As it happens, or rather happened, the growth of Marxism was tied to imperialist war more than to industrial exploitation. In Germany, which had an active and advanced worker movement the Freikorps pointed their rifles at the workers and shot dead thousands while the year before Russian soldiers refused the Czar’s orders to shoot and the Bolsheviks took over easily. In Russia’s 1905 Revolution on what’s called Bloody Sunday, December 22, more than 250,000 protestors gathered in the square in front of the Palace and the Czar had the soldiers fire into the crowd killing more than 1500 and wounding more than 3000. Afterward the Czar was quoted as saying, “I forgive them their guilt.” He meant the peasants not the soldiers. I recall someone once referring to the Bolsheviks’ execution of the Romanovs as a noble deed and he didn’t intend humor. But in the West, for decades, we’ve been trained to think of that execution as murder. As with the French Revolution where we are taught about the Reign of Terror when, in fact, only about 1500 people were executed in a country of tens of millions. But those 1500 deserved to live. After all they were parasitic aristocrats. Kind of like financiers today.

Looking back it’s obvious that the 20th century, and the first decade of the 21st, were marked by wars of colonial struggles for independence. To capitalist societies and their political henchmen all these struggles were Communist inspired or Communist led or Communist financed and had to be put down. So Britain and France and the US fought against these insurgencies and many, many millions died, as millions more continue to do. If one reads D.F. Fleming’s The Cold War and Its Origins, 1917-1960 (2 vol., 1961) one finds that Western opposition actually helped the insurgencies because oppressed people would look at the two sides and pick the one that was indigenous and not funded by the imperialistic West. They preferred a home-grown Red to a Chiang or Diem or Rhee who sided with the white people. But I doubt that means the West chose the “wrong” side; they simply chose their side, the side of private property and exploitation. It’s like that same goes-nowhere argument leftists have been having for half a century: how can we design a humane capitalism? The answer, of course, is you can’t. As Adam Smith wrote, “All for us and nothing for anyone else.”

These colonial struggles do continue. Afghanistan has been in civil war for 35 years; that’s how the Soviets got involved. Now the US has been there for nearly a decade and I read where Karzai thinks he’ll need western troops for at least 15 more years. Supposedly, Nato troops outnumber Taliban by more than 12 to 1. That Durand line from 19th century Britain has led to the spreading of the Afghan civil war into Pakistan since it seems the US has chosen the Tajik minority to support over the more numerous Pashtun, 2/3 of whom live in Pakistan. We don’t have Bolsheviks to push around any longer so now we have to use terrorists. 9/11 seems to have been a godsend for the fascists and they will stoke our fears to the utmost to keep up the military spending – somebody’s gotta absorb that surplus – and increase world domination. That assumes the US doesn’t self-destruct. Once they’ve drained our blood we will have become useless to them and they can simply arrange our unfortunate deaths. Healthcare is just too expensive. If people need things let them find jobs. The rule or ruin types of the Confederacy and the Cold War eras are still with us and the financial crisis maneuvers make very clear who is thought important enough to save.

So, in many countries, notably in my own dear US, the expendables, the dispossessed are growing and they won’t be able to afford enough jails to house us all. Those poor rich bastards are in a bind, forced to bankrupt the nation to support a bankrupt economy arisen from a bankrupt ideology. In political terms reaction means fighting to hold back the tide and like that Indonesian tsunami the US will likely be swamped. The entire fight over intellectual property – copyrights and patents – is all about stopping development. Obviously if technology makes file reproduction easy and nearly costless a new paradigm is called for. How does one make money from free? But then why are there millions of homeless and millions more forced out of their homes when over 18 million housing units sit empty? The time has come to think of moving past labor-power as a commodity. If our rulers continue they will test the bottom – the mere subsistence wage – from both sides and that’s where many of us will perish. In poor communities of my own experience the police are viewed as an occupation force and not just by ethnic minorities.

The modern welfare state arose in post-WW I Europe and its motivation was not humanitarianism but security: to stave off rebellion. This was the other side of demolishing the “soviets” that had formed among German workers. Just as civil rights laws, court decisions and enforcement in the US arose more from fear caused by riots than from a progressive impulse. Today’s economic depression mostly eludes bourgeois solution and with reduced government revenues the welfare state is shrinking and many poor are being cast adrift. And with the “hook” of terrorism as a propaganda tool, one that isn’t tied to a country, like the USSR, or a defined ideology, like Marxism, disgruntled and protesting poor people will be easily demonized. The contemporary response to disorder will be a mailed fist, no velvet cover. Rebellion will be suppressed. Period. The Dispossessed will be the locus of unrest and they are the least likely to have strong organizations, such as unions. As in discussions about angels dancing on the head of a pin, leftist theorists find the Dispossessed a puzzle.

Being long-term or permanently unemployed puts people outside the productive process, the center of capitalist exploitation. So Marxists have trouble pigeon-holing them. The easy answer is to consider them de-classed elements. But from an historical viewpoint that might be a rash judgment. Has automation, specifically computer control, rendered human labor obsolete? In the opening pages of Capital, Marx writes, insightfully, of value and use-value and how when one want is sated a new want appears. If he was right, and I suspect he was, then, as a matter of principle, it is impossible to render human labor redundant. That cheap, low quality, Chinese-made shoes, from automated factories using dirt cheap labor, are the only shoes we can afford or that are even sold, doesn’t mean that higher quality, more expensive, more labor-intensive shoes are unwanted or unnecessary. One shouldn’t confuse the limited reality that capitalists shove down our throats with a bigger, more desirable reality that is possible. The de-industrialization of the US occurred not because we live in a post-industrial era but because transportation was “rationalized” – containerized shipping – and digitized telecommunications and relaxed capital controls made it possible and profitable to relocate jobs to low wage countries. The bourgeoisie controls not only the economy and the state but accepted discourse as well and progressive people must fight as much to liberate their thought as their daily lives. I think the approach of Ramin Ramtin’s Capitalism and Automation (1991) is closer to the mark: those with jobs, or job prospects, are working class proletarians and those without jobs or job prospects are non-working class proletarians. The details change but the song remains the same.

It’s good to recall that the struggle is political, not merely economic. Decades of media propaganda have us believing that more and more and more stuff is god’s plan for the universe and produces the best of all worlds. As with discussions schooling for trade skills versus liberal education, what we want and why is a necessary partner with how we do things. In 1933 Irving Fisher wrote that technically society had developed enough to satisfy all human needs. Now, in the age of robots, some think many humans are mere surplus and, well, tough. People on opposite ends of the political spectrum seem to buy this. I do not.

Obama said in his speech that 911 was planned in Afghanistan though the
official 911 commission report said the planning was done in Abu Dhabi and
Hamburg. The scriptwriters didn’t do their homework, or maybe they just
figured noone would notice. Speaking to Jim McDermott (D-MA), who opposes the extra troops after 8 years of failure and Karzai’s continued corruption and vote rigging, NPR’s Rene Montaigne said, mirabile dictu, “maybe they weren’t really trying.” !!! The head of the British Army said that “we” will be in Afghanistan for another 40 years. The half-century war. Obviously, US media don’t mention these things; they’re still trying to connect the dots in pre-schoolers’ puzzle books. I’ve been reading lots about the US Civil War era (to me tracking down stuff from the past is one of the Internet’s most useful features, and the writings are even in the public domain!). For example, there seems to be no (as in zero) first-hand, eyewitness accounts of Ulysses Grant’s supposed drunkenness, much unlike Andrew Johnson’s embarrassing inebriation whereof there is much testimony. Perhaps that is one reason Johnson was impeached. As best I can figure most people with power just didn’t like Grant which I infer goes back to his service in but heated opposition to the Mexican War, from which Zachary Taylor launched a successful presidential run. Grant wasn’t a team player and he wasn’t an imperialist. As President he successfully resisted the push to seize Cuba, an expansion that was always dear to the hearts of Southern plantation owners. But this is mere aside. What’s really fun is reading what Americans of 150 years ago actually said and wrote. For the most part my opinion is that journalists and editors wrote what they really thought; in other words they were honest. One of my favorites is an 1860 editorial in the Augusta (GA) Chronicle and Sentinel about the Republican Party that “…stands forth today, hideous, revolting, loathsome, a menace not only to the Union of these States, but to Society, to Liberty and to Law. It has drawn to it the corrupt, the vile, the licentious, the profligate, the lawless, and is the embodiment not only of anti-slavery, but of communism, of agrarianism, of free-loveism, and all the abominations springing from a false reality.” What reaction is proper? That the Republicans used to be decent folks, or that Georgians should tell us what they really think?

Meanwhile, back on the home front, impoverishment continues unabated. In
the US poverty is an industry. Think of all the social workers and
sociologists and psychologists and organizations and the government workers who might be forced to find real jobs if poor people disappeared. When the Salvation Army got $2 billion from Joan Kroc they didn’t give it to poor people; I hear they became money managers. ‘The poor will always be with you’ was a capitalists’ wet dream. Journalists, not being bright nor energetic – not liking to do homework – mention unemployment as though it were ancillary to the economy rather than its heart. Irving Fisher, the Yale economist who predicted enduring prosperity in 1929 before the crash and in 1933 wrote the Debt-Deflation Theory of Great Depressions, an analysis dear to our Fed chief’s heart, wrote “Idle men and idle machines spell lessened production and lessened real-income, the central factor in all economic science.” Jobs create value and provide wages to buy products. Work is at the core of wealth, not an addendum. The ignoramuses who spout empty platitudes in news reports don’t seem to get this but appear to believe that wealth is created by the mathematical equations of Wall Street financiers. The best bet may be that things will get even worse, that the poor will be blamed for their poverty to partner with cuts in welfare spending, social unrest and crime will increase, repression will grow and we’ll end up with our own fascists waging war from the Mediterranean to India. And that may be the good news. If they use nukes and figure they can take out Russia that would be even worse news. For the large ranks of the unemployed and poor the message will become clear: Move to Sherwood Forest and join up with Robin Hood.

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.

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 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.

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.

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.

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.

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.