Prior to the 1960s, historical scholarship tended to emphasis the role of great men in shaping human history. Reacting to this, there emerged a tendency to give emphasis to underlying social forces in explaining the events the shaped the direction of human history. But the error of the previous scholarship was not that it emphasized the importance of exceptional individuals. Rather, its fundamental error was that it was written from above, from the perspective of the dominating classes, nations and gender. Somewhat off base in its critique of the previous scholarship, the new scholarship of the North, concentrating on social forces, did not reflect profoundly on the possible development of knowledge from below. It thus could not see the important role of exceptional individuals in forging anti-colonial, anti-neocolonial, and anti-imperialist revolutions in the formerly colonized regions of the world.
If we of the North could escape from the lens that blinds us to exceptional leadership, we would be able to discern that Third World leaders were not only unifying the people for effective collective and political action, they also were creating new understandings, and thus were implicitly advancing the possibilities for a comprehensive philosophical-historical-social science from below. And we would be able to see that in Third World national liberation revolutions that had significant gains, the presence of leaders with an exceptional capacity to analyze and to lead was the norm. This suggests that Max Weber was on to something when he identified charismatic authority as one of the three forms of authority in human history, and it leads to the conclusion that the emergence of charismatic leaders is integral to revolutionary processes when they have success in attaining a major part of their goals.
One of these charismatic leaders was Fidel Castro. He is perhaps the most important of the charismatic leaders of the modern era, considering that the Cuban Revolution in the 1960s was a symbol to the hopes and aspirations of subjugated peoples throughout the world, and the Cuban nation today continues to be a symbol for the peoples of the Third World as they seek to create a more just and democratic world-system. As Fidel led the Cuban Revolution and the revolutionary project of the independent Cuban nation, he repeatedly demonstrated an exceptional capacity to analyze the global structures of domination and exploitation, understanding them to be structures of colonial and neocolonial domination, class exploitation, and gender domination; and to understand the steps necessary for creation of a sovereign Cuban nation characterized by the protection of the political, civil, social and economic rights of the people. And he also demonstrated mastery of the art of politics: he was able to unify the people to lead them in the taking of power, in the consolidation of state power, in the institutionalization of an alternative political process of popular power, and in the necessary economic adjustments at different historic moments in the development of the world-economy.
One example of the charismatic leadership of Fidel was his role as chair of the Non-Aligned Movement from 1979 to 1983, which occurred during the historic movement in which the global powers were turning to the implementation of the neoliberal project on a global scale. In accordance with the rules of the Non-Aligned Movement, Cuba and Havana had been previously selected to be the host country and city for the 1979 Summit, with Cuba serving as president of the Non-Aligned Movement until the following summit, held in 1983 in New Delhi, where the presidency was turned over to India. As we have seen (see “Derailing the Third World project” 7/22/2016), as outgoing chair of the Non-Aligned Movement, Fidel addressed the New Delhi Summit. His speech, “The Economic and Social Crisis of the World,” was enthusiastically and emotionally received by the delegates, even though political realities prevented nearly all nations from following its suggestions. The speech was printed in an expanded form and distributed in various languages. The expanded version was prepared by Fidel with the support of scholars of the Cuban Center for Research on the World Economy, the Center for Research on the International Economy of the University of Havana, and the Economics Faculty of the University of Havana. It provided a thorough and informed analysis of the problems that the world-economy confronted, and it proposed an alternative direction to that being implemented by the global powers. Although dated with respect to statistics cited, the document’s proposals remain viable, and indeed they are more urgent than ever, as the world-system enters increasingly into crisis, led by a global elite that ignored the proposals of Fidel and the Third World, and that could conceive of no other response to the structural crisis of the world-system than a global economic war against the poor and the unleashing of neo-fascist wars.
The Economic and Social Crisis of the World: Its repercussions for the underdeveloped countries, its dismal prospects, and the need to struggle if we are to survive: Report to the VII Summit of the Non-Aligned Countries was published by the Cuban government in 1983. It understands the global crisis to be fundamentally rooted in the structures of a neocolonial world-system that is based on centuries of colonial and neocolonial exploitation. At the same time, it identifies particular steps taken during the 1960s and 1970s by the hegemonic power that sent the system spiraling toward crisis. In the view of the report, these steps were taken by the United States in an effort to preserve its hegemony in the system; and the results were disastrous, because the preservation of US hegemony was not possible, a fundamental fact never understood by US leaders.
The report notes important characteristics of the post-World World II period of 1946 to 1970, a period that began with uncontested US hegemony. It was above all a period of commercial expansion and long economic growth for the developed capitalist nations, uninterrupted by depression or long recessions. And it was a period characterized by: important technological and scientific advances, which facilitated the emergence of consumer societies in the developed capitalist nations as well as a tremendous increase in the destructive capacity of military weapons; the emergence of transnational corporations to a position of dominance accompanied by increasing concentration of power, capital, and production; an increasing role of states in their economies, including state ownership or co-ownership of companies in many countries; and a relative decline in industry and the emergence of service as a more dynamic sector of the economies of the developed capitalist nations. And the same time, it was a period of enormous inequality between the developed and underdeveloped worlds, during which the underdeveloped world developed mechanisms to challenge the structures of the system. And during the period Japan and Western Europe (especially Germany) emerged to challenge US hegemony, establishing by 1970 three centers of power in the capitalist world, namely, the United States (still dominant), the European Economic Community, and Japan, all of which were united in their opposition to the protest movements in the underdeveloped countries (Castro 1983:17-19, 54-55).
The report notes that from the 1944 Bretton Woods conference to 1971, the US dollar enjoyed a privileged position in the international monetary system. Since the value of the dollar was fixed in gold, possession of it was equivalent to the possession of gold itself, and thus the US dollar functioned in practice as the fundamental holding for international reserves. As a result of its privileged position in the international monetary system, in conjunction with its unchallenged dominance in production and commerce, the United States could obtain financing through the simple mechanism of a policy of monetary expansion, so long as there were sufficient gold reserves to support the money in circulation. An expansionist monetary policy was the mechanism used from 1946 to the late 1950s to finance massive exportations of capital as well as programs of reconstruction in Europe and an enormous military budget that included maintenance of military bases throughout the world (Castro 1983:79-80).
But in the late 1950s, the favorable position of the United States began to suffer erosion. Of primary importance was the emergence of competition from Japan and Western Europe, reducing the growth of US exportation of goods and services. Beginning in the early 1960s, the United States responded to its declining position by the emission of dollar bonds, which were increasingly less backed in gold, other currencies, or in the exportation of goods and services. This strategy was described by commercial bankers as “creating money with the stroke of a pen.” It financed investments by US transnational corporations as well as programs of “foreign aid” (tied to political conditions) and military expenditures abroad. This was a successful strategy for the attainment of political and economic objectives in the short term, but it had the consequence of undermining the position of the dollar, and it was one of the primary sources of the high level of inflation of the 1970s, which began in the late 1960s. In spite of the weakened position of the dollar, the price of the dollar remained fixed in gold, so that the dollar was overvalued, until it was freed from the gold standard in 1971, when it suffered devaluation and a subsequent devaluation in 1973 (Castro 1983:80-81).
The 1970s was a decade of high levels of inflation. From 1973 to 1981, the inflation rate varied from 7.0% to 13.3% for the seven principal capitalist countries. The inflation was caused by the issuance of bonds by the US government to sustain unproductive state expenditures, especially military expenditures, as well as by control of prices by the transnational corporations that controlled international commerce, including international commerce in petroleum. Although some Western economists blamed the inflation of the 1970s on the 1973 OPEC price increase for crude petroleum, the 1983 Castro report argues that that nationalized petroleum companies of the OPEC countries controlled only the supply of petroleum, while the transnational petroleum companies maintained control over technological and commercial aspects. The report maintains that the transnational petroleum companies profited enormously during the 1970s as a result of the rapid increase in the prices of the derivative products as well as speculation in combustibles. Making a distinction between inflation generated from imported products, including petroleum, and inflation generated internally by US producers and distributors, the report finds that the US inflation rate during the 1970s was almost entirely generated by domestic inflation. In 1974, for example, 11% of the 12% total US inflation rate was generated domestically, while only 1% was generated from importations (Castro 1983:80-82, 157, 160-61).
The weakened position of the dollar and high levels of inflation were signs of an international monetary system in crisis. The crisis had particularly negative effects on the nations of the Third World. The inflation rate was higher for the underdeveloped world: underdeveloped countries that were exporters of petroleum had inflation rates from 10.5% to 18.8% during the period 1973 to 1981; underdeveloped countries that were importers of petroleum had inflation rates from 22.1% to 36.9% during the period (Castro 1983:82-83).
Moreover, changes in financial relations between the North and South during the 1970s had negative consequences for the Third World. Private banks in the core significantly increased the amount of lending to Third World governments and decreased investment in Third World production, inasmuch as profits from loans became higher than profits from production. As result, capital flows between the banks of the North and Third World governments increased, while the participation of Third World countries in world commerce declined. By the end of the decade, Third World debt payments to the banks of the North greatly exceeded investments by banks, governments and corporations of the core in Third World production (Castro 1983:20-23, 54-55, 95, 146-47).
High prices for manufactured goods and low prices for raw materials historically has been central to an unequal exchange between the developed capitalist countries and the underdeveloped world, inasmuch as for the latter, income from agricultural and mineral raw materials constitutes the principal source of income from exportation. However, during the 1960s and 1970s, declining terms of exchange between raw materials and manufactured goods occurred. For example, in 1960, the sale of a ton of coffee enabled purchase of 37.3 tons of fertilizer, but by 1982, a ton of coffee could buy only 15.8 tons of fertilizer; in 1959, twenty-four tons of sugar could buy a sixty-horsepower tractor, but in 1982, 115 tons of sugar were needed to buy the same tractor; and in 1959, six tons of jute fiber could buy a seven-ton truck, but in 1982, twenty-six tons of jute were needed. The declining terms of trade were aggravated during the 1970s by inflation and the high cost of petroleum, generating a chronic situation of a commercial balance deficit for the underdeveloped countries. The negative commercial balance of the Third World countries during the period 1973 to 1981 became the basis for the Third World debt problem (Castro 1983:23, 59-66, 88).
The 1983 Report to the Non-Aligned Movement especially focused on dynamics of the world-economy from 1979 to 1982, the period of the Cuban presidency. In 1979, responding to the unprecedented situation of stagnation combined with inflation, the developed capitalist countries departed from Keynesian economic policies and adopted a monetary-fiscal recipe of combining a monetary policy of high interest rates (to increase money reserves and reduce money in circulation) with a fiscal policy of reduced government spending (by reducing budgets for social programs and rationalizing of government employment), thus giving priority to the problem of inflation. The result was moderation in the inflations rates but reduced industrial production and high levels of unemployment in the seven most developed countries of the world by 1982 (Castro 1983:30-37).
The Report considers that “the indiscriminate elevation of the rate of interest, promoted by the government of the United States, constitutes, without doubt, one of the most arbitrary economic measures of recent years.” The policy had negative consequences for the economy of the United States, and it deepened the crisis of the international financial system. And it had “disastrous economic repercussion for the underdeveloped countries,” for which it has meant the “nearly complete ruin of their economies and the cancelation of hopes for improvement.” The high-interest rate policy increased the cost of the servicing of the external debt of Third World governments, thus increasing government budgetary deficits as well as increasing the percentage of capital flow to the core in the form of interest payments on loans as against profits from production. At the same time, the policy increased the value of the dollar, leading to its overvaluation, and a corresponding reduction in the value of the national currencies of the nations of the Third World. It thus intensified the problem of the balance of payments deficit of the underdeveloped countries (Castro 1983:30-31, 36-38, 46-48, 82).
The severity of the situation, the Report maintains, has obligated an increasing number of countries to adopt “adjustment” policies that are not a result of their own decisions in the context of a development plan formulated in the exercise of their sovereignty. Rather, these policies are adopted as emergency measures in response to balance of payments and government deficits. And they are adopted as conditions for the reception of loans from the International Monetary Fund. The measures include devaluation of national currencies, reduction of government expenditures, and opening the economy to the merchandize and investments proceeding from the developed capitalist countries. The measures do not reduce the deficits, because foreign capital invests in its own profit and not in forms of production that promote the development of the nation. They are presented as measures that follow from technocratic considerations, but they are in reality neocolonial measures that are integral to an international monetary system that responds to a small group of five countries (Castro 1983:48-49, 87).
Thus, there has occurred in the period 1979 to 1982 a deterioration in the situation of the less developed countries: a decline in the value of national currencies with respect to the dollar, a fall in the prices of raw materials and declining terms of trade with the advanced capitalist nations, a reduction in rates of growth, and a spiraling escalation of the external debt (Castro 1983:12, 14, 41-44). With respect to the external debt, the report states:
The external debt of the Third World—considered by many authors as irrecoverable and unpayable in strict technical terms—with its exorbitant sum, its incredible rate of growth, and the continuous worsening of its conditions, is probably one of the best indications of the irrationality and unviability of an outmoded international economic order (Castro 1983:49).
The transnational corporations have a perspective on the development of the Third World countries, which the Castro report refers to as the “transnational ideology.” It proposed a model of development based on transforming underdeveloped countries into “exporting platforms.” This model of development, the Report maintains, does not respond to the basic requirements for the true economic development of these countries; rather, it responds to the needs of capital, and in particular, the need of capital for a cheap work force that elevates profitability. The exporting platforms, although they in degree contribute to employment, are isolated from the rest of the economy in the countries where they are located. They therefore have an extremely limited effect on the national economy, and they could not be considered as promoting independent economic development. In order to attract investments by international corporations in exporting platforms, governments grant enormous liberties to foreign capital, including unlimited transfer of capital out of the country and exemptions from taxes, as well as unlimited access to cheap labor and to natural resources. By 1975, exporting platforms had been developed in seventeen countries in Asia, thirteen in Africa, and twenty-one in Latin America (Castro 1983:148-49).
The 1983 Report maintains that the growing presence of transnational corporations in the underdeveloped countries constitutes a serious threat to the national sovereignty of these countries. Transnational corporations do not adjust their operations in accordance with the legislation of the countries in which they are located. They interfere directly or indirectly in the internal affairs of the countries in which they operate. They ask the governments of the countries from which they come to pressure the governments of the countries in which they are operating, in support of their particular interests. They attempt to obstruct governments of the underdeveloped countries from exercising control over their natural resources (Castro 1983:150-51).
The 1983 Report also discusses the environment. It maintains that “human action on the natural environment is provoking in an accelerated manner changes without precedent in the stability, organization, equilibrium, interaction, and even the survival of the principal ecological systems of the planet.” Issues of concern include desertification, the accelerated erosion of agricultural soil, the increasing contamination of water and the exhaustion of its sources, and deforestation. The Report maintains that “the market economies of the developed countries are directly responsible for an important part of the degradation of the environment,” including contamination of the air, lakes, rivers, and oceans as well as an enormous quantity of chemical and nuclear residues that have been deposited in the atmosphere, the fresh waters, and the seas. It also maintains that transnational enterprises are responsible for the exhaustion of mineral, agricultural and forest resources of numerous underdeveloped countries (Castro 1983:118-25)
Fidel Castro did not consider that these maladies of the international financial system and the neocolonial world-system could be rectified within the structures of the international economic order. But he believed that they could be overcome through the mobilization of a global political will for the creation of a New International Economic Order. This will be the subject of our next post.
Castro, Fidel. 1983. La crisis económica y social del mundo. La Habana: Oficina de Publicaciones del Consejo de Estado.
Key words: Fidel, Non-Aligned Movement, global crisis, structural adjustment, transnational corporations