor. Cadre
parties were namely formed of professional revolutionaries convinced that their mission was to
bring revolutionary consciousness from outside within the forms of spontaneously arising trade
union consiousness of self-organized working classes. In such circumstances, instead of self-
negation of the priviledge of privately owning higher education and putting one’s knowledge in
the service of the emancipation of the proletariat, there came to the establishment of the
dictatorship over the proletariat.

On the example of the transformation of the model of production processes and relations in
basic industry in Venezuela, Federico Fuentes (Fuentes: 2009) shows that the class struggle is
heating up arround the fight for workers' control. From the very beginning this first example of
"democratic planning from below" is facing resistance not only by the capitalists, but from right-
wing corrupt "mafia" within the state bureaucracy, the management of state-owned companies
and parts of the revolutionary movement. Michael Lebowitz (Lebowitz: 2008) rightly reminds us
of Marx's insight that the simultaneity of changing circumstances and changing consciousness
can be understood only as revolutionary practice. He also rightly summarizes the difficulties that
have been encountered in the past by all attempts to realize the idea of cooperation and self-
government on the example of Yugoslav self-management, as these difficulties will appear in
future attempts as well. Lebowitz first points out that there was no systematic effort to educate
workers in the workplace on how to manage their business, so that a difference between
performers of commanding work functions (professional managers) and performers of executing
work functions (less skilled workers) was preserved, perpetuating the existence of private
ownership of one’s own labor force as a commodity. Market context and the selfish interests of
employees in the given enterprise to maximize income per enterprise member, obstructed the
spreading of solidarity to the workers employed in competing enterprises and to society as a
whole and included tendency of degeneration of socialized property into the group forms of
capitalist ownership.

Lebowiz is searching for a solution to separation and instrumentalisation of a private individual

by other private individual within the market relations of private owners, much like Marx and
more recently Meszaros (Meszaros: 1994, 2007) in the development of human capabilities in the
direct association of producers and consumers where instead of the division of labor and
exchange of comodities, there is organization work and exchange of activites.

In Argentina also already at the beginning of the twenty-first century there re-emerged forms of
self-governing self-organization of workers and occupation of factories when the speculative
private owners left the productive capacities of the country in disarray (Klein, Lewis video). In
Serbia there are as well first signs that there is progress in coordinating the protests of workers of
several companies based in various cities. With this has begun the overcoming of the former
isolation of individual protests within individual companies, which enabled the owners and
authorities to silence protesters easier (Coordinating Committee of Workers' protest in Serbia:
2009), and the workers demonstrated that they better manage expropriated enterprises than
speculative new private owners.

3 Instead of a conclusion - what is to be done?

Despite the shift in fashionable popularity between neo-Smithism and neo-Keynesism, common
to proponents of both paradigms and strategies is staying within the framework of intrasystemic
mitigation of the consequences of the existing antagonistic relations of reproduction.

Advocates of neo-Marxist paradigm and strategy, on the contrary, since they detect the causes of
the crisis in the internal contradictions of capitalist relations of social production of surplus labor
ant exchange value and the private appropriation of profit, they see the only way out of
hyperaccumulation of capital crisis in the abolition exactly of capitalist relations that keep on
reproducing systemic crisis and threaten the very biological survival of humanity.

With the first steps in the process of establishing a substantially and not merely formally
democratic relationships of participation of all producers and consumers in deciding about the
social process of production, exchange, distribution and consumption, from the local level of
basic production units and units of consumption, through the regional and national to global
level, could agree also many neo-Keynesians:
1st: reconsideration of privatizations done so far, canceling those that were not only illegitimate
but also illegal, and enacting legislation baning sales of natural resources, infrastructure, public
services and of the remaining domestic banks (as is the case in France) and placement of the
National Bank under the control of Parliament;
2nd: more just distribution of socially produced wealth, raising the minimum wage and pension
benefits, thereby increasing the purchasing capable mass demand for the products of domestic
industry and agriculture, progressive taxation of the richest, obligation of foreign companies to
reinvest a part of profits in Serbia, the right of employees to participate in the profits and in
decision making in the domestic and foreign enterprises;
3rd: employees should in even greater numbers than so far occupy companies in which new
private owners sabotage or do not know how to organize production;
4th: declaration of a moratorium on repayment of debt in which we were driven even deeper by
neo-Smithean neo--liberals by doubling indebtedness and halfing the coverage of imports by
exports in ten years of their rule, and deverting of these funds to the strategic infrastructure,
agricultural and industrial production;
5th: renewal of the legal action against the NATO aggressors and of compensation demand for
committed crimes against peace and the genocidal destruction with radioactive missiles;
6th: taxation of imports and stimulating exports from obtained funds, instead of unilateral
implementation until recently of the free trade agreement at the expense of the domestic industry
(Vratuša: 2010b)

Concealment of restoration of capitalist relations by the technocratic faction of "red bourgeoisie"

under the guise of reforming socialism since the end of the nineteen eighties, was substituted by
the extended period of illegality (up to change of the Constitution in 2006) and still standing
illegitimacy of neo-liberal practices of forced and speeded up privatization in Serbia against the
will of a relative or absolute majority of the population (Vratuša: 1993, 2008, 2009).

Revolutionary violence of the vast majority of the population over the extreme minority of
controllers of counter-revolutionary violence could be avoided during the attempts to abolish
capitalist relations of exploitation and oppression, if a decision on renationalisation and
resocialization of basic means of production for the purpose of renewal and redirection of social
production process to solidary creation of conditions for a dignified life, work and development
of creative abilities of everybody through the system of communal, health and educational
services available to all, citizens would passe in a referendum by a qualified majority.

In order to avoid mistakes of socialism of the 20th century, new building of institutions should 1.
embody mentioned ideals; 2. not to be grounded in dogmatic ideas; 3. not to privilege one ideal
at the cost of others; 4. not to give primacy neither to individual nor to the collective; 5. to be
embedded in the nets of homologous but not utopian institutions and cultural meanings, that can
be realized in the given moment of history. Applying these guiding principles of institution
building of the better organized society, Wilpert (2009) resumes how concretely these
institutions should look like. Wilpert claims that the recommended participative model of
optimal institutions is compatible with contemporary capitalism. In the contribution to the claim
that this model does not cause the conflict of interests, Wilpert cites the example of corporations
like IBM which have included and supported the development of the programs for free use.

Wilpert however does not explain how is it possible to develop in a critical mass of people new
forms inclusive systemic thinking which integrates different perspectives, if in their everyday
mode of life predominate the relationships of exploitation and domination of “normal
capitalism” which reproduces predominant forms of thinking characteristic of capitalism, that is
individualism , atomism, instrumental reductionist rationalism.

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