Jacques Derrida, Specters of Marx, SovereignRisk and Rationality of Francis Fukuyama’s “The

End of History”

Ajit Kumar Ray

I. In lieu of introduction

Jacques Derrida is, as we all know, recognized as one of the mostinfluential philosophers of the twentieth century for developinga form of general philosophical theory of analysis known asdeconstruction. Notwithstanding the polemical differences withpost-modernism, we can still make the statement that he is one ofthe greatest critiques of structuralism and one of the brilliantimpassioned proponent of a new thought which now is considered aspostmodern philosophy. In analyzing and criticizing WesternPhilosophy beginning with the pre-Socratics to Heidegger, Derridapublished particularly three books in the sixties of the lastcentury– ‘Speech and Phenomena’, ‘Of Grammatology’ and ‘Writingand Difference’, which outlined the deconstructive approach toreading texts. Since then deconstruction has been applied as astrategy of analysis to literature, linguistics, philosophy andeven in law by many belonging to post-modernist school ofthought.

Knowing the above about Jacques Derrida, how we could relate himwith Francis Fukuyama1? We, of-course, do not want to considerthe event which had occurred in the life of young Fukuyama. Theevent has neither been noticed nor it has been mentioned oftenanywhere as a consequential connection between them. Aftercompleting initial graduate studies in comparative literature atYale University he went to Paris to study under Jacques Derrida,

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but became disillusioned very soon switched to study politicalscience at Harvard University. Except this, there is noconnection between Fukuyama and Derrida. Fukuyama never had anybusiness with literature, linguistics, philosophy or law.However, we hope that the reader must have noticed that we arenot interested to relate everything of the person Fukuyama withour context but only with the ‘rationality’ of Francis Fukuyama’sarguments in his thesis titled “The End of History”.

Even before publication of main thesis in the book form Fukuyamahad been able to create a stir and jubilation among the believersof supremacy of liberal democracy and free market economy. Thepredecessor of this book of Fukuyama was an article titled “TheEnd of History” published in the journal The National Interest2 in1989 where he had articulated the initial outline of the maintheme of his thesis. Principal contention of the article was thenelaborated in his book. His basic proposition in that book wasthat “a remarkable consensus concerning the legitimacy of liberaldemocracy as a system of government had emerged throughout theworld over the past few years”. This proposition was based on hisinterpretation of the history of the twentieth century thatliberal democracy had finally conquered rival ideologies likehereditary monarchy, fascism and Marxism. Under this perspectivehe argued that liberal democracy as a form of governance to runfree market economy has finally triumphed as the ultimate “formof human government". He then put forward the main contention ofhis thesis that civilization has reached the "end point ofideological evolution” of mankind and, therefore, constituted aphase of history that he referred to as the "end of history." Heexplained that while inherently existing fundamentalirrationalities in other forms of government for obvious reasonsdemonstrated serious flaws that led to their ultimate downfall,liberal democracy, on the other hand, being free from suchfundamental inherent contradictions has been able to becomevictorious against all odds. In his opinion, if any kind of

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serious injustice or social problems is still exiting in liberaldemocracy, this is because of “incomplete implementation of thetwin principles of liberty and equality on which modern democracyis founded, rather than of flaws in the principles themselves.”Fukuyama drew on the philosophy of Hegel, who defined history asa gradual progression through evolutionary process ofdistinguishably different epochs - from tribal to feudal toindustrial society. For Marx, within the foreseeable future, thisrevolutionary journey of history would be ended with communism;on the contrary, Fukuyama has announced “the end” of that journeyof history at the present phase where the civilization hasalready reached.

II. Why history ends?

The question arises, quite naturally, that what are thoseevidences that suggest him to conclude emphatically that finaltriumph of liberal democracy has been achieved historically?Three main historical events of late eighties of the last centuryinspired him to write a treatise on final triumph of free marketeconomies along with its political form liberal democracy. Thoseare (i) Crumbling of Berlin Wall in 1989 in Germany, (ii)Dissolution of the Soviet Union in 1989 and (iii) Confrontationsin China in 1989 which they loved to call Tiananmen Squaremassacre. But, according to Fukuyama these historical events werenot the beginning of an era of new kind of free market economy orliberal democracy. On the contrary it seemed to him that thefinal phase of the victory of a war for liberal democracy came toa logical end. Because, he thought that these events were nothingbut decisive blows or death nails in a century long fight againstall sorts of absolutism, the final phase of which was launchedafter World War II. Let us examine the rationality that driveshim to conclude the above and have a quote from his treatise tounderstand his understanding of history:

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“The ruins of the Reich chancellory as well as theatomic bombs dropped on Hiroshima and Nagasaki killedthis ideology on the level of consciousness as well asmaterially, and all of the proto-fascist movementsspawned by the German and Japanese examples like thePerónist movement in Argentina or Subhas Chandra Bose'sIndian National Army withered after the war.”(Fukuyama, 1989,10)

First I would request readers to remember the names of two cities– Hiroshima and Nagasaki. What comes to our mind normally withreference to the words like ‘Hiroshima’ or ‘Nagasaki’? Then whatcould we expect should come to the mind of Fukuyama? Great humantragedy? Killing of millions of innocent civilian people?Complete destruction of cities? Making millions of people - oldand young, woman and child – permanently disabled? Bearing scarsof atomic despotism from generation to generation through givingbirth to disabled and crippled children by mothers? No, nothingof these. None of these came to Fukuyama’s mind for this aghastand horrified historical event of dropping atomic bombs oncivilian people of Hiroshima and Nagasaki. He, of-course,referred to ‘killing’ but not killing of millions of human beingbut killing of an ideology on the level of consciousness.

How an ideology could be killed by dropping atom bombs oncivilian people? This is what constitutes the basic presumptionof Fukuyama’s rationality which assumes that an ideology could beannihilated by applying atom bombs on millions of innocentcivilian people. Interestingly, in support of his presumption hereferred the historical episodes of Subhas Chandra Bose andPerónist movement of Argentina. Subhas Chandra Bose’s politicalviews and philosophy are well recorded and known to anyoneinterested in this subject in our country. In spite of that,declaring Subhas Chandra Bose as proto-fascist due to hisstrategic alliance with Japan does not only indicate that

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Fukuyama’s reading of history is poor, but his rationality isflawed. Particularly, readers of this journal do not require tobe informed that political ideals and activities of SubhasChandra Bose be introduced to them elaborately to prove whyFukuyama’s rationality is flawed. I have, therefore, decided notto discuss on his understanding of Subhash Chandra Bose and,instead, decided to understand rationality of his logic that hasmade his belief on Perónist movement in Argentina in the contextof history.

III. Structure of Rationality of Fukuyama

Ideals of Perónist movement and its history are not widely knownto people outside Latin America. Since we would inspect argumentswith reference to the Perónist movement put forward by Fukuyamain defence of his thesis, we need here a very brief summary ofhistory and political demands of the movement. The nature of theideological character of the Perónist movement has not yet beendecisively resolved by Scholars.

“For decades, scholars have been struggling with the problemof how to characterize politically, in contrast to socially,Perónism. Is it "populist"? But then what is meant bypopulism, and is neo-liberal Perónism still populist? Was it"fascist"? Can it be equated with a Labor party? Is, or wasit, on the Left (or Center-Left), the Right, or even in theCenter?” (Ostiguy, 1997)

Initial analysis that I intend to present, therefore, is neitherrelated to the judgement on the character of that movement, norrelated to the scrutiny of Perónist’s argument in favour of theirpolitical philosophy, but related to historicity that appears asperceived and narrated by Fukuyama.

In Argentina, the spread of Perónist movement was a post-WorldWar-II incident that started much later than August, 1945. Thisis that fateful month when, leader of the so-called liberal

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democracy and champion of free market economy, US experimentedwith the extent of power of devastation of nuclear bombsconsecutively on the 6th and, three days later, on the 9th. Perónstarted his first presidency in 1946 by winning a vote securingmore than 56 percent as a member of the Labour Party. But,important point is that Perón was re-elected in 1951, obtaining amassive 62% of the votes for the next five years on behalf of aparty (Justicialist Party or PJ) formed by him which isconsidered as a Perónist political party in Argentina. However,Mr. Perón - the most popular political leader of the country andelected President for the second term - was ousted from hisoffice by a military Coup d’état on September 1955 and was forcedto go on exile. Perón spent the next 18 years in exile, mainly inneighbouring Latin American or European countries. What we findfrom history? History reveals that in 1946, when Perón waselected first time as a President, he was a member of the LabourParty and the party based on his ideal, known as Perónist Party,was formed later in 1951. It is clear like crystal that if anyPerónist political philosophy came into existence that was in1951. The pertinent question, therefore, is that how Perónistideology which came into existence in 1951 could be killed bydropping bombs in August, 1945?

We further find that military ruler made any support of Perón,including even saying his name in public, illegal in the country.But the extent of Perón’s influence over the people and also overArgentine politics from exile was such that candidates hesupported from abroad frequently won elections. However, beingforced by the acute political crisis and people’s unrest, themilitary regime allowed Perón to visit Argentina in 1972. InMarch 1973, Perónists party again gained control over thegovernment in national elections, and Perón himself was electedpresident in a special election. However, when Perón died on July1, 1974, the elected vice- president assumed the office of thePresident as per the provision of the constitution “but was

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deposed in an air-force-led coup and a right-wing military juntatook power that brutally ruled Argentina until 1982”3. Since theend of military junta rule the candidate of Perónist party wonthe presidential election several times and, incidentally, thepresent President of Argentina is also a Perónist. We do not liketo debate on whether the Perónist ideology is proto-fascist ornot. Whatever it may be, do the historical evidences substantiatethat the atom bombs dropped in Hiroshima and Nagasaki in 1945killed the ideology of the Perónist movement in Argentina at thelevel of consciousness? Had it been the truth, how could Perónistcandidates manage to get elected as a President repeatedly?

However, of greater importance is that Fukuyama’s analyticalexplanation of history quoted above from ‘the end of history’demands us to believe two axioms implicit in his construction:firstly, something may be killed even when that is yet to existor that has yet to be a ‘being’; and secondly, someone electedrepeatedly by popular votes is to be considered as proto-fascistwhile a military junta is to be welcomed as representative andprotector of democratic liberalism. Does it not raise a bigquestion - Why? The presence or absence of which element thenwould make a system liberal democratic or a fascist in accordanceto the constructed rationality of Fukuyama?

However, Fukuyama is not naïve.

IV. What irritates Fukuyama?

Underlying irrationality of the first part of his construction, Ido hope, does not require any further explanation for obviousreasons. But for the second, if someone does not consider fewpolitical-economic decisions of Perónist government, without of-course vouching anything in support of their ideologicalposition, one would fail completely to understand the reasonbehind the strange position of Fukuyama. How and why a champion

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of liberal democracy like Fukuyama became jubilant at the ousterof a successively elected government by a military junta?

We would cite below few government decisions and policydeclarations by Peron during initial years of his presidency.

Firstly, assuming power in 1946, by 1948, Perón nationalizedthe Central Bank, paid off its billion-dollar debt to the Bankof England; nationalized British and French railways companies,merchant marines and public transport (then, mostly tramways);

Secondly, in the international arena, Perónist movement tooknon-aligned position since Bandung conference of 1955.

Thirdly, from the very beginning Perón declared that “hiseconomic model would have its bases in nationalism, strongredistribution of wealth and national self-sufficiency.”(Ratliff and Calviño, 2007)

Fourthly, dating from the first government, Perón createdArgentine Institute for the Production or Trade (IAPI) to monopolize theforeign trade under public enterprises in order to put inpractice his first government’s great income redistribution.“This redistribution of wealth had a central role in themassive labor mobilizations as well as Perónist policy.”(Ratliff and Calviño, 2007)

Fifthly, it has been accepted by the scholars that “stablework, wage homogeneity and legal protection were part of theeveryday life of most workers in Argentina” (Nudler, 1996) dueto enactment and sincere implementation of several laws infavour of work force.

It is, therefore, not surprising that many who studied politics,philosophy and policies implemented by Perónist governmentcategorized Perónist movement as “Poor People’s Politics”(Auyero, 2001). Perónists declared themselves as opposed to

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Marxism. Their principles and political philosophy are not basedon Marx’s ideals. Then, does it not appear from Fukuyama’sarguments that none of the above pro-poor, pro-workers humanistcharacteristics of their policies is seemingly acceptable toliberal democracy or free market economy?

Yes, it is. Free market economy does not like anything to benationalized, even nationalization of institutions providingbasic necessities and public services to poor and under-privileged. According to their philosophy, every need and want ofhuman society must be transformed into commodities of the market– be it health, be it education or be it even right to life.State should allow the capital to exploit profit from everyaspect of existence of human being. Is it precisely the reasonthat Fukuyama considered repeatedly elected Perónist Presidentsas proto-Fascist as because Peron’s doctrine of providingservices to the poor by the state goes against the desire ofcapital? We are leaving this to our readers to decide. Let us beallowed to point out more serious issues relating to therationality of Fukuyama.

V. A Bombshell That Shook an Entire Universe

It should surely be considered as irrational if a school ofthought holds its hopes on some outstanding historical events ofrelevance in a particular period of time but ignores importantdevelopments during the same period simply because those arecontra-indicative evidences to their thesis. Eighties of the lastcentury did not only witness the fall of socialist states but atthe same time encountered a few other unprecedented incidentslike one on the 3rd of August, 1982 which has been described byKraft Joseph ( 1984) as “a bombshell that shook an entireuniverse”. Since, in no way it does substantiate the claim of thefinal triumph of free market economy and liberal democracy,Fukuyama ignored this newly appeared critical facet of perennialcrisis of free market economy. This is what is now termed as

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‘sovereign risk’ of the international financial market and globalfree market economy due to foreign indebtedness (or some placesreferred as sovereign indebtedness in the literature) of lessdeveloped countries (LCD) or poor countries. Before 1982, in theliterature of trade and business we were accustomed to two typesof risk – business risk and financial risk associated with twodifferent categories of uncertainties. The Mexican incident of1982 showed that the sovereign indebtedness is another seriousone that could destroy the whole structure of global free marketeconomy.

The incident may be stated by the following one-liner: FinanceMinister of Mexico announced on August 13, 1982 that Mexico couldno longer service its enormous external debt. Let me introducebriefly the real character of this newly born baby of crisisridden global economic system which, since then, has beenperceived by free market enthusiasts as ugly, unwanted, un-called-for but unfortunately unavoidable. It is consideredunquestionably as the latest menace to the so-called peacefulheaven of free market. Suppose, an economic agent lends money toanother within the same country and, at the time of repayment,borrower expresses its inability to repay. Under thesecircumstances, the lender would resort to the nation’s law-enforcing agencies and the state would ensure that either thelender would get back his money from the borrower or would becompensated adequately. It is the state which plays the role ofultimate guarantee against the chances of the borrower becomingdefaulter. But, the situation is completely different when aninternational financial institution lends money to a sovereigngovernment of another country. If, then, government defaults ordeclares its unwillingness to repay, it is obvious that suchrecourse to the domestic law-enforcing agency is not possible.However, before 1982, in the international financial market, thebasic presumption of lending business was based on the good faiththat no sovereign government would ever be a defaulter and

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instances in the history of international trade would suggestthat there were reasons for having such a belief pattern.

There are many instances but the recent case of Nicaragua may becited as a good example to explain why such belief was so strong.In 1979, Sandinistas occupied the state power by way ofoverthrowing the then government and found that they had only$3.5 million as foreign reserve against huge amount of overseasloan liability. Not only that, they also came to know that theprevious government had already begun defaulting on interestpayment. Interestingly, most of these foreign loans borrowed bythe previous government were used to buy weapons from abroad tofight Sandinistas. It was the wide spread apprehension in theinternational financial circle that the new government, undersuch an acute crisis of foreign reserves, would not honour theprevious government’s commitments. However, the new Sandinistasgovernment negotiated with all foreign lenders and “did notdisavow a cent”. In a country, whoever comes to state power andby adopting whatever means, there exists a web of compulsionsfrom which escape is almost impossible. Thus, usual beliefpattern has a base.

But, if it happens (and what actually happened in 1982) then whatwould happen to lender country? What would be the predictedbehavioural pattern of all economic agents under this newcondition? If accepted as a practice, should borrower countrytake advantage of this and, whenever needed, renege on its loancommitments? And, should lender country, knowing borrower countrywill renege, refuse to lend that country? Following such game-theoretic arguments of choosing optimal strategy options, weeasily find that the whole system would collapse if beliefpattern changes. The incident of Mexico of 1982 raised questionsagainst the validity and justification of traditional beliefpattern and gave birth to a new kind of uncertainties. We know,risk is always associated with every kind of uncertainty and,

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therefore, a new type of risk concept was introduced in thefinancial literature in post-1982 Mexico incident which is nowknown as ‘sovereign risk’. Thus, what appeared to beunpretentious simple statement of Mexico actually sent shiversdown the spine of international financial system. It wassomething like a last resort of endurance vanishes into the blue.Because, it proved that sovereign guarantee might also be fragileand unstable.

VI. What Gets Away as Dead from Marxism?

Thus, in international trade and finance the problem now is notconfined only with budget deficits, overvalued exchange rates,world interest rates and commodity prices (Sachs, 1989). At thesame time, the other fact that also comes to fore is that,relying solely on sovereign guarantee, too much of loan-pushingto LDCs or poor countries in the name of developmental assistancewould not be a very safe way out for the over accumulated financecapital though it can not breathe without seeking opportunity ofinvestment through out the globe in every moment. The nature ofthis crisis was such that immediately few noble-laureateeconomists like Stieglitz, Krugman etc jumped on the problem tofind a theoretical solution.

Surprisingly, ignoring this very crucial aspect of crisis of freemarket economic system, Fukuyama depicted a complete differentpicture of optimism. Bernd Magnus and Stephen Cullenberg in theIntroduction to the book of Jacques Derrida described this asfollows:

“A wave of optimism engulfed the Western democratic States. Thiscontagious optimism was best exemplified by the confidence andpopularity of Francis Fukuyama's claim that the end of history wasat hand, that the future - if that word could still be said tohave the same meaning - was to become the global triumph of freemarket economies.”

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No doubt, apart from the collapse of socialism in Eastern Europeand the Soviet Union, there had been certain other developmentsin global economic scenario that, mentioned by Magnus andCullenberg, helped to create such optimism among free marketenthusiasts. Phenomena like starting of the process of economicintegration of Europe; sustenance of growth of Japan’s economy;South Korea, Taiwan and Singapore becoming considerable economicforces etc resembled the hope of inner contradictions beingwithered away around this period. All these together caused sucha feel-good politico-economic milieu that global politicalleaders started to believe that political, economic and socialsettings had been changed fundamentally at the internationallevel. In response to such optimism, scholars, intellectuals andactivists throughout the world started to rethink the meaning ofpast verities and, quite expectedly, many concerned issues havebeen raised from several left intellectual camps of differentshades contesting the views and analysis of Fukuyama. But, at thesame time, it is important to mention that questions have notbeen raised solely to contest Fukuyama’s contention but few werealso asked to argue against their own traditional Marxistperception regarding the causes of a number of historicalincidences.

For example, few central contested issues, which could not beavoided by any serious left intellectual, political orrevolutionary activist, were: What remains of the socialistvision(s) after the "collapse" in 1989? Has the collapse ofcommunism also spelled the death of Marxism, and of Marx as animportant philosopher and political thinker? Have we indeedreached "the end of history" as Fukuyama has argued, wherepluralistic democracies and capitalist economies reign supreme?What new international contradictions will emerge and what willbe the nature of theoretical and political discourse as weapproach the twenty-first century? Does the "end of history" alsopredict the end of Marxist theory? What remains as living in

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Marxism and what gets away as dead from Marxism? (Magnus andCullenberg, 1993)

Their claim is that the system of free market economy and itspolitical form - liberal democracy – has finally been provedsupreme. But people simultaneously could not get away ofobserving ‘the tragedy of the commons’ (of course, not exactly inthe same sense of Garrett Hardin, 1968). The plight of thehomeless, hunger, starvation death, acute poverty, widening ofinequality in distribution of wealth as well as income,deprivation, lack of adequate health care, non-accessibility ofpoor section of the population to elementary education, ever-increasing national debt burdens of many countries (not only ofthird world but also of Europe), environmental degradation andmany other such furuncles of free market economy are becomingmore and more acute as the market has continuously been givengreater freedom. Is there any logical reason to believe that theliberal democracy and free trade regime would ever be able to getrid of such abscesses permanently from the society in the newworld order? No, there is no indication of it – eithertheoretical or empirical.

On the contrary, what we actually find is that the presentsituation bears complete resemblance to what Marx has foreseen168 years ago and has encrypted in Communist Manifesto:

It has resolved personal worth into exchange value, andin place of the numberless indefeasible charteredfreedoms, has set up that single, unconscionable freedom— Free Trade. In one word, for exploitation, veiled byreligious and political illusions, it has substitutednaked, shameless, direct, brutal exploitation.

Thus Marx’s foresight did not fail to predict the true nature of“freeness’ and its trade related implications. While free marketenthusiasts feel that greater the freeness, greater is their hope

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of triumph, Marx has foreseen that greater would be the brutalityof exploitation. And, thus, greater the exploitation, greater isthe necessity of revolt by the proletariat. It was true in thepast and it remains true at the present that desire forcompletely free market is, in fact, would prove to be despair forthe future.

Present international finance and trade arrangement of relativelyfree movement of capital and traded goods through out the globewithout any barrier, which has normally been thought by many as anew concept developed after the fall of socialism and at theadvent of WTO regime, is neither unanticipated nor a newphenomenon. This is neither a wonderful magic wand nor is itsomething new that Marx could not visualize as a consequence ofcapitalist development. Free market enthusiasts have normallydescribed this as such a solace to the capitalist economy thatthey prefer to call it as “New World Order”. They are used toargue in such a way, as if, it is completely a new vista whichMarx had never thought off that it could be discovered by thecapitalist system for its survival. What has Marx foreseen andwritten in the Manifesto?

The need of a constantly expanding market for itsproducts chases the bourgeoisie over the entire surfaceof the globe. It must nestle everywhere, settleeverywhere, establish connexions everywhere.

And not only that, Marx also has explained4 what this process ofso-called globalization would do. Multi-national corporates,whose existence would become a life and death question for allcivilised nations, would come-up destroying all nationalindustries. Raw materials of remotest zones of the earth would beplundered to produce products of these corporates and the peoplein every corner of the globe would be bound to consume thoseproducts. During the financial crisis of 2007-08 we find how the

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fall of financial corporates like IndyMac, Lehman Brothers etcbecame the life and death question for all nations.

Nothing, therefore, has happened which is new in the sense thatit was not visualized before by Marx and his fellow comrades. Onthe contrary, the present socio-economic condition does notsubstantiate the explanation provided by the free marketenthusiasts against the fundamental question raised by Karl Marx.Marx asked the simple question: if all goods and services in acapitalist society tend to be sold at prices (and wages) thatreflect their true value (measured by labor hours), how can it bethat capitalists enjoy profits—even if only in the short run?Corollary of this question is even simpler: if some portion ofthe total value produced is expropriated by a class instead ofbeing distributed as income among the consumers, then how thetotal produce could be exhausted in the market?

Denying Marx’s proposition of profit characteristically as theexpropriation of labour time as surplus value, what is theexplanation of mainstream economists? They believe thatcapitalists do not earn profits by exploiting workers. Insteadcapitalists earn profits by foregoing current consumption, bytaking risks, and by organizing production. Does this by any waylogically substantiate the consequences of ‘naked, shameless,direct, brutal exploitation’ that have been thoroughly exposed asincurable ulcer in society through out the world?

Let us take the example of the extent of sum total of benefitagainst this so-called sacrifice of current consumption made bythe capitalists, risk borne by them and managing theorganisation. This is the present figure of disparity in incomedistribution among the world population. It has been reportedthat only 0.7 percent of population owns 41 percent of wealth and83.3 percent of total global wealth has been concentrated in thehands of only 8.4 percent population (Credit Suisse Report,2013). As a contrast of it, in describing the state of world

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hunger at present, the situation of two countries may be cited asexample. It has been reported that the livelihoods of anestimated 12 million people are currently under threat in theHorn of Africa and nearly 4 million people in Somalia alone arein need of life-saving assistance. Although the world producesmore than enough food to feed everyone, almost 1 billion peoplewill go hungry (WDR, 2011). Would any person with consciencebelieve that this concentration of wealth in one hand and thepresence of acute hunger on the other, are not due toexpropriation of labour time or exploitation of surplus value butbecause of due and justified payment against the sacrifice ofpresent consumption of a capitalist?

While explaining theories of surplus value Marx showed5 how thisimbalance in the system invariably would generate contradictionswhich would cause crises. To Marx, therefore, every reason whichfree market enthusiasts put forward against crisis was anexorcised contradiction. According to Marx, there will be crisesif there are contradictions. But they can only erasecontradiction in their imagination. Socialist system hascollapsed but it does not necessarily mean that it erases thecontradictions within the capitalist system. Socialist system hascollapsed but causes of socialism remains within the unjustsociety through out the globe. Hence, nothing gets away as deadfrom Marxism.

VII. Specters of Marx and Derrida:

According to Derrida, to all Fukuyamas (Derrida used plural ofspecter, I use plural of Fukuyama), the situation is veryperplexing in the sense that they are living in a land where onlyspecters of Marx are roaming around. Whatever happens anywhere inthe world – resistance, protest or disagreement - Fukuyamas findspecters of Marx. They see specters of Marx not in their dreambut to them it is a reality. It exists objectively. It isdistressing, inauspicious, awful, terrifying, depressive, but not

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a dream to them. Unwanted nightmare but reality. It is normallybelieved that specters or ghosts are bodiless - without a shapeor definite form, but to them it has a definite shape, colour andsmell. Yes, smell also. They feel the smell of danger to theirsystem. Essence of their system is expressed by injustice,inequality, discrimination, unfairness, deprivation but ispresumed as liberal. So long they do not see specters challengingor contesting the very essence of the system, liberalism appearsto be very docile and meek. But if the very essence of the systemis challenged, the world is used to witness the real meaning ofliberalism encrypted in the human devastation in Vietnam, Iraq,Afghanistan, Latin America, Africa, Hiroshima, Nagasaki and manyother such places.

Ironically, in the post-USSR period, what perplexed many peoplewas that who must ask questions relating to irrational jubilationof Fukuyamas and to whom must they be addressed? In particular,how will activists or intellectuals in the tradition of Marxistideology and philosophy respond, theoretically and politically,to the extremely rapid global changes that has been constantlyoccurring at every moment? Who is that authority who will provideguidance and explanation to confront the constantly changingdisguise of moribund capitalism that creates hope against hopeamong these exploited people?

Surprisingly, however, questions were raised and discussions tookplace. A new discourse was initiated. But, it was unexpectedly inUS and obviously not in a Marxist manner. In an environmentcharged by anger against Fukuyamas along with many radicalquestions, Center for Ideas and Society, University of Californiaat Riverside (CIS-UCR) convened a seminar where Jacques Derridadelivered his plenary lecture on April, 1993. This was laterpublished as a book – "Specters of Marx: The State of the Debt,the Work of Mourning, and the New International”. In a way, which

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is very unique to Derrida, he deconstructed the structure of therationality of Fukuyama and exposed his confused state of mind.

Jacques Derrida ruthlessly contested Fukuyama’s rationality ofthis optimism. If liberal democracy and free market economyappears to be as final to him, Derrida questioned, then where isthat realized state? Unless Fukuyama ignores the evidence thatbears massive witness “to the fact that neither the US nor the EChas attained the perfection of the universal State or of liberaldemocracy, nor have they even come close” – how liberal democracyfinally triumph over socialism? How can one minimize “all thecontradictions at work within the trade between the wealthycountries and the rest of the world”? What final answer they havefound against the phenomena of pauperization and the ferocity ofthe "foreign debt," ? How they have overcome the crisis of "theepidemic of overproduction” that had been pointed out in theManifesto? What about the effects of what the CommunistManifesto (1848) called the "state of momentary barbarism" thatcan induce in so-called civilized societies?

Apart from the most-talked-about curses of the ‘new economicorder’ evidently manifested by the chronic existence ofunemployment, the massive exclusion of homeless citizens from anyparticipation in the democratic life of States, the ruthlesseconomic war among the countries etc, Derrida raised few otherfundamental questions as irrefutable contradictions in thesystem. First one is ‘the inability to master the contradictionsin the concept, norms, and reality of the free market’. In whichway the market is free? Where that market exists which is free?What is the essence of ‘freeness’ of market? How it is achieved?Every country expresses its respect towards free market economy,solemnizes good faith on non-barriers and against protectionism,pledges to follow truthfully the time schedule, meticulously andunanimously designed in international fora, of removing allinsofar imposed tariff and non-tariff barriers for free movement

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of factors of production, and then seeks protection of thedomestic economy from the consequences of free movement oflabour. How this dichotomy is resolved before being reached atthe end of history?

VIII. All that is solid melts into air, all that is holy isprofaned:

Kindleberger (1989) observed that multinational banks with theobjective of finding new foreign borrowers “practically forcedmoney on the less developed countries.” Many such examples arecited by Darity and Horn (1988). In order to indicate thecontradictions due to intensification and spiral growth of theforeign debt, loan pushing and other connected mechanisms Derridaused the set of words ‘The State of the Debt’ which is driving to‘despair a large portion of humanity’. Contradiction is suchthat, as Derrida pointed out, instead of making the market freeand extended, it gradually tends to exclude ever more countriesand their people from the very market. “This type ofcontradiction works through many geopolitical fluctuations evenwhen they appear to be dictated by the discourse ofdemocratization or human rights.” Acute contradiction also existswith relation to arm industries and its trade. Production cannotbe “suspended or even cut back without running major risks,beginning with the worsening of the said unemployment.” Why thevery existence of a liberal state within an environment ofdemocracy requires so much of arms? In which sense the system isliberal? If it is liberal, why does it require piles of lethalweapons meant for coercion? No where is the answer to theelementary question as to how these serious contradictions havebeen resolved before arranging ‘the orgy of self-congratulations’due to achieving the ultimate objective?

The basic fallacy in Fukuyama’s rationality is that he tried toprove supremacy of one inherently crippled and crisis-pronesystem by the failure of another system. Why the socialist system

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of economy failed is a separate issue and may be discussedseparately. But, the failure of the socialist system does notjustify that the Marxian economy has failed permanently and as aconsequence, inter alia, the ultimate triumph of free marketeconomy has been achieved. Without resolving the causes ofcontradiction within the free market economy, no one couldestablish the final triumph of capitalism and its political formliberal democracy. In this connection let us quote a paragraphfrom Joseph A. Schumpeter to make our argument clear.

“CAN capitalism survive? No. I do not think it can. Butthis opinion of mine, like that of every other economistwho has pronounced upon the subject, is in itselfcompletely uninteresting. What counts in any attempt atsocial prognosis is not the Yes or No that sums up thefacts and arguments which lead up to it but those factsand arguments themselves. They contain all that isscientific in the final result. Everything else is notscience but prophecy. Analysis, whether economic orother, never yields more than a statement about thetendencies present in an observable pattern. And thesenever tell us what will happen to the pattern but onlywhat would happen if they continued to act as they havebeen acting in the time interval covered by ourobservation and if no other factors intruded.“Inevitability” or “necessity” can never mean more thanthis.” (Schumpeter,1942, p- 61)

Thus, according to one of the greatest economists and mostrespected proponent of the free market liberalism, capitalismwould not survive if it continues to act as it has been acting sofar. Thus, the crux of the problem lies in the answer to thequestion whether there is any newer way to act differently to getrid of the genesis of in-built disequilibrium of the free marketeconomy? Does there exist any completely new and unheard offactor that could be intruded in to the system that wouldpermanently remove the inbuilt imbalances? No, nothing. We know

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that whatever new and extra-ordinary theory they invent, it is insomeway actually some means of expanding the market. We havealready pointed out that, in relative sense, they could notexpand the market. For example, Schumpeter himself proposed‘creative destruction’ which, in final analysis, is one of theinstruments of reshaping a new market out of the old one. But,none of their theories has ever claimed that the issue ofinherent imbalances and contradictions within the system has beenresolved.

IX. Theory that Explains Little but Confuses Much:

The ever expanding market is the only solution and every oneknows that. Then why the system of free market economy fails toexpand its market? Let us take the situation of foreignindebtedness and sovereign risk. How do lenders cover themselvesagainst ‘sovereign risk’ which we have already explained as arisk associated with the lending to another country? In theliterature, they have identified three ways6 (Basu, 1991):

(1) The lender can threaten to refuse future loans to adefaulting borrower. The effectiveness of this strategy, however,is contingent upon two conditions: (a) if the borrower has acyclical need for credit and limited investment opportunities,(b) the debt in question must not be so large that the advantagesof default outweigh the cost of penalty.

(2) The lender can embargo trade with the borrower.

(3) A lender can intervene militarily.

It does not require any deeper explanation to state that theseoptions are not based on the liberal philosophy which they boastso much on claiming the supremacy of the system. This is oldbarbaric ideology where might reigns the supreme as the effective

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use of the fear of being punished is the rule of law. However, wewould also find that, in final analysis, all these three waysessentially not commensurate with the purpose of market expansioneither. Basic character of first two options is exclusionary innature and, therefore, shrinks the market directly instead ofmaking the market expanded, at least in short-run. How can thethird option be befitting with proclaimed liberal philosophy?However, it is a threat perception on which suppliers of financecapital primarily rely on. In the literature, it has been saidthat adherence to norms is in the borrower’s self interestbecause deviations from norms will make other agents respond in aways that are undesirable from the borrower’s own point of view(Basu, 1991). The most frightening fear of undesirableness is,of-course, military intervention. Irony is that it does work tostraighten the defaulting country but instead of removingcontradictions of the system, even temporarily - forget aboutpermanently, it decisively proves that there are certainimbalances in the system which could not be smoothened withoutapplying fearful force. It shows that market needs help toperform not from a liberal but from a tyrant. Countless instancesof military intervention through out the globe in recent times bythe US in particular and developed world in general bear theillustrations of the type of liberal political economy that hasbeen developed in the world.

Interestingly, instead of reconciling contradictions, theoriesdeveloped so far in the area of sovereign indebtedness haveactually exposed factual character of hitherto concealed innercontradictions. Now it becomes undeniable that the vulnerabilityof the system is really more acute than it had been conceivedbefore by a Marxist. While a section of economists have tried tosearch out a solution of the crisis with the assumption that themarket structure of international finance is a competitive one,other sections have refused to accept that assumption altogether.Many economic features and indicators have substantiated their

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reasons of rejection. Contradictory evidences are plenty. Let usexamine few which reveal critical aspects of the crisis.

It has been well accepted in theories of internationalindebtedness that competition among lenders of finance capitalshould lead the market to a point of equilibrium where lender’sopportunity cost of lending to the borrower must be equal to therate of interest. In reality, we find that the rate of interestis always higher than the opportunity cost of capital. We knowwhere there is a scope of controlling the supply; it breaks downthe competitive nature of the market. In a market this situationis only possible when the supply of fund is less than the demand.As a consequence, borrowers will be deprived of getting thecompetitive price (interest in this case) benefit in one hand andsuppliers would enjoy more than normal profit (here the extrapremium on interest rate over and above opportunity cost).

The ‘competitive model’ in the debt literature is described ashaving essentially two necessary pre-requisite characteristics:one, there are many lenders, and second, there is limited numberof borrowers or, if number is not limited, they constitute acollusive group. Reader should notice that none of theseconditions does reflect the reality in any sense. On thecontrary, opposite is true. Numerically the borrowers aremanifold than the number of lenders or suppliers of fund. Theborrowers are either governments or other private economic agentsof a disparate group of third world countries. Theseunderdeveloped countries, having minerals and other resources,are poverty stricken, without skilled man power and access rightto technology. Moreover, many of these countries are governed byeither tyrant or despot or military junta or any other person nottruly people’s representative. Expecting collusiveness, somethingcarefully and consciously nourished among them, is a distantdream. Historical records would vouch that even minor bilateralcooperation fails frequently while the record of agreement among

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a large group is notoriously poor. On the opposite side, lendersare much better organized with respect to having a built-upconvergence of interests and operate through syndicates, cartelsor conglomerates.

That the situation is monopolistic in nature is evidenced by therate of interest being greater than the opportunity cost in theinternational debt market. How lenders enjoy benefits ofmonopolistic market? Is there any shortage of fund? Is the supplyof fund less than the total demand? If it is, then, however,hardly any economic argument would be left to explain thephenomenon of loan pushing. It is well known and no one deniesthe fact that Mexican incident of 1983 was the culmination of theunprecedented loan pushing in fifties and sixties of the lastcentury. Moreover, according to World Bank (1988) analysis, inthe 1970s, developing-country debt grew at an alarmingly highannual rate of 21 percent by pushing loan to different poorcountries going beyond their capability of repayment. If loanpushing is a phenomenon that contradicts the generally acceptednotion of shortage of fund, then we have to reconcile manyseemingly irreconcilable economic counter points.

What is then loan pushing? How it is done? Let me explain firstthe mechanism of loan pushing in the guise of financialassistance to development.

Let us consider a hypothetical situation of the countryBangladesh, for example sake, seeking finance for constructingPadma Bridge which would connect the southern part of the countrywith the rest. Suppose, Bangladesh prepares a project costing $1billion with a specific design of the bridge that suits theirpurpose and also meets their financial constraints with regard tocapability of long-run revenue mobilization to meet theirrepayment liability. Bangladesh then submits the same to any ofthe international financial agencies like IBRD (World Bank), ADBetc for the consideration of granting loan. The agency then would

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make an appraisal of the project viability or feasibility andsubmit their conditionality of providing fund along with otherrecommendations, if any. The story of loan pushing would startfrom this point. The agency would suggest the following, forexample:

(a) Instead of road and rail line side by side, why are younot considering a two-storied bridge for motorized vehiclesthrough one floor and the rail on the other?

(b) Why are you not considering multiple approach roads onboth sides instead of single approach road?

(c) Why are you not considering few long and extended fly-overs along with the bridge for better connectivity andavoiding traffic congestion?

And many more like this. Obviously, as a consequence of all theseadd-in benefits, cost would escalate, say to $3 billion.Freelance experts, may be through NGOs funded by developednations, would start to advocate how this added cost would bringmuch more benefits to the country. Media would start to createpublic opinion in the direction that the country is fortunateenough to have such a farsighted leader who has the courage tovisualize such a big project in the interest of the futuregeneration. Series of similar kind of activities would create adevelopment mileu within the country. It is needless to say,however, as an integral part of agreement, a substantial amountof this project investment of $3 billion would go back to thefirst world consultancy firms as a service cost for projectdesigning and supervision on the plea that native engineers arenot experienced enough to handle such a big project. Anyway, thisis what is known as a loan-pushing in the debt literature inEconomics. However, we should be interested to seek the answer ofa very important question relevant to our discussion at thispoint. The question is: if there is a shortage of fund for whichborrower countries are deprived of getting benefit of non-

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monopolistic market in terms of lower interest rate, why thenlending countries at the same time are so enthusiastic to pushloans to borrower countries?

But, if the loan amount is beyond the capacity of the borrowercountry how they would meet the liability of repayment? Here liesthe importance of belief pattern in the period before August 13,1982, the date which is conventionally treated as the start ofinternational debt crisis. The belief was that a sovereigngovernment could not be a defaulter or, better to say, would notdare to default. But, frustrating every stake holder, it actuallyhappened that Mexico declared its inability to repayinternational loan in 1982. It would be very interesting for usto know how the causes of the crisis were diagnosed and remedywas prescribed in the literature of economics. Let me quote aparagraph:

“Another feature of the international credit market isthe seemingly fragile structure of the interpersonalconjectures on which it survives. Mexico had failed toraise loans large enough to service earlier debts beforedeclaring moratorium. If banks had continued to lend,however, Mexico might have been able to avert the crisisby borrowing from one bank, paying another, andcontinuing the juggling until it regained its liquidity.”(Basu, 1991)

This is, perhaps, the funniest possible solution of theproblem. Take a loan from one, repay another and continue.What would happen if liquidity is not regained? Is it not aperpetual process of lending that could lead to even greatercrisis?

Within this hopeless situation Fukuyamas want to win the game andto win they actually define first the concept of “win” accordingto their pious wish, as said by Karl Marx. It reminds me a

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beautiful passage of the article “The Tragedy of the Commons” ofGarrett Hardin published in the journal ‘Science’ in 1968.

“Recall the game of tick-tack-toe. Consider the problem,"How can I win the game of tick-tack-toe?" It is wellknown that I cannot, if I assume (in keeping with theconventions of game theory) that my opponent understandsthe game perfectly. Put another way, there is no"technical solution" to the problem. I can win only bygiving a radical meaning to the word "win." I can hit myopponent over the head; or I can drug him; or I canfalsify the records. Every way in which I "win" involves,in some sense, an abandonment of the game, as weintuitively understand it.”

To make the liberal democracy winner, Fukuyamas do everythingthat has been said in the above passage. They hit the opponent’shead whenever necessary by military intervention; they useeverything like drug – decayed culture and values, immorality,pornography, self-centered ideology etc; they falsify records,facts and historicity. Ultimately, in every sense, it is anabandonment of liberalism, as we intuitively understand it. Inthis process, Fukuyamas claim that liberal democracy has beensuccessful in exorcising spectres of Marx and thus it endshistory. Irony, however, is that it has already been proved as awishful thinking by several incidents of crisis during the post-publication period of his treatise like one in 2008. Alas! Thereis no scope of momentary respite for you Fukuyama; spectres ofMarx would continue to haunt free market economy and so-calledliberal democracy till ‘the end of history’.

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References:

1. Basu K., (1991), “The International Debt Problem, Credit Rationing and Loan Pushing:Theory and Experience”, Princeton Studies in International Finance, No.-70,International Finance Section, Department of Economics, PrincetonUniversity, Princeton, New Jersey.

2. Darity, W., Horn B. (1988), “The Loan Pushers: The Role of Commercial Banks in theInternational Debt Crisis”, Cambridge, Massachusetts, USA

3. Derrida J. (1994), “Specters of Marx, The State of the Debt, the Work of Mourning and theNew International”, Routledge (Translated version from the French by Peggy Kamuf), NY and London

4. Fukuyama Francis (2006), “The End of History and the Last Man”, Free Press, New York (Paper Back edition)

5. Fukuyama Francis (1989), ‘The End of History?’, The National Interest, USA

6. Garrett Hardin , “The Tragedy of the Commons”, Science, New Series, Vol.162, No. 3859 (Dec. 13, 1968), pp. 1243-1248

7. Javier Auyero (2001), “Poor People’s Politics: Perónist Survival Networks and the Legacyof Evita”, Duke University Press, Durham & London , 2001

8. Kindleberger C. (1989), “Manias, Panics and Crashes: A History of Financial Crisis”,Basic Books (Reprint), New York,

9. Kraft Joseph (1984), “The Mexican Rescue”, New York Group of Thirty, USA

10. Magnus and Cullenberg (1993), “Editors’ Introduction”, in JacquesDerrida, ‘Specters of Marx: The State of the Debt, the Work of Mourning and the NewInternational’, Routledge

11. McFate K.,Roger L., William J.W. (1995), “Poverty, Inequality, and theFuture of Social Policy”(Ed), New York: Russell Sage.

12. Nudler J. (1996) as quoted in Javier (2001)

13. Ostiguy Pierre (1997), “Perónism and Anti-Perónism: Social-Cultural Bases ofPolitical Identity In Argentina”, University of California at Berkeley,Department of Political Science, USA

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14. Ratliff William and Calviño Luis Fernando (2007), User Guide, 20THCentury Argentina, The Hoover Institution Archives

15. Sachs Jeffrey D (1989), “Developing Country Debt and Economic Performance”(Ed), A National Bureau of Economic Research Project Report, Vol-1,University of Chicago Press, London.

16. Schumpeter Joseph A. (1942), “Capitalism, Socialism andDemocracy”, Harper Perennial Modern Thought, New York

17. World Disasters Report ( 2011), Overseas Development Institute, UK

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1Notes:

1. Francis Fukuyama was deputy director of the State Department's policyplanning staff and former analyst at the RAND Corporation. This article isbased on a lecture presented at the University of Chicago's John M. OlinCenter

2 The National Interest, founded in 1985, is an American journal on US foreignpolicy. The objective of the journal is declared clearly as follows: “TheNational Interest seeks to serve this country’s wider national interest.”

3.3 See http://www.history.com/this-day-in-history/peron-deposed-

in-argentina5.

4 Though the word ‘multi-national corporate’ was not used by Marx, but theessence is the same when he said the following:7. The bourgeoisie has through its exploitation of the world market givena cosmopolitan character to production and consumption in every country. Allold-established national industries have been destroyed or are daily beingdestroyed. They are dislodged by new industries, whose introduction becomes alife and death question for all civilised nations, by industries that nolonger work up indigenous raw material, but raw material drawn from theremotest zones; industries whose products are consumed, not only at home, butin every quarter of the globe. In place of the old wants, satisfied by theproduction of the country, we find new wants, requiring for theirsatisfaction the products of distant lands and climes. (Marx & Engels,Communist Manifesto)8.

5 The apologetic phrases used to deny crises are important in so far as theyalways prove the opposite of what they are meant to prove. In order to denycrises, they assert unity where there is conflict and contradiction. They aretherefore important in so far as one can say they prove that there would beno crises if the contradictions which they have erased in their imagination,did not exist in fact. But in reality crises exist because thesecontradictions exist. Every reason which they put forward against crisis isan exorcised contradiction, and, therefore, a real contradiction, which cancause crises. The desire to convince oneself of the non-existence ofcontradictions is at the same time the expression of a pious wish that thecontradictions, which are really present, should not exist. (Marx, Theory ofSurplus Value)

10.11.6 However, the present author does not consider that the mechanism of sovereign

debt operations is based on these three options only. The IBRD plays animportant strategic role to manipulate national governments in fulfilling theobjectives of developed nations. Role of the IDA is an example. Since, thisis beyond the scope of this article that point is not discussed here.

13.14.

15.16.17.