23 June 2009

The market and the future of Eastern Europe, from 1989

In the summer of 1989, just as the old order in Eastern Europe was beginning to disintegrate, left wng activists and academics discussed the way forward at a conference in Oxford. Here are the notes giving my perspective at the time•.

All the time we are told that only the market can solve problems
of Eastern economies. Yet three economies which have gone
furthest in direction of market, Hungary, Yugoslavia and China
have all been experiencing economic crises, although of
different sorts.


Over only got 20 minutes to summarise what I recently wrote in a
25,000 word article, so I will only deal with what I would call
the four great myths.

(1) The myth of the market as a smoothly functioning mechanism
for relating the supply of goods to the demand for them. This
myth is often expressed in talk of ''consumer sovereignty'', of
''economic democracy''.

It paints picture of market as allowing people who want goods to
send out price signals which cause producers to turn our what is
desired when it is desired.

This is not a picture of what we might call actually existing
capitalismœ, with it monopolies and oligopolies. It is at best a
picture of capitalism in Adam Smith's time or of marginal partsÜh
of the present wold system, the where a mass of small farmers
continue to produce foodstuffs.

But even then it was not a system in which signals caused supply
and demand to coincide. For production always takes place before
consumptions, even if only by a matter of months as in farming.
Food is produced today. If there are shortages prices rises. But
the increase in production to match these prices does not occur
until next year. Hence the cyclical nature of production even
in farming.

That is why almost every actually existing capitalist state
intervenes to try to overcome the crises of the market.
According to a Financial Times report on Thursday, subsidies for
farming in the OECD as a whole in 1988 are $157 billion, or 45
per cent of total agricultural output.

When we talk about more advanced forms of production, modern
industrial production, the discrepancies between supply and
demand can and do get much grater. It takes five to ten years to
get a modern car or aerospace plant into operation. Yet no©one
knows what the price of oil will be in two years time, let alone
ten years time.

Such a system necessarily end up in rival firms responding to
price signals by building plants in competition with each other.
The result inevitably is, at some point over accumulation,Üh
production trying to expand faster than the inputs of raw
materials, skilled labour and finance. ?The result then is
either a classic crisis of overproduction, as we saw in 1974©6
and the early 1980s, or state intervention to close down some of
the capacity in order to let the rest prosper.

ie market leads to cyclical crises, huge, painful and very
wasteful adjustments of supply and demand.

(2) ”Second myth
That the market causes the capitalist firm to be as efficient and
innovative as possible.•”•

Most Western economists simply take this for granted, for their
economics looks at the interconnection between firms, not the
internal functioning. Their assumptions are then taken for
gospel truth by Eastern European economists who have looked at
the internal functioning of their own enterprises.

But what material there is on the internal functioning of Western
firms points to a huge proliferation of waste, eg Harvey
Leibenstein's calculation of up to 50 per cent waste in terms of
labour inputs.
Look for instance at David Halbersham's recent book on the
American motor industry or recent Wall STreet journal articles
on IBM. Look also at earlier material, like the VAnce Packard
stuff of the 1950s. Üh
There is a reason for this waste.

Modern capitalism is not small firms, but giant firms, and theses
giant firms are absolutely aware of the danger to themselves of
getting caught inthe crises of the market. They seek to protect
themselves by non©productive expenditure©advertising, marketing,
bribery, military contracts, if necessary war.

So vast non productive expenditures, according estimates by
Mike Kidron 20 years ago 50 per cent of US GNP,, and vast waste
inside corporations as they a cushioned against immediate

(3) ”Third myth • œThat Eastern economies are qualitatively
different to those of rest of world.

But in reality there is a continuum in terms of state ownership,
from US at one extreme through South European states like Italy
and Spain, then through many third world states to USSR.

Why? Because crisis of 1930s led many more backward capitalisms
to turn to state to protect them against immediate market
competition from more advanced imperialisms. Just as the
advanced capitalist firms were using non©productive expenditure
to protect themselves, so the more backward capitalisms combined
these with state ownership and control.Üh
But these states could not opt out of world system. HAd to find
means to protect themselves. Some key commodity they sold to
rest of system, or huge military expenditures to defend
So Russian bureaucracy spends twice the proportion of its GNP on
arms as its American rival. It has to have huge heavy industry
sector to back up its arms spending.

Civilian consumption and real wages of workers are necessarily
cramped as a result. Estimates by deputy head of USSR unions
suggest that only 35 per cent GNP goes on wages and salaries.
Sselyunin shows that consumer goods fell from 60 per cent of
output in 1928 to 25 per cent in 1985.

He says picture is one of an ''economy..working more and more
for itself, rather than for man.''
The similarity of this with Marx's description of capitalism
should not need commenting: ''accumulation for accumulation's
sake, production for the sake of production''
For a period they could develop under behind the carapace of the
state in a way which would not have been possible otherwise. But
the unproductive expenditures necessarily began to sap the
dynamic of economic development inthe long term.

These countries also affected by something else. Mistakes in
investment policy in the more advanced states were magnifiedÜh
inthe more backward states trying to compete with them.

THe Eastern European states, near one extreme of the continuum
were the most affected by these. Eg half Us missile projects are
eventually abandoned, with waste of billions. We should expect
same number rot be abandoned in USSr, but impact to be twice as

(4)”Fourth myth: that the market is the way forward in EAstern
Europe, or, for that matter , for socialists in West.•

For those who want to reform the system in order to preserve it,
the turn to the market is an enormous gamble.

For can the industries built up behind closed national boundaries
survive in the face of competition from the giants of US, West
Europe and Japan? AT a time when American giants have difficulty
in the face of Japanese giants there is certainly no guarantee.

Direct impact of market competition throughout whole USSR economy
might well be to create huge black holes.

So, just as trend to protectionism in US and Europe, no great
rush to embrace world market in USSR.

But without world market you are talking of trying to get
competition within USSR. But to match world productivity USSR
firms have to be similar in size to great western firms. \but
this means they necessarily have a monopolist or semiªmonopolistic position inside USSR. Hence way in which relaxation
of controls over enterprises last year led to firms raising
prices and producing more profitable goods, without regard to

It is worth emphasising there are economic, as well as simple
conservative political pressures, which lead burst of economic
reform in Eastern Europe to give way to shifts back to central

Yet the limitations of the market are also beginning to lead
some people in the USSR to look in different direction, not to
market as such but to the global priorities of the economy.

As long as ago as 1957 Kalecki suggested that what was wrong in
Poland was not so much the use of the plan as against the
market, but the mistaken character of the plan, the
disequilibrium which flowed from overambitious investment.

Today in USSR some economists beginning, under the impact of the
mass awakened demand for better consumption, to ask the same

eg scientists who recently wrote ot Izvestia protesting at hugeÜh
investment in Western Siberia jointly with Wetern firms, saying
it would destroy chances of raising living standards and cut
world price of out puts so as not to make a profit.

Let's return to Marx ideal:

''In bourgeois society living labour is but a means to increase
accumulated labour. In communist society, accumulated labour is
but a means to widen, to enrich, to promote the existence of the

But we cannot get there without revolutionary action to rest
control of the market from ruling classes, east and west. And the
ideology of the market is designed to stop us doing so

The outbreak of the 2007 crisis: talk at Historical Materialim weekend, November 2007

Transcript of talk at Historical Materialism weekend in November 07

II want to start by saying that a couple of times in the pest I’ve been on platforms debating with Bob Brenner. On this occasion I agree completely with his conclusions even if I come to this conclusion by a rather different path to him.

I want to start by looking at predictions and so see whether they have fitted or not. If you are a Marxist it is sometimes rather disturbing to look at what you said ten or 15 years ago. My first major attempt to produce something in Marxist economics was a series of articles in International Socialism Journal which later appeared as the book Explaining the Crisis. I wrote these articles in 1981-2 as we were going through the second of the crises which have characterised the world since 1975. We have been through two more major crises since then.

My conclusion essentially was this. Capitalism inbuilt features included its cyclical movement --- the business cycles, the slumps and booms, the ups and downs, that Marx described.

There were also two long terms trends. First, there was the tendency of the rate of profit to fall, which Marx argued was counteracted by the devaluation of capital through the crisis. Second, there was the concentration and centralisation of capital

The British Marxist—or rather South African-Israeli-British---Marxist Mike Kidron made the point that the tendency to the concentrations and centralisation of capital, with individual capitals getting bigger and bigger and representing a bigger part of the world system –makes kit more difficult over time for capitalism to solve it crisis by the devaluation of capital through crisis. This is because the units of the system become so big, that any that go out of business in the crisis create the danger of what he called “black holes”, whereby one giant firm goes down and pulls others down with it. The unprofitable firms go out of business causing the profitable firms that supply them also to go out of business. As capitalism gets older this leads firms to put pressure on the state to try to stop devaluation through crisis taking place, regardless of what the capitalist ideology says.

Mike argued the possibilities of doing this began to come to an end in the 1970s. Then you are faced with a situation where capitalism, still unable to solve its problems by devaluation, enters a period of low levels of accumulation, low levels of profitability,

My conclusion in 1982 was essentially we were in a period, a long downturn of capitalism —I don’t like talk of up waves and down waves, that is far too mechanical. Kidron spoke of ageing capitalism, it had become sclerotic, it no longer had the flexibility to solve its own problems by its own inbuilt mechanisms, and that therefore we were faced with a long period of crisis. I rephrased that to say crises because in this process two things happened. You had minor devaluations of capital. And you had increased pressure on workers, on wage and so on—and increasing rate of exploitation, as is shown in the graphs. I nevertheless argued this would not be sufficient to clear out the system and open up the way for a new period of expansion. I wrote it would require the bankruptcy of two or three major economies to clear out sufficient of the old capital from the sys tem for the system to revive.

Looking back at what I wrote, I think I underestimated the capacity for there to be booms of five or six years in particular parts of the capitalist system in these period. We have to be honest. There was a recovery from the crisis of the 1980s to some extent in the US, particularly in Japan and in Germany. There was a recovery from the crisis of the 1990s towards the end of the 1990s. And clearly there has been a whole new area of capital accumulation in China over the last 20 to 25 years.

Nevertheless, the central point I still want to persist with is that capitalism still faces the central problem of, if you like, the weight of the past, of past accumulation which it find difficult now to write off. It can past the buck. Firms get into trouble and the central banks move in to rescue them. But the costs of doing so are spread out among the system.

So the first graph I want to show you was produced by two people working for the ~IMF two years ago. They produced a major study of saving and investment through the system as a whole. What is important is that both saving and investment go down. But if you look at it more closely, the line for investment is for gross investment as defined in normal capitalist terms, that is, it includes things like housing—even though in reality housing is a form of consumption. If you were to take in terms of productive investment, what you would find is a long term decline, so that is now considerably less than global savings. Global savings are effectively surplus value created on a world scale, and it is less than global investment.

The second feature worth looking at is the rate of profit, which Bob also talked about. These are the figures for the US.

manufacturing nonfarm/non man nonfinancial corpns

1948-59 0.250 0.110 0.143

1959-69 0.246 0.118 0.150

1969-73 0.166 0.109 0.108

1969-79 0.135 0.107 0.103

1979-90 0.130 0.094 0.090

1990-2000 0.177 0.107 0.101

2000-2005 0.144 0.091

If you looked at the figures for Germany, for most western countries and Japan they would show to a very large extent a similar picture. You find a big fall in the rate of profit from the late 1960s until 1982. Then from then onwards a recovery in the rate of profit, then a lowering of the rate of profit, then recovery of the rate of profit again, then lowering of the rate of profit again. But at no point before the year 2000 does it arise above the level of the mid 1970s that provoked the first major post war crisis. So you have recovery on the basis of increased exploitation, and also, with crisis of the early 1990s and the crisis of 2002-2 were distinct from all the previous capitalist crises of the post war period in the sense that they were accompanied by major bankruptcies. There was a study of bankruptcies. There is a study of bankruptcies, the Bankruptcy Year Book, which points out there were no major bankruptcies in the United States between the 1930s and the Grand Pen bankruptcy which was 1970, and that was an isolated occurrence. But if you look at the last few crises you find a growing number of big bankruptcies in all the major economies. And you also find the bankruptcy of one major economy, and a number of minor economies – that is the bankruptcy of the old USSR. This had some effects for the system as a whole.

Despite these things, the rate of profit for the system as whole had not recovered by the year 2000 above the level. If the rate of profit does not recover, as Bob said quite rightly, then there is a problem with investment. The incentive to invest is not sufficient to absorb all the productive capacity of the system.

This does not mean there is no productive investment. Rather, there is this mass of capital wondering round the world with internationalisation of the financial system looking for any opportunity where it seems there are profits to be made. Usually these opportunities are not productive – as with the housing boom and as with previous speculative booms like the stock exchange boom of the late 1980s, and stock exchange and dot.com booms of the late 1990s. Occasionally they will focus on some area where they believe there is profit to be made by productive investment. The big case was the telecoms boom that took place as the same time as the dotcom shares boom of the late 1990s. The expenditure on that was amazing.

The crisis of the early 2000s began before the 9/11 2001. The week before 11 September the Financial Times had a series on the telecoms industry. It calculated that $1000 billion dollars worth of optical cables etc had been laid down by the telecoms industry in the expectation of somehow making profits from it. The value of that much investment was wiped out in the crisis—and in Britain one great bastions of the British engineering industry, GEC-Marconi was also effectively wiped out. In the US we saw Enron and WorldCom wiped out in that crisis.

What was wiped out was investment on the expectation of profits which could not be achieved.

The latest bubble has been a bubble in the United States, but also accompanied by a drive of investment towards China, which I will return to later.

The third thing which has to understand is that when we talk about internationalisation of the system does not mean the decoupling of the giant corporations from the state. There is something called the Transnationality Index produced every year by UNCTAD which measures the proportion of assets, sales and workforce of the major corporations that are based in one country. Of the top 100 corporation’s world wide, on average, despite all the talk about globalisation, half the assets of each of those corporations are based in one country. That means that what happens in that country is central to their profitability and so forth. It is also quite interesting that the for United States multinationals the average is greater than half—in other words US multinationals are on average less multinational than others. The most multinational are the ones based n small countries – like Sweden, Holland. And even there the figures are deceptive. The other assets of multinationals based in Sweden are likely to be in the neighbouring Scandinavian countries, of those in Holland in Germany or sometimes in Britain.

So declining world wide profitability, leading to declining rates of accumulation, also experiences bursts of frenzied investment in one part of the world or another. So it seems that the engine driving the system forward is first in one part of the world, then in another, only for the engine then suddenly to falter. The Japanese engine faltered 15 years ago, just as the American Congress were worried that Japan was going to overtake the United States in seven or eight years.

Faced this situation the states are not something separate from the system. They intervene in the system. So when we talk about an economic crisis, this reflects itself politically. I thnk it does so in two ways. It is very difficult not just to speak in terms of countries. It is also very difficult not just to speak in terms of corporations. We have to say the corporations based in particular countries use their governments to offload the impact of the economic crisis on to corporations based in other countries. That is politics becomes global politics.

Something else also happens. The word “neoliberalism” is very much a misnomer in describing of how governments respond in this situation, because they are under intense pressure from corporations to intervene to prop them up. Therefore there is a paradox. During what is sometimes called the “Keynesian period”, or sometimes the “Fordist period” – I prefer the phrase the “state capitalist period “--of the system from the 1940s until the mid 1970s, the world economy was expanding, most national economies were expanding, and very rarely did states intervene with the classical Keynesian methods of pumping money into the economy to keep it expanding. During what people tend to call the “neoliberal period” of the last 35 years, governments have intervened in this way much more than they did in the previous period.

When they do so it can produce crises inside governments, not merely between governments. People in Britain who have been watching the spectacle of the Governor of the Bank of England hauled over the coals by the big voices in the City of London for not intervening over Northern Rock earlier. Whatever they say in theory, the big figures in finance and industry look to government intervention in such a situation.

The rise of China is another factor in the situation. People sometimes see as it as meaning we are moving out of the long period of crises is.

This is depicted in the graph.

You can see that China is rising very quickly within the system.

What are not called the BRICS—Brazil, Russia, India, China and South Africa—are shown as just abut reaching the level of the European Union 15 (that is, before its expansion into Eastern Europe) on terms of output.

But I must give a warning on these figures. The IMF, the World Bank and OECD tend to give figures for the size of national economies these days in terms of “PPP” – that is in terms of how much can be bought internally with the currency. These are very useful figures for providing a view of how much people are actually consuming, since at current exchange rates a very important range of goods—staple foods, transport, personal services—are much cheaper in some countries rather than in others. But in terms of what matters to capitalism as a system, they are misleading. If you want to know living standards are in a country use PPP. If you want to know what capitalists and states can buy in the world system, you have to use exchange rate figures. And therefore exchange rate figure for China (and to the Brics as a whole) would be much lower than that shown in the graph – that is at perhaps a third of the EU 15 level. Indeed, a recent recalculation for the Asian Development Bank of the Chinese economy in PPP terms shows it as being half the size as shown in the graph. (it shows it as being about $4 trillion as opposed to the US’s 13 trillion in 2005 and would lower the graph line for both China and the BRICS a lot).

I will argue that the rise of china is not yet sufficient to change the dynamics of the world system. There are people who say the rise of China can solve all the problems created if there is a crisis in the United States or Europe. I would argue palpably from the figures that the Chinese economy is just not big enough to carry that through.

What is more, an important fact about the rise of China is that it represents a further destabilising element in terms of the state system of capitalism. Capitalists see need the state to intervene to deal with the threat of crisis.. But the instability makes it much more difficult for states to do so effectively..

An important element on instability lies in tango for two between the Chinese and the American economies. The Chinese economy has a surplus of vast sums of money which are lent to the United States to allow American consumers and the American state to buy; things to keep the US economy running. This is an element of instability in the system.

A couple more things. This graph shows the rate of exploitation of the advanced economies over recent decades. I t shows the proportion of wages in national value added. What can be seen is that the rate of exploitation everywhere has been rising. This is one of the important factors countering the fall in the rate of profit, permitting profit rates to rise by the year 2000, so that they had made up half of what they had lost between the late 1960s and 1982.

But, here comes the crucial point in terms of the system. As Tony Cliff used to say, capitalism is caught between two Scylla and Charybdis, the two mythical monsters in Homer’s The Odyssey. Cliff always used to argue one monster was the falling rate of profit, the other was the reaction to the falling rate of profit by cutting wages. If the rate of profit does not raise investment high enough to produce a new spell of investment and wages are cut, then there is a problem of a shortage of total demand in the system to keep the system going forward. This is precisely what is shown by the figures given earlier for global saving and investment. If gross investment is only just about saving .and productive investment is below savings, then there are funds that cannot be absorbed by the system in such a way as to produce more surplus value. But they can be absorbed for a time if the sys tem finds some way by which people can borrow to buy what the system is producing.

This leads us straight to the subprime mortgage crisis in the US. What has been happening effectively for the last five years is that American financiers conned themselves into the belief that poor people in the US could borrow enough money to buy the excess produced n a world . This is a form of the old pyramid scam, what economists sometimes call a Ponzi scheme, the illusions that you give money to people and they buy things off you and somehow you are going to end of better off than before.

We are seeing that come unstuck, but not only in the United States. It is coming unstuck in terms of China. The figures for China for saving and investment are quite incredible. For the world as a whole officially defined gross capital for the world is above saving, for China officially defined gross capital formation is below saving,. This leaves a vast excess of domestic saving over investment which is then sent across the Pacific to be lend in the American economy to keep the whole system running. That is why the situation today is very serious.

Riccardo Bellofiore at an earlier meeting used the phrase “privatised Keynesianism”. Keynes imagined you could drop pound notes from a helicopter and this would keep the economy working through a crisis. Instead of dropping pound notes from a helicopter, the United States financiers have been giving away houses in the belief that somehow they will get something back from it. That creates a very serious crisis.

Faced with it, the options for capitalists are very limited. Martin Wolff writing in the Financial Times puts forwards three options. In his case it is a question of once bitten, twice shy because he wrote at the time the Asian crisis of ten year ago began in Thailand that it was only a “hiccup” in the system, of no importance whatsoever. This time he does see the importance of what is happening. Using the figures on savings and investment from the IMF he is saying effectively there may be no way out of the crisis but for the American state to bear the burden of all the loans that have been given to the American population. But from a Marxist point of view that really means that the American state raises the wages of the American workers so that they can buy the goods which have been supplied by capitalism. That is only another way of saying the only way out of the crisis is not to raise the rate of profit but to lower it. This is very serious in terms of the system.

That does rule out completely the possibility of short term solutions. When crises began to develop in 1987 and 1997, they managed to defer the crises by two to three years by government action. They may be able to do that. I don’t believe they can defer it indefinitely because of the contradictions of the system.

There are longer contradictions which will be there even if they have a short crisis and they find some way out of it. There are two long terms problems.

The rise of China is putting enormous pressure on all the other capitalist countries . Their response to it is to increase the rate of exploitation, and that then become a game that puts the pressure on every other country to do the same. It is very clear if you read the various documents produced by the European Union, European business committees, agencies and so forth, Europe can only survive in global competition—they mean European capital in global markets—against American, Chinese and still Japanese capital by increased pressure on welfare, on wages, on hours and so forth. All the measures that are rather misleading entitled neoliberalism – they are really the measures capitalism needs in the current phase of the system regardless of the ideology of those who run the system—all these measures are built into the current phase of the system. So even if we see through this crisis, we are not going to see an upturn in living standards and conditions such as those of us who are old enough witnessed in the 1950s and 1960s.

The last point is that along with this there will be increased clashes between the great capitalist powers in which the great corporations are based , clashes which can be quite dramatic, can take the form of proxy wars elsewhere in the world—in some ways the Iraq War is a proxy war by the United States in order to be able to exert pressure on Europe, Japan, Russia, and China. There will be more such things. In such a situation any notion that capitalism in its present phase is somehow peaceful is nonsense.

My last graph is for government expenditure which shows it as rising not only over the last two centuries. It but over the last two decades, through the phase of so called neoliberalism. There has been more government involvement, particular with the growth of US arms spending over the last six years. According to one calculation by one of the writers in Monthly Review, US arms expenditure is not two and half or three percent of GNP. He puts the figure at 5 percent. That is there is militarisation, not in terms of great powers – I am tempted to say “as yet”—but in terms of the most powerful great power, the US, trying to protect its multinationals in this situation by waving the big stick. In order to get the other powers to accept what it says in the crisis.

I cannot see any easy way for the system to get out of the long period of economic downturn it has been going through. To get out of it, just raising the rate of exploitation is not enough. It requires some of the giants of the system to go out of business to clear the way for others. I don’t think the system in its present phase can tolerate this. The other multinational corporations can’t tolerate it. Therefore we are going to see this crisis, emergence from this crisis, possible another boom somewhere in the world, then another crisis and all the time a tightening on the people working within the system.

The Aztec Exhibition 2002

The Aztecs exhibition at London’s Royal Academy will stun and perplex many people who see it. There are displays of magnificent sculptures from pre-Hispanic Mexico.

There is a beautiful filmed reconstruction of the Aztec capital, Tenochtitlan, one of the biggest and most magnificent cities in the world before the Spanish conquistadors tore it down to build Mexico City.

But there are also written descriptions of how many of the sculptures and building were used from gruesome religious rites in which captives were lined by the thousands, their hearts cut out, their blood drained into giant vessels and their flesh eaten.

How are the two sides of Aztec civilisation to be reconciled? The notes to the exhibition describe the succession of civilisations in Mexico and Guatemala over a 2000 year period and provide a chronology of the rise of the Aztecs in the 13th to 16 centuries AD. They contrast the figurative art of early civilisations with the realist sculptures of the Aztecs. But they do not account for the mixture of refinement and barbarity that is on show.

All the ancient civilisations originated, like modern capitalism, out of a combination of human ingenuity on the one hand and of crude exploitation on the other. Ingenuity led to new ways of producing wealth, especially the food needed for people to ward off malnutrition and starvation. Exploitation channelled the new wealth into the hands of minority ruling classes who used it to live in luxury, to creating elaborate structures for themselves, while the mass of people continued to lead lives of poverty and toil.

The Aztecs originally were foragers – people who surveyed by gathering wild fruit, nuts and roots and by hunting. They were an egalitarian, classless group. Early in the last millennium they began moved southwards from their original home region to the area around the Valley of Mexico. There they came into contact with peoples settled into villages and towns who sustained themselves by growing crops. The Aztecs began to copy their ways, but were subjugated by the rulers of one of the towns and forced to hand much of their harvest to them. Eventually they rebelled and fled, in 1322 AD, to marshy islands on one of the valley’s lakes.

Here ingenuity led to more advanced ways of growing food, by covering rafts of branches and roots with earth to create chinampas or floating gardens. Over the next century, the increased productivity of the Aztec cultivators provided the means to building Tenochtitlan as a city and to wage war successfully. A people who had once been subjugated began to subjugate others until Tenochtitlan was the centres of huge empire, extracting wealth as tribute from subject peoples

The growth of the empire did not, however, benefit all the Aztecs. It was accompanied by a polarisation between a small aristocracy of warriors and priests headed by a royal family one the one hand, and the mass of toilers, who lost their rights as they were reduced to serfdom.

A transformation in religious beliefs and ceremonies took place along with this. The Aztecs had a set of beliefs about gods associated with life as foragers and cultivators– with fertility, the seasons, the rising of the sun, rain and water.

But an emerging aristocracy needed religious sanctity for its power. It found it in the cult of Huitzilopochtli, the humingbird god. It ascribed to him a role similar to that given to Jehovah in the Old Testament, as a god of war leading a chosen people through various hardships to their present eminence. His supremacy was embodied in the temple towering over Tenochtitlan.

The cult involved rites of human sacrifice. This had existed in the preceding civilisations of the region, as in many early urban civilisations elsewhere in the world (early ancient China and early ancient Egypt, for instance). But as in these other cases, there were signs of the practice dying out. The god Quetzalcoatl had supposedly brought it to an end among the Toltecs half a millennium before. The rulers of the Aztecs now revived it on massive scale, claiming that unless Huitzilopochtli and his fellow gods received repeated libations of human blood the sun would stop rising. The blood was to come from the peoples conquered by the Aztecs.

These bloody rites fulfilled a triple function. They glorified the conquering, military role of the ruling class. like gladiatorial conquests of ancient Rome, they provided a ghoulish spectacle to distract the Aztec serfs from their own discontents. And they terrorised the subject peoples into submission

As in other similar societies, the costly superstructure of ruling class power began to have a debilitating effect on the agricultural output of the serfs, and series of famines beset the Valley of Mexico in the last decades of the 15th century. The rulers reacted by staging ever more spectacular sacrificial ceremonies – even waging mock battles against the subject peoples (by agreement their local rulers) so as to provide an endless stream of captive victims.

Bitterness at Aztec rule grew ever more intense among the subject peoples and classes. A widespread myth arose that the god Quetzalcoatl would return from exile in the east to bring to an end the blood sacrifices, the tribute and the oppression. Interestingly, the lower class artisans who made religious sculptures produced many more of Quetzalcoatl than of the bloodthirsty Huitzilopochtli.

Then in 1519, as the empire and the bitterness were both at their height, Cortes landed with a small band of Spanish soldiers intent on establishing an empire of his own. To some it seemed that here was Quetzalcoatl returned to free them from their servitude. The oppressed peoples flocked to fight for him against the Aztec rulers - only to find with a couple of years that Spanish oppression was as bad as the Aztecs had been. The Spanish even had their own version of human sacrifice to intimidate opponents of their rule – an auto de fe for burning heretics alive in what had been the Aztec market place.

• For an easily accessible introduction Aztec history and society, read Friedrich Katz’s Ancient American Civilisations