Wednesday, August 22, 2018

On Dependency School and Monopoly Capitalism Theory

By Kamran Nayeri, August 19, 2018
Rudolf Hilferding, 1926.

1. Introduction
This essay offers an outline of a unified critique of the dependency and monopoly capitalism theories both popular among socialist activists.  While the dependency school included mainstream economists as well as “Marxists” and ran its course by the end of the 1970s, the latter is part of the post-Marx theorizing by the socialist intelligentsia and dominant within most strands of “Marxism.” The essay largely is drawn from my dissertation, The Role of Competition in Theories of Late Capitalist Development (1992) available to the interested reader in PDF format (see, References section below). Thus, in this essay, I simply report my conclusion of the critical assessment of four dependency theorists’ work treated in three chapters of the dissertation and leave it to the interested reader to read any or all of them for my detailed treatment (Section 2).  Most of the essay is given to a critical assessment of the monopoly capitalism thesis (Section 3).  I will show that both the “Marxist” strand of the dependency theories and monopoly capitalism theories are influenced by the neoclassical notion of perfect competition and therefore undermine Marx’s theory. In particular, they negate the materialist conception of history and its application to the capitalist mode of production, Marx’s labor theory of value.  In Section 4, I will close with comments on the limitations of this study, as well as its implications.

 2. Dependency theories
Dependency school refers to the cluster of explanations for capitalist “development and underdevelopment” of what used to be called the Third World that became prominent after the collapse of the British,  French,  Dutch,  Japanese,  PortugueseBelgian and Italian colonial empires and the rise of post-Wold War II anti-colonial revolutions and ebbed by the 1970s.  Elizabeth Dore summarizes a Marxist critique of them:

“While the theory encompasses a large body of literature which incorporates many concepts and methods, the distinguishing feature of all dependency writers is that they treat social and economic development as being conditioned by external forces: namely domination of these countries by other, more powerful countries. This leads dependency theorists to adopt a circulationist approach. They posit that underdevelopment can be explained in terms of relations of domination in exchange, almost to the exclusion of an analysis of forces of production and relations of production.” (Dore, 1983, p. 183)

However, not all theoreticians of dependency have been “Marxists.”  Thus, it is unwarranted to criticize them, as Dore seems to do, for not following the historical materialist methodology.  In my own study of these theories, I focus on the theory of competition used by each theorist of economic backwardness of the Third World and their capitalist development because competition is the organizing principle of most economic theorists.

The dissertation is an extensive critical study of the contributions of eight prominent theorists, including four dependency theorists. The latter includes W. Arthur Lewis (growth with an unlimited supply of labor), Raul Prebisch (terms of trade), Arghiri Emmanuel (unequal exchange), and Paul Baran (monopoly capital) who are all prominent dependency theorists. (What appears inside parentheses is their causal mechanism to explain economic backwardness and dependency) The other four theorists are Stephen Hymer (internationalization of capital and uneven development), Nicholas Kaldor (cumulative causation model), Alexander Greschenkron (relative backwardness thesis), and Ernest Mandel (search for surplus profit and uneven development).  In the opinion of my dissertation committee and myself, these selected theorists provided an almost comprehensive selection of the theories of the capitalist development of latecomers.  By latecomer, I mean countries that entered capitalist development after the formation of the capitalist world market at the end of the nineteenth century.

My critical review of the dependency theorists showed that their contribution to the understating of the problem of capitalist development of latecomers suffers because of the unstated neoclassical theory of perfect competition except for W. Arthur Lewis who clearly breaks with it in his dualist model of the latecomer’s economy. (for a discussion of theories of competition, see, Nayeri, 1992, pp. 4-49).  The theory of perfect competition assumes an idealized world in which (1) the participants in economic activities (producers and consumers) show utility-maximizing behavior, (2) there is a large number of buyers and sellers so no firm or consumer has a significant influence on the quantity sold or bought in the market, (3) resources are perfectly mobile between the production possibilities, so that differential rates can be eliminated (free entry and exit assumption). (Arrow and Hahn as quoted in Semmler, 1984, p. 11) “The theory of perfect competition also assumes that all firms within an industry are exactly alike so that a uniform selling price for each product implies a uniform profit rate for each firm.” (Shaikh, 2016, p. 117)  “It follows that any differences among wage rates, product prices of individual firms, is putative evidence of the ‘imperfection’ of the real world.”  (ibid. p. 118)

Not surprisingly, Marx’s theory of free competition fundamentally is different from the neoclassical model of perfect competition.   For Marx, “a scientific analysis of competition is not possible, before we have a conception of the inner nature of capital.” (Marx, 1867, p. 316). Therefore, competition is socially and historically determined and its development follows the development of capital as a social relation: “Free competition is the real development of capital.” (Marx, 1857, p. 650; my emphasis). Thus, the emergence of free competition is tied to the process of primitive accumulation through which the pre-capitalist conditions of monopoly are overcome. Development of competition presupposes the creation of an industrial reserve army, real subsumption of labor to capital (the dominance of the production of relative surplus-value over the production of absolute surplus-value), and the triumph of industrial capital over merchant capital. (Marx, 1885, chapters 8 and 9; Shaikh, 1978). Competition for Marx is a manifestation of the expansion of capital-value, that is, the growth of the firm. Thus, for Marx competition cannot be eliminated through increasing firm size or a gradual decrease in the number of firms in an industry. (Marx, 1867, p. 433)

Monopoly Capitalism
Surprisingly a significant number of prominent Marxist theorists have incorporated the neoclassical theory of perfect competition in their analysis and theorizing often without acknowledging it.  It is almost an article of faith among many Marxists that capitalism had a progressive “competitive phase” that ended before the twentieth century and a regressive “monopoly phase” since.  I will discuss some of the most importance below.

The replacing of Marx’s free competition with monopoly in Marxist writings originated with Engels in his editorial note in Volume 3 of Capital (Engels, in Marx, 1894, pp. 568-69) and popularized by Lenin’s highly influential Imperialism: The Highest Stage of Capitalism (1916). But the intellectual fountainhead of this staging of the history of capitalism was Rudolf Hilferding.  In his Finance Capital (1910), Hilferding offers a systematic analysis of the changing character of the nineteenth-century capitalist development, in particular in Germany. The analysis of competition is the chief aim of part three titled “Finance Capital and Restrictions to Free Competition.” 

For Hilferding, capitalist development was such that it undermined competition for two reasons. First, capital concentration created larger firms. The sparse number of large firms seemed to make collusion and cooperation among them possible.  Second, centralization of capital through the merger movement tended to produce cartels and trusts. The capitalist competition also seemed unstable due to barriers to entry and exit that hampered capital mobility across industries. Concentration and centralization of capital led to barriers to equalization of profit rates. For Hilferding, differential profits rates implied a two-sector economy: one competitive and the other monopolistic.  He expected the monopolistic sector eventually to take over the entire economy: “The ultimate outcome of this process would be the formation of a general cartel.”  (Hilferding, 1910, p. 234).  Taking his criticism to its logical conclusion, Hilferding concluded that Marx’s labor theory of value would cease to operate:  

“Classical economics conceives price as the expression of the anarchic character of social production, and the price level as depending upon the social productivity of labour. But the objective law of price can operate only through competition. If monopolistic combinations abolish competition, they eliminate at the same time the only means through which an objective law of price can actually prevail. Price ceases to be an objectively determined magnitude and becomes an accounting exercise for those who decide what it shall be by fiat, a presupposition instead of a result, subjective rather than objective, something arbitrary and accidental rather than a necessity which is independent of the will and consciousness of the parties concerned. It seems that the monopolistic combine, while it confirms Marx's theory of concentration, at the same time tends to undermine his theory of value.” (ibid., p. 228; my emphasis)

What would replace Marx’s laws of motion of the capitalist system in finance capital? Hilferding believed a fusion of the general cartel with the capitalist state which will result in “organized capitalism” and argued for a reformist course for Social Democracy:

“Organized capitalism means replacing free competition by the social principle of planned production. The task of the present Social Democratic generation is to invoke state aid in translating this economy, organized and directed by the capitalists, into an economy directed by the democratic state. (Hilferding quoted in Green, 1990, p. 203)

Zoninsein (1990) who systematically has analyzed Hilferding’s theory argues that a revision of Marx’s theory of competition is fundamental to it.

The history of Marxist theorizing of capitalism after Hilferding has been characterized by a divide between those who have maintained that Marx’s theory of competition remains operative, hence his labor theory of value remain valid, and those that have argued for some variety of monopoly capitalism.  Some in the latter category have openly argued that Marx’s law of value is no longer operative. Most have sidestepped this crucial conclusion of their theory. 

Politically, those who accepted the main argument in Finance Capital have in turn been divided between the reformists and revolutionary socialists. The former includes Hildferding and Kautsky (theory of ultra-imperialism) who have argued for a tendency for organized capitalism which can then be utilized by socialists through some form of democratization of the capitalist state.  The latter includes Lenin and Bukharin who have stressed “monopolistic competition” without clarifying what that means. 

Lenin’s appropriation of Hilferding’s theory introduces an important difference. While Hilferding envisions lessening of competition, Lenin speaks of increasing “monopolistic competition” and rivalry, no doubt under the influence of the raging World War I.  However, this concept is not made clear. He speaks of oligopolization as well as competition and rivalry in production, circulation, and the banking sectors, as a necessary tendency in capitalist development.  However, the cause of instability and rivalry in Lenin’s theory is linked to the increasing integration of the state and monopoly capital. Thus, monopolistic competition and capitalist rivalry increasingly have a political rather than an economic content. (Lenin, 1916, 410)  There is supporting evidence for this reading of Lenin.  First, the central reason for his pamphlet was political: to explain the imperialist character of the war and to outline a revolutionary internationalist policy. Second, Lenin supported Bukharin’s view (see below) that capitalist competition has moved to the world economy in the form of rivalry among state capitalist trusts. Third, Lenin did not criticize Hilferding’s explicit statements that conjectured a contradiction between Marx’s labor theory of value and his theory of concentration and centralization of capital. 

There is some evidence that Lenin did not distinguish between Marx’s theory of competition and the neoclassical theory of perfect competition. He took from Hilferding, without critical examination, conclusions from bourgeois economists that are contrary to Marx’s theory.  For instance, he adopts “chiefly from Jeidels” the following conclusions: “Banks replace the Stock Exchange,” “Tendency of banks to monopoly,” “No big industrial enterprise can exist without the help from the bank.” (Lenin, 1968/1974, p. 337)  In his view, the dynamics of concentration and centralization of capital “drags the capitalists, against their consciousness, into some sort of new order, a transitional one from free competition to complete socialization.” (Lenin, 1916, p. 204)  He also seems to employ a quantitative theory of competition and attributes it to Marx as well (ibid., p. 200). 

However, Lenin opposed Kautsky’s vision of a world trust that would replace national rivalry of finance capital with an internationally united finance capital as “abstract, simplified, and incorrect.” (Lenin, 1915, p. 11) Still, he asked: 

“Can one, however, deny that in the abstract a new phase of imperialism, namely, a phase of ultra-imperialism, is ‘unthinkable’? No…There is no doubt that the development is going in the direction of a single world trust that will swallow up all enterprises and all states without exception.” (Lenin, 1915, p. 13-14) 

Thus, Lenin opposed Kautsky’s vision only on extra-economic grounds: “stress…tempo…contradictions, conflicts, and convulsions—not only economical, but also political, national, etc.” (ibid, p. 14) 

These ideas are also found in a more elaborated and systematic form in Bukharin’s Imperialism and World Economy (1915). Bukharin analyzes two inter-related movements of concentration and centralization of capital. National development of the capitalist mode of production internationalizes capital and progressively develops the capitalist world economy. At the same time, however, national accumulation of capital continually disrupts the internationalization of capital. (Bukharin, 1915, p. 80). The concept of nationalization of capital in Bukharin is closely linked to the proposition that free competition has been gradually replaced by monopolies leading to the formation of state capitalist trusts. (ibid. pp. 73-74) At the same time banks and industrial capital merge (finance capital) and the monopolies and the state merge (state capitalism).  On this basis, Bukharin argues that as competition disappears in the national economies it flourishes in the world economy. He then divides the history of the world economy into two periods: Before the twentieth-century competition in the world economy was limited but was fierce in the national capitalist economies.  With imperialism, competition has been pushed outside of the national capitalist economies into the world economy.  Thus, competition is “elevated” from among capitalist firms to competition among capitalist states.  (ibid. p. 107)  

This theory is then used to explain World War I.  But Kautsky in Ultra-Imperialism (1914) used a similar argument except he proposed that the process would lead to the formation of a world capitalist trust that would do away with capitalist conflicts. Bukharin, like Lenin, concedes that this was a theoretical possibility.  (ibid, p. 52)  However, he argued that such an outcome is unlikely due to uneven capitalist development (ibid. p. 74)  

It is revealing how both Lenin and Bukharin accept the theoretical possibility of ultra-imperialism but reject it on the practical grounds, that the reality of World War I is negating it in practice. Thus, the theory of monopoly capital in this view can lead to two politically opposite conclusions: socialist reformism of Hilferding and Kautsky or socialist internationalism of Lenin and Bukharin. Theoretically, the problem again originates in the theory of competition. Bukharin’s theory of competition is distinct from Marx’s in a number of important ways.  For Bukharin, free competition existed prior to the rise of the capitalist mode of production. In fact, Bukharin argues that it gave rise to the capitalist mode of production. (ibid. p. 65) Also, for Bukharin, there is a correlation between the size and number of “commodity producing” firms and the extent and intensity of competition. Competition is “extensive” if there is a large number of firms in the industry and “intensive” if there are a few but large firms. (ibid. p. 119).  Although Bukharin identifies intra-industrial and inter-industrial forms of competition similar to Marx, he argues that the modern capitalist system is characterized by a new form of “complex competition” which is a struggle “along both horizontal and vertical lines.” (ibid. p. 63) The main implication is that competitive struggle overflows from the economic to the non-economic (political) sphere.  (ibid. p. 64)

Marx’s labor theory of value is therefore undermined in Bukharin in both national and international arena.  Once the existence of the state capitalist trust is theoretically accepted, it follows that prices deviate from value quite arbitrarily.  International competition is also identified with the rivalry between state capitalist trusts and uneven world capitalist development ensures that at least among some economies the law of value is undermined due to Long-arm tactics of the imperialist states. (ibid. p. 115)

Baran and Sweezy
Both Lenin and Bukharin left the status of Marx’s labor theory of value in limbo. Baran and Sweezy noticed this tension and formulated a more consistent theory of monopoly capital. They write:

“We believe the time has come to remedy this situation and to do so in an explicit and indeed a radical fashion. If we are to follow the example set by Marx and Engels and make full use of his powerful analytical method, we cannot be content with patching up and amending the competitive model which underlines his economic theory. We must recognize that competition, which was the predominant form of market relations in nineteenth-century Britain, has ceased to occupy that position, not only in Britain but elsewhere in the world.”  (Baran and Sweezy, 1966, pp. 5-6)

Their approach to Marx involves two theoretical steps. First, it is claimed that Marx’s theory of competition begins with the assumption of a large number of small and impotent firms. (ibid. p. 41-42) Second, once it is accepted that Marx’s theory of competition is similar to the neoclassical notion of perfect competition, it is easy to “prove” that it does not apply to the modern-day capitalist economy.

"At a certain point in the unfolding of the concentration-centralization process, the assumption that individual producers are too small to exercise a significant influence on the prices of their products loses its justification. When this happens in the sectors of the economy that together dominate the functioning of the system as the whole, capitalism has passed from its competitive to its monopoly stage." (ibid. p. 42) 

Baran and Sweezy are therefore justified on the grounds of consistency of the monopoly capital theory to replace Marx’s labor theory of value with the neoclassical theory of price: “[T]he appropriate general price theory for an economy dominated by such [oligopolistic] corporations is the traditional monopoly price theory of classical and neoclassical economics.” (ibid. p. 59)

Monopoly capitalism revisited
Let me sum up where the post-Marxian theorists of monopoly capital go wrong.  First, the presumption that Marx’s theory of competition is similar to the neoclassical theory of perfect competition is misguided. As discussed earlier, for Marx the capitalist firm aims at its own reproduction and expansion and competition is seen as a result of this goal and thus a heuristic concept not a preconceived idealized model as in the neoclassical theory. The activities of the larger capitalist firms, rediscovered by the post-Marxian and post-Keynesian theorists are already fundamental to Marx’s theory of capital accumulation and competition (Shaikh, 2016, chapters 7-11).  

Second, monopoly capital theorists concede that Marx did not suggest the necessity for a theory of monopoly capital. (Sweezy, 1981; Foster 1986, chapter 3) However, it is argued that Marx simply did not foresee the merger movement that came at the end of the nineteenth century that while confirming Marx’s theory of concentration and centralization of capital undermined his view of the capitalist mode of production as a competitive system.  However, this argument assumes that Marx held a quantitative theory of competition which as has been argued above and as Weeks (1981, p. 153) has pointed out is incorrect.  

But let’s delve on this claim for a moment.  The following quotation from Marx is often used to justify the claim that he held a quantitative notion of a competitive economy. 

“The battle of competition is fought by cheapening of commodities.  The cheapness of commodities depends, all other circumstances remaining the same, on the productivity of labour, and this depends in turn on the scale of production.  Therefore, the larger capitals beat the smaller. It will further be remembered that, with the development of the capitalist mode of production, there is an increase in the minimum amount of individual capital necessary to carry on a business under its normal conditions. The smaller capitals, therefore, crowd into spheres of production which large-scale industry has taken control of only sporadically or incompletely. Here competition rages in direct proportion to the number, and in inverse proportion to the magnitude, of the rival capitals. It always ends in the ruin of many small capitalists, whose capitals partly pass into the hands of their conquerors, partly vanish completely.” (Marx, 1867, p. 777) 

Marx also goes on to say that “[i]n any given branch of industry centralization of would reach its extreme limit if all the individual capitals invested in it were fused into a single capital.” (ibid. p. 779) 

Let’s note the following. First, the applicability of the above statement is limited to a particular historical period, when large-scale industry “has taken control of only sporadically or incompletely.” It is in those spheres of production where large-scale industry has not dominated yet, i.e., capitalist development is still in its infancy, that “competition rages in direct proportion to the numbers.” (For a detailed description of the backward sector see, Marx, 1867, chapter 15; Steindl’s (1952, pp. 40-52) theory of absolute concentration also deals with this problem) 

Second, even if one still would argue on the basis of the above quotation that Marx’s theory of concentration and centralization of capital provides a basis for a monopoly capital theory, the argument faces a fundamental methodological problem: The attempt to completely separate a part from the whole, to strip it of its textual and theoretical context, and then to generalize on the basis of it is alien to Marx’s methodology. The resulting theory might have merit on its own basis but could not be said to reflect Marx’s thinking or be in continuity with Marx’s theory (as they invariably deny that his labor theory of value is no longer operating under the rule of monopoly capital regime). Therefore, it is prudent to conclude that the above quotation does not serve as the basis for the claim that Marx held a quantitive theory of competition apart and separate from his more general thinking and without any regard for the conditions of technical change, access to credit, degree of capitalist development, differential rates of growth, and so on.

Third, the issues of increasing fixed capital outlay and capital mobility are also a concern for monopoly capital theorists.  In Volume III of Capital Marx argues that the process of equalization of profit rates will require a different amount of time depending on the level of fixed capital investment and other technical considerations. However, in Marx, the level of fixed capital investment did not mean sustained higher than average profit rates. (Marx, 1894, p. 310-11). For Marx, it is the condition of entry and exit that competition of capitals must take into consideration: “The fluctuation of profit caused by fat and lean years succeeding one another in any branch of industry…must receive due consideration.” (ibid. p. 208) A good example of this is how industries with above average and below average levels of fixed capital experience cycles of expansion and contraction.  The time required for a turn-around in the profit rate directly correlates to the level of fixed capital: more fixed capital, a longer period of the turn-around. If one considers agriculture, the volatility in prices and profit rates is actually even more considerable. (ibid. pp. 212-14; Clifton, 1983)

Fourth, Marx was highly skeptical of long-run stability of price collusion. In Marx, several factors work against such stability. Two of them stand out. Technical change constantly works against price collusion. (Marx, 1894, pp. 295-96) The industrial cycle regularly mitigates against collusion. Marx argues that significant downturns transform normal rivalry into “the most furious combat” over market shares. (ibid. 285-86) 

Finally, markup pricing developed by the large corporations since the 1920s is compatible with the classical and Marxian concept of production prices and can be integrated into it. (Botwinick, 1988, p. 189) Thus, while there may be a quantitive change in firms’ control over market conditions due to the existence of excess capacity, there is no qualitative change to warrant the definition of a new monopolistic stage of the capitalist mode of production. Historical accounts of the emergence of administrative pricing reveal that these policies were devised primarily to address growing amount of fixed capital requirement, continued fluctuation in capacity utilization over the business cycle and the development of multi-plant, multi-product firms. (Clifton, 1983; Semmler, 1984, p. 43) 

Concluding remarks
First, I like to stress the limits of this essay which is taken from my studies in the period 1987-91. Thus, it is not covering the literature since then. While the dependency school has become largely marginalized, similar new circulationist theories of the world economy have been proposed either in a direct challenge to Marx’s theory or as “new interpretations” of his work.  They need to be critically examined on their own basis.  While the monopoly capitalism theories are still popular, Baran and Sweezy Monopoly Capital (1966) seems to me to be the latest major theoretical contribution to this field.

Second, by criticizing monopoly capital theories as being different from Marx’s theory I do not mean to suggest that are therefore “wrong” unless I offer a critical analysis of a particular theory to show its internal logical tension that cast doubt on its validity.  In the case of the monopoly capital theory, its political efficacy is certainly in doubt because both reformist and revolutionary socialists appeal to it for their own political ends. In my view, Marx’s theory of the capitalist mode of production has been highly successful in anticipating its development since the late nineteenth century.  Anwar Shaikh’s  Capitalism: Competition, Conflict, Crises (2016) combines Marx’s theory of accumulation and competition with insights from noted economists to offer a consistent theory of modern capitalism that is also empirically validated. 

Third, most of the Marxist theories of imperialism rely on a variety of the monopoly capitalism theory.  But if the monopoly capitalism theories are built on a misunderstanding of Marx’s theory of accumulation, competition, and crisis, theories of imperialism built upon them are suspect, including the highly popular theory of Lenin.  For me, just as there are no periodization of the history of capitalism into “competitive” and “monopoly” stages with the latter being called “imperialism,” there is also no need for a separate theory of imperialism: capitalism is imperialism just as it was in part built on colonialism. 

Fourth in my dissertation, not only I have provided an immanent critique of the dependency theories, I have also proposed an outline of an alternative theory of late capitalist development using Marx’s theory and focusing on the internationalization of primitive accumulation and internationalization of capital that offers an uneven and combined theory of the world economy consistent with the rise of China and other newly industrializing countries and the relative decline of the West (Nayeri, 1992, Chapter IX).

Fifth, the unsurpassable advantage of Marx’s labor theory of value, the application of his materialist concept of history to the capitalist mode of production, is in its empowering conclusion stated in his eleventh thesis on Feuerbach: “The philosophers have only interpreted the world, in various ways; the point is to change it.” Economic theories are at best sound explanation of the capitalist economy, the point is to transcend it.  For this, we need to turn to a social agency which is only clearly indicated by Marx’s critique of political economy and his labor theory of value as the modern working class.   Of course, the theory of the working class as the agency for the socialist revolution itself requires critical study. Yet, there is no other theory of capitalism that has offered an alternative remotely as powerful. 

Finally, today’s radicalized youth and workers face a crisis that is both planetary and social, threatening the human species as well as much of life on Earth. Marx’s was a genius revolutionary socialist of the nineteenth century whose own plan of work was never completed.  We must learn from him but also go beyond his legacy to an ecocentric theory, strategy, and program of socialism if we are to save the world for the future generations.  

Dedication: This essay is dedicated to Ross Thomson, my best academic teacher and dissertation supervisor, who died prematurely on February 12, 2015, and to Anwar Shaikh, also on my dissertation committee, and a world-renowned Marxist economist, whose work has influenced my own work. I am grateful to both. 

1. Although I am a student of Marx I do not consider myself a “Marxist,” and use the terms “Marxism” and “Marxist” with hesitation (thus the quotation marks) when referring to a body of work and experience because many socialist intellectual and political currents who often disagree deeply with each other use these terms to describe their work or themselves. As the reader of this essay can verify, the body of work and practice of Hilferding, Lenin, Bukharin, and Baran and Sweezy, who differ from each other in important respect, and significantly different from Marx in their theory of capitalism are all classified as "Marxist." 
2. My academic studies that cumulating in writing a dissertation followed the defeat of the 1979 Iranian revolution at the end of 1982 at the hands of the clerical capitalist Islamic Republic.  In early 1970s, as a young socialist I had joined the Iranian section of Fourth International, the Sattar League, in part motivated by the same problems addressed in this essay, economic backwardness and the imperialist-backed dictatorship of Mohammad Reza Pahlavi.  The Fourth International was founded by Leon Trotsky, a central leader of the Russian revolution, who became the central leader of the international Left Opposition that resisted the bureaucratization of the Communist Party (Bolshevik party renamed) and the Soviet State in the 1920s caused by the degeneration of the October 1917 revolution.  The Russian revolutions of 1917 and Trotsky’s theory of Permanent Revolution, first formulated in Results and Prospects (1906), informed our program and strategy for the coming Iranian revolution.  Thus, to overcome economic backwardness and imperialist domination we argued the coming Iranian revolution must resolve historical bourgeois democratic tasks. But to do so,  we believed we must help organize the Iranian working class to lead the revolution because the Iranian bourgeoisie was too deeply entrenched in the archaic landed relations and tied to the international capitalist relations to be able to lead the revolution.  We also believed that once the Iranian working class assumed the power in alliance with the peasantry and other exploited and oppressed social groups, it will take an anti-capitalist course, opening the road to the socialist revolution.  Finally, we argued, the socialist revolution cannot triumph in any single country, we must aspire to international working class solidarity and the world socialist revolution.  
As it turned out, we were lucky as the “coming revolution” we hoped for arrived in February 1979.  But we were too small, inexperienced, and not rooted in the working class to make a difference. Still, the defeat of the revolution confirmed the correctness of the programmatic and strategic course we learned from the Bolsheviks (for a short assessment, see, Nayeri and Nassab, 2006). Once in New York in 1982, an opportunity arose after a decade of intense activism for me to study Marx and some of the same theoretical questions that already occupied me in my dissertation, a small part of which appears in this essay. 

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