It appears that our new President is out to continue the authoritarian and reprehensible policies of his predecessor through finesse by acknowledging illegality and transforming it into legality. The
underlying idea isn’t all that weird but it certainly seems so. Since so many people use illegal drugs let’s make them legal. No, that’s not what’s on tap: our leaders are going to legalize denial of habeas corpus and they think they can get away with it by having it only apply to non-citizens. The historical trend of civilization is to define, codify and enforce human rights; this is what international law and the World Court are all about. This is what led to actions and trials over Rwanda and Bosnia. Many have noted that there has been a narrow-minded focus of these investigations and prosecutions. Many, including many Americans, think W. should have been in the dock and on the scaffold with Saddam. The very motivation of international law is to universalize standards so that they apply to all. But those in power never want laws to apply to them, as in the old saw that only the “little people” pay taxes. It is an interesting question whether
these “leaders” are cynical liars or naifs. But the answer doesn’t really matter. If your house is burglarized the motives of the burglar are not of great import.

The administration believes that as long as they can convince a judge to agree to temporary preventive detention and get periodic renewals of this jailing, then they can keep “terrorism suspects” incarcerated forever, or at least until the “suspect” dies, a life non-sentence. I recall the OJ trial and the outrage many felt at his escape, an outrage still felt. And it seemed to me that this anger was misplaced. OJ was found not guilty by a jury. The prosecutors did not impress with their competence (“If the glove doesn’t fit, you must acquit.” Marcia Clark should have anticipated this and had an answer.) but the jury’s decision was how things are supposed to work. Would people feel better if after the acquittal OJ had been re-arrested and
then condemned to a life sentence because some thought he was guilty and deserved jail or death? All groups have rules for members; otherwise chaos ensues. And societies need rules, sane and sensible ones, and enforcement needs to apply to all.

All this seems to be an abstract argument but in a crisis the word is made flesh. My local public radio station is soliciting listener input for what they might do if they lose their jobs, calling it “What is your Plan B?” This cuts to the heart of American ideology and the dilemma it poses. It is obvious we are all individuals and act as individuals and die as individuals. This does not mean that the world is only made up of individuals as in the absurdity of Margaret Thatcher that “There is no such thing as society.” In truth, not even the most hard-hearted right winger believes that. Right wingers want
the Air Force and they want Courts and Police to protect them and their property; they simply don’t want those things that help and protect the poor. It is equally obvious to even the most simple-minded that life plays out in dialectical fashion between the one and the many and the fights are about the interplay between them.

Even the most entrepreneurial need a market. Robinson Crusoe was a polemic about political economy though most take it as a Disney fantasy. There can be no Plan B for an unemployed individual in a society that offers no jobs. Journalists don’t seem to be a reflective set and my opinion is that few of them do any homework. This Plan B solicitation is framed the wrong way. Responding to mass unemployment demands collectivity and political action. Governors in fiscally-strapped states want to handle budget shortfalls by eliminating services for the poor. This is not the behavior of a civilized society and I doubt that many of us want that kind of world. What we want is to raise up the downtrodden, not condemn them
to a penurious, painful death.

We need to increase inclusiveness, not diminish it. Denying legal rights to non-citizens is a step to denying them to citizens once they are re-categorized as terrorists. Many citizens may fear and despise the poor and homeless but if they themselves lose their jobs or homes will their self-opinion change and lead them to hate themselves? Were the 25% unemployed during the Great Depression lazy, shiftless people? What Americans need to do is some thinking and talking. A great national conversation needs to take place about the nature of our societal structure and what changes we want. If we fall prey to the preaching that current winners are God’s chosen and deserve to stay on top at our expense, well, maybe slaves needed and wanted slavery as some Southern planters claimed. If we put ourselves outside the realm of accountability, which is what chauvinism is, then we will have more war and more crises and more chaos. If we call Taliban bombings terrorism but don’t recognize Predator drone bombings that kill wedding parties as terrorism then we are debasing not only language and thought but our very lives.

Recent news-talk is of a bottoming-out and rebound in the economy. It’s not quite clear upon what this optimistic reporting is based. Foreclosures are growing; unemployment is growing; debts are growing; interest rates for consumers are not falling; investment in production is not growing. I’d guess the same ignorant folks who thought that financial innovation would carry us to unbounded heights, and who never saw the crash coming, are still scurrying around and garnering notice. The doom-and-gloom folks who forecast the crash were avoided as party poopers before the fall and they are no more popular today.

For 35 years the productive 80% of the population has either treaded
water or sunk below the surface. Economic growth didn’t appear in their yards and fewer of them even have yards today. The wealthy have always controlled the economy and they use it for their own enrichment tapping the egotism of the political folks, whose lust for power is unbounded, to set the laws to enhance concentration of wealth and funnel taxpayer money to their wallets. Even laws that supposedly benefit the plebs were skirted. The “Homeland Investment Act” cut corporate tax rates from 35% to 5.25% for foreign profits returned to the US and invested in production here. A study cited by Floyd Norris in the New York Times showed how that didn’t work out and how basically new investments in home production never happened; instead 92% of $299 billion went to shareholders. One lack of clarity in the article was the fuzziness in explaining how the corporations managed to evade the law but not break it. In any event, it’s just another example of how the economy and the governing laws are designed to move money from my pocket, and yours, and put it in the fat cats’ wallets.

Wild speculation in the 1920s led to the famous crash and the lack of
solvent consumers ushered in the famous depression. New Deal policies
took the edge off some misery yet unemployment and poverty remained
high and in 1938 the wealthy led an assault against the New Deal and
another recession ensued. It took WW II to work up to full employment
and after that war organized labor was strong and kept workers’ share
of national income historically high. Then came the wild inflation of
the late 60s with a bloated Pentagon and foreign war being paid for
with funny money. Along then came Volker and Reagan and the wealthy’s assault against workers got very heavy-handed and it’s been downhill for ordinary folk ever since. The credit card industry boomed and workers have been taking on debt to the extent that most Americans are technically insolvent. Productivity is high so most workers aren’t needed, at least not in highly paid, high value-added work; we can’t afford to buy stuff we don’t even make. The Fed and Treasury, along with their partners in other countries, are working overtime to stave off a deflationary spiral; their success, if it comes, may usher in hyperinflation and that as well would probably end in deflation. After all, we’ve been living in a deflationary era for a long time.

As more than one observer has written, the Federal Reserve isn’t
federal, has no reserves and isn’t even a bank. Created in 1913, the
Fed is owned and operated by commerical banks and they act in those
banks’ interests. If we benefit it is a side-effect, not a goal. So,
that the Fed and Teasury have indebted the country, the government,
the taxpayers to an endless future of wealth transfers should surprise
noone. The Congress outsourced money creation to private interests and financial innovation has been a seemingly sophisticated game of
Whack-a-Mole. I’m acquainted with someone who likes to buy lottery
scratch-off tickets. Sometimes he wins; one day he won $500. Regardless, after winning or losing he keeps buying tickets until he has no money left. Literally. I could bank on it, if I were a bank. But this guy isn’t a bank so he can only play as long as he has greenbacks in his pocket. Would that the banks were in the same position.

The banks create money ex nihilo every time they issue a loan. Credit
creates inflation since interest demands you pay back more than you
borrowed. For over 40 years official policy has been mild inflation. The experts don’t call it inflation; of course, they also call 4% unemployment full employment. But the rules in recent years have been quite lax and money creation got out of hand. Now when the
bills can’t be paid we, the taxpayers, through our government, are
promising to pay back all these creditor-magicians. Money effectively
is a claim upon a society’s resources and these claims are piling up
in the ultra-rich’s vaults. Once again, public health care is on the
agenda and the propagandists are hard at work to kill it since it
might harm private insurers. Their attitude is that the public masses
must cater to the needs of the wealthy few. Well, we’ve been suckers
for a very long time. It seems that Medicare and Medicaid are very
efficient, with overhead of only 4% while private insurers have 25%
overhead. That’s where the profit lies. I never understood how voters
fell for the scam that a public utility, a water department for example, could provide better service at a lower cost. Public utilities are defined by being something that affects everyone such that the public itself, through their government, should control them for their benefit. Money and credit are public utilities and should not be controlled by private interests.

Financial innovation gave us asset inflation, usurious interest rates, great volatility, and now collapse. In some ways it developed because it became harder to make money through productive investment: there’s more money to be made in lending to a developer than in being a developer. Of course this isn’t long-term true. Money is a measure of
value and value is a creation of human work. Most “modern” economists
try to deny this but if it weren’t true there could be neither inflation nor deflation. Money can be skimmed in transaction costs (20% fee to an investment banker) or profits before assets resettle at their “real” value, which brings in the musical chairs metaphor. But a return to value is unavoidable and that’s why asset prices have been falling and that’s why putting workers’ pension funds in stocks is insane. Gambling is not a plan for the future. Uncontrolled money creation gave us AOL-TimeWarner, a disastrous merger but very profitable for a few. Recall when the Tokyo Palace Gardens had a higher market value than the state of California (supposedly the world’s 7th largest economy). When something sounds crazy, it is.

Again, the problem seems to be that productive capacity and
productivity have grown beyond the ability of consumers to buy. So
financiers decided to make money from money, a weird kind of alchemy
where you park a pile of money, go off to recite your incantations
and when you return the pile has grown. Amazing! To quote Marx from
Volume 3, Chapter 30, of Capital: “The ultimate reason for all crises
always remains the poverty and restricted consumption of the masses,
in the face of the drive of capitalist production to develop the
productive forces as if only the absolute consumption capacity of
society set a limit to them.”

Some current Marxists think that the microelectronics revolution has
so changed the nature of production that some solutions, such a
Stalinist socialism, are of limited utility. Others, such as David
Harvey think that in a de-industrializing place such as the US that
the state-finance nexus now dominates thus sidelining workers. Professor Harvey is a learned man and the others do their homework as well. But somehow I don’t buy it. Marx wrote of “fictitious capital”, an appelation that was created by classical economists to name funny money, and the havoc it could wreak. Personally, I see Marx as the culmination of classical political economy. Our 20th and 21st century economists want to deny the inescapable validity of classical political economy, making wealth creation virtually an act of will. This belief has given us the financial disasters of the past 2 or 3 decades. I doubt the law of value has been eliminated by technological developments. The way I see it is simply that History moves slowly, and at its own pace, not that of the theorists. Marx noted that there is no end of wants and wants provide the motivation for action and Voila! Wealth creation! Stuff!!

The USSR had its problems, particularly in heavy investment that it
was loath to destroy as jobs might go along with it. But I’ve spent
the past 20 years reading up on the USSR and it seems that this was a
technical problem, not a foundational one. The USSR didn’t collapse;
it was destroyed from the top. What was amazing is that there wasn’t
revolt there when the people’s property was stolen from them and given to speculators. And that points not to problems of economic design but to ideology of the masses. In this regard I think the most amazing book I’ve read in the past, well, forever, is A Journey in the Back Country by Frederick Law Olmstead. A journey taken through the South in 1856. This book described to a large extent the world I lived in in the late ’70s and ’80s. To discover that the people’s views, their
ideology, was the same in 1986 as it was in 1856 and that a contemporaneous writer had an explicit handle on those views astounded me. How coul this be possible? Sure, people still go to Church but I’d guess few believe in the same way their progenitors did.

I’d say the problems we face are political and conceptual. And it’s
hard for folks to get a grasp on events when they’re lied to and
propagandized from before sunrise to after sunset. More people were
arrested in St. Paul at last summer’s Republican convention than the
600 reported arrests in Iran thus far. Our House did not vote a
resolution condemning the police in St. Paul, and media talk was of
anarchists, not people practicing democracy. The drive for more war,
as it expands in Afghanistan and Pakistan and probably to Iran, and
who knows, maybe Korea. Our leaders are aggressive, greedy and very
dangerous. In fact, the USSR is the only example I can think of when
power conceded without a fight. No one in the West ever explained how the “evil empire” gave up peacebly, how Lucifer became Gabriel. Do you think the evil bastards destroying our society will give up so easily.

In the 1980s the United States was ruled by the very right wing Reagan regime. Such a construction does not imply that its predecessor was left wing. Historically, the left is concerned with the welfare of the broad mass of the population and the right pursues the interests of wealth. From that perspective, the US has always been controlled by the right. Even the Roosevelt New Deal was not leftist but realist in that its social welfare programs were meant to stave off radical, if not revolutionary, threats represented by the example of Soviet socialism thus to preserve the rule of private property. To say that the Reaganites were very right wing is merely to acknowledge the extremity of its views and actions: to roll back New Deal gains and public expenditures for the broad population, to destroy unions, to increase the wealth and power of the richest, to eliminate the Soviet Union itself. That many working class Americans had, perhaps still have, a fond and benign view of the “Gipper” merely illustrates their ignorance and lack of understanding. It doesn’t appear that knowledge and understanding have grown over these past 25 years. Not knowing is ignorance; not learning is stupidity. A “Shoe” cartoon of post-election 1980 had a caption saying that Americans finally got the government they deserved. Despair.

In the midst of the worst recession since WW II (today’s papers still use references to 1982-3) Reagan massively cut taxes for the wealthiest, massively increased military spending, massively cut social programs, and began the huge increase in the federal debt. We are now in the third decade of large government debt which has the effect of crowding out social spending and, if they can manage to keep us afraid enough, keep the military budget huge and growing. This makes the rich happy (at least for a few months at a time, until their greed returns, as hunger always does. Marx himself wrote that there is no end to wants.) and the defense contractors profitable. This assault upon the “left” cut federal funding to education by about 50%, created the desire for, and news stories about, housing in “good” school districts; thus was planted the seeds of the housing boom which has imploded over the past year or two. Reagan also cut funds for libraries, producing a crisis which is still playing out. At the same time that Reagan was supporting Solidarity in Poland, a workers’ movement that challenged successfully that government, he fired the Air Traffic Controllers, destroying their union. I remain amazed how that very pointed contradiction didn’t merit much mention in the media. Of course, the media was undergoing consolidation. Capital Cities bought ABC, and the largest shareholder at that time of Cap. Cities was William Casey, who became Reagan’s CIA director. The CIA has a long, sordid, documented history of using journalists and prominent “culture warriors” to spread propaganda. The violent and illegal Contra war against Nicaragua was run out of Honduras by John Negroponte and Casey, ably assisted by Robert Gates, currently Democrat Obama’s Secretary of Defense. Tracing the genealogy of wealth and political power for the past 70 years is amazingly revelatory though too long for blog posts. But the bad penny thesis holds and there sure are a lot of tarnished coins floating about.

The changes wrought by historical development caused economic stagnation since capitalism is based upon growth and scarcity. Productive capacity and productivity make it easy to flood markets with goods. Finding customers with money is harder. So financiers have completely taken over the economy making money from money, a fundamentally impossible task. Fed and Treasury policy since Nixon’s day have been about inflation and the siphoning off of surplus. Now, taxpayer funds are shifted to Wall Street, with crippling debt service stretching farther than we can see. But the automakers will endure bankruptcy as this will destroy union contracts and pensions, which is sort of the point. Funding for social programs withers and the future for the health of our increasing poor is bleak indeed. So an assault to split workers from the unemployed through resentment is on the menu. There was a report today about how much it’s costing those with private health insurance to allow the poor medical care, and, of course, how public funding would create rationing, as though high-cost private insurance wasn’t itself rationing. Perhaps we should have doctors auction off services to the highest bidders.

The rule of the rentiers is tied into wonderful world of intellectual property. We are looking to a future of royalty payments to genetically modified grains and entertainment producers, and the list goes on and on. Almost like a return to feudalism though we won’t be as well taken care of as serfs of the past. Analysis from a worker’s (including those unemployed) perspective doesn’t get any media play; our highly individualistic, winner-take-all culture is supposed to be the pinnacle of a Calvinistic god’s creation. And even on the political left disagreement and shoddy analysis are the rule. Most intellectuals are entranced by the ability to blow hot air; I’m not certain they care what happens as long as they can talk and write about it. Some think the development of microelectronics has undermined the surplus value paradigm. I have my doubts about that. Irving Fisher, Yale professor, wrote in 1929 that the stock market had reached a ‘permanently high plateau’ until it crashed a few months later. Then,in 1933, Professor Fisher wrote the canonical analysis “The Debt-Deflation Theory of Great Depressions” in which he claimed that scarcity had been eradicated and productive capacity was sufficient to fulfill all human needs. His debt-deflation theory is what motivates Bernanke at the Fed and why he and his cronies are so hot to prop up the banks and asset prices in general. If prices fall faster than debts (in real value terms) then the more debts one pays off the more indebted one becomes. Inflation or deflation: the poles between which capitalism swings.

As things worsen, and they will, in our real lives (not stock trading lives) the media will assist in the propaganda campaign to split us and turn us against each other, killing each other and the poor of other nations. It would seem to need a miracle for the majority of Americans to get a handle on how they’ve been used and abused and manipulated and lied to and what it would take to change the structure and direction of the country. Most likely we are looking at catastrophe, the real not the metaphorical kind, and other countries and other peoples may take the lead in moving forward. This morning I heard on the news that Americans have gone from buying 16 million cars a year to now buying 9-10 million. As someone remarked about Germany: If your economy is built on people buying a new car every 3 years and they switch to buying every 5 years, you’re screwed. Solving our problems requires fundamental change and that does not mean further impoverishing workers. After capitalism came to Russia workers there made in 1992 only 40% of what they made in 1991, and word is that the Poles will be lucky if they regain 1989’s income by 2015!

Usually the solution to economic crisis is cast in “Keynesian” terms, named after the British economist John Maynard Keynes, who, with America’s Dexter White, worked out a plan of government spending for employment to fill the slack left by private employers. Full-bore Keynesianism has never been tried and Dexter White paid the price for his ‘radical’ views during the McCarthy hearings. One little noted recommendation of Keynes was ‘euthanasia for rentiers.’ Or, as the Bolsheviks put it: eliminate the kulaks as a class. Now, more than ever, this task confronts the world and not just Americans. From IMF and WB and WTO and Wall Street and Washington and City of London: the financiers are sucking our blood. They really need a stake through the heart.

Tomorrow is the first day of Spring and the two month anniversary of Obama’s administration. Can we tell the difference? Money is still being funneled to wealthy investors; houses are still being foreclosed; unemployment keeps rising. There is much todo about those evil bonus babies at AIG. Politicians think they can defuse our anger by taking back $165 million out of $170 billion, a sop of 0.1%. Maybe we won’t notice their sleight of hand. The bailout is merely a way of paying off wealthy investors so they have their bucks if and when there is a rebound. Since Obama’s team is a replay of Bush’s team which is a veteran group from Clinton’s team…, it’s almost enough to make one cynical.
Forsooth, as they say, our problems are deep and broad, both fundamental and structural; meaningful reform would be revolutionary and capitalists and their hirelings will fight to our last dollar and our last drop of blood to stave off revolution. This will be a long conflict and
we’ll have to forsake that all-American belief in fantasy, as though real life were a movie with magic and heroes. Magic and heroes are for the very selective histories and their Hollywood adaptations. Martin Luther King Jr. might be considered a hero today but he was hated and vilified by those in and close to power back in the 60s. In grade school I was taught about the Boston Tea Party as part of our war against tyranny but the leaders of the day, such as Founding Father John Adams, excoriated the act for its destruction of private property and money was raised to compensate the owners. Yesterday’s sinners become tomorrow’s saints. The problem is that, to quote a Bob Dylan song title, tomorrow never comes.
There’s a <a href=”http://www.counterpunch.org/harvey03132009.html”>marvelous piece</a> by David Harvey that recapitulates and encapsulates both our present predicament and its evolution in an unusually clear way. In many ways one can think of the 1930s’ Depression as the Big One that some think today’s Big One represents. Historically, capitalism’s recurrent crises of accumulation and overproduction and market saturation lead to unemployment and production cutbacks and deflation until the excess is eliminated and a new cycle can begin. The 30s’ Depression went beyond that and it took the full mobilization of WW II to put people to work and the massive destruction of that war  created the necessity of continued high employment and production to rebuild the industrial world of Europe and Asia. Our difficulties today are similar but worse and have some qualitative differences.
The first qualitative difference is the debt market. Capitalism’s engineers, the economists and financiers, have remade our world to have debt be an asset. Of course, debt cannot be an asset nor credit capital, but they pretend it is and design the economy so that almost everybody has to borrow almost all the time to do almost everything. This produces liquidity crises which we’ve been seeing with increasing frequency as bankruptcies lead to greater consolidation of capital. While the propagandists love to preach to us about competition there is less of it each passing year: concentration of capital is the natural development of the system and whenever rules are written to limit or control monopolies they are immediately undermined and eventually eliminated.  But in the postwar world consumer credit was systematized and it exploded to keep markets viable. Today there is a real dilemma in that capitalists need us to keep buying stuff but we’re tapped out and seemingly they’d rather starve us and destroy perhaps themselves than to write off our debts. This is why mortgagors get bailouts but mortgagees get evicted. This is a real problem for our creditors to ponder as they sip their Napoleon brandies.
So they’re working on the solving the capitalists’ debt problem through indenturing us through our taxes and shrinking social spending into an endless future. Today the report came out that the Fed is printing $1 trillion in new greenbacks to flood the economy in the hope that something will happen.  (Some have written that such an approach would work better if they simply mailed all of us packages of $100 bills.) This increases the likelihood of hyperinflation, particularly if the Chinese stop rolling over their purchases of Treasuries. Fascism and war were the outcome of Germany’s hyperinflation in the 1920s and in a nuclear world I think most of us, the sane ones at least, would prefer not to go that route.
The second qualitative difference is the massive increase in productivity over the past four decades or so. Fewer and fewer workers are needed to produce the necessities of life so even with restructuring it’s hard to envision a bright future for the jobless. This is particularly acute for the future of the US. It makes no sense for our large and rich country to become post-industrial, as though we no longer needed the stuff coming off the assembly lines and for the US to run continuous trade deficits signals the absurdity of this development. All countries, that is, a land with a centralized government and laws and its own currency and central bank, need to sell as much as they buy and offshoring our jobs makes our problems worse, not better, except for  investors. The era of capitalism, of deriving concentrated wealth from exploitation of workers’ surplus value, has become obsolete. A new paradigm is needed.
Professor Harvey’s article is concerned mostly with this issue. The history of domination and exploitation was constructed on the ownerhship of private property and governments and legal systems and propaganda machines (including our own news and opinion media) were created and evolved to enforce and enhance rights of owners of private property. Ol’ Abe Lincoln wrote, spoke and died over the belief that a nation can’t continue half-slave and half-free. And Americans couldn’t have a viable workers movement with Section 14-B (Taft-Hartley Act of 1947, as amended) that allowed the open shop, nor keep borrowers solvent with usurious compounded interest rates that became universal after the Carter-Reagan transition, nor markets growing with steadily lowering wages. The heavy thinkers advising our rulers are making sure that wealthy investors keep and increase their control and that we pay our debts, and their own as well, and do this without having open revolt. I don’t know if they can succeed. But if we rebel we need to think through how we want to remake our world and our thinking needs to be as deep and broad as the problems we face. In the short run we can only demand that our government defend us against the predators and at their expense. Ultimately, however, we will need to rewrite the social contract that includes our being productively employed and decently housed. The USSR eliminated private ownership in means of production and in land, and we might consider using that model at least for land and the housing built on it. And this will require that we reflect on individuality and its emblem, the cowboy. We have to start thinking socially and our views of a “man’s castle” and all that implies. A long struggle indeed.
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In this final countdown, the election ads and analyses will soon end. Candidates carping about their opponents’ characters and policies induce headaches. Few of us believe either Obama or McCain will lead us to the promised land. Both major political parties are captives of the financial elite: McCain with people like Phil Gramm and Obama with Robert Rubin. Wall Street finance and the investors they represent gave us this mess of runaway liquidity and debt all the while siphoning off wealth for their own control. A common operation of investment banks is the 2/20 rule: 2% annual fees for money under management and 20% of profits. With derivatives and credit default swaps, deals are packaged and sold so if they later go bust the original financiers are in the clear counting their money on their multimillion dollar yachts off the shore of their multimillion dollar Long Island estates. And this bailout, by design, offers nothing for debtors or even the productive (real) economy. Goldman Sachs at the Treasury (Paulson) and Goldman Sachs at the Fed (Bernanke) will join with Goldman Sachs’ (and current Citi chair) Rubin at Obama’s right hand, and they will screw us all (or at least 90% of us).

When corporations found it difficult to make money through production first they moved factories from the unionized north (rust belt) to the non-union south, then to Mexico and Central America, then Taiwan and South Korea and to Indonesia and China and now even Vietnam. But with the growth of technology-based production and automation, not even low-wage countries were enough. Capital accumulation became so severe that new ways to make a buck had to be found and innovative financial engineering was born. Actually, this stuff is not new, except for the CDS and the complexity and splitting of the underlying “assets” if we can call them such. Consider this from Alfred Marshall’s 1923 Money, Credit and Commerce (which used to be required reading for budding economists):

Of course, bills of exchange could do most of the work without the aid of any formal avenues of credit. But their scope was limited; and there remained a great opening for any paper currency issued by people known in each neighborhood; and which every one would accept in payment, at all events for small sums; not so much because he was certain of the permanent solvency of the issuer, as because he felt sure of quickly passing it on to his neighbors. A rich harvest was often reaped by those who could start as dealers in loans by making them chiefly in the form of their own notes or promises to pay; and by using the loans themselves as a means of getting these notes into circulation. This state of things has some striking results: it led many to think that credit is capital. They saw that whoever could put his own notes into circulation got command of capital, which he could use in his own business or lend to others; and they did not see that he was in effect turning to his own use part of the expensive machinery of trade, which had been provided by the public expense by the national metallic currency, by political security and social credit. They did not observe that while making that machinery more efficient, he made it also more likely to break down; and that, while he reaped for himself the chief benefit from this increase in its efficiency, the chief evils from its increased instability fell upon others.

This certainly describes much of today’s finance. In a sophisticated economy (and this has been our world for at least a century) money isn’t the cash in your pocket or the gold in your strongbox but your share in the right to control currency and capital. When your check gets paid you lose part of your command over money and transfer it to your creditor. And debts, which used to mean a bill to be paid but now ongoing payments, ie, a revenue stream, are considered assets. To repeat one of Marshall’s lines:  This state of things has some striking results: it led many to think that credit is capital; or another, which presaged the derivatives mess: …he felt sure of quickly passing it on to his neighbors; or another, which has already begun: the chief evils from its increased instability fell upon others. While I like a ‘tec novel as much as anyone the truth is that burglary and armed robbery are passe. Today you do it with paper and digital bits and you can do a lot of it legally, since laws are passed by and for the wealthy.

But bankers don’t even trust each other these days; that’s why the bailout isn’t leading to more lending but to use for acquisitions, which led Joe Nocera in the NY Times it write that he felt he had been sold bill of goods. Depressions are eras of accumulation crisis where markets are totally saturated (these days it means consumers are tapped out and maxed out on their credit cards) so assets deflate, businesses go bankrupt and the really wealthy increase their power through buying up cheapened assets for pennies on the dollar. Not everyone is broke: Warren Buffet and Bill Gates certainly aren’t. Debts must be liquidated and assets destroyed so that a cycle can begin anew with the rich richer and everyone else indebted through the national debt. They, the powers that be, have decided to unite the best of capitalism — it’s a free world and we’re all free to starve if we have no money — with the best of feudalism — we owe our payments to our masters just because they “own” everything.

The future shakeout will be nasty and long and people will want to fight back, even before they have acquired the workable interpretive framework, and this is where the drive for growing executive power and militarization come in. Why do you think the armed forces have spent years and billions developing weapons and measures for crowd control? Ya think it can’t happen here? This is what it looks and feels like when it’s happening. Don’t expect a guy with a funny mustache and an amphetamine addiction. This time it might turn out to be a really “nice” really smart minority guy.

The sky is falling! The sea is rising! The ice cap is melting! So the Fed
chair pushes his Great Depression analysis; the Treasury head extends his hand
to worried creditors. According to the recent Forbes 400 list those wealthy
creditors have a net worth of $1.6 trillion. If these distressed loans will
appreciate in value for a payback to taxpayers they would also appreciate for
the Forbes 400. If collapse is in the cards why isn’t Buffet rallying his
class to save the system? Since the Fannie and Freddie takeover gives the
power to Paulsen to renegotiate mortgage loans why has he not begun to do so?

If Bernanke is such a student of the ’30s why doesn’t he understand pushing on

a string? Which was the robber baron who said that a depression is when money

returns to its rightful owner?

The basic problem is that the masses of the people, that is to say, the
workers and those who would be workers if the financial industry hadn’t
exported all those jobs, can’t afford to buy houses, rent apartments, buy
digital tvs or cars or even pay off their existing loans. And giving money to
wealthy investors won’t change that reality. And listening to journalists and
the usual suspects they interview doesn’t aid understanding either. Everyone
recognizes and acknowledges the housing bubble but when it pops they scramble
and scream how we need to pump in money to reinflate the bubble, even though
doing so would only put off the reckoning for a few days. Oil companies want
new oil leases not to drill for oil but to prop up their stock prices since
reserves drive equity prices. Paulsen wants money to buy up debts to keep the
housing bubble intact. But stock prices remain, even after yesteday’s 777 drop
in the Dow and 109 in the S&P, greatly overvalued and probably need to fall
another 20% to achieve an historically realistic PE ratio. The housing-income
ratio remains excessive so house prices should fall another 15-20%.

It does seem true that without intervention credit dries up, the economy
stalls and unemployment shoots up. But even if intervention occurs with a
taxpayer buyout there still won’t be a market of money-flush consumers ready
to buy houses or cars or dishwashers. And that is why there is much recent
writing, from the New York Review of Books to the Economist, about a major
push for infrastructure spending. The capitalists want it not because they
like bridges but because they realize consumers are tapped out so they hope
for profits from the taxpayers where infrastructure costs are spread out over
the entire population. Of course, the trillions of dollars that would cost
added to the ten trillion of current government debt, let alone all the
recently incurred Treasury debt or even the $700 billion current proposal,
would make serfs of us. And that is the point; the capitalists realize that
their historical paradigm — hire workers to make things and pay them to buy
those commodities — is dead. It died more than 35 years ago and has been only
a zombie since then, energized and moving through debt. And now the payment is

due: Final Notice!

Up through 1980 it was generally believed that the US debt was a bill to
someday pay off but with Reagan and ballooning debt through military spending
+ rich people tax cuts many perceptive observers realized that we were
entering a new era: the income stream. Capitalists don’t really want to be
capitalists in competition with each other. They want to be monopolists where
they can dictate terms and prices. But even then they don’t like monolpoly
where they have to dirty their hands actually running factories and
warehouses; now they aspire to be rentiers. They simply want to own everything
and collect monthly allotments from 80-90% of the population and the
government. And this is what motivates all the propaganda and legislation over
“intellectual property” and that is Bill Gates’ new capitalism. Gates went from
competing, more or less, to win the operating system war to monopoly in the PC
market and now into the “software as a service” realm where consumers will pay
monthly bills to use MS Office. And Monsanto wants a rentier income from every
green bean or ear of corn all people in all places all the time have to
pay. The real engineering that contemporary corporations seek is legal and
financial: they own; we pay or die.

Last week Michael Bloomberg, New York mayor and on the Forbes
list with $20 billion, was interviewed and explained that the current
situation grew out of financial innovation which was a response to crisis (not his
word). Bloomberg said that computerization and telecommunications had led to
automated and instantaneous stock trading and that made the stock broker
redundant and obsolete. An astute and revolutionary comment by Hizzoner. When
automation and speed hit an auto factory the workers lose their jobs. But Wall
Street adapted by inventing new investment vehicles and strategies so they
could not only keep their jobs but make even more money. Today is the fruit of
that innovation. Now we have SIV and CDS. CDS (credit default swaps) are
simply ways of gambling and their “value” (which assumes they have any value
at all) can be created out of thin air and their current stated worldwide
value is $61 trillion while 2007 worldwide GDP was only $57
trillion. Obviously the inmates are running the asylum.

If there is a solution it would be for nationalization of housing
itself. Take over the mortgages and renegotiate them down so that people can
afford not only to make the payments but also afford the food to cook in those
kitchens. Let the investors take the hit. And if they squawk then we can enact
wealth laws to fund these expenditures and even job creation overall. Most
people buy houses to live in, not to flip for a profit. Let specualtors suffer
and let’s move more people into all those empty tract homes. If our government
can go into trillions of dollars of debt to pay investors and make war it
could also spend the money improving the real lives of real people. It is
becoming clear that for perhaps the first time in history socialism is
not just a moral imperative but an objective necessity. The capitalists can no
longer create jobs for the masses or increase people’s real incomes. History
moves slowly but it moves inexorably. One hundred and fifty years ago one
didn’t need to be a genius to know that slavery needed to end (economic
problems of slave replacement was recognized among slaveholders in the 1770s)
but it took a devastating civil war to settle the issue. We may not survive
another international war with nuclear weapons. Greed, envy and lust dominate
our culture and these ’sins’ are fostered by Wall Street investors. It’s long
overdue that these sinners be reined in and corralled.

Every four years our ying-yang political parties inflict their pageantry upon us as the kings and queens of the ball pose as common people. It’s sort of a fantasy that all too many indulge in: that these puppets of money-power play their roles as saviors of the commoners. Mr. Obama pledges to bring a new day to America – perhaps through incantations to the sun? – and sense and sensibility
to foreign policy. He pledges to align freedom-of-religion America in support of a one-religion Jewish state and the pursuit of democracy while he supports bombing other countries, which are acts of war, not peace, and is advised by Rubin and Summers who are the ones, among others, who orchestrated the finance-dominated policy that has given us our penury and eroding lifestyles. And Obama’s dance partner is McCain, who promises endless war and who concerns himself about democratic, peace-loving Georgia and those war-mongering Russkies.

And we, the commoners, get caught up in this dance and think it’s the ultimate in artistic and intellectual quality or get so bored we don’t even pay attention. And we can’t rely on our “free press” to enlighten us as they, with all too few exceptions, are as ignorant as ourselves or as cynically dishonest as the balls’ royalty. In Minneapolis, on Tuesday, August 26, police, using “homeland security” powers, stopped a group and confiscated their property: cameras, cell phones, computer hard drives. This event dribbled into the news only to be quickly absorbed in more meaningful events such as parsing Hillary’s speech for the thoroughness of its Barack support. This group dedicates itself to documenting, visually, political protests and are in the Twin Cities for the Republican masquerade. The group was not carted off to jail, thus, by Supreme Court decision, not arrested. I remember growing up during this change of definition. The word arrest means stop but our courts have redefined the word to mean jailing and charging. And our Bill of Rights,in the 5th amendment, proclaims noone can be “deprived of life, liberty, or property without due process of law” but I guess “homeland security” trumps the Constitution. Those of us who care must hope this Gestapo-type incident won’t stay submerged or unrectified. If it had happened in Moscow (Russia, not
Idaho) it would have headlined as another example of anti-democratic
authoritarianism there. In the US, protesters are, or are at least
suspected to be, anarchists and a danger to the polity, while in other
countries, in a sliding scale that is graduated by a country’s support of
US foreign policy, protesters are strivers for democracy. Democracy
means people power and it seems to be problematic. By equating money with speech the Supreme Court has decided that speech is a commodity and Gates, Buffet et al. have a billion times as much free speech as the rest of us. But with the inconsistent exception of Jefferson, our Founding Fathers didn’t support democracy and structured the Constitution to restrict its development.

Also making the Wednesday news was the Pentagon’s decision not to sail into the port at Poti, Georgia, not wishing to risk confrontation with nearby Russian ships and Russian checkpoints; thus, they used a port 50 miles or so to the south. And the report said this ship is a United States Coast Guard cutter which I found astounding. What is a Coast Guard ship doing 5,000 miles away in the Black Sea? The reporter had no comment on this. This isn’t really surprising since reporters seem incapable of thought and they certainly rarely
do any homework. Even their continuing reference to Abkhazia and South Ossetia as breakaway regions of Georgia exposes their laziness. In the 19th and early 20th century Imperial Russia was a multi-ethnic, multi-national state and Georgia was part of Russia and when the Bolsheviks took over it became a constituent republic of the USSR. Lenin had tasked Stalin to take charge of the “nationalities” issue and that solution, which continued throughout the USSR’s history was realistic and rather elegant. In any event, Ossetia and Abkhazia were autonomous regions and in the true anarchy of the USSR’s demise,
an illegal act of Yeltsin, Abkhazia and South Ossetia became incorporated within Georgia’s borders but the people there didn’t accept that nor Georgia’s dedication to “Georgia for Georgians” and the Russians were required to become peacekeepers as early as 1991-2, and continued that role through Georgia’s military attack on August 8 of this year.

It is almost a truism of sociological analysis that atomization produces oligarchic control: the more share holders a corporation has the fewer shares must someone own to exercise effective control over that company; the more separated and alienated people are -this is individualism- the easier it is for a small group to control a state even with “free” elections and the destruction of the union movement in the US has been a salient in that regard; the more countries are broken up into small principalities the easier it is for the “big boys” to boss them around. The lack of a national industrial policy in the US is directly tied to the groveling that states and cities engage in to attract business. And the ideological control that the US capitalist state exercises over the commoners demands that an enemy exist and Russia is certainly convenient. I heard Scott Simon on NPR a couple weeks ago
say that the Russian army incursion into Georgia was akin to Nazi’s takeover of the Sudetenland in Czechoslovakia in 1938. Mr. Simon is a dedicated propagandist for the DC junta but I would have thought even he would have been embarassed to make that comparison. Mr. Medvedev’s recent statement on the recognition of South Ossetia and Abkhazia was nuanced and wistful. Of course the Russians have much more experience with the nationlities issue than white chauvinist Americans. In the run-up to the US Civil War and the secession of
South Carolina a prominent citizen of that state expressed his opposition to secession, saying “South Carolina is too small to be a country and too large to be an insane asylum.” The individual vs. the group, one group vs. another, one ethnicity within a multiplicity, one nation within another: these are complex issues that develop dialectically and do not admit of simplistic solutions. But to our rulers, immersed in the Grand Ball of a quadrennial Masquerade, nothing is important but their power, their control, their wealth and they’ll endanger or incarcerate or destroy without remorse as many of us
as they think necessary to their interests. The lunatics are running the asylum.

According to the news media covering the seemingly endless Presidential campaign the economy far outstrips the Iraq war for the “people’s” major worry. And the economic news is even more endless than politics. Of course, the economy is politics as much as the war. Bush didn’t invade for the date palms. I read something recently that summed it up and I couldn’t have written it more pithily myself. So below I reproduce an article from People’s Tribune:

The economic crisis that is steadily engulfing our country is getting broader and deeper. This is not just another recession. The market economy system is running out of steam. The temporary “fixes” that have been used over the past 30 years to patch up the capitalist economy and keep it going no longer work. Now, only fundamental change that addresses the underlying problem will get us out of this mess. What is the underlying problem? While the corporate press talks of the bursting housing bubble and the subprime mortgage mess “spreading to the broader economy,” this is only a symptom of the problem. At the root of the crisis is the way a market or capitalist economy really works.
It works through workers selling their ability to work – their labor power – to a capitalist in return for wages. That labor power creates more economic value than it consumes – this is the source of profit. The capitalist owns what the worker produces and sells it to get his profit. The “market” that the capitalist sells to consists of businesses and workers that have money to spend. The basic problem is, the market is being destroyed because advancing technology is replacing workers and wiping out jobs and whole industries. As more workers compete for fewer jobs, wages fall for those who still have jobs. Technology, combined with globalization, also means millions of jobs can be shipped overseas, so workers in one country are competing for jobs with workers all over the world. The result? A new class of dispossessed workers – permanently unemployed, or with only temporary, low-paying jobs – is being created and is moving steadily toward becoming the majority. Workers with little or no money cannot consume. This destroys the market for what is produced, and the market economy begins to fail. This is the foundation of the crisis we see developing now.
Until now, the crisis has been averted. For about the past 30 years, the US economy has been propped up with borrowed money. Workers and homeowners have borrowed on their credit cards and against their homes. Banks, investors, industrial firms and the US government have borrowed from foreign investors and governments. The US today relies on $2 billion a day from abroad to finance investment. The periodic recessions and other economic crises that have developed have been temporarily solved with more borrowed money. But sooner or later the loans have to be repaid. And now everyone involved is out of options. Unemployed and impoverished workers can’t pay. Without buyers, businesses can’t sell what they make, and now they can’t pay. Seeing this, bankers and other lenders are pulling back. Credit is drying up.
The US “Rust Belt” – the former industrial heartland – tells the story. Look at Michigan, for example, where auto layoffs and buyouts continue, and 400,000 jobs have been lost since 2000. The jobs aren’t coming back, and new “New Deal”- style government programs won’t solve the problem. It does no good to put money in the hands of workers who will never again have jobs. Once the money is spent, we’re right back where we started. During the Great Depression, it wasn’t Roosevelt’s New Deal programs that ended the Depression, but World War II, which put everybody back to work. But today, the military industries and modern warfare are so automated, even another world war won’t put many people to work, and it would probably destroy the world. History shows that depression, war and fascism go hand in hand. If we continue to follow capitalist leadership world war is where we’re headed. And we’ll have fascism in the bargain, as the corporations seek to turn us against each other so we don’t turn on them. There is only one way out of this – we, the people, must organize ourselves to fight for a new society where we use the marvelous technology at our disposal to produce everything we need and guarantee that everyone has the necessities of life. It is a world worth fighting for.

There is a liquidity crisis because there is too much liquidity, all based
on debt, or as Marx called it, fictitious capital. Fundamentally there is an
accumulation crisis; there are few places to invest profitably in production so
capitalists thought up making money from money and so extended credit that Bear
Stearns had only $1 in capital reserves for each $30 in debt. Thus the
liquidity crisis manifests itself as a solvency crisis. Both the government
through the Treasury and the privately owned Federal Reserve have moved debt
from insolvent corporate debtors to the taxpayer. This can only buy time as
insolvency and devaluation works its way through the economy. And it can’t
solve the basic contradiction that workers can’t pay bills or buy products
because they don’t have the income. Major shrinking of economic activity is in
the offing with the Feds trying to fight it off through hyperinflation which
can only add to the problem.

For more than a century many leftists thought that capitalism would collapse
on its own, as though an accumulation crisis were a typhoon or tsunami that
would wipe the slate clean and a new order might be writ. That idea is probably
a fantasy, an implausible fiction. Crisis occurs, assets are devalued, those
with wealth pick up the bargains, lay off workers, lower wages and destroy
pensions (which are merely deferred compensation). There will be a continued
push for privatizing the public sphere as one of the very few productive areas
that have a necessary, captive market that will be enforced through a
manipulated government. Wait for the day when your neighbor knocks on your door
not to borrow a cup of sugar but a gallon of water! As after WW II, and as
‘they’ hoped after seizing Iraq, a devastated country needs to be rebuilt and
by putting people to work, creating wealth for investors the game begins
anew. Capitalism doesn’t collapse and die, it destroys and rebuilds at a higher
level of exploitation. More bullets bombs and deaths await us. If people want a
more humane and cooperative world, society and economy, they will have to fight
for it and create it. Goldman Sachs and its wholly-owned subsidiaries, the US
Treasury and Federal Reserve, will not do it for us.

You’re probably thinking: “Is it?” Well, ymmv, but consider reports today (040308) about whistle blowers at the FAA concerning safety checks of 737 aircraft at Southwest Airlines and how a supervisor shut down an investigation/inspection then took a job at Southwest. Having had a father-in-law (now deceased) who was a commercial airline pilot (and one-time ALPA official) and used to rail against the FAA for being lax in standards enforcement and being well below international standards going back at least to the 60s, this news report about upcoming Congressional testimony was striking for being presented in an abstract stand alone fashion. The reporter either didn’t know or chose to ignore a very long history of controversy about FAA inspections and possible corruption. In my former father-in-law’s day it was common opinion among pilots that the FAA was in the industry’s pocket. And this ignorance or dismissal of history and wider implications is common in reporting, as though journalists were all newborn babes in a de novo world.

Or consider the credit crunch. Paeans to ‘moral hazard’ all the while dismissing it but not digging into the obvious that the Federal Reserve is owned by commercial banks; ergo, almost by definition, not primarily interested in public welfare. Congressman Barney Frank orates about increasing scrutiny of the financial industry after he was instrumental in repealing Glass-Steagall that opened the door to this crisis. With rare exceptions, elected politicians are paid agents of capital and when, a few decades ago, capital decided it had to make money through job relocation, deindustrialization and finance, their legislators were only too willing to facilitate this. And finance has grown from its historical average of about 6% of the economy to 15%, an unsustainable level since finance is parasitical on real wealth creation in production. But the surfeit of news reports and analyses never gets into any of this. All they do is repeat the propaganda that officials and their lackeys spout about saving the economy through saving the investors. Which is peculiar since they also keep repeating that the economy is 70% propelled by consumer spending; thus, it would seem that it is the average consumer (otherwise known as debtor) that needs help, not hedge fund investors.

And sometimes it seems reporters aren’t even capable of thought. On this past Sunday I was listening to Morning Edition on NPR when they presented the first of what they promised will be many interviews with “wealth creators,” which I thought was a bit pretentious. And with whom was this first interview conducted? An auctioneer! (As the I Ching puts it: “Disaster at the beginning.”) And not just any auctioneer but one who auctions off foreclosed mortgages on courthouse steps in northern Virginia (so they didn’t have to travel far from their DC offices, gas being expensive). Anyone who knows anything about economics or cost accounting or industrial engineering also knows that auctioneers do not add value, do not create wealth, they only ride on the coattails of real wealth production (this being the point of trying to cut transaction costs in business). Or consider another NPR report a few days before that. (I don’t mean to pick on only public radio but they do brag a lot about the breadth and depth of their coverage.) The story was about some low-dosage heroin in elementary schools in Texas that the reporter pronounced Cheez. He ended his piece noting use was dropping which I thought was odd in itself by saying “…though no longer so prevalent it is still rampant.” The sentence being contradictory I surmised that the reporter must be young and that schools no longer require vocabulary study as they did in that other millenium when I grew up.

Or consider the continuing coverage of Kosovo and Nato expansion. Reporters never mention the UN resolution that says Kosovo is integral part of Serbia/Yugoslavia and must find its autonomy within that country or that international treaties prohibit breaking up countries thus denying them their sovereignty. They never ask why does the Bush junta want to expand Nato up to Russia’s border? For almost all reporters in all media neither the world nor the US has a history, let alone one that has an impact upon contemporary events. And never, never, never might rulers (at least of the US) have an unstated agendum. The major assault upon public education began with Reagan and his masters’ goal of “defunding the left” through tax cuts for the wealthy along with large military spending increases. Which brings up another recent story about metropolitan public high schools graduating only half their students. For reporters the word ‘context’ is not in their lexicon and whatever press releases the Pentagon, White House or Wall Street hand out constitute factual reality. As in past days in the computer industry reporters merely re-word what private interests hand them and call that journalism. It’s no wonder our world is in such a mess when those who inform us ignore and disregard 80% of the population and take their direction from the “decider.” Broader knowledge and understanding are out there but it takes digging and thinking and few citizens will join an ‘informed electorate’ if they rely on mainstream journalism.

Reporters don’t offer much information about employment either. If they looked they’d learn that willing workers without jobs are a multiple of the ludicrous 4+% official unemployment rate that counts a contingent temp laborer who works one day each week as employed. In past years I had a job that required reading trade mags and one of them, Modern Plastics had a monthly editorial – “Answering The Critics” – dealing with environmental concerns which always varied its tune but played the same melody (like the joke about Vivaldi who ‘only wrote one song but wrote it 500 times”) that plastic makes good landfill! So with economic trends where the mantra is how we all benefit from cheap Chinese-made products sold at Walmart. Reporters, and economists, never mention that if we all had good-paying permanent jobs we wouldn’t need to shop at Walmart, a place where I’ve read that 40% of its employees qualify for some form of public economic assistance. We’re in for a bumpy ride.

On Reading Resistance Is Surrender by Slavoj Žižek in the London Review of Books

I suspect the Orwellian title is intentional. He begins:

One of the clearest lessons of the last few decades is that capitalism is indestructible. Marx compared it to a vampire, and one of the salient points of comparison now appears to be that vampires always rise up again after being stabbed to death. Even Mao’s attempt, in the Cultural Revolution, to wipe out the traces of capitalism, ended up in its triumphant return.

Other than his metaphor being inapt he doesn’t write that capitalism is a tough enemy, or that the struggle for socialism is taking longer than one might have anticipated; he simply claims that capitalism is eternal. The Soviet Union closed up shop and China changed horses; ergo, socialism is dead, even if not everyone has gotten the news. I also suspect, notwithstanding the author’s identification as a dialectical materialist that he wasn’t Marx’s kind of dialectical materialist. In May 1940 the German Army swept to the coast where they chased out the British, while the French, Dutch and Belgian Armies and governments collapsed. The Nazis had a much easier time with their collaborationist regimes than Bush is having in Iraq. To some degree this was because of fascists who were present and prominent in those countries. Let’s say there were some divided loyalties, and not all anti-capitalists’ sympathies are entirely anti-capitalist.

In the physical sciences nothing is deemed eternal. The closest we have come to indestructibility — in our understanding — is that the proton has a life expectancy greater than 10⁸⁰ years. And that belief is based upon a “notion” derived from both experience and probability that if something is thought to occur x times in y years then one merely has to watch that something for y/x years. And having “watched” a big tank of water containing 10⁸⁰ protons with a detection monitor for a year and having detected no decays the assumption was that protons must live at least one year longer. There are many unstated premises encoded in this approach. The belief about the efficacy of probability is an heuristic ploy that seems sensible, at least until proved otherwise. In mathematics itself, not being confined to reality, beliefs and results are supposedly very tightly wrapped in rigorous logical deduction. Notwithstanding this, in University Mathematics Departments, in courses in mathematical probability, one meets Bayes’ Theorem which deals with expectations. It’s not really a theorem although textbooks containing it call it such: it has no proof. Bayes Theorem is more like a rule of thumb. Now, rules of thumb are very useful and often right: tomorrow’s weather will probably be just like today’s weather. Try it out; you’ll be amazed how often it is correct. (Until a front moves through and the temp drops 20° and the snow falls.) The theorem has long held sway in the United States but only in the past two decades has it found root in Europe as the US developed not only financial hegemony but, it seems, mathematical hegemony as well. Now Bayes’ Theorem affects the reliability one places in sampling results: calling elections when only a few per cent of the votes have been tabulated, something usually but not always correct. It was a response to the “frequentists” who rely on ever increasing sample size. But as time is money we need quick answers so capitalism enslaved mathematics! The use of Bayes’ Theorem is especially perilous in very small samples where a glimpse of a few trees is supposed to represent the whole forest. In real life, sometimes yes, sometimes no. An example of error, and confusion (at least for mere mortals), is the health effects of coffee. Try to track down a meta-analysis of medical studies for the past four decades. You’ll find results propounding coffee causes heart disease and cancer all the way to its being highly beneficial. In our bodies, where everything is connected to everything else, and some things take years or decades to manifest themselves, multivariate analysis is required, or as a doctor once put it to me: “Any drug strong enough to have therapeutic effects will have other effects as well.”

And so it is in the body politic. Now while our bodies contain more cells than the planet does people, human societies are also very complicated things. Karl Marx, a contemporary of both Dickens and Darwin, invented dialectical and historical materialism, a very profound approach to studying human societies with a richness that has not been fully explored. If one reads Mommsen’s magisterial History of Rome (he also was Marx’s contemporary) the good professor writes of capitalists in that ancient city and 20th century historians of the Middle Ages often write of capitalism existing in those days. Opinions being free and plentiful, one may call the economies of the ancients or the dark agers capitalistic if one wishes though doing so doesn’t seem to advance understanding, being useful merely as a propaganda tool, as the preacher quoted in Marx’s “On the Question of Free Trade” who claimed that “Free trade is Jesus Christ. Jesus Christ is free trade.” (And we have been arguing that same point in those same words for 150+ years! Them that’s on top wish all below them to accept their rule as ordained by God from the beginning.) In Marxian analysis, capitalism is based upon wage labor and the earliest instance of wage labor being the leading, dominant, influence is considered to be mid-16th century England during the Tudor reign, and if one insists we could pick Henry VIII’s death in 1547 as the birth year of a capitalist economy. Adam Smith’s The Wealth of Nations was published in 1776, 229 years later. And the Communist Manifesto was published in 1848, 301 years after capitalism had taken over! And 69 years after that the Bolsheviks took power.

For those fond of conspiracies –I love paranoid fantasies myself– perhaps China is doing something similar to the Bolsheviks’ New Economic Plan, using capitalism to develop the country, anticipating it will lead –as it seems to be doing– to crisis and collapse of world capitalism and then they can institute a more egalitarian socialism. I don’t want to get carried away and impute beliefs to this author without warrant but as a baby boomer I’ve lived a long life of reading and listening to comments bemoaning the failure of socialism. Now I never heard anyone moan about capitalism’s eternal nature because of 2000 years of dominance or even the 301 years from Henry to Karl, nor the three quarters of a century from Karl to Vladimir. No, the triumph of capitalism and the death of socialism are tied to Stalin and the USSR’s dissolution. Sort of like: “Sex: tried it; didn’t like it.”

Marx was a student of history who did the analysis that laid bare the workings of capitalism. He saw the contradictions and the trends and forecast the development of socialism through the class struggle, and for himself claimed his only originality was the dictatorship of the proletariat. One thing Marx did not do was write the rules of revolution nor create a blueprint for a socialist economy. When the Bolsheviks took over they had to make it up as they went along. This is not a bad thing, nor a criticism; this is real life. It’s just that for most people in most situations revolutionary change is something to read about, not experience. Phrased differently, history moves at a glacial pace until one day a crisis occurs, something new appears on the horizon and surges into town, creating havoc, and that is when most people start to pay attention.

Stalin created socialism in the Soviet Union. His two great ideas were the Soviet Union (Stalin: membership mandatory; Lenin: voluntary) and collectivization of agriculture. From the beginning, the forces of reaction fought (and are still fighting) with any weapons they had to preserve their power. The US and Britain intervened militarily against the Bolsheviks, and red scares and red baiting date to those days of Woodrow Wilson. Propaganda to glorify capitalism and discredit communism along with the iron fist of ruthless violence has been with us for nearly a century (much longer really as organized Marxism in the US predates the Republican Party). In 1931 Stalin said that the USSR had ten years to catch up with the capitalist countries or be destroyed and in 1941 the Nazis invaded.

Mr. Žižek’s article is about the Left and it’s responses to the long, seemingly endless life of capitalism, and his theme seems to be futility against hegemony: there is little we can do except try to be moral, good, and self-satisfied in our tilting at windmills. He lays out some of the floundering to which late 20th century “leftism” has succumbed. In the analysis of what or who constitutes the “Left” there are many definitional difficulties. The range, at least in the US, might run from Hillary Clinton (to Mr. Žižek writing in Britain it is Tony Blair) to Noam Chomsky to unreconstructed Stalinists and finding common ground among them might be as vague as shared desires for a more peaceful egalitarian society. Beyond that the arguments start. In common with most social democrats Mr. Žižek equates “liberal democracy” with capitalism and while there is an historical connection and democracy, of a sort, was instrumental in capitalism’s development it’s not a necessary consequence that capitalism needs democracy to survive or thrive. The franchise is merely one tool. In Joyce Kolko’s marvelously informative 1988 book, Restructuring the World Economy, she is insistent on the distinction between structural and systemic features. Capitalism and liberal democracy were built on private property and its preservation and if one doesn’t tackle the issue of property then one can’t attack capitalism, even theoretically, and therefore shouldn’t be considered a leftist. In a very limited scope social democrats such as Blair or Clinton are called leftist as they might pass higher taxes on wealth to fund social programs but they never attack the basis of wealth. This is the history of social democracy, its collapse in post-WW I’s Germany, the splits within Lenin’s RSDLP and Stalin’s CPSU as right deviations and the source of all those former “leftists” in the West who became neo-conservatives. It’s amazing how many well-educated, well-intentioned people think they can decry the excesses of capitalism without a policy on private property. Even one man, one vote, without property restrictions, didn’t hit the US until the mid-60s. And in the style of taking away with one hand what the other has given US Courts have ruled that money is speech. It makes sense that in the US speech would be commodified; thus, Bill Gates has about a billion times more free speech than most Americans. And when they vote Americans get to choose one of the two candidates of Gore Vidal’s one political party with two right wings. Except in 2000 when they didn’t!

After specifying the non-specifics (a rule of all true post-modernism) of these flounderings

• accept the hegemony
• accepts the futility of all struggle
• recognises the temporary futility of the struggle
• it takes the ‘postmodern’ route, shifting the accent

Mr. Žižek states:

These positions are not presented as a way of avoiding some ‘true’ radical Left politics – what they are trying to get around is, indeed, the lack of such a position. This defeat of the Left is not the whole story of the last thirty years, however. There is another, no less surprising, lesson to be learned from the Chinese Communists’ presiding over arguably the most explosive development of capitalism in history, and from the growth of West European Third Way social democracy. It is, in short: we can do it better.

Is this something like Clinton’s out-Republicaning the Republicans? Sure let’s have a war in the Balkans. Or since he says 30 years… let’s see 2007-30=1977, aha! Jimmy Carter is President, the middle East is in turmoil and the Carter Doctrine has been introduced: the Arabs’ oil is a strategic matter to the US, and 30 years later we have Iraq and Afghanistan. Boy, how much better can they get?

Most commentary in “respected” journals such as the London (or New York) Review of Books is written and read by petit bourgeois intellectuals. I know this being one myself. True bourgeois don’t waste their time (eagles don’t hunt flies) and most proletarians, even if they are sufficiently interested or well-read, are turned off by those “effete intellectual snobs” to use Spiro Agnew’s phrase. Although with Spiro having been a crook, as was his boss Tricky, perhaps his analysis might have been biased. And to most petit bourgeois intellectuals what matters are free elections and free speech –and feeling good about themselves: never underestimate smugness. They can tolerate genocide, as in the Americas and the antipodes with European colonization or in Africa,– Hitler explicitly compared his lebensraum drive to the East with America’s settlement of the frontier and the treatment of Indians — as long as they themselves aren’t targeted and they are free to talk about it. But with elections controlled by moneyed interests and sanctioned by the Courts, the Elect(ed) become paid spokesmen and spokeswomen of capital and passing laws to benefit capital is their job. Many voters like to think that they can elect true progressives but I personally haven’t heard of it since John T. Bernard got elected in 1936 in Minnesota and became the only member of Congress to vote against the arms embargo to Republican Spain. He didn’t get a second term. Play our game or you don’t get in and should an error occur it will be immediately corrected. The 2006 US election is an example: once in office the new Democratic majority is toeing the line and Hillary has already promised to continue the Iraqi occupation through 2012. Unlike Supreme Court nominees the true litmus tests occur offstage and waffling answers are not accepted. In the real world representative democracy members tend to be more reactionary and repressive than the Executive. Being beholden to a more localized group of capitalists –farm subsidies, border controls, free trade or tariffs– they can’t argue the need to balance interests that often quiets the disgruntled of a larger audience.

In free speech, internet blogs have bred like mice such that they drown each other. Meanwhile, in the large media, consolidation continues apace. I know from experience that today’s articles in the New York Times will be tomorrow’s stories on National Public Radio. And if the NYT gives scant notice to a 20,000 person demonstration at Fort Benning in Georgia (where those Latin American death squads were trained) with hundreds of arrests then it won’t be covered by NPR, though I was mesmerized by the continuing coverage (propaganda campaign) of Putin’s “authoritarian” Russia where he democratically got 60%+ of the vote while Gary Kasparov’s party got less than 1%. (Putin recently noted, in his Time interview, that Kasparov spoke to the media in English, not Russian, making him -Putin- wonder who was Kasparov’s audience.) But that is par for the course. Give plenty of coverage to Solzhenitzyn (who wanted to bring back the Czars) or Natan Sharansky who moved to Israel and became one of the most regressive, reactionary rightists in a reactionary rightist country. For 30 years journalists have been patting themselves on their collective back about how great and necessary they are and how great a service they provide. One must wonder just how many among them are truly that stupid and how many know exactly what they are doing. Unlike the Manchurian Candidate the real brainwashed are not Korean implants. Thorstein Veblen in his 1904 Theory of the Business Enterprise noted that newspapers are capitalist businesses whose owners are interested in pecuniary gain (Veblen’s pet term for profit) whose incomes are derived from advertisers who likewise are in business for pecuniary gain; thus, one cannot expect newspapers to publish articles criticizing advertisers or profits or capitalism itself. If you’re not ‘with the program’ you don’t get a byline. It’s amazing that Marx supported himself (partially) as a journalist.

Near the end of his essay Mr. Žižek gets down to brass tacks to deal with some real issues such as the post-modern left working in the “interstices” and not seeking or challenging Power directly. Other than some complimentary comments about Hugo Chávez, the author has no remedy for how to achieve results except his concluding paragraph:

The lesson here is that the truly subversive thing is not to insist on ‘infinite’ demands we know those in power cannot fulfill. Since they know that we know it, such an ‘infinitely demanding’ attitude presents no problem for those in power: ‘So wonderful that, with your critical demands, you remind us what kind of world we would all like to live in. Unfortunately, we live in the real world, where we have to make do with what is possible.’ The thing to do is, on the contrary, to bombard those in power with strategically well-selected, precise, finite demands, which can’t be met with the same excuse.

Let’s see, strategic, well-selected, precise (how many significant figures?), finite demands which can’t…. How about capital export controls, laws requiring companies relocating jobs in the great international game of wage arbitrage to pay off the deserted community, sort of like divorce’s alimony, changing the tax structure to benefit the masses at the cost of the wealthy, laws mandating that lower-taxed gains actually be reinvested in domestic jobs and not in offshore tax havens (or spent, say on Maseratis or yachts) or be penalized, investing in publicly-owned infrastructure and education, single-payer government run universal health care…. That would be a tasty morsel to start. The essay wasn’t detailed enough to figure out what impossible, asking for the moon, “infinite” demands this post-Soviet left has been demanding nor whence the confidence that all demands couldn’t “be met with the same excuse.” In real life the more demanding the demand the less likely that those in power will ever hear it; it certainly won’t make headlines with the Propaganda Ministry, I mean, mainstream media. Capitalists, qua capitalists, are okay with integration or equal rights for women or even pollution controls (if they get tax incentives); just don’t challenge property. Don’t try to pass a law or alter the Constitution to guarantee everyone a job. The whole thrust of contemporary challenges to power is that they don’t challenge power. There was a TV lawyers’ show decades back where a firm’s partner said to a non-partner: “No one gives you power. You have to grab it.”

Meanwhile, back on planet Earth some of us have noticed that utopian socialists and “Marxists” who have yet to pass their finals (would that be A levels in Britain?) have been in disarray since the 1930s. Whole bunches of them never got over the Moscow Trials. Or over collectivization. Or over “selling out” of post WWW II communist parties. Or the post-Stalin revisionists. Or dadgummitt! Gorby & Boris, the worst of the lot! A few of us have realized that life is complex and history is long and to have expected that after 1917 heaven on earth was around the corner or that now all the dominoes would fall or that with the Party in charge the class struggle was just a mop-up campaign, well just thank godlessness that we didn’t have to design Nirvana in the largest country in the world.

When Gorbachev was in power he legalized private ownership of property. In fact, there were polls canvassing opinion and the “people” were against it. Gorby did it anyway. Capitalists certainly understood what the consequences would be. It strains credulity that the Soviet leader did not. There is a lot of evidence that dissent in the old Soviet Union was based in the petit bourgeoisie: intellectuals, artists, factory managers, etc. On the other hand there isn’t much evidence of workers or school teachers marching or picketing. A Soviet citizen gets a piece of paper of ownership to an apartment -will wonders never cease- then loses her job, the economy tanks, hyperinflation occurs, a new ruble is issued but what had she done? She had sold her “deed” to a speculator whose ruble holdings were similarly wiped out but still found he owned an apartment building and when business picked up he was on easy street. During the 30s’ Depression many businesses closed down but when things picked up they still owned that good ole machine shop and workers were desperate for jobs.

One of the changes over the centuries has been the growing complexity of industry. To quote from R.A.S. Macalister’s Ireland in Pre-Celtic Times:

Civilization can be gauged by the degree of complexity in the specialization of trades and tools. Contrariwise, civilization can equally be gauged by the degree of simplification of the social order.

Reading Thompson’s Making of the English Working Class is enough to warm the cockles of the heart of any 20th century union organizer. When farmers in earlier centuries found themselves squeezed by the miller or the baker or the tax collector they knew precisely whom to blame and they marched right down to the offender’s place of business and set him straight. Life was simultaneously simpler and more complex. The 20th century was the age of bureaucratization. Historically the true petit bourgeoisie, or middle class, was comprised of small capitalists and professionals such as doctors and lawyers. Industrial growth created engineers and middle managers whose sympathies lay with ownership. That allegiance has become sorely tested in recent decades as managers have been cashiered wholesale, ie, proletarianized.

Marx in a letter dated December 28, 1846 to a friend (P.V. Annenkov) regarding Proudhon wrote:

From head to foot M. Proudhon is the philosopher and economist of the petty bourgeoisie. In an advanced society the petty bourgeois is necessarily from his very position a socialist on the one side and an economist on the other; that is to say, he is dazed by the magnificence of the big bourgeoisie and has sympathy for the sufferings of the people. He is at once both bourgeois and man of the people. Deep in his heart he flatters himself that he is impartial and has found the right equilibrium, which claims to be something different from mediocrity. A petty bourgeois of this type glorifies contradiction because contradiction is the basis of his existence. He is himself nothing but social contradiction in action. He must justify in theory what he is in practice….

A few decades ago a leftist social critic named Irving Howe compiled a book called Steady Work: Essays in the Politics of Democratic Radicalism, and the title says it all. Intellectuals enjoy being intellectuals. They enjoy sitting on the fence watching both sides fight it out and producing commentary and even tomes about these struggles. But given their heartfelt desires I suspect they want to join the rich on the right not the poor on the left.

Triumphalism might be premature. Our world remains dynamic. Earnings for the masses peaked more than 30 years ago. Unemployment figures are uninformative since one must be collecting unemployment payments to make the list. Some, such as Jack Rasmus, have figured out that if you look at the total picture including part-time and contingent workers that true un(der)employment is not 4 or 5 or 6% in the US but over 18%. During the 30s’ Depression unemployment was calculated to be about 25%. And job figures don’t even get to the housing or health care issue. Harvard Law Professor Elizabeth Warren whose specialty is contract and bankruptcy law has found that what is driving people into heavy debt are housing, health care and transportation, not buying “things” or restaurant meals or vacations. Those who make their money in strictly financial instruments may not care where factories are located but workers do and a nation’s economy does also. With the US having undergone significant deindustrialization it may be impossible to export our way out of foreign debt and if some disaster happened that cut off Chinese shoe factories Americans would be walking around barefoot or with shoes held together with duct tape (is that made in China too?). Financiers don’t care about citizens, Chinese or American; they care about profits.

With America’s shrinking middle class it means that the petit bourgeoisie is shrinking and since it is their role to be the aspirants in waiting –for some to rise while others fall– it must be hard to keep up circulation figures in respectable journalism. It’s said that Sears Roebuck’s demise was caused by the disappearance of its customer base: the upper strata of blue collardom. Thirty years ago the largest UAW local in the US had more members unemployed than working. Sam Walton may or may not have been smart but he certainly jumped into a heavy growth segment: poor people. Since the late 60s unofficial US government policy has been permanent inflation. That way money is always available for investment and expansion, nominal wages can rise and downturns will be mild. But investors are never satisfied; they always want more. So in addition to the contradictions that they’re making money through the impoverishment of their customer base and productivity has outstripped market growth they keep looking for new ways to make money and the wunderkinds with Nobels got roped into finance and LTCM was born, grew into a strapping lad then died spectacularly. They confused their elegant models with reality. Probably used Bayes’ Theorem.

Today’s worry is that no one really knows just how much debt overextension is out there nor even who or what will be left standing when the music stops. Crisis breeds unrest and unrest offers opportunities. In the large people don’t rebel until their backs are against the wall; they certainly don’t do it because someone tells them about Marx or even to hate Marx. The job of those who follow the windings of dialectical history is to have workable explanations and viable actions when the shit hits the fan. And if these dialecticians are smart enough and lucky enough to have found an audience beforehand the rebellion might find a path that’s not a dead end. In Bush’s America the mantra is “freedom” and Marx, in the aforementioned “On the Question of Free Trade” dealt with that too:

Do not allow yourselves to be deluded by the abstract word freedom. Whose freedom? It is not the freedom of one individual in relation to another, but the freedom of capital to crush labor.

Needing to find a sports metaphor to prove true Americanism I’d suggest life is like baseball where there is no clock and it ain’t over till it’s over.

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