http://paeditorsblog.blogspot.com/
C U B A
Havana. March 9, 2009
REFLECTIONS OF FIDEL
A meeting that was worth it
AT the end of the Globalization and Development event, with the presences of more than 1,500 economists, outstanding scientific figures and representatives of international organizations meeting in Havana, I received a letter and a document from Atilio Boron, a Doctor of Political Science, senior professor of political and social theory, director of the Latin American Program for correspondence courses in the social sciences – PLED, as well as other important scientific and political responsibilities.
Atilio, a firm and loyal friend, had participated on Thursday the 6th in the “Roundtable” Cuban television program together with other eminent international figures who attended the Conference on Globalization and Development.
I found out that he was leaving on Sunday and decided to invite him to a meeting at 5 p.m. the day before, Saturday, March 7.
I had decided to write a reflection on the ideas contained in his document. I will use his words in the summary.
“…We find ourselves facing a general capitalist crisis, the first of any magnitude comparable with the one that broke out in 1929 and the so-called ‘Long Depression’ of 1873-1896. A crisis that is integral, of civilization and multifaceted, whose duration, profundity and geographical reach will surely be of a greater scope that the ones that preceded it.
“It is a crisis that goes far beyond financial and banking aspects and is affecting the real economy in every department. It is affecting the global economy, and goes far beyond the borders of the United States.
“Its structural causes: it is a crisis of overproduction and at the same time of under-consumption. It is no coincidence that it broke out in the United States, because this country has been living for more than 30 years from external savings, from external credit and these two things are not infinite: companies got into debt over their heads; the state also got into debt over its head in order to deal with not one but two wars, and not just without increasing taxes, but cutting them. Its citizens are systematically pushed, by way of commercial publicity, into getting into debt in order to sustain exorbitant, irrational and wasteful consumerism.
“But in addition to these structural causes others should be added: the accelerated financialization of the economy, the irresistible tendency to foray into increasingly risky speculation operations. With the discovery of capital’s “fountain of youth,” thanks to which money generates more money based on the value given to the exploitation of the workforce, and taking into account that enormous masses of fictitious capital can be achieved in a matter of days — or weeks, at the most — capital’s addiction is leading it to set aside any calculations or any scruples.
“Other circumstances favored the outbreak of the crisis. Neoliberal deregulation and liberalization policies made it possible for the most powerful actors roaming the markets to impose the law of the jungle.
“Enormous destruction of capital on a world scale, characterizing it as a ‘creative destruction.’ On Wall Street, this ‘creative destruction’ meant the devaluation of companies listed on that market to reach almost 50%; a company that was previously worth $100 million in capital on the market now has $50 million. A fall in production, prices, wages, purchasing power. ‘The financial system as a whole is about to explode. We already have more than $500 billion in banking losses, a billion more is to come. More than a dozen banks have gone bankrupt and hundreds more are expecting the same fate. At this point, more than $1 billion has been transferred from the FED to the banking cartel, but $1.5 billion more will be needed to maintain the liquidity of banks in coming years.’ What we are seeing is the initial phase of a long depression and the word recession, so much utilized recently, does not capture what the future holds for capitalism in all its dramatic dimension.
“Ordinary Citicorp stock lost 90% of its value in 2008. The last week in February, it was worth $1.95 per share on Wall Street!
“This process is not neutral, because it will benefit the largest and best-organized oligopolies, which will oust their rivals from the markets. The ‘Darwinian selection of the fittest’ will clear the way for new mergers and business alliances, sending the weakest into ruin.
“Accelerated increase in unemployment. The number of unemployed in the world (some 190 million in 2008) could rise by another 51 million throughout 2009. Poor workers (who earn just two euros daily) will number 1.4 billion; that is, 45% of the economically active population on the planet. In the United States, the recession has already destroyed 3.6 million jobs, half of them in the last three months. In the EU, the number of unemployed stands at 17.5 million, 1.6 million more than one year ago. By 2009, it is projected that 3.5 million jobs will have been lost. Because of their close ties with the U.S. economy, several Central American states such as Mexico and Peru, will be hard hit by the crisis.
“A crisis that affects every sector in the economy: banking, industry, insurance, construction, etc. and that is spreading throughout the international capitalist system as a whole.
“Decisions that are taken in world centers and which affect the subsidiaries of the periphery, generating massive layoffs, interruptions in the chain of pay, a fall in demand for supplies, etc. The United States has decided to support the Big Three (Chrysler, Ford, General Motors) of Detroit, but only to save their plants within the country. France and Sweden have announced that they will condition aid to their automotive industries: only the centers located in their respective countries will be able to benefit. The French minister of the economy, Christine Lagarde, stated that protectionism could be ‘a necessary evil in times of crisis.’ The Spanish minister of industry, Miguel Sebastián, is urging ‘Buy Spanish products.’ Barack Obama, we would add, is promoting ‘Buy American!’
“Other sources of the propagation of the crisis in the periphery include the fall in prices for commodities exported by Latin American and Caribbean countries, with their recessive consequences and higher unemployment.
“A drastic diminishment in remittances from Latin American and Caribbean emigrants in the developed countries. (In some cases, remittances are the most important item in international hard currency income, over and above exports.)
“The return of emigrants, depressing the labor market even more.
“This is combined with a profound energy crisis that requires the replacement of the current one, based on the irrational and predatory use of fossil fuel.
“This crisis coincides with growing awareness of the catastrophic scope of climate change.
“Add the food crisis, sharpened by capitalism’s attempts to maintain an irrational pattern of consumption, which has led to taking land suitable for producing food and allocating it for producing agro-fuels.
“Obama admitted that we have not yet touched bottom, and Michael Klare wrote recently that ‘if the current economic disaster turns into what President Obama has called the lost decade, the result could be a global landscape full of convulsion caused by the economy.’
“In 1929, unemployment in the United States reached 25%, as agricultural and raw material prices fell. Ten years later, and despite radical policies implemented by Franklin D. Roosevelt (the New Deal), unemployment remained very high (17%) and the economy could not climb out of the depression. Only World War II put an end to that stage. And now, why should it be shorter? When the 1873-1896 depression, as I explained, lasted 23 years!
“Given this background, why would we now come out of the current crisis in a matter of months, as some Wall Street publicists and ‘gurus’ predict?
“We will not come out of this crisis with a couple of G-20 or G-7 meetings. If there is any test of their radical incapacity to solve the crisis, it is the response of the world’s stock markets after each announcement or each law passed for a new bailout: invariably, the response of ‘the markets’ is negative.
“As George Soros attests, ‘the real economy will suffer the secondary effects, which are now gaining force. Given that in these circumstances the U.S. consumer can no longer serve as the driving force of the world economy, the U.S. government should stimulate demand. Given that we are facing the threatening challenges of global warming and energy dependence the next government should direct any stimulus plan toward energy savings, by developing alternative energy sources and building environmentally-friendly infrastructure.
“A long period of tug-of-war and negotiations is opening up to define how to get out of the crisis, who will benefit and who will pay the price.
“The Bretton Woods Agreements, which originated in the framework of a Keynesian stage of capitalism, coincided with the stabilization of a new model of bourgeois hegemony, which, as a product of the outcome of the war and anti-fascist struggle, has as a new and unexpected backdrop the strengthening of the gravitation of trade unions, leftist parties and states’ regulating or intervening abilities.
“The USSR is gone; its sole presence and the threat that its example could spread westward tipped the balance of negotiations in favor of the left, popular sectors, trade unions, etc.
“Currently, China holds an incomparably more important role in the world economy, but without reaching a parallel importance in world politics. The USSR, in contrast, despite its economic weakness, was a formidable military and political power. China is an economic power, but with little military or political presence in world affairs, although it is beginning a very cautious and gradual process of reaffirmation in world politics.
“China may come to play a positive role for the re-composition strategy of countries on the periphery. Beijing is gradually reorienting its enormous national energies toward its internal market. For many reasons that would be impossible to discuss here, it is a country that needs its economy to grow at an annual rate of 8%, whether as a response to the stimulus of world markets or to those that originate in its immense — only partially exploited — internal market. If that turn were to be confirmed, it is possible to predict that China will continue to need many products from Third World countries, such as oil, nickel, copper, aluminum, steel, soy and other raw materials and foods.
“In the Great Depression of the 1930s, in contrast, the USSR had a very weak insertion in world markets. China is different: it could continue to play a very important role, and like Russian and India (although these to a lesser extent), to buy the raw materials and foods that it needs, as opposed to the case of the USSR in the times of the Great Depression.
In the 1930s, the ‘solution to the crisis was found in protectionism and world war. Today, protectionism will come up against many obstacles due to the inter-penetration of the great national oligopolies in different spheres of world capitalism. The formation of a global bourgeoisie, rooted in gigantic companies that, despite their national base, operate in a countless number of countries, causes the protectionist option in the developed world to have scant effectiveness in North-North commerce, and policies will tend — at least for now and not without tensions — to respect the parameters established by the WTO. The protectionist card appears to be much more probable when it is applied, as it surely will be, against the global South. A world war driven by ‘national bourgeoisies’ of the developed world ready to fight amongst themselves for market supremacy is virtually impossible, because such ‘bourgeoisies’ have been displaced by the rise and consolidation of an imperial bourgeoisie that periodically meets in Davos, and for which the option of military confrontation is a phenomenally stupid thing to do. That does not mean that that global bourgeoisie does not support, as it has to date with the military adventures of the United States in Iraq and Afghanistan, the realization of numerous military operations in the system’s periphery, necessary for the preservation of the profitability of the U.S. military-industrial complex and, indirectly, for the great oligopolies of other countries.
“The current situation is not the same as the one in the 1930s. Lenin (said):
‘Capitalism does not fall without a social force that makes it fall.’ That social force today is not present in the societies of metropolitan capitalism, including the United States.
“The USA, UK, Germany, France and Japan settled their struggle for imperial hegemony on the military field.
“Today, hegemony and domination are clearly in the hands of the USA. It is the only guarantee of the capitalist system on a world scale. If the USA fell, it would produce a domino effect that would cause the collapse of almost all metropolitan forms of capitalism, let alone the consequences in the system’s periphery. If Washington were to see itself threatened by a popular insurgency, they would all rush to its rescue, because it is the last bastion of the system and the only one that, in case of necessity, can help the others.
“The United States is an irreplaceable actor and unquestionably the center of the world imperialist system: only it has more than 700 military missions and bases in some 120 countries, which constitute the system’s final reserve. If all other options fail, force will appear in all its splendor. Only the United States can deploy its troops and its war arsenal to maintain order on a planetary scale. It is, as Samuel Huntington said, ‘the solitary sheriff.’
“This ‘shoring-up’ of the imperialist center has the invaluable collaboration of its other imperial partners, or its competitors in the economic realm and even the majority of Third World countries, which accumulate their reserves in U.S. dollars. Neither China, Japan, Korea or Russia — to mention the largest holders of dollars in the world — can liquidate their stock in that currency because it would be a suicidal move. Of course, this is also a consideration that should be made with much caution.
“The conduct of the markets and savings-holders throughout the world is strengthening the U.S. position: the crisis is deepening; the bailouts are demonstrating their insufficiency; the Dow Jones on Wall Street is falling below the psychological barrier of 7,000 points — falling below the mark it fell to in 1997! — and despite that, people are seeking refuge in the dollar, with the value of the euro and gold falling!
“Zbigniew Brzezinski has said, ‘I am worried because we are going to have millions and millions of unemployed, many people really having a difficult time. And that situation will be present for some time before things eventually improve.’
“We are in the presence of a crisis that is much more than an economic or financial crisis.
“It is an overall crisis of a model of civilization that is economically unsustainable; politically unsustainable, without appealing increasingly more to violence against the peoples; environmentally unsustainable, too, given the destruction, in almost all cases irreversible, of the environment; and socially unsustainable, because it degrades the human condition to unimaginable limits, and destroys the very fabric of social life.
“The answer to this crisis, therefore, cannot just be economic or financial. The ruling classes will do exactly that: use a vast arsenal of public resources to socialize the losses and set the great oligopolies afloat again. Occupied with defending their most immediate interests, they lack even the vision to conceive of a more comprehensive strategy.
The crisis has not touched bottom,” he says. “We find ourselves facing a general capitalist crisis. There has not been a larger one. The one that took place between 1873 and 1896 lasted 23 years; it was called the Long Depression. The other, more serious one was the one of 1929. It also lasted no less than 20 years. The current crisis is all-embracing, of civilization, multifaceted.”
He immediately adds, “It is a crisis that goes far beyond the financial and banking aspects and is affecting the real economy in every department.”
If anyone were to take this summary and carry it in his or her pocket, read it over once in a while or learn it by heart like a small Bible, he or she will be better informed about what is happening in the world than 99% of the population, where citizens live under siege from commercials and saturated with thousands of hours of news, and real or false soap operas or fiction films.
Fidel Castro
March 8, 2009
11:16 a.m.
Is the Revolution in sight?
looks like the barge may be lifting off a sand bar...
March 9, 2009
The End of an Era: Neoliberalism and the Roots of Capitalism's Latest Crisis
by C.J. Atkins
http://dynamicmagazine.blogspot.com/
As the campaigns of Barack Obama and John McCain raced toward the Election Day finish line, the country and the world seemed to sink into a panic as the economy was collapsing all around us. Banks were going belly up, stock prices went on a roller-coaster ride, companies announced major layoffs, and Washington politicians were scrambling to point fingers and shift the blame.
How did this crisis sneak up on us? How was everyone caught off guard?
The truth is that millions of families across the country were not surprised in the least. For them, the economy was already in trouble a long time ago. What was really going on was that the economic hard-times that many working people had been feeling for years were finally starting to trickle up to those at the top. But to really understand how we got to this point, it is necessary to look back several years (even decades) to some of the trends that have come to characterize the capitalist economy. The current crisis is not something that just popped up. It is the result of more than thirty years of pursuing an economic model that has ultimately failed.
The Golden Age
In the years following World War II, capitalism in the West seemed to gain a new lease on life after the near total collapse of the Great Depression. The economy recorded higher growth each year and both big business and the working class seemed to be benefitting. Profits for capitalists were soaring higher as productivity notched upward. In the U.S., McCarthyism had stripped organized labor of some of its best leaders and tamed the unions, guaranteeing relative stability for the big corporations that dominated the economy. But even those attacks on the left could not totally destroy the victories that workers and their unions had achieved in the New Deal years. So the working class (or at least a certain sector of it) was enjoying some of the gains of this period that came to be known as capitalism’s “Golden Age”. Incomes were rising and the increasing inequality between the richest and poorest groups in society was actually reversing for the first time. The state was playing a very active role in the economy with several countries having substantial parts of their industry under public ownership. Some were starting to say that the boom-and-bust cycle of capitalism that Karl Marx had analyzed was now a thing of the past.
For some groups, of course, this Golden Age had never really been so “Golden”. In the U.S., African Americans continued to suffer from the economic and political oppression of segregation and second-class citizenship. Most immigrants, too, were excluded. Outside the advanced capitalist countries, many of the nations of Africa, Asia, and Latin America were struggling for independence, but they remained mired in the poverty resulting from centuries of imperialism.
But by the 1970s this mythical period of a new crisis-free capitalism started to unravel. The economic growth that had been the necessary glue holding together the stable class relations of the post-war period stalled and stagnation set in. The mass output of consumer and industrial goods in the 1950s and 60s was finally starting to outstrip effective demand. Markets were flooded with products as the old problem of overproduction reappeared. Inflation and unemployment shot up at the same time that productivity started to decline. The capitalist class searched for a solution as they watched profit rates trend steadily downward. On an international scale, the dominant position of the U.S. in the capitalist world economy seemed to be under strain as well. Europe and Japan were becoming major capitalist powers and the U.S. dollar’s status as the world’s currency was under increasing pressure.
Neoliberalism: The Return of Market Fundamentalism
Part of the solution they discovered was a process that has become known as financialization. Over time, more and more capital investment was gradually moved out of the “real” economy – those industries where people actually make and sell material goods and services – to the financial sector of the economy, or what is sometimes known as the “paper” economy. Activities in sectors such as banking, insurance, and investment started to vastly expand.
Occurring simultaneously with this structural shift in the economy was an ideological attack by the ultra-right. Free market fundamentalists like Milton Friedman declared that government had no place in the economy. Privatization of public companies and services was urged. The removal of government oversight of banks and corporations was said to be the best way to restore profitability and economic growth. Taxes were too high and valuable money was being wasted on social programs. Labor unions were strangling companies into bankruptcy. The free market would solve all of these problems if only the state would get out of the way. It was all a rehash of the same ideology of liberal capitalism that Marx had critiqued more than a century earlier.
Of course, the free market crowd did not truly want the government to completely get out of economic matters. They had some big tasks that only the power of the state could carry out. With the election of Ronald Reagan to the presidency in 1980, they got just the man for the job. Unions came under fierce attack, the budgets for social programs were gutted, and financial regulations were stripped away. Interest rates were sent upward to squeeze out inflation and restore the power of the U.S. dollar in the world economy. This also had the effect of shuttering plants across the nation, sending millions to the unemployment lines. Combined with this neoliberal approach in the economy was a heightening of Cold War tensions with the Soviet Union. Money was poured into the arms race. This sent government deficits and debt soaring higher than any social program ever had. It seemed the dominance of the U.S. in the world capitalist system was being restored.
The trend of decreasing inequality that had characterized the “Golden Age” was also in full reverse. Corporate CEO salaries went through the roof as working class incomes failed to keep up with inflation. Millions of families started to rely more and more on credit and debt to maintain their living standards.
The “Victory” of Capitalism
By the early 1990s, the economic and political problems of the socialist states in Eastern Europe had resulted in the collapse of the governments there and the discrediting of communist parties around the world. The neoliberal ideologists and the mass media declared that the battle between capitalism and socialism was over. According to them, Marxist ideas had been proven wrong and the “invisible hand” of the free market had triumphed. It seemed governments everywhere were starting to agree that there was no alternative to unrestricted and unregulated capitalism. Even centrist and left politicians, such as Tony Blair in the U.K. and Bill Clinton in the U.S., could be accused of abandoning any pretense of egalitarianism and continuing the pursuit of neoliberal policies. People were told that the good times were here again.
Profit rates did increase once more and consumerism was back. But much of the celebration rang hollow for millions of poor and working people. Expenditures on social welfare continued to decline over the decade and good-paying full-time union jobs disappeared. The reliance on credit that had started to appear earlier increased even more as people ran up their credit cards and took out second and third mortgages on their homes.
At a superficial level, things looked good. GDP was indeed growing and everyone was talking about the “new economy” of service and high-tech jobs. Many jobs were actually being created. These “good” times though, were only sustained by repeatedly delaying the downturns that were a basic part of the capitalist economic cycle. Financial speculation and outright gambling inflated one investment bubble after another. In the U.S., the federal government used its fiscal and monetary policies to encourage such activity in order to avoid recession. In the late 1990s, there was the so-called dot.com bubble, which saw massive amounts of capital flood into the internet and high technology industries. As that hype died down, money began pouring back into other stocks.
The deregulation and financialization madness reached new heights under the administration of George W. Bush. Since the 1970s, Wall Street had been inventing all kinds of new ways to funnel money through financial channels in order to generate huge profits. There were various kinds of derivatives, credit default swaps (CDSs), collateralized debt obligations (CDOs), and a myriad other forms of ever-more complicated financial instruments created. Put more simply, much of this was simply the cutting up and endless buying and re-selling of what in essence were just very complicated IOUs. Nothing real was being produced in this sector, yet billions of dollars were being made. Finance, which had in the past accounted for a small percentage of U.S. economic activity accounted for nearly a quarter of the country’s entire economy by the first decade of the twenty-first century.
The Bottom Falls Out
As the stock bubble began to burst and the “real” economy started showing signs of trouble with mass layoffs in manufacturing, the short-lived recession of 2001 was softened with the inflation of a new bubble. This one, which had actually gotten its start in the late 1990s, was in the real estate and housing sector. Home prices had begun to rise rapidly for several years, but they really started to take off by the early 2000s. . Millions of families who already had homes took out new mortgages to cash in on their increasing equity. Some who could afford it started purchasing two or three homes expecting to sell at a profit.
Suddenly, even families who in the past had been turned down for a mortgage because of their poor credit or low incomes were told they too could become part of Bush’s “ownership society”. A new kind of home loan, the sub-prime mortgage, was made available to millions of poor families – a large number of them African American or Latino. They were told there was no danger in taking out a mortgage that far exceeded their ability to pay or one that had adjustable rates. They could always just sell the house and make a profit if there was ever a problem. It was all presented as a safe investment. And so with all these new customers, the home construction craze continued.
But after a few years, problems started to appear. Home sales began to slump. In the suburbs, entire newly-built neighborhoods were sitting empty. In the cities, expensive condos waited for residents who weren’t coming. More and more homes were piling up. Of course, this didn’t mean that everyone now had a home and too many had been built. The fact is that by 2007 there were approximately 12 million empty unsold homes in the U.S. while at the same time about the same number of people were homeless.
Home prices, which everyone had been told could only go up, mysteriously started to fall – and fast. But there really was no mystery at all. It soon became quite clear that there was once more a situation of overproduction. The housing bubble had burst. People very quickly discovered that they now owed more on their mortgage than their house was worth. And as those adjustable interest rates kicked in, many found themselves facing mortgage payments they simply could not afford. Hundreds of thousands started to lose their homes. The fuse was now lit for a major economic crisis.
As these families started to default on their mortgages, the effects spread throughout the economy. Like all of those very complicated IOUs discussed above, these mortgages had been split up, packaged with other loans and debts, and resold. They were sold to other banks, to mutual funds, to pension funds, to other companies, to international banks, to foreign governments. When the mortgage doesn’t get paid by the homeowner at the bottom, the effect goes right up the chain to every bank, company, or investor that holds a piece of it. Everyone is left with a little sliver of a loan that will never be paid back.
It took several months to fully develop, but by the fall of 2008 the effects were clear. Banks and firms that had invested heavily in the subprime mortgage mess were in big trouble. Lehman Brothers went under as the invisible hand did its job. Other banks panicked. They refused to make loans to one another, businesses, or consumers out of fear they would never be paid back. Credit markets rapidly froze as lenders held tight to their cash. The world’s biggest insurance company, AIG, teetered on the brink and mortgage giants Fannie Mae and Freddie Mac looked ready to collapse.
Free market mythology had brought capitalism to the edge of an abyss. It became obvious to almost everyone that if the government did not act, the economy could crash. And so the bailouts began. Billions of dollars of taxpayer money poured into the banks to “recapitalize” them. Many were effectively nationalized. In some countries, they actually were. State intervention in the economy was seen by all, even Bush, as unavoidable. In the election, McCain was left without an economic leg to stand on as his message of deregulation and tax cuts seemed out of touch with reality.
Bush and Paulson offered what has been called “socialism for the rich” but did not bother to throw any kind of lifeline to working people. Their half-hearted actions in the fall did little to resuscitate the sinking economy in any meaningful way. The Obama campaign, already riding a wave of popular dissatisfaction with eight years of war and mismanagement, was pushed over the top by an economy that was spiraling downward more every day. As December and January rolled on, little was done by the lame-duck Republican administration. Companies that had already been in trouble were now in even more dire straits. They were hemorrhaging jobs, with over 100,000 lost in a single week in January.
As Obama takes office, he inherits a capitalist economy in ruins. The veil over the thirty year myth has been lifted for all to see – neoliberalism has failed. No matter what Republican politicians or Fox News may claim, socialism is not on our immediate horizon to be sure, but a major overhaul of capitalism is. The period of neoliberal dominance coincides almost exactly with that of the ultra-right in our country. Now the political and economic dynamics have shifted dramatically. It falls to those of us on the left to assert ourselves into that reform process and help shape the next step for our country and the world.
C.J. Atkins is from Arkansas. He is currently a graduate student in political economy at York University in Toronto, Canada.
http://dynamicmagazine.blogspot.com/
As the campaigns of Barack Obama and John McCain raced toward the Election Day finish line, the country and the world seemed to sink into a panic as the economy was collapsing all around us. Banks were going belly up, stock prices went on a roller-coaster ride, companies announced major layoffs, and Washington politicians were scrambling to point fingers and shift the blame.
How did this crisis sneak up on us? How was everyone caught off guard?
The truth is that millions of families across the country were not surprised in the least. For them, the economy was already in trouble a long time ago. What was really going on was that the economic hard-times that many working people had been feeling for years were finally starting to trickle up to those at the top. But to really understand how we got to this point, it is necessary to look back several years (even decades) to some of the trends that have come to characterize the capitalist economy. The current crisis is not something that just popped up. It is the result of more than thirty years of pursuing an economic model that has ultimately failed.
The Golden Age
In the years following World War II, capitalism in the West seemed to gain a new lease on life after the near total collapse of the Great Depression. The economy recorded higher growth each year and both big business and the working class seemed to be benefitting. Profits for capitalists were soaring higher as productivity notched upward. In the U.S., McCarthyism had stripped organized labor of some of its best leaders and tamed the unions, guaranteeing relative stability for the big corporations that dominated the economy. But even those attacks on the left could not totally destroy the victories that workers and their unions had achieved in the New Deal years. So the working class (or at least a certain sector of it) was enjoying some of the gains of this period that came to be known as capitalism’s “Golden Age”. Incomes were rising and the increasing inequality between the richest and poorest groups in society was actually reversing for the first time. The state was playing a very active role in the economy with several countries having substantial parts of their industry under public ownership. Some were starting to say that the boom-and-bust cycle of capitalism that Karl Marx had analyzed was now a thing of the past.
For some groups, of course, this Golden Age had never really been so “Golden”. In the U.S., African Americans continued to suffer from the economic and political oppression of segregation and second-class citizenship. Most immigrants, too, were excluded. Outside the advanced capitalist countries, many of the nations of Africa, Asia, and Latin America were struggling for independence, but they remained mired in the poverty resulting from centuries of imperialism.
But by the 1970s this mythical period of a new crisis-free capitalism started to unravel. The economic growth that had been the necessary glue holding together the stable class relations of the post-war period stalled and stagnation set in. The mass output of consumer and industrial goods in the 1950s and 60s was finally starting to outstrip effective demand. Markets were flooded with products as the old problem of overproduction reappeared. Inflation and unemployment shot up at the same time that productivity started to decline. The capitalist class searched for a solution as they watched profit rates trend steadily downward. On an international scale, the dominant position of the U.S. in the capitalist world economy seemed to be under strain as well. Europe and Japan were becoming major capitalist powers and the U.S. dollar’s status as the world’s currency was under increasing pressure.
Neoliberalism: The Return of Market Fundamentalism
Part of the solution they discovered was a process that has become known as financialization. Over time, more and more capital investment was gradually moved out of the “real” economy – those industries where people actually make and sell material goods and services – to the financial sector of the economy, or what is sometimes known as the “paper” economy. Activities in sectors such as banking, insurance, and investment started to vastly expand.
Occurring simultaneously with this structural shift in the economy was an ideological attack by the ultra-right. Free market fundamentalists like Milton Friedman declared that government had no place in the economy. Privatization of public companies and services was urged. The removal of government oversight of banks and corporations was said to be the best way to restore profitability and economic growth. Taxes were too high and valuable money was being wasted on social programs. Labor unions were strangling companies into bankruptcy. The free market would solve all of these problems if only the state would get out of the way. It was all a rehash of the same ideology of liberal capitalism that Marx had critiqued more than a century earlier.
Of course, the free market crowd did not truly want the government to completely get out of economic matters. They had some big tasks that only the power of the state could carry out. With the election of Ronald Reagan to the presidency in 1980, they got just the man for the job. Unions came under fierce attack, the budgets for social programs were gutted, and financial regulations were stripped away. Interest rates were sent upward to squeeze out inflation and restore the power of the U.S. dollar in the world economy. This also had the effect of shuttering plants across the nation, sending millions to the unemployment lines. Combined with this neoliberal approach in the economy was a heightening of Cold War tensions with the Soviet Union. Money was poured into the arms race. This sent government deficits and debt soaring higher than any social program ever had. It seemed the dominance of the U.S. in the world capitalist system was being restored.
The trend of decreasing inequality that had characterized the “Golden Age” was also in full reverse. Corporate CEO salaries went through the roof as working class incomes failed to keep up with inflation. Millions of families started to rely more and more on credit and debt to maintain their living standards.
The “Victory” of Capitalism
By the early 1990s, the economic and political problems of the socialist states in Eastern Europe had resulted in the collapse of the governments there and the discrediting of communist parties around the world. The neoliberal ideologists and the mass media declared that the battle between capitalism and socialism was over. According to them, Marxist ideas had been proven wrong and the “invisible hand” of the free market had triumphed. It seemed governments everywhere were starting to agree that there was no alternative to unrestricted and unregulated capitalism. Even centrist and left politicians, such as Tony Blair in the U.K. and Bill Clinton in the U.S., could be accused of abandoning any pretense of egalitarianism and continuing the pursuit of neoliberal policies. People were told that the good times were here again.
Profit rates did increase once more and consumerism was back. But much of the celebration rang hollow for millions of poor and working people. Expenditures on social welfare continued to decline over the decade and good-paying full-time union jobs disappeared. The reliance on credit that had started to appear earlier increased even more as people ran up their credit cards and took out second and third mortgages on their homes.
At a superficial level, things looked good. GDP was indeed growing and everyone was talking about the “new economy” of service and high-tech jobs. Many jobs were actually being created. These “good” times though, were only sustained by repeatedly delaying the downturns that were a basic part of the capitalist economic cycle. Financial speculation and outright gambling inflated one investment bubble after another. In the U.S., the federal government used its fiscal and monetary policies to encourage such activity in order to avoid recession. In the late 1990s, there was the so-called dot.com bubble, which saw massive amounts of capital flood into the internet and high technology industries. As that hype died down, money began pouring back into other stocks.
The deregulation and financialization madness reached new heights under the administration of George W. Bush. Since the 1970s, Wall Street had been inventing all kinds of new ways to funnel money through financial channels in order to generate huge profits. There were various kinds of derivatives, credit default swaps (CDSs), collateralized debt obligations (CDOs), and a myriad other forms of ever-more complicated financial instruments created. Put more simply, much of this was simply the cutting up and endless buying and re-selling of what in essence were just very complicated IOUs. Nothing real was being produced in this sector, yet billions of dollars were being made. Finance, which had in the past accounted for a small percentage of U.S. economic activity accounted for nearly a quarter of the country’s entire economy by the first decade of the twenty-first century.
The Bottom Falls Out
As the stock bubble began to burst and the “real” economy started showing signs of trouble with mass layoffs in manufacturing, the short-lived recession of 2001 was softened with the inflation of a new bubble. This one, which had actually gotten its start in the late 1990s, was in the real estate and housing sector. Home prices had begun to rise rapidly for several years, but they really started to take off by the early 2000s. . Millions of families who already had homes took out new mortgages to cash in on their increasing equity. Some who could afford it started purchasing two or three homes expecting to sell at a profit.
Suddenly, even families who in the past had been turned down for a mortgage because of their poor credit or low incomes were told they too could become part of Bush’s “ownership society”. A new kind of home loan, the sub-prime mortgage, was made available to millions of poor families – a large number of them African American or Latino. They were told there was no danger in taking out a mortgage that far exceeded their ability to pay or one that had adjustable rates. They could always just sell the house and make a profit if there was ever a problem. It was all presented as a safe investment. And so with all these new customers, the home construction craze continued.
But after a few years, problems started to appear. Home sales began to slump. In the suburbs, entire newly-built neighborhoods were sitting empty. In the cities, expensive condos waited for residents who weren’t coming. More and more homes were piling up. Of course, this didn’t mean that everyone now had a home and too many had been built. The fact is that by 2007 there were approximately 12 million empty unsold homes in the U.S. while at the same time about the same number of people were homeless.
Home prices, which everyone had been told could only go up, mysteriously started to fall – and fast. But there really was no mystery at all. It soon became quite clear that there was once more a situation of overproduction. The housing bubble had burst. People very quickly discovered that they now owed more on their mortgage than their house was worth. And as those adjustable interest rates kicked in, many found themselves facing mortgage payments they simply could not afford. Hundreds of thousands started to lose their homes. The fuse was now lit for a major economic crisis.
As these families started to default on their mortgages, the effects spread throughout the economy. Like all of those very complicated IOUs discussed above, these mortgages had been split up, packaged with other loans and debts, and resold. They were sold to other banks, to mutual funds, to pension funds, to other companies, to international banks, to foreign governments. When the mortgage doesn’t get paid by the homeowner at the bottom, the effect goes right up the chain to every bank, company, or investor that holds a piece of it. Everyone is left with a little sliver of a loan that will never be paid back.
It took several months to fully develop, but by the fall of 2008 the effects were clear. Banks and firms that had invested heavily in the subprime mortgage mess were in big trouble. Lehman Brothers went under as the invisible hand did its job. Other banks panicked. They refused to make loans to one another, businesses, or consumers out of fear they would never be paid back. Credit markets rapidly froze as lenders held tight to their cash. The world’s biggest insurance company, AIG, teetered on the brink and mortgage giants Fannie Mae and Freddie Mac looked ready to collapse.
Free market mythology had brought capitalism to the edge of an abyss. It became obvious to almost everyone that if the government did not act, the economy could crash. And so the bailouts began. Billions of dollars of taxpayer money poured into the banks to “recapitalize” them. Many were effectively nationalized. In some countries, they actually were. State intervention in the economy was seen by all, even Bush, as unavoidable. In the election, McCain was left without an economic leg to stand on as his message of deregulation and tax cuts seemed out of touch with reality.
Bush and Paulson offered what has been called “socialism for the rich” but did not bother to throw any kind of lifeline to working people. Their half-hearted actions in the fall did little to resuscitate the sinking economy in any meaningful way. The Obama campaign, already riding a wave of popular dissatisfaction with eight years of war and mismanagement, was pushed over the top by an economy that was spiraling downward more every day. As December and January rolled on, little was done by the lame-duck Republican administration. Companies that had already been in trouble were now in even more dire straits. They were hemorrhaging jobs, with over 100,000 lost in a single week in January.
As Obama takes office, he inherits a capitalist economy in ruins. The veil over the thirty year myth has been lifted for all to see – neoliberalism has failed. No matter what Republican politicians or Fox News may claim, socialism is not on our immediate horizon to be sure, but a major overhaul of capitalism is. The period of neoliberal dominance coincides almost exactly with that of the ultra-right in our country. Now the political and economic dynamics have shifted dramatically. It falls to those of us on the left to assert ourselves into that reform process and help shape the next step for our country and the world.
C.J. Atkins is from Arkansas. He is currently a graduate student in political economy at York University in Toronto, Canada.
January 22, 2009
Capitalism's Self-inflicted Apocalypse, by Michael Parenti
After the overthrow of communist governments in Eastern Europe, capitalism was paraded as the indomitable system that brings prosperity and democracy, the system that would prevail unto the end of history.
The present economic crisis, however, has convinced even some prominent free-marketeers that something is gravely amiss. Truth be told, capitalism has yet to come to terms with several historical forces that cause it endless trouble: democracy, prosperity, and capitalism itself, the very entities that capitalist rulers claim to be fostering.
Plutocracy vs. Democracy
Let us consider democracy first. In the United States we hear that capitalism is wedded to democracy, hence the phrase, "capitalist democracies." In fact, throughout our history there has been a largely antagonistic relationship between democracy and capital concentration. Some eighty years ago Supreme Court Justice Louis Brandeis commented, "We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both." Moneyed interests have been opponents not proponents of democracy.
The Constitution itself was fashioned by affluent gentlemen who gathered in Philadelphia in 1787 to repeatedly warn of the baneful and dangerous leveling effects of democracy. The document they cobbled together was far from democratic, being shackled with checks, vetoes, and requirements for artificial super majorities, a system designed to blunt the impact of popular demands.
In the early days of the Republic the rich and well-born imposed property qualifications for voting and officeholding. They opposed the direct election of candidates (note, their Electoral College is still with us). And for decades they resisted extending the franchise to less favored groups such as propertyless working men, immigrants, racial minorities, and women.
Today conservative forces continue to reject more equitable electoral features such as proportional representation, instant runoff, and publicly funded campaigns. They continue to create barriers to voting, be it through overly severe registration requirements, voter roll purges, inadequate polling accommodations, and electronic voting machines that consistently "malfunction" to the benefit of the more conservative candidates.
At times ruling interests have suppressed radical publications and public protests, resorting to police raids, arrests, and jailings – applied most recently with full force against demonstrators in St. Paul, Minnesota, during the 2008 Republican National Convention.
The conservative plutocracy also seeks to rollback democracy's social gains, such as public education, affordable housing, health care, collective bargaining, a living wage, safe work conditions, a non-toxic sustainable environment; the right to privacy, the separation of church and state, freedom from compulsory pregnancy, and the right to marry any consenting adult of one's own choosing.
About a century ago, US labor leader Eugene Victor Debs was thrown into jail during a strike. Sitting in his cell he could not escape the conclusion that in disputes between two private interests, capital and labor, the state was not a neutral arbiter. The force of the state – with its police, militia, courts, and laws – was unequivocally on the side of the company bosses. From this, Debs concluded that capitalism was not just an economic system but an entire social order, one that rigged the rules of democracy to favor the moneybags.
Capitalist rulers continue to pose as the progenitors of democracy even as they subvert it, not only at home but throughout Latin America, Africa, Asia, and the Middle East. Any nation that is not "investor friendly," that attempts to use its land, labor, capital, natural resources, and markets in a self-developing manner, outside the dominion of transnational corporate hegemony, runs the risk of being demonized and targeted as "a threat to U.S. national security."
Democracy becomes a problem for corporate America not when it fails to work but when it works too well, helping the populace move toward a more equitable and livable social order, narrowing the gap, however modestly, between the superrich and the rest of us. So democracy must be diluted and subverted, smothered with disinformation, media puffery, and mountains of campaign costs; with rigged electoral contests and partially disfranchised publics, bringing faux victories to more or less politically safe major-party candidates.
Capitalism vs. Prosperity
The corporate capitalists no more encourage prosperity than do they propagate democracy. Most of the world is capitalist, and most of the world is neither prosperous nor particularly democratic. One need only think of capitalist Nigeria, capitalist Indonesia, capitalist Thailand, capitalist Haiti, capitalist Colombia, capitalist Pakistan, capitalist South Africa, capitalist Latvia, and various other members of the Free World – more accurately, the Free Market World.
A prosperous, politically literate populace with high expectations about its standard of living and a keen sense of entitlement, pushing for continually better social conditions, is not the plutocracy's notion of an ideal workforce and a properly pliant polity. Corporate investors prefer poor populations. The poorer you are, the harder you will work—for less. The poorer you are, the less equipped you are to defend yourself against the abuses of wealth.
In the corporate world of "free-trade," the number of billionaires is increasing faster than ever while the number of people living in poverty is growing at a faster rate than the world's population. Poverty spreads as wealth accumulates.
Consider the United States. In the last eight years alone, while vast fortunes accrued at record rates, an additional six million Americans sank below the poverty level; median family income declined by over $2,000; consumer debt more than doubled; over seven million Americans lost their health insurance, and more than four million lost their pensions; meanwhile homelessness increased and housing foreclosures reached pandemic levels.
It is only in countries where capitalism has been reined in to some degree by social democracy that the populace has been able to secure a measure of prosperity; northern European nations such as Sweden, Norway, Finland, and Denmark come to mind. But even in these social democracies popular gains are always at risk of being rolled back.
It is ironic to credit capitalism with the genius of economic prosperity when most attempts at material betterment have been vehemently and sometimes violently resisted by the capitalist class. The history of labor struggle provides endless illustration of this.
To the extent that life is bearable under the present U.S. economic order, it is because millions of people have waged bitter class struggles to advance their living standards and their rights as citizens, bringing some measure of humanity to an otherwise heartless politico-economic order.
A Self-devouring Beast
The capitalist state has two roles long recognized by political thinkers. First, like any state it must provide services that cannot be reliably developed through private means, such as public safety and orderly traffic. Second, the capitalist state protects the haves from the have-nots, securing the process of capital accumulation to benefit the moneyed interests, while heavily circumscribing the demands of the working populace, as Debs observed from his jail cell.
There is a third function of the capitalist state seldom mentioned. It consists of preventing the capitalist system from devouring itself. Consider the core contradiction Karl Marx pointed to: the tendency toward overproduction and market crisis. An economy dedicated to speedups and wage cuts, to making workers produce more and more for less and less, is always in danger of a crash. To maximize profits, wages must be kept down. But someone has to buy the goods and services being produced. For that, wages must be kept up. There is a chronic tendency – as we are seeing today – toward overproduction of private sector goods and services and underconsumption of necessities by the working populace.
In addition, there is the frequently overlooked self-destruction created by the moneyed players themselves. If left completely unsupervised, the more active command component of the financial system begins to devour less organized sources of wealth.
Instead of trying to make money by the arduous task of producing and marketing goods and services, the marauders tap directly into the money streams of the economy itself. During the 1990s we witnessed the collapse of an entire economy in Argentina when unchecked free marketeers stripped enterprises, pocketed vast sums, and left the country's productive capacity in shambles. The Argentine state, gorged on a heavy diet of free-market ideology, faltered in its function of saving capitalism from the capitalists.
Some years later, in the United States, came the multi-billion-dollar plunder perpetrated by corporate conspirators at Enron, WorldCom, Harkin, Adelphia, and a dozen other major companies. Inside players like Ken Lay turned successful corporate enterprises into sheer wreckage, wiping out the jobs and life savings of thousands of employees in order to pocket billions.
These thieves were caught and convicted. Does that not show capitalism's self-correcting capacity? Not really. The prosecution of such malfeasance – in any case coming too late – was a product of democracy's accountability and transparency, not capitalism's. Of itself the free market is an amoral system, with no strictures save "caveat emptor."
In the meltdown of 2008-09 the mounting financial surplus created a problem for the moneyed class: there were not enough opportunities to invest. With more money than they knew what to do with, big investors poured immense sums into nonexistent housing markets and other dodgy ventures, a legerdemain of hedge funds, derivatives, high leveraging, credit default swaps, predatory lending, and whatever else.
Among the victims were other capitalists, small investors, and the many workers who lost billions of dollars in savings and pensions. Perhaps the premiere brigand was Bernard Madoff. Described as "a longstanding leader in the financial services industry," Madoff ran a fraudulent fund that raked in $50 billion from wealthy investors, paying them back "with money that wasn't there," as he himself put it. The plutocracy devours its own children.
In the midst of the meltdown, at an October 2008 congressional hearing, former chair of the Federal Reserve and orthodox free-market devotee Alan Greenspan confessed that he had been mistaken to expect moneyed interests – groaning under an immense accumulation of capital that needs to be invested somewhere – to suddenly exercise self-restraint.
The classic laissez-faire theory is even more preposterous than Greenspan made it. In fact, the theory claims that everyone should pursue their own selfish interests without restraint. This unbridled competition supposedly will produce maximum benefits for all because the free market is governed by a miraculously benign "invisible hand" that optimizes collective outputs. ("Greed is good.")
Is the crisis of 2008-09 caused by a chronic tendency toward overproduction and hyper-financial accumulation, as Marx would have it? Or is it the outcome of the personal avarice of people like Bernard Madoff? In other words, is the problem systemic or individual? In fact, the two are not mutually exclusive. Capitalism breeds the venal perpetrators, and rewards the most unscrupulous among them. The crimes and crises are not irrational departures from a rational system, but the converse: they are the rational outcomes of a basically irrational and amoral system.
Worse still, the ensuing multi-billion dollar government bailouts are themselves being turned into an opportunity for pillage. Not only does the state fail to regulate, it becomes itself a source of plunder, pulling vast sums from the federal money machine, leaving the taxpayers to bleed.
Those who scold us for "running to the government for a handout" are themselves running to the government for a handout. Corporate America has always enjoyed grants-in-aid, loan guarantees, and other state and federal subventions. But the 2008-09 "rescue operation" offered a record feed at the public trough. More than $350 billion was dished out by a right-wing lame-duck Secretary of the Treasury to the biggest banks and financial houses without oversight--not to mention the more than $4 trillion that has come from the Federal Reserve. Most of the banks, including JPMorgan Chase and Bank of New York Mellon, stated that they had no intention of letting anyone know where the money was going.
The big bankers used some of the bailout, we do know, to buy up smaller banks and prop up banks overseas. CEOs and other top banking executives are spending bailout funds on fabulous bonuses and lavish corporate spa retreats. Meanwhile, big bailout beneficiaries like Citigroup and Bank of America laid off tens of thousands of employees, inviting the question: why were they given all that money in the first place?
While hundreds of billions were being doled out to the very people who had caused the catastrophe, the housing market continued to wilt, credit remained paralyzed, unemployment worsened, and consumer spending sank to record lows.
In sum, free-market corporate capitalism is by its nature a disaster waiting to happen. Its essence is the transformation of living nature into mountains of commodities and commodities into heaps of dead capital. When left entirely to its own devices, capitalism foists its diseconomies and toxicity upon the general public and upon the natural environment – and eventually begins to devour itself.
The immense inequality in economic power that exists in our capitalist society translates into a formidable inequality of political power, which makes it all the more difficult to impose democratic regulations.
If the paladins of Corporate America want to know what really threatens "our way of life," it is their way of life, their boundless way of pilfering their own system, destroying the very foundation on which they stand, the very community on which they so lavishly feed.
--Michael Parenti's recent books include: Contrary Notions: The Michael Parenti Reader (City Lights); Democracy for the Few, 8th ed. (Wadsworth); and God and His Demons (forthcoming). For further information, visit his website: www.michaelparenti.org.
The present economic crisis, however, has convinced even some prominent free-marketeers that something is gravely amiss. Truth be told, capitalism has yet to come to terms with several historical forces that cause it endless trouble: democracy, prosperity, and capitalism itself, the very entities that capitalist rulers claim to be fostering.
Plutocracy vs. Democracy
Let us consider democracy first. In the United States we hear that capitalism is wedded to democracy, hence the phrase, "capitalist democracies." In fact, throughout our history there has been a largely antagonistic relationship between democracy and capital concentration. Some eighty years ago Supreme Court Justice Louis Brandeis commented, "We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both." Moneyed interests have been opponents not proponents of democracy.
The Constitution itself was fashioned by affluent gentlemen who gathered in Philadelphia in 1787 to repeatedly warn of the baneful and dangerous leveling effects of democracy. The document they cobbled together was far from democratic, being shackled with checks, vetoes, and requirements for artificial super majorities, a system designed to blunt the impact of popular demands.
In the early days of the Republic the rich and well-born imposed property qualifications for voting and officeholding. They opposed the direct election of candidates (note, their Electoral College is still with us). And for decades they resisted extending the franchise to less favored groups such as propertyless working men, immigrants, racial minorities, and women.
Today conservative forces continue to reject more equitable electoral features such as proportional representation, instant runoff, and publicly funded campaigns. They continue to create barriers to voting, be it through overly severe registration requirements, voter roll purges, inadequate polling accommodations, and electronic voting machines that consistently "malfunction" to the benefit of the more conservative candidates.
At times ruling interests have suppressed radical publications and public protests, resorting to police raids, arrests, and jailings – applied most recently with full force against demonstrators in St. Paul, Minnesota, during the 2008 Republican National Convention.
The conservative plutocracy also seeks to rollback democracy's social gains, such as public education, affordable housing, health care, collective bargaining, a living wage, safe work conditions, a non-toxic sustainable environment; the right to privacy, the separation of church and state, freedom from compulsory pregnancy, and the right to marry any consenting adult of one's own choosing.
About a century ago, US labor leader Eugene Victor Debs was thrown into jail during a strike. Sitting in his cell he could not escape the conclusion that in disputes between two private interests, capital and labor, the state was not a neutral arbiter. The force of the state – with its police, militia, courts, and laws – was unequivocally on the side of the company bosses. From this, Debs concluded that capitalism was not just an economic system but an entire social order, one that rigged the rules of democracy to favor the moneybags.
Capitalist rulers continue to pose as the progenitors of democracy even as they subvert it, not only at home but throughout Latin America, Africa, Asia, and the Middle East. Any nation that is not "investor friendly," that attempts to use its land, labor, capital, natural resources, and markets in a self-developing manner, outside the dominion of transnational corporate hegemony, runs the risk of being demonized and targeted as "a threat to U.S. national security."
Democracy becomes a problem for corporate America not when it fails to work but when it works too well, helping the populace move toward a more equitable and livable social order, narrowing the gap, however modestly, between the superrich and the rest of us. So democracy must be diluted and subverted, smothered with disinformation, media puffery, and mountains of campaign costs; with rigged electoral contests and partially disfranchised publics, bringing faux victories to more or less politically safe major-party candidates.
Capitalism vs. Prosperity
The corporate capitalists no more encourage prosperity than do they propagate democracy. Most of the world is capitalist, and most of the world is neither prosperous nor particularly democratic. One need only think of capitalist Nigeria, capitalist Indonesia, capitalist Thailand, capitalist Haiti, capitalist Colombia, capitalist Pakistan, capitalist South Africa, capitalist Latvia, and various other members of the Free World – more accurately, the Free Market World.
A prosperous, politically literate populace with high expectations about its standard of living and a keen sense of entitlement, pushing for continually better social conditions, is not the plutocracy's notion of an ideal workforce and a properly pliant polity. Corporate investors prefer poor populations. The poorer you are, the harder you will work—for less. The poorer you are, the less equipped you are to defend yourself against the abuses of wealth.
In the corporate world of "free-trade," the number of billionaires is increasing faster than ever while the number of people living in poverty is growing at a faster rate than the world's population. Poverty spreads as wealth accumulates.
Consider the United States. In the last eight years alone, while vast fortunes accrued at record rates, an additional six million Americans sank below the poverty level; median family income declined by over $2,000; consumer debt more than doubled; over seven million Americans lost their health insurance, and more than four million lost their pensions; meanwhile homelessness increased and housing foreclosures reached pandemic levels.
It is only in countries where capitalism has been reined in to some degree by social democracy that the populace has been able to secure a measure of prosperity; northern European nations such as Sweden, Norway, Finland, and Denmark come to mind. But even in these social democracies popular gains are always at risk of being rolled back.
It is ironic to credit capitalism with the genius of economic prosperity when most attempts at material betterment have been vehemently and sometimes violently resisted by the capitalist class. The history of labor struggle provides endless illustration of this.
To the extent that life is bearable under the present U.S. economic order, it is because millions of people have waged bitter class struggles to advance their living standards and their rights as citizens, bringing some measure of humanity to an otherwise heartless politico-economic order.
A Self-devouring Beast
The capitalist state has two roles long recognized by political thinkers. First, like any state it must provide services that cannot be reliably developed through private means, such as public safety and orderly traffic. Second, the capitalist state protects the haves from the have-nots, securing the process of capital accumulation to benefit the moneyed interests, while heavily circumscribing the demands of the working populace, as Debs observed from his jail cell.
There is a third function of the capitalist state seldom mentioned. It consists of preventing the capitalist system from devouring itself. Consider the core contradiction Karl Marx pointed to: the tendency toward overproduction and market crisis. An economy dedicated to speedups and wage cuts, to making workers produce more and more for less and less, is always in danger of a crash. To maximize profits, wages must be kept down. But someone has to buy the goods and services being produced. For that, wages must be kept up. There is a chronic tendency – as we are seeing today – toward overproduction of private sector goods and services and underconsumption of necessities by the working populace.
In addition, there is the frequently overlooked self-destruction created by the moneyed players themselves. If left completely unsupervised, the more active command component of the financial system begins to devour less organized sources of wealth.
Instead of trying to make money by the arduous task of producing and marketing goods and services, the marauders tap directly into the money streams of the economy itself. During the 1990s we witnessed the collapse of an entire economy in Argentina when unchecked free marketeers stripped enterprises, pocketed vast sums, and left the country's productive capacity in shambles. The Argentine state, gorged on a heavy diet of free-market ideology, faltered in its function of saving capitalism from the capitalists.
Some years later, in the United States, came the multi-billion-dollar plunder perpetrated by corporate conspirators at Enron, WorldCom, Harkin, Adelphia, and a dozen other major companies. Inside players like Ken Lay turned successful corporate enterprises into sheer wreckage, wiping out the jobs and life savings of thousands of employees in order to pocket billions.
These thieves were caught and convicted. Does that not show capitalism's self-correcting capacity? Not really. The prosecution of such malfeasance – in any case coming too late – was a product of democracy's accountability and transparency, not capitalism's. Of itself the free market is an amoral system, with no strictures save "caveat emptor."
In the meltdown of 2008-09 the mounting financial surplus created a problem for the moneyed class: there were not enough opportunities to invest. With more money than they knew what to do with, big investors poured immense sums into nonexistent housing markets and other dodgy ventures, a legerdemain of hedge funds, derivatives, high leveraging, credit default swaps, predatory lending, and whatever else.
Among the victims were other capitalists, small investors, and the many workers who lost billions of dollars in savings and pensions. Perhaps the premiere brigand was Bernard Madoff. Described as "a longstanding leader in the financial services industry," Madoff ran a fraudulent fund that raked in $50 billion from wealthy investors, paying them back "with money that wasn't there," as he himself put it. The plutocracy devours its own children.
In the midst of the meltdown, at an October 2008 congressional hearing, former chair of the Federal Reserve and orthodox free-market devotee Alan Greenspan confessed that he had been mistaken to expect moneyed interests – groaning under an immense accumulation of capital that needs to be invested somewhere – to suddenly exercise self-restraint.
The classic laissez-faire theory is even more preposterous than Greenspan made it. In fact, the theory claims that everyone should pursue their own selfish interests without restraint. This unbridled competition supposedly will produce maximum benefits for all because the free market is governed by a miraculously benign "invisible hand" that optimizes collective outputs. ("Greed is good.")
Is the crisis of 2008-09 caused by a chronic tendency toward overproduction and hyper-financial accumulation, as Marx would have it? Or is it the outcome of the personal avarice of people like Bernard Madoff? In other words, is the problem systemic or individual? In fact, the two are not mutually exclusive. Capitalism breeds the venal perpetrators, and rewards the most unscrupulous among them. The crimes and crises are not irrational departures from a rational system, but the converse: they are the rational outcomes of a basically irrational and amoral system.
Worse still, the ensuing multi-billion dollar government bailouts are themselves being turned into an opportunity for pillage. Not only does the state fail to regulate, it becomes itself a source of plunder, pulling vast sums from the federal money machine, leaving the taxpayers to bleed.
Those who scold us for "running to the government for a handout" are themselves running to the government for a handout. Corporate America has always enjoyed grants-in-aid, loan guarantees, and other state and federal subventions. But the 2008-09 "rescue operation" offered a record feed at the public trough. More than $350 billion was dished out by a right-wing lame-duck Secretary of the Treasury to the biggest banks and financial houses without oversight--not to mention the more than $4 trillion that has come from the Federal Reserve. Most of the banks, including JPMorgan Chase and Bank of New York Mellon, stated that they had no intention of letting anyone know where the money was going.
The big bankers used some of the bailout, we do know, to buy up smaller banks and prop up banks overseas. CEOs and other top banking executives are spending bailout funds on fabulous bonuses and lavish corporate spa retreats. Meanwhile, big bailout beneficiaries like Citigroup and Bank of America laid off tens of thousands of employees, inviting the question: why were they given all that money in the first place?
While hundreds of billions were being doled out to the very people who had caused the catastrophe, the housing market continued to wilt, credit remained paralyzed, unemployment worsened, and consumer spending sank to record lows.
In sum, free-market corporate capitalism is by its nature a disaster waiting to happen. Its essence is the transformation of living nature into mountains of commodities and commodities into heaps of dead capital. When left entirely to its own devices, capitalism foists its diseconomies and toxicity upon the general public and upon the natural environment – and eventually begins to devour itself.
The immense inequality in economic power that exists in our capitalist society translates into a formidable inequality of political power, which makes it all the more difficult to impose democratic regulations.
If the paladins of Corporate America want to know what really threatens "our way of life," it is their way of life, their boundless way of pilfering their own system, destroying the very foundation on which they stand, the very community on which they so lavishly feed.
--Michael Parenti's recent books include: Contrary Notions: The Michael Parenti Reader (City Lights); Democracy for the Few, 8th ed. (Wadsworth); and God and His Demons (forthcoming). For further information, visit his website: www.michaelparenti.org.
January 14, 2009
Nature, Society and Human Survival , By Marc Brodine
From Political Affairs Online Magazine:
http://www.politicalaffairs.net/article/view/5781/1/281/
Editor’s Note: This article is based on a longer essay, “The Dialectics of Climate Change,” that addresses the ecological crisis in more detail, with more social and scientific examples. The complete essay relates dialectical materialism to the environment; provides a unified framework to help us understand the interrelationships between social, economic and environmental crises; addresses several contentious questions like China’s role, nuclear power, and the practical and theoretical challenges that environmental crises pose for socialists and communists; and proposes a number of steps humanity needs to take to begin to deal with the most crucial climate change questions. For an interview with Marc Brodine see: Political Affairs Radio – Episode 33
Frederick Engels, in his graveside address for Marx, noted that “Marx discovered the law of development of human history: the simple fact, hitherto concealed by an overgrowth of ideology, that mankind must first of all eat, drink, have shelter and clothing, before it can pursue politics, science, art, religion, etc.”
These are the fundamental realities of all human life: our lives are based on food, water, and resources that come from nature. As well, the ways in which we create and distribute food, drink and shelter impact the natural world we depend on. We need nature for our survival. If the air becomes too polluted for human health, we can’t simply breathe something else. Pollution that is blown away is blown away to somewhere else; it doesn’t just disappear. We can’t just stop eating; we require water.
Humans are not separate from their environment, and the environments of different countries are not separate from each other; what we experience in one region of the world is intimately connected to what people experience in other regions; what happens to natural global systems also happens to all of us.
All value to humanity comes either directly from nature, or from nature altered by human labor. If we compromise nature’s ability to regenerate the materials we need for our survival, we compromise our own ability to survive. We face a series of linked environmental problems – from climate change, to water use, to soil depletion – which have the potential to negatively affect sea levels, weather systems, our ability to grow food and drink water, and other essential aspects of human life. We can’t endlessly alter the balance of natural systems like the atmosphere or the oceans without suffering the consequences of that alteration.
There are direct human costs of capitalism, but there are also serious indirect costs, as capitalist production and agriculture exploit the non-renewable resources we depend upon in an ever-speedier race to catastrophe.
Capitalism operates on several deadly assumptions: that nature is “free,” that natural resources are limitless, that the waste-absorbing capacity of nature is infinite, that economic activity and the natural world are separate, that short-term profit is more important than long-term sustainability, and that the production of more commodities without end is progress. This is in addition to the human exploitation and oppression capitalism engenders and profits from.
The potential of looming environmental catastrophe isn’t a single problem with a simple solution. The climate crisis, excessive garbage and toxic waste, an increasing list of endangered species, pollution and toxic chemicals in the air, water, soil, and in our food, our workplaces, and our homes, are among the myriad problems we face. When we are threatened with a series of related potential crises, the chances that one or another of them will happen are much greater. We can’t now predict exactly which of the interlocked environmental problems we face will first lead to major negative tipping points. But because we face so many related problems, we can be pretty sure that if we fail to act, one or another of these crises is going to get us.
That’s the nature of risk probability: many risks times many opportunities for system breakdown equals inevitable crisis. Because the world is a complex of interlocking processes with dynamic interrelationships, once any one of these crises hit, the chances of the others
occurring escalate rapidly. More global warming results in more forest fires. More forest fires heat the atmosphere and result in more glacial melting, melting more permafrost, releasing more greenhouse gases, melting more glaciers, resulting in more forest fires, all of which increase global warming. The world is a series of giant feedback loops. And humanity is busy impacting those feedback loops.
The real question is: will we continue to force these natural systems to work together against humanity? Or will we restructure our social, economic, agricultural, and industrial systems to work more in harmony with them?
Human Society Needs to Change
The adaptability of human social systems is more limited than general human adaptability. When oppressive, class-divided societies are stressed by external events, whether war, economic crisis, or impending environmental collapse, the ruling class first transmits the main burdens of that crisis to the oppressed and exploited classes, using money and power to escape the consequences as long as possible. So the crises that threaten us are not just environmental, they are also crises of our social and economic systems and will accelerate social and economic problems, contributing to even more social instability and conflict. The genocide in Rwanda is one example – global warming and competition for limited degraded agricultural land were
not the only causes, but certainly exacerbated the genocide.
When a society comes into unresovlable conflict with its environment, there are three basic adaptations that can happen:
• the society can move elsewhere and continue as before in a new place (the main adaptation in ancient times),
• people can stay where they are and transform their society and economy, or
• the society and people can die out.
There are many examples of all three occurring over the course of human history, such as the Mesopotamian Fertile Crescent, North Africa, and Easter Island.
Our globalized economy and globalized environmental crises have left us with nowhere else to go. We can change our economic practices or else perish, or perhaps survive in a diminished fashion in a much more inhospitable world.
In the 10,000 years of agriculture and the four or five centuries of capitalism, humans have already transformed our relations with the microbial world, the seas, the vegetation, the crust of the earth, and now the atmosphere. We have reached a new successional stage in our relations with the rest of nature. The ecological crisis of our species is inextricably entwined with capitalism and its inefficient use of resources for the profit of a relative handful of individuals. If we create ways to transform our relationship to nature by changing our social and economic systems, we may be able to adapt and create a new ecology that enables our species to continue. Otherwise, we will be subjected to the often brutal workings of climate change and natural selection.
The world will survive. That is not in question. The earth has been through many more cataclysmic changes than global warming will bring. Nature will reach a new equilibrium. The question is whether or not our species will be able to survive that new balance. And if we are, will it be compatible with developed human existence, with the existence of human sustainability at a level of technological and cultural advancement and agricultural and water sufficiency. We can either work with nature, or nature will work against us. Nature doesn’t “care” about humanity; humanity must care about nature. We must work to enable nature to sustain us.
Most discussions of global climate change are limited in an odd way. The problems are seen as problems of human interaction with natural systems (which they are) or as problems in need of technological solutions (which they are). But little is done to connect any of this to our economic and social systems. In a private property system, when we collectively face problems that need collective solutions (and it doesn’t get much bigger or more collective than global climate change, both on the problem side and the required solution side), we run into private property rights and private decision-making about production, land use, resources, disposal of waste, and investment. The environmental problems we face are fundamental, so the solutions need to be fundamental. Solutions to our collective problems must be collective solutions.
A starting point is transforming the political and economic system from one that is ruled by a tiny class that privately expropriates maximum profit from socially-produced goods and services, to one led by the vast majority, motivated by the collective survival and sustainability needs of humanity as a whole. As with fundamental solutions to other problems such as racism, inequality, economic exploitation and others, socialism is a necessity for the survival of the human race – not a guarantee, but a necessary precondition for the kinds of fundamental solutions humanity needs. Socialists also need to understand that if capitalism does a bad enough job of ruining the environment, then the material basis for socialism will be harmed or destroyed. Socialism is a necessary, essential aspect of the changes we need to make to protect the survival of our species, but it is not a sufficient condition by itself.
However, we can’t wait for socialism to preserve our existence on this planet. We need to stop making things worse now. As well, confronting environmental problems and their social and economic causes are part of what will convince millions that we need socialism.
What More is Needed?
Socialism is crucial to the environmental, industrial, agricultural, and distribution changes we need to make, but by itself that won’t be enough. We need to integrate socialist economics with environmental science.
The natural world we live in is not infinite, and the resources in and of nature are also not infinite. So our definition of the “greatest good” must not be the greatest amount of material goods, but rather improving the living and health standards of all humanity while facilitating the continual reproduction and restoration of the natural conditions which we need to survive. We can’t have healthy humanity without a healthy natural world.
While the history of socialist countries contain positive environmental steps (such as Cuba’s recycling, organic agriculture and reforestation programs), they also have produced some very negative examples. This is discussed in more detail in the complete essay, available online.
Ultimately, failures and problems of socialism represent a failure to think, research, plan and implement dialectically. Economics and development are based on nature, based on the ability of nature to reproduce itself, and based on maintaining a healthy balance between human needs and the needs of the natural systems humanity depends on. If economics and development don’t work to maintain that balance, they work against the survival of humanity, and that is as true of socialist development as any other kind.
We shouldn’t use up non-renewable resources wastefully, like oil, and we can’t act as if the waste-absorbing capacity of the natural world is infinite. Even renewable resources can be damaged by human activity – if water and soil are degraded faster than nature rebuilds them, they turn into non-renewable resources. Significant shifts in what and how we produce, and in how we package and distribute goods, are necessary for our survival as a species. We have to redesign our industrial processes to eliminate the creation of pollution and take other steps to decrease the impact of human activity on the natural world, including reducing the impact of our agricultural systems and reducing over-reliance on chemical fertilizers, including reducing toxic chemical wastes. We have to restore and rebalance our relationships with nature.
The collective problems of humanity require the collective thinking and action of humanity. That is part of what socialist economic democracy must be about, the mobilization of our collective intelligence, ability and activity to solve our shared problems.
What To Do
click to subscribe
There are many steps we need to take to address the linked series of environmental problems facing humanity. Some are changes in individual behavior; others are major changes in how we produce food and industrial commodities. Both kinds of changes are needed – if we only focus on changing the habits of individuals but still keep running our industries in ways that continue to produce pollution, CO2 and methane, we won’t make much of a dent in the problems.
Social, economic, industrial and agricultural changes are required to solve environmental problems. Capitalism is a big part of the problem, and engaging in struggles to solve ecological crises are part of the path to replacing capitalism.
Recognizing Necessity
Engels said that “freedom is the recognition of necessity.” Only by recognizing environmental imperatives will we be free to make the right choices for humanity’s survival. Only by recognizing the restraint required of us by natural systems can we become truly conscious factors in improving the world for ourselves and our descendents.
--Send your letter to the editor to pa-letters@politicalaffairs.net
http://www.politicalaffairs.net/article/view/5781/1/281/
Editor’s Note: This article is based on a longer essay, “The Dialectics of Climate Change,” that addresses the ecological crisis in more detail, with more social and scientific examples. The complete essay relates dialectical materialism to the environment; provides a unified framework to help us understand the interrelationships between social, economic and environmental crises; addresses several contentious questions like China’s role, nuclear power, and the practical and theoretical challenges that environmental crises pose for socialists and communists; and proposes a number of steps humanity needs to take to begin to deal with the most crucial climate change questions. For an interview with Marc Brodine see: Political Affairs Radio – Episode 33
Frederick Engels, in his graveside address for Marx, noted that “Marx discovered the law of development of human history: the simple fact, hitherto concealed by an overgrowth of ideology, that mankind must first of all eat, drink, have shelter and clothing, before it can pursue politics, science, art, religion, etc.”
These are the fundamental realities of all human life: our lives are based on food, water, and resources that come from nature. As well, the ways in which we create and distribute food, drink and shelter impact the natural world we depend on. We need nature for our survival. If the air becomes too polluted for human health, we can’t simply breathe something else. Pollution that is blown away is blown away to somewhere else; it doesn’t just disappear. We can’t just stop eating; we require water.
Humans are not separate from their environment, and the environments of different countries are not separate from each other; what we experience in one region of the world is intimately connected to what people experience in other regions; what happens to natural global systems also happens to all of us.
All value to humanity comes either directly from nature, or from nature altered by human labor. If we compromise nature’s ability to regenerate the materials we need for our survival, we compromise our own ability to survive. We face a series of linked environmental problems – from climate change, to water use, to soil depletion – which have the potential to negatively affect sea levels, weather systems, our ability to grow food and drink water, and other essential aspects of human life. We can’t endlessly alter the balance of natural systems like the atmosphere or the oceans without suffering the consequences of that alteration.
There are direct human costs of capitalism, but there are also serious indirect costs, as capitalist production and agriculture exploit the non-renewable resources we depend upon in an ever-speedier race to catastrophe.
Capitalism operates on several deadly assumptions: that nature is “free,” that natural resources are limitless, that the waste-absorbing capacity of nature is infinite, that economic activity and the natural world are separate, that short-term profit is more important than long-term sustainability, and that the production of more commodities without end is progress. This is in addition to the human exploitation and oppression capitalism engenders and profits from.
The potential of looming environmental catastrophe isn’t a single problem with a simple solution. The climate crisis, excessive garbage and toxic waste, an increasing list of endangered species, pollution and toxic chemicals in the air, water, soil, and in our food, our workplaces, and our homes, are among the myriad problems we face. When we are threatened with a series of related potential crises, the chances that one or another of them will happen are much greater. We can’t now predict exactly which of the interlocked environmental problems we face will first lead to major negative tipping points. But because we face so many related problems, we can be pretty sure that if we fail to act, one or another of these crises is going to get us.
That’s the nature of risk probability: many risks times many opportunities for system breakdown equals inevitable crisis. Because the world is a complex of interlocking processes with dynamic interrelationships, once any one of these crises hit, the chances of the others
occurring escalate rapidly. More global warming results in more forest fires. More forest fires heat the atmosphere and result in more glacial melting, melting more permafrost, releasing more greenhouse gases, melting more glaciers, resulting in more forest fires, all of which increase global warming. The world is a series of giant feedback loops. And humanity is busy impacting those feedback loops.
The real question is: will we continue to force these natural systems to work together against humanity? Or will we restructure our social, economic, agricultural, and industrial systems to work more in harmony with them?
Human Society Needs to Change
The adaptability of human social systems is more limited than general human adaptability. When oppressive, class-divided societies are stressed by external events, whether war, economic crisis, or impending environmental collapse, the ruling class first transmits the main burdens of that crisis to the oppressed and exploited classes, using money and power to escape the consequences as long as possible. So the crises that threaten us are not just environmental, they are also crises of our social and economic systems and will accelerate social and economic problems, contributing to even more social instability and conflict. The genocide in Rwanda is one example – global warming and competition for limited degraded agricultural land were
not the only causes, but certainly exacerbated the genocide.
When a society comes into unresovlable conflict with its environment, there are three basic adaptations that can happen:
• the society can move elsewhere and continue as before in a new place (the main adaptation in ancient times),
• people can stay where they are and transform their society and economy, or
• the society and people can die out.
There are many examples of all three occurring over the course of human history, such as the Mesopotamian Fertile Crescent, North Africa, and Easter Island.
Our globalized economy and globalized environmental crises have left us with nowhere else to go. We can change our economic practices or else perish, or perhaps survive in a diminished fashion in a much more inhospitable world.
In the 10,000 years of agriculture and the four or five centuries of capitalism, humans have already transformed our relations with the microbial world, the seas, the vegetation, the crust of the earth, and now the atmosphere. We have reached a new successional stage in our relations with the rest of nature. The ecological crisis of our species is inextricably entwined with capitalism and its inefficient use of resources for the profit of a relative handful of individuals. If we create ways to transform our relationship to nature by changing our social and economic systems, we may be able to adapt and create a new ecology that enables our species to continue. Otherwise, we will be subjected to the often brutal workings of climate change and natural selection.
The world will survive. That is not in question. The earth has been through many more cataclysmic changes than global warming will bring. Nature will reach a new equilibrium. The question is whether or not our species will be able to survive that new balance. And if we are, will it be compatible with developed human existence, with the existence of human sustainability at a level of technological and cultural advancement and agricultural and water sufficiency. We can either work with nature, or nature will work against us. Nature doesn’t “care” about humanity; humanity must care about nature. We must work to enable nature to sustain us.
Most discussions of global climate change are limited in an odd way. The problems are seen as problems of human interaction with natural systems (which they are) or as problems in need of technological solutions (which they are). But little is done to connect any of this to our economic and social systems. In a private property system, when we collectively face problems that need collective solutions (and it doesn’t get much bigger or more collective than global climate change, both on the problem side and the required solution side), we run into private property rights and private decision-making about production, land use, resources, disposal of waste, and investment. The environmental problems we face are fundamental, so the solutions need to be fundamental. Solutions to our collective problems must be collective solutions.
A starting point is transforming the political and economic system from one that is ruled by a tiny class that privately expropriates maximum profit from socially-produced goods and services, to one led by the vast majority, motivated by the collective survival and sustainability needs of humanity as a whole. As with fundamental solutions to other problems such as racism, inequality, economic exploitation and others, socialism is a necessity for the survival of the human race – not a guarantee, but a necessary precondition for the kinds of fundamental solutions humanity needs. Socialists also need to understand that if capitalism does a bad enough job of ruining the environment, then the material basis for socialism will be harmed or destroyed. Socialism is a necessary, essential aspect of the changes we need to make to protect the survival of our species, but it is not a sufficient condition by itself.
However, we can’t wait for socialism to preserve our existence on this planet. We need to stop making things worse now. As well, confronting environmental problems and their social and economic causes are part of what will convince millions that we need socialism.
What More is Needed?
Socialism is crucial to the environmental, industrial, agricultural, and distribution changes we need to make, but by itself that won’t be enough. We need to integrate socialist economics with environmental science.
The natural world we live in is not infinite, and the resources in and of nature are also not infinite. So our definition of the “greatest good” must not be the greatest amount of material goods, but rather improving the living and health standards of all humanity while facilitating the continual reproduction and restoration of the natural conditions which we need to survive. We can’t have healthy humanity without a healthy natural world.
While the history of socialist countries contain positive environmental steps (such as Cuba’s recycling, organic agriculture and reforestation programs), they also have produced some very negative examples. This is discussed in more detail in the complete essay, available online.
Ultimately, failures and problems of socialism represent a failure to think, research, plan and implement dialectically. Economics and development are based on nature, based on the ability of nature to reproduce itself, and based on maintaining a healthy balance between human needs and the needs of the natural systems humanity depends on. If economics and development don’t work to maintain that balance, they work against the survival of humanity, and that is as true of socialist development as any other kind.
We shouldn’t use up non-renewable resources wastefully, like oil, and we can’t act as if the waste-absorbing capacity of the natural world is infinite. Even renewable resources can be damaged by human activity – if water and soil are degraded faster than nature rebuilds them, they turn into non-renewable resources. Significant shifts in what and how we produce, and in how we package and distribute goods, are necessary for our survival as a species. We have to redesign our industrial processes to eliminate the creation of pollution and take other steps to decrease the impact of human activity on the natural world, including reducing the impact of our agricultural systems and reducing over-reliance on chemical fertilizers, including reducing toxic chemical wastes. We have to restore and rebalance our relationships with nature.
The collective problems of humanity require the collective thinking and action of humanity. That is part of what socialist economic democracy must be about, the mobilization of our collective intelligence, ability and activity to solve our shared problems.
What To Do
click to subscribe
There are many steps we need to take to address the linked series of environmental problems facing humanity. Some are changes in individual behavior; others are major changes in how we produce food and industrial commodities. Both kinds of changes are needed – if we only focus on changing the habits of individuals but still keep running our industries in ways that continue to produce pollution, CO2 and methane, we won’t make much of a dent in the problems.
Social, economic, industrial and agricultural changes are required to solve environmental problems. Capitalism is a big part of the problem, and engaging in struggles to solve ecological crises are part of the path to replacing capitalism.
Recognizing Necessity
Engels said that “freedom is the recognition of necessity.” Only by recognizing environmental imperatives will we be free to make the right choices for humanity’s survival. Only by recognizing the restraint required of us by natural systems can we become truly conscious factors in improving the world for ourselves and our descendents.
--Send your letter to the editor to pa-letters@politicalaffairs.net
January 12, 2009
Those whom the gods would destroy, they first make mad, Willem Buiter
September 29, 2008
The US House of Representatives has voted to reject the Emergency Economic Stabilization Act - the $700bn Treasury-funded facility for purchasing and managing toxic assets held by the US banking system.
Opposition to the proposal came from two different sources. A few remaining libertarians and believers in unfettered free enterprise voted against. Even when they recognise the risk that a calamitous collapse in economic activity may result, they view this as a form of creative destruction that is an integral part of a Darwinian market economy. I don’t know anything about Gresham Barrett, a Republican congressman from South Carolina but his statement fits the bill: “My fear is the government will be forever changing the face of the American free market. Because I believe so strongly in the principles of the free market and the belief in freedom, I will be opposing this bill.” Those who genuinely hold these views are mad, but honest and principled. I wish them a good depression.
A larger body of nay-voters consists of populist rabble-rousers or, worse, politicians who know better but follow the whims, fancies and passions of their constituents, even when this means that before long the real economy risks falling off a cliff. The following statement by Ted Poe, a Texan Republican member of Congress is a nice example: “New York City fatcats expect Joe Sixpack to buck up and pay for all of this nonsense,”… “Putting a financial gun to the head of every American is not the answer.”
The dedicated followers of constituency fashion reckon that the date of the election is likely to be before the full impact of the financial collapse made likely by this vote will hit their constituents’ jobs and businesses. They put re-election before the economic health of the nation and the interests of their constituents. Opportunism guides them rather than principle. I wish them a rather nasty depression.
What is likely to happen next? With a bit of luck, the House will be frightened by its own audacity and will reverse itself. If a substantively similar bill (or a better bill that addresses not just the problem of valuing toxic assets and getting them off the banks’ books, but also the problem of recapitalising the US banking sector) is passed in the next day or so, the damage can remain limited. If the markets fear that the nays have thrown their toys out of the pram for the long term, the following scenario is quite likely:
* The US stock market tanks. Bank shares collapse, as do the valuations of all highly leveraged financial institutions. Weaker versions of this occur in Europe, in Japan and in the emerging markets.
* CDS spreads for banks explode, as will those of all highly leveraged financial institutions. Credits spreads generally take on loan-shark proportions, even for reputable borrowers. Again the rest of the world will experience a slightly milder version of this.
* No US bank will lend to any other US bank or any other highly leveraged institution. The same will happen elsewhere. Remaining sources of external finance for banks, other than the facilities created by the central banks and the Treasuries, will dry up.
* Banks and other highly leveraged institutions will try to unload assets at fire-sale prices in illiquid markets. Even assets not viewed as toxic before will become unsaleable at any price.
* The interaction of a growing lack of funding liquidity and increasing market illiquidity will destroy the banks’ business models.
* Banks will stop providing credit to households and to non-financial enterprises.
* Banks will collapse, both through balance sheet insolvency and through liquidity insolvency. No bank will be safe, not even the household names for whom the crisis has thus far brought more opportunities than disasters.
* Other highly leveraged financial institutions collapse on a large scale.
* Households and non-financial businesses revert to financial autarky, among wide-spread defaults and insolvencies.
* Consumer demand and investment demand collapse. Unemployment shoots up.
* The government suspends all trading in financial stocks until further notice.
* The government nationalises all US banks and other highly leveraged financial institutions. The shareholders get nothing up front and have to wait for an eventual re-privatisation or liquididation to find out whether they are left with anything at all. Holders of bank debt get a sizeable haircut ‘up front’ on the face value of the debt and have part of the remainder converted into equity that shares the fate of the old equity.
* We have the Great Depression of the 2010s.
None of this is unavoidable, provided the US Congress grows up and adopts forthwith something close to the Emergency Economic Stabilization Act as a first, modest but necessary step towards re-establishing functioning securitisation markets and restoring financial health to the banking sector. Cutting off your nose to spite your face is not a sensible alternative.
PS My remaining financial wealth is now kept in a (small) old sock in an undisclosed location.
PPS The conduct of both US Presidential candidates in this matter makes them unfit for purpose.
_____________________________________________________
Willem Buiter: Professor of European Political Economy, London School of Economics and Political Science; former chief economist of the EBRD, former external member of the MPC;
September 29th, 2008 in Economics, Ethics, Financial Markets, Monetary Policy, Politics | Permalink
January 9, 2009
The time of the righteous By Gideon Levy
http://www.haaretz.com/hasen/spages/1054158.html
This war, perhaps more than its predecessors, is exposing the true deep veins of Israeli society. Racism and hatred are rearing their heads, as is the impulse for revenge and the thirst for blood. The "inclination of the commander" in the Israel Defense Forces is now "to kill as many as possible," as the military correspondents on television describe it. And even if the reference is to Hamas fighters, this inclination is still chilling.
The unbridled aggression and brutality are justified as "exercising caution": the frightening balance of blood - about 100 Palestinian dead for every Israeli killed, isn't raising any questions, as if we've decided that their blood is worth one hundred times less than ours, in acknowledgement of our inherent racism.
Rightists, nationalists, chauvinists and militarists are the only legitimate bon ton in town. Don't bother us about humaneness and compassion. Only at the edges of the camp can a voice of protest be heard - illegitimate, ostracized and ignored by media coverage - from a small but brave group of Jews and Arabs.
Alongside all this, rings another voice, perhaps the worst of all. This is the voice of the righteous and the hypocritical. My colleague, Ari Shavit, seems to be their eloquent spokesman. This week, Shavit wrote here ("Israel must double, triple, quadruple its medical aid to Gaza," Haaretz, January 7): "The Israeli offensive in Gaza is justified ... Only an immediate and generous humanitarian initiative will prove that even during the brutal warfare that has been forced on us, we remember that there are human beings on the other side."
To Shavit, who defended the justness of this war and insisted that it mustn't be lost, the price is immaterial, as is the fact that there are no victories in such unjust wars. And he dares, in the same breath, to preach "humaneness."
Does Shavit wish for us to kill and kill, and afterward to set up field hospitals and send medicine to care for the wounded? He knows that a war against a helpless population, perhaps the most helpless one in the world, that has nowhere to escape to, can only be cruel and despicable. But these people always want to come out of it looking good. We'll drop bombs on residential buildings, and then we'll treat the wounded at Ichilov; we'll shell meager places of refuge in United Nations schools, and then we'll rehabilitate the disabled at Beit Lewinstein. We'll shoot and then we'll cry, we'll kill and then we'll lament, we'll cut down women and children like automatic killing machines, and we'll also preserve our dignity.
The problem is - it just doesn't work that way. This is outrageous hypocrisy and self-righteousness. Those who make inflammatory calls for more and more violence without regard for the consequences are at least being more honest about it.
You can't have it both ways. The only "purity" in this war is the "purification from terrorists," which really means the sowing of horrendous tragedies. What's happening in Gaza is not a natural disaster, an earthquake or flood, for which it would be our duty and right to extend a helping hand to those affected, to send rescue squads, as we so love to do. Of all the rotten luck, all the disasters now occurring in Gaza are manmade - by us. Aid cannot be offered with bloodstained hands. Compassion cannot sprout from brutality.
Yet there are some who still want it both ways. To kill and destroy indiscriminately and also to come out looking good, with a clean conscience. To go ahead with war crimes without any sense of the heavy guilt that should accompany them. It takes some nerve. Anyone who justifies this war also justifies all its crimes. Anyone who preaches for this war and believes in the justness of the mass killing it is inflicting has no right whatsoever to speak about morality and humaneness. There is no such thing as simultaneously killing and nurturing. This attitude is a faithful representation of the basic, twofold Israeli sentiment that has been with us forever: To commit any wrong, but to feel pure in our own eyes. To kill, demolish, starve, imprison and humiliate - and be right, not to mention righteous. The righteous warmongers will not be able to allow themselves these luxuries.
Anyone who justifies this war also justifies all its crimes. Anyone who sees it as a defensive war must bear the moral responsibility for its consequences. Anyone who now encourages the politicians and the army to continue will also have to bear the mark of Cain that will be branded on his forehead after the war. All those who support the war also support the horror.
This war, perhaps more than its predecessors, is exposing the true deep veins of Israeli society. Racism and hatred are rearing their heads, as is the impulse for revenge and the thirst for blood. The "inclination of the commander" in the Israel Defense Forces is now "to kill as many as possible," as the military correspondents on television describe it. And even if the reference is to Hamas fighters, this inclination is still chilling.
The unbridled aggression and brutality are justified as "exercising caution": the frightening balance of blood - about 100 Palestinian dead for every Israeli killed, isn't raising any questions, as if we've decided that their blood is worth one hundred times less than ours, in acknowledgement of our inherent racism.
Rightists, nationalists, chauvinists and militarists are the only legitimate bon ton in town. Don't bother us about humaneness and compassion. Only at the edges of the camp can a voice of protest be heard - illegitimate, ostracized and ignored by media coverage - from a small but brave group of Jews and Arabs.
Alongside all this, rings another voice, perhaps the worst of all. This is the voice of the righteous and the hypocritical. My colleague, Ari Shavit, seems to be their eloquent spokesman. This week, Shavit wrote here ("Israel must double, triple, quadruple its medical aid to Gaza," Haaretz, January 7): "The Israeli offensive in Gaza is justified ... Only an immediate and generous humanitarian initiative will prove that even during the brutal warfare that has been forced on us, we remember that there are human beings on the other side."
To Shavit, who defended the justness of this war and insisted that it mustn't be lost, the price is immaterial, as is the fact that there are no victories in such unjust wars. And he dares, in the same breath, to preach "humaneness."
Does Shavit wish for us to kill and kill, and afterward to set up field hospitals and send medicine to care for the wounded? He knows that a war against a helpless population, perhaps the most helpless one in the world, that has nowhere to escape to, can only be cruel and despicable. But these people always want to come out of it looking good. We'll drop bombs on residential buildings, and then we'll treat the wounded at Ichilov; we'll shell meager places of refuge in United Nations schools, and then we'll rehabilitate the disabled at Beit Lewinstein. We'll shoot and then we'll cry, we'll kill and then we'll lament, we'll cut down women and children like automatic killing machines, and we'll also preserve our dignity.
The problem is - it just doesn't work that way. This is outrageous hypocrisy and self-righteousness. Those who make inflammatory calls for more and more violence without regard for the consequences are at least being more honest about it.
You can't have it both ways. The only "purity" in this war is the "purification from terrorists," which really means the sowing of horrendous tragedies. What's happening in Gaza is not a natural disaster, an earthquake or flood, for which it would be our duty and right to extend a helping hand to those affected, to send rescue squads, as we so love to do. Of all the rotten luck, all the disasters now occurring in Gaza are manmade - by us. Aid cannot be offered with bloodstained hands. Compassion cannot sprout from brutality.
Yet there are some who still want it both ways. To kill and destroy indiscriminately and also to come out looking good, with a clean conscience. To go ahead with war crimes without any sense of the heavy guilt that should accompany them. It takes some nerve. Anyone who justifies this war also justifies all its crimes. Anyone who preaches for this war and believes in the justness of the mass killing it is inflicting has no right whatsoever to speak about morality and humaneness. There is no such thing as simultaneously killing and nurturing. This attitude is a faithful representation of the basic, twofold Israeli sentiment that has been with us forever: To commit any wrong, but to feel pure in our own eyes. To kill, demolish, starve, imprison and humiliate - and be right, not to mention righteous. The righteous warmongers will not be able to allow themselves these luxuries.
Anyone who justifies this war also justifies all its crimes. Anyone who sees it as a defensive war must bear the moral responsibility for its consequences. Anyone who now encourages the politicians and the army to continue will also have to bear the mark of Cain that will be branded on his forehead after the war. All those who support the war also support the horror.
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