Socialism or Barbarism

It is obvious to all of us that capitalism is once again in crisis, a crisis it created but failed to predict. While it was historically predictable and inevitable, it is the nature of capitalism.
And so the only solution is not band aid bail outs but for us, the proletriat to take over capitalism, which cannot exist without our labour, and which has produced an artifical boom of credit which we as proletarians were sold as consumers. Crediting the working class and the those who had no equity so that capital could continue to make record profits is what had kept America and its NAFTA allies going.
The public secret that is known to all of us, including capital, the state and the unions is that we the workers create real capital, production of goods which need to be consumed. All other capital, investments, the stock market, bonds, hedge funds, private equity, is all surplus value created by workers producing real value. The current crisis of capitalism is that finance, fictious capital, that produces no real value that is real objects we can consume, is now dominating the productive market. We the workers are not consuming the value we create.
And we now spiral into the real historic crisis of capitalism which is over production. And the solution to this crisis historically has been either war or revolution.
Unfortunately for the Trade Unions and the Social Democratic left the latter is not on their agenda. But for capital the former is a solution they are willing to use, by enabling counter revolutionary nationalism; fascism.
We live in interesting times once again. The phoney stability of consumer capitalism has its facade ripped away daily as its chief clowns; the politicians try to assure us all is fine with capitalism and there is no alternative, when they know full well the alternative is the historic reality of socialism or barbarism.

In 1848 Karl Marx and Frederick Engels argued in the Communist Manifestothat the historic fight between the oppressor and oppressed ended 'either ina revolutionary reconstitution of society at large, or in the common ruin ofthe contending classes'. Engels said that 'bourgeois society stands at thecrossroads, either transition to socialism or regression into barbarism'.Later Rosa Luxemburg, a Polish revolutionary working in Germany at the endof the First World War, raised the slogan: 'Socialism or Barbarism'!

The fact is that the elephant in the room is another form of barbarism, that which could result from the climate crisis created by mass industrialization. Instead of looking at the decline in production as an opportunity to create an ecological socialist society, the same old cries of more work, more jobs, more consumption is echoed by the capitalists, the unions and the social democrats. It's not that 'There Is No Alternative', rather the alternative is as clear as the nose on their faces, they just don't want to face it. Their political solutions are as bankrupt as the system they are trying to bail out.


Drought means workers hungry in U.S. produce capital
By TRACIE CONE Associated Press Writer
Posted: Dec. 12, 2008
MENDOTA, Calif. — Idled farm workers are searching for food in the nation's most prolific agricultural region, where a double blow of drought and a court-ordered cutback of water supplies has caused hundreds of millions of dollars in losses.
This bedraggled town is struggling with an unemployment rate that city officials say is 40 percent and rising. This month, 600 farm families depleted the cupboards of the local food bank, which turned away families - more than 100 of them - for the first time.
"We're supposed to supply the world," said Mendota Mayor Robert Silva, "and people are starving."
The state's most dire water shortage in three decades is expected to erase more than 55,000 jobs across the fertile San Joaquin Valley by summer and drive up food prices across the nation, university economists predict.
"People being thrown out of work are the ones who can least afford it," said Richard Howitt, a professor of agriculture economics at the University of California-Davis, who estimates that $1.6 billion in agriculture-related wages across the valley will be lost in the coming months because of dwindling water.

SEE:
There Is An Alternative To Capitalism


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There Is An Alternative To Capitalism

While the defenders of capitalism attempt to pose the solution to the crisis of their beloved capitalist system in terms of increasing Free Trade, opposing government regulations, transparency, social responsibility, but still promote the public bail out of private captial with no strings attached, the reality is that there is a spectre haunting capitalism today; the zietgiest of Marx.

The solution is not reforming capitalism, or creating statist capitalism, but worker self management the socialization of capital by the community in other words real authentic socialism.

Here are some recent commentaries on the return of spectre of Marx to haunt 21st Century Capitalism.

Friedman looks enviously and longingly at the public transport system in Europe, which helps in the reduced use of private vehicles and consequently in the reduction of carbon fumes, though on the other hand he favours free enterprise. The paradox seemingly stares the reader in the eye, though the recent collapse of capitalism has triggered the re-examination of a free market obsession, leaving no doubt that rampant privatisation is not the answer to global prosperity. And the spectre of Karl Marx returns to haunt the world again.

There will be one prominent gatecrasher at the G20 summit in Washington today: Karl Marx will be much in evidence, gleefully dancing on the grave of capitalism. With major American and European belly-up banks turning to their governments for rescue, capitalism does seem to have self-destructed in fulfilment of Marxian prophecy. The question facing the G20 meet is: What new geo-economics do we evolve, not only to tide over the current panic but to ensure that such crises of confidence do not recur? Conventional experience teaches us that competition makes for a better delivery system of goods and services than a monopoly, whether it is state-controlled or otherwise . Monopolies, by and large, don't work; competition, by and large, does. So what went wrong in the current scenario? One obvious answer is lack of transparency in the banking and financial sectors. Free market competition assumes free choice, which in turn presupposes access to reliable information on which to make that choice. If information is concealed, or falsified, as it was in the current case (where hugely leveraged trade in 'exotic derivatives'
created a soap bubble that burst), the 'free' goes out of the free market and the system collapses, requiring a bailout. Constant vigilance (caveat emptor) is the price we pay for a free market. So, far from being dead, capitalism needs to be more wide-awake than ever before. Instead of getting less competitive it needs to get more competitive, i.e. anti-monopoly. For far too long, the US has enjoyed a monopoly raj over the global economy thanks to its dollar which forms the basis of all international trade. Maybe it's time to think of a new unit of global exchange, based on a basket of currencies.

Business to hang itself on loan plan
Terence Corcoran, Financial Post Published: Wednesday, November 05, 2008
If we have learned anything about business and economics over the centuries, it is that we cannot look to business for our free market economic principles. Whether individually or in groups, known affectionately as associations and coalitions, we can be certain that the people who run business will always and everywhere pursue economic ideas that first suit their interests; all else is conveniently disposable ideological baggage. When the going gets tough, business gets weak on the core ideas that make business possible.
Adam Smith recognized the essential moral flabbiness of the individual business person or corporation. "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." Karl Marx had a wittier take on the nature of the beast: "The Capitalists will sell us the rope with which we will hang them."

Government by market gods or for the people?
Over the past 20 years of economic rationalist (neo-liberal) economic policies, western governments and third world governments (under duress from the International Monetary Fund) have pursued financial and economic deregulation, privatisation, unrestricted foreign investment and free trade policies. They have wound back the role — and with it the sovereignty — of governments, effectively leaving critical policy matters to the so-called free markets. This process has involved a significant transfer of power from elected governments to monopoly capital.Decisions regarding currency, interest rates, production, trade, provision of services, price of services, etc have been handed over to the markets. Every piece of deregulation hands over more power. But who or what are these markets? Who controls them? Where is this power being transferred to?It is being passed to the largest, most powerful transnational corporations and financial institutions. The most powerful of these monopolies are the financial conglomerates. They manipulate markets, they stand over and dictate to governments, they sit on the boards of central banks, they allocate credit, and so on, and in the case of the US, own the Federal Reserve.The investment banks, insurance companies, managed, hedge and other funds have gone in pursuit of fast and big profits, speculating on high risk products. They gamble on movements in prices on the stock exchange, they trade in debt, bet on profit results, and a myriad of other "products". They relied on ever expanding markets and endless growth, on bubbles that one day had to burst.Their empires were built on debt and much of the money they risked was not their own, but drawn from superannuation, retirement and other funds. In the process, the billions of dollars that they gambled with were withdrawn from the real economy. They were withdrawn from human needs, from social development, basic services, infrastructure, and from food production.Every dollar directed to speculation was a dollar less spent on consumption, reducing demand for the goods and services being produced. This massive withdrawal of money from circulation in the real economy of production, distribution and exchange exacerbates an already developing crisis of over production and recession.These crises are endemic to capitalism. They arise out of the exploitation of workers who are not paid the full value of the work they put in producing goods and providing services. The gap between the value of their labour and what they are paid is what Karl Marx called surplus value — profit. Employers never let up in their struggle to reduce the cost of labour by such means increasing output per worker, lower wages, and so on to increase their profits.

Politics keeps Left
WESTERN governments are nationalising industry to bail out the economy but you won't catch them calling it socialism.
Did Karl Marx get it right? Many will argue yes, especially in the wake of the most severe global financial crisis in seven decades, and after last week's Washington G20 summit at which governments pledged a greater interventionist role in economic affairs.
The Hard Left of politics, including in Australia, will say Marx – the 19th-century German political economist and father of modern communism – correctly predicted the failure of the capitalist free market.
After all, as Canadian publisher Martin Masse notes, Marx's fifth proposal in his 1848 Communist Manifesto calls for the centralisation of credit in the banks of the state.
Importantly, G20 has resolved to undertake further stimulatory spending to stabilise the financial system, and the reform of the IMF and World Bank as global financial instruments. And while the free-trade mantra was repeated, there's already talk in the US and elsewhere of a return to the most trenchant trade barriers since the 1970s.
All of this follows record government bailouts of banks and industry in the US, Britain, Germany, France and elsewhere that has been, for want of a better term, covert nationalisation. In Australia, Prime Minister Kevin Rudd has provided his government's own bank guarantee, and propped up ABC Learning and the car industry with yet more taxpayer dollars.
Some have quipped that Western capitalist leaders have done more for socialism in the past few weeks than communist parties have done in a century. That's probably hyperbole, but the free market, small government orthodoxy that has dominated Western politics for the past three decades, does appear to be over. At least for now, until the cycle again turns, and the stifling effects of big government again produce stagflation. The calls will then be for a return to the free market.
In that sense, Marx didn't get it right. But the global financial crisis inevitably will see a sharpening of the traditional Left-Right ideological divide, one blurred in recent decades as the old class politics gave way to the new politics of culture and environment.

Revenge of the Left across the world
No matter that statist policies were responsible for this global crisis in the first place. It was Western governments that set interest rates too low for too long, encouraging us all to abuse credit.
It was Eastern governments that held down their currencies to pursue mercantilist trade advantage, thereby accumulating vast foreign reserves that had to be recycled. Hence the bond bubble. This is the deformed creature known as Bretton Woods II. Protectionist Democrats are right to complain that the game is rigged. Free trade? Laugh on.
But at this point I have given up hoping that we will draw the right conclusions from this crisis. The universal verdict is that capitalism has run amok.
In any case the damage caused as credit retrenchment squeezes real industry is likely to be so great that Barack Obama may have to pursue unthinkable policies, just as Franklin Roosevelt had to ditch campaign orthodoxies and go truly radical after his landslide victory in 1932. Indeed, Mr Obama – if he wins – may have to start by nationalizing the US car industry.
For those who missed it, I recommend Edward Stourton's BBC interview with Eric Hobsbawm, the doyen of Marxist history.
"This is the dramatic equivalent of the collapse of the Soviet Union: we now know that an era has ended," said Mr Hobsbawm, still lucid at 91.
"It is certainly greatest crisis of capitalism since the 1930s. As Marx and Schumpeter foresaw, globalization not only destroys heritage, but is incredibly unstable. It operates through a series of crises.
"There'll be a much greater role for the state, one way or another. We've already got the state as lender of last resort, we might well return to idea of the state as employer of last resort, which is what it was under FDR. It'll be something which orients, and even directs the private economy," he said.
Dismiss this as the wishful thinking of an old Marxist if you want, but I suspect his views may be closer to the truth than the complacent assumptions so prevalent in the City.

How to save the economy
Marx, Joseph Schumpeter and Keynes shared one insight at odds with until-recent modern orthodoxy.
They all knew that capitalism is inherently unstable, that it soars and collapses – a mixture of "mania and panic" as we all now know too. There have been at least half a dozen such shocks in the past 25 years – the Thatcher-Reagan era, you might say – though this is the big one, as Vulcanologists might put it.

Global financial crisis is the “end of the era” for capitalism
Eric Hobsbawm, the 91-year-old Marxist historian, author and academic, told MSN Money the past two decades of unfettered capitalism had been as damaging as Soviet economic totalitarianism.

In his responses to MSN Money's questions, Hobsbawm predicted that far from being a hiccup or correction of the markets, "the present crisis is certainly the end of the era in the development of the global capitalist economy."
Hobsbawm's views on the present crisis present a radical counterpoint to mainstream financial journalism and uncover potential causes and repercussions that have not received much coverage.
The media and economic analysts have given many explanations of why the crash happened and who is to blame. Few have blamed free market capitalism itself as the cause of its own inevitable demise. Many point instead to elements within the system that could have been controlled better.
The New York Times, for instance, argued that Alan Greenspan's support for derivatives while Federal Reserve chairman from 1987 to 2006 "helped enable an ambitious American experiment in letting market forces run free. Now, the nation is confronting the consequences." It said that if Greenspan had acted differently "the current crisis might have been averted or muted."
Hobsbawm in contrast told MSN Money that he believed a "free market theology," a sort of blind faith in capitalism, was the root cause.
In the e-mail interview, Hobsbawm said that running global economies on an "effectively unregulated basis" is as doomed to failure as "the project of a totally state-run planned economy in the Soviet systems." He said he welcomed state intervention as a "return to common sense".
We might be entering a period when traditionally socialist principles hold sway, and if this means that the traditional aims of socialism - to create conditions for a good life for all people equally and to subordinate profit to human values - are adhered to, then so much the better for Hobsbawm.


Do recent events herald a fundamental change in the way markets are regulated and economies are structured or will they prove to be blips in the inevitable march of market capitalism? How do you think the world will remember the economic events of 2008 in years to come?


The present crisis is certainly the end of the era in the development of the global capitalist economy which began around 1973. While globalisation continues in most aspects of life except politics, it was always an error to suppose that it inevitably took the extreme, indeed pathological, form indicated by the free market theologians. I expect its rate to slow down somewhat in the next few years. However, forecasting is not the business of historians. The way markets are regulated and economies structured has too many unpredictabilities. I imagine it will take many years before a new pattern of the world economy will fully emerge. When it does it will probably be relatively stable for several decades until the next crisis of the economy. Nothing is forever in history.


In your collection of essays, Globalisation, Democracy and Terrorism you write that "Since 1997-8 we have been living in a crisis of the capitalist world economy," and of how America's economic problems might mean an end to their "foreign military adventures". Are recent events the most obvious signs yet of a shift in the world order away from US hegemony?


The United States remains, and will remain, a major world power. It is, after all, single handed the most populous country in the world after China and India and the present crisis shows that it remains the fulcrum of the world economy. However, the shift of economic power away from it and towards south and east Asia is clear and will not be reversed. It no longer dominates the world economy or is able to impose its own rules and conventions on world business and other governments' policies. The Iraq and Afghanistan wars have demonstrated that its overwhelming high tech military power is incapable of imposing its political solutions even on weak countries. The brief era when it thought it could exercise a single-handed hegemony over the globe is over, but it will remain an essential and important element in a more pluralist world order.

FREE TRADE DEPRESSION
In toto, what we are witnessing is no less that the greatest, involuntary, transfer of wealth and power in the history of the world – all due to a trade regime within which we are forced to trade with the greater slave, regardless of consequence or end result. In the corporate media, no one is asking trade with whom, on what terms, and to what end? In addition, no dismal result is ever ascribed to “free” trade - much like the Fed is never blamed for the Great Depression and the Smoot-Hawley bogeyman is touted as cause one. Indeed, it is Free Trade Uber Alles today, and for free traders their imagined ends justify their fascist, undemocratic, means which, as a result, mean endless social and economic cost. All in all, these “free” policies mean a demise resulting in the most expensive trade possible in which both economic benefit and social power are privatized to the few while all the immense costs are socialized upon the many. Current trade policies are neither intelligent economy nor the result of majority rule but, rather, reflect a religious-like absolutism - a naïve and perfidious faith in the service of Capital alone. Despite ever-growing trade deficits, job losses, dependency upon imports, phony export statistics, doctored employment statistics, and willingness to undermine our currency "in order to compete," free traders go on pretending there is nothing wrong with our mounting deficits, loss of capacity, and all the myriad social costs on this paved road to depression. Indeed, free traders have no answers to growing deficits or the potential loss of nearly every industry, only a blind and irresponsible faith in a centuries-old English, imperial, dogma unfit for a still very disparate and dangerous world – i.e., one in which capital now moves at the speed of light. Even US intelligence agencies are now warning that globalization has become a serious threat to US security due to its unwanted, negative, effects on economies around the world. In other words, “free trade” and globalization are breeding global dissent, terrorism, oligopoly and oligarchy. Firstly, for trade to be truly free you have to be free not to trade, otherwise it is forced trade. Worse, no morality, freedom, justice, human rights, child labor, or ecological impacts are considered or calculated – meaning the regime is a clear recipe for universal loss. Under capital’s GATT/NAFTA, even our energy–efficiency standards are a crime, as are recycling laws, attempts to protect family farmers, and virtually any Buy-American effort or legislation. In short, in a still very disparate and dangerous world - wherein huge magnitudes of differences in wages, standards and human rights exist - to have virtually no incentives working to improve rather than reward the greater slave and their worse conditions, is simply to reward the criminal, the dictator, the terrorist, the Red Chinese generals, all the greater exploiters of mankind and the environment, and punish the free, democratic, and ecologically responsible. It is utter perversity to give away entry into our G7 markets and get nothing in return – except the promise of evermore lob loss, lower currency values, corporate hegemony, and endless rewards for the greater-slavemaster. Yet this is capital’s criminal nonsense, which is guaranteed to end in riot, revolution, and new pogroms against the rich… as Karl Marx predicted. To avoid depression, the concept of "comparative advantage" (i.e., a 250 year old amoral theory once appropriate for agricultural products in a world where capital was relatively stationary) must be re-mediated by truly free, democratic, and ecologically responsible countries and policies. Otherwise, neo-slavery, child labor, ecological ruin, and currency destruction are "advantages" which cannot be lost by economies forcibly turned into export machines - only to generate huge overcapacity, dependency, local and global ruin, and our complete capture and enclosure by capital. In my book Cap-Com, The Economics Of Balance, I propose a re-writing of GATT/NAFTA to give nations, and the great majority of wage-earning people, the freedom to define their 'free markets’ - as opposed to Capital having all the power to define the terms, dictate the legislation, and then extort the wage-earning majorities of every country. This despicable, undemocratic, regime is guaranteed to pervert economy, ecology, freedom, and lead to riot and revolution as the backlash to forced globalization gathers steam.



'Capitalism is Obsolete-Mao and Marx Will Soon Be Back'

Sitting on the shady patio of a seaside hotel in Colaba, Samir Amin speaks in fluent English with a French accent . It's difficult to imagine a more global citizen than this disarming economist. Born in Egypt, to Egyptian and French parents, and educated at the Sorbonne, Amin has worked in several African countries , and is now director of the Third World Forum in Dakar, Senegal. He is best known as co-founder of the "World Systems' ' school of thought, which produced landmark critiques of global capitalism

The latest financial collapse is symptomatic of a deeper crisis in the capitalist global structure, Amin said. "Capitalism is obsolete because it was patently superfluous. It believed in plundering natural resources and perpetuating a system which vested in a handful the authority to take political and economic decisions for mankind," he added.
A social system must integrate the common will and aspirations of the people , he said, adding, "If it fails to respond to the people, then it has to be changed, because it has turned obsolete... Marx and Mao will soon be back."
Amin warned that the superpowers would do everything to restore the financial system, to maintain their profits and continue the exploitation of cheap labour and natural resources. He said a constant journey to democratisation alone would strengthen developing countries . "Democratisation should mean social progress... upholding the right to food, education, shelter and health care." Trade, he added, should not be equalised with free trade. Responding to a question , Amin said the choice was not between socialism and capitalism, but between socialism and barbarism.

Liberal capitalism, Amin said, is as much an ideology as dogmatic Marxism. The conviction that markets are self-regulatory "should make anybody laugh today ," Amin said.

Building a Better World: A Dialectical Approach
That the world is sick is beyond doubt. But how sick is it? Moderately sick, as the champions of the Neo-Liberal Globalisation (NLG) proclaim? Or incurably, terminally, sick, as some extreme critics maintain? Or very sick, but probably not beyond saving, as I believe, based on the work that I have done in the last three years or so on this subject. So, in other words, that Human ‘Civilisation’ faces the most serious crisis in its ten to twelve thousand years History (since the invention of agriculture in the Fertile Crescent of Mesopotamia) is beyond doubt.
The risk that It could be destroyed, in large part or even completely, is quite substantial; moreover, the Planet on which It sits could suffer catastrophic damage that may take several centuries (if not millennia) to repair. Therefore, assuming (a fair assumption) that we are at a critical stage of our History, and that the appropriate question to ask is no longer ‘If’ disastrous events will occur, but ‘When’, Humanity’s most urgent task appears to be what to do to ‘deal with’ these inevitable disastrous events. Most experts agree that it is not too late to significantly diminish, if not entirely eliminate, the terrible consequences of these catastrophic events. They may be wrong. But we must hope – even if sometimes against hope -- that they are right, and roll up our sleeves, and put up the best fight we can to build a better and sustainable world.
What Can Be Done? -- What Should Be Done? I have come to believe, based on the work that I have done (and trusting my intuitive intelligence)[1] that a Dialectical Approach is the best one. Thus, the Thesis, Antithesis, and Synthesis that follow this Introduction. In the Thesis, I will be presenting the arguments of the proponents of the Reformist ‘Solution’; in the Antithesis, those of the Radical (or Revolutionary) ‘Solution’; and in the Synthesis, my final thoughts and opinions.
The proponents of the Reformist ‘Solution’ believe that Globalisation is basically Good, and that whatever problems it may have, can be ‘fixed’ or corrected. The advocates of the Radical ‘Solution’ try to demonstrate that NLG is basically Bad, because its problems are of a structural and institutional nature and cannot be ‘fixed’, or corrected; which means that NLG must be scrapped, and replaced. I will try to show that the correct solution, inevitably, must incorporate aspects of both. Moreover, we need a pragmatic solution which makes it necessary for the two sides to make concessions and compromises. That said, I must also underline that I believe the correct solution is much closer to the Radical one, than it is to the Reformist one.
Globally speaking, there are four Major Players: the Governments of the Rich and Powerful Countries (GRPCs);[2] the Large Multinational Corporations (LMNCs); the International Organisations (IOs); and the Civil Society Organisations (CSOs). The GRPCs and LMNCs are the proponents of the Reformist Solution; the CSOs, of the Radical Solution; and the IOs have positioned themselves between the two, trying to find constructive solutions and thus bring them together. The main difference, I believe, between the IOs and my solutions, is that the IOs’ solutions have a bigger Technocratic content, whereas I think that the Spiritual Dimension is essential.
The main problems are (not necessarily in that order; the following order reflects my personal sensibilities): the Persistence of Extreme Poverty; the (rapidly growing) Wealth and Power Gap between the rich and the poor; Global Warming and its catastrophic consequences, due to unlimited economic growth and unbelievable waste (especially in the United States); the sizeable risk of a Third (or fourth) World War, owing to the competition for scarce resources getting out hand; Nuclear Proliferation; International Terrorism; and Human Migration out of control.

The road away from Serfdom

In a world where Liberal usually means right of centre, non-Americans are astonished to hear "Liberal' launched as a cuss-word by people who believe that the world was created in seven days and that dinosaurs and humans once walked the earth at the same time.
A few days ago it was announced that Volkswagen had overtaken Exxon-Mobil as the world's most highly valued company. In a world where 'socialism' is an even more outrageous insult than 'liberal', it is startling to contemplate the fact that Volkswagen is a product of the post-war British Army of the Rhine directed by the 1945 British government of Clement Atlee- a bunch of socialist commissars who reinvented Hitler's 'People's Car' and put it on the road.
It was these same socialists who were responsible for civilising industrial relations in Germany by inventing the idea of Co-Determination, a system where the worker participates at every executive level of the German corporation and worker directors sit on corporate boards.
Co-Determination is an idea which has been so successful that it has transformed European social relations and flowered into the adoption of an EU social agenda - aimed at full employment and a more inclusive, participatory society. On December 9, 1989, the member states, with the historically ironic exception of the United Kingdom, adopted a declaration constituting the Community Charter of the Fundamental Social Rights of Workers.
Among the areas regulated in this charter are such matters as employment and remuneration, improvement of living and working conditions, social protection, freedom of association, collective bargaining, equal treatment of men and women, industrial health, the protection of children, elderly and disabled persons; and information, consultation and participation of workers in decision-making. Most of these principles are still, in the United States, subjects of bitter dispute.
A couple of weeks ago, President Bush, in a piteous appeal for a return to the wild, begged his fellow world leaders not to abandon the principles of laissez-faire when they come to remake the world in the aftermath of the current economic meltdown and the almost inevitable social catastrophe to follow.
The next president of the United States will need to come to terms with a world which no longer works according to American principles and rules. Free trade, globalisation, and the ideas behind the multilateral agreement on investment are obsolete.
This time, as in every crisis of capitalism, the pundits are dashing to the Internet and the libraries to reread Karl Marx. Marx was not a sentimentalist. He hated neither capitalism nor capitalists. They were objective realities and functioned according to certain principles. Capitalism was doomed to fail because of its fundamental internal contradictions - not because of the greed of its practitioners.
These contradictions include the antagonism between the social, collective nature of production on the one hand, and private ownership of the means of production on the other; and the antagonism between the world market and the limitations of the nation state. Capitalism is based on production for profit and not for social need. The working class creates new value but receives only a portion of that new value back as wages.
The capitalists take the rest - the surplus. As a result, the working class collectively cannot afford to buy back all the goods it produces. Capitalism destroys its own markets by pauperising its workers and by over-production. Marx predicted globalisation and the worldwide effects we now experience.
The opponents of socialism, the proponents of laissez-faire, tend to believe like Margaret Thatcher that "There is no such thing as society" and like Ronald Reagan that "Government is not the answer, Government is the problem." The ultra-capitalists and globalisers abhor what they call "the Nanny State" - the welfare state that attempts to guarantee a basic level of civilised existence for all.
In FA Hayek's "Road to Serfdom?" the problem is stated: "In place of individual liberty, socialism offers security. It promises protection from personal economic necessities and restraints, and an equality of economic well-being." Hayek was not a socialist.
The main architect of the latest disaster, Alan Greenspan, has proclaimed himself confounded by the turn of events. He had a set of rules which he says had always worked. Until now! He cannot understand the disaster over which he presided.
Greenspan is a disciple of Ayn Rand, one of recent history's most eminent false prophets. Rand's theory - so-called 'Objectivism' - holds that human beings must rationally be selfish, putting individual self-interest first. She therefore rejects the ethical doctrine of altruism - a moral obligation to live not only for one's self but for the sake of others. Since Rand took millions of words to define her philosophy, any summary of it is perforce crude. I do not think, however, that I have misrepresented her, or Hayek, or Greenspan, or Thatcher or Reagan or the millions of others to whom freedom is a purely personal attribute and life is every man for himself and the devil take the hindmost.
Some others of us think that none of us is free if any of us is unfree. The fascists believe that any sense of duty outside of self is a fetter, restricting real freedom. We believe that only by our mutual recognition of all our humanity are we human, and that our civilisation and survival depend on that. We are all in the same boat and on the same journey.
Individual liberty clearly means different things to different people. The International Republican Institute, headed by John McCain, no doubt believes that the people of Haiti are free, and free to starve to death, while the people of Cuba are enslaved by socialism, free education and the best health services in the world.
The IRI was one of the prime movers in usurping Haitian sovereignty to get rid of Jean Bertrand Aristide whom they consider a serious threat to real democracy as he was intent on building another socialist/welfare state alongside Cuba.

Now that the capitalists have established that the state - that is, us, we, the people - are the benefactors of last resort, it is time that we too discovered that truth. The billions we are spending to rescue banks and capitalists would be more efficiently and cost-effectively spent on rescuing our communities. If Obama becomes president, that is a discovery his constituents are likely to make sooner rather than later. In fact, some are already making it, demanding fundamental change and a new economic order.
The decay of imperial capitalism is bound to produce unforeseen byproducts, some beneficial, some toxic. Those who will survive need to be able to quickly choose between them.


Financial Crisis - Turning From Capitalism to Socialism
But both recent and historical experience shows an undeniable association between capital mobility and crises, especially when domestic institutions are weak and the harmonization of capital account liberalization and other policy reforms is inadequate.
In spite of the US government's bid to take more measures in order to prevent a total paralysis of the international economy, much of globalization and concomitant increases, in flows of capita and trade have led to high volatility in international financial markets.
Some of these have erupted into crises, in the form of runs and banks-both national and multinational-as well as attacks on currencies. The resultant effects have included the significant increase in contagion and the collapse of both venerable private banks as well as national institutions.
The public sector ( US government) therefore, had no choice but to work on a bailout plan of these institutions worth 700bn dollars, and recaptured state control of these institutions to keep the economy from the blink of collapse-one can be justified to call it nationalization in the face of capitalism failure.
Isn't this Socialism? The greatest socialist ideology of all times, KARL MARX had envisaged this trend of events in his communist manifesto on the chapter entitled "Historical Materialism", where the invisible hand as foretold by ADAM SMITH an architect of free market forces (Non-government intervention in the economy), had argued that the economy was self-regulating and self-sustaining.
That there was essentially nothing like market failure since the economy would correct itself. He says that law maintained that, "supply created its own demand". Therefore, there can never be a crisis in the real market.
All these people had it wrong; the current trend has demystified them and vindicated the great Karl Marx. I wish he could be present to witness his prophesy coming true.
Marx had prophesied that capitalism must eventually pave way to socialism as a matter of fact, due to the inevitable social forces of production because of surplus production (indicating exploitation of the proletariats by the bourgeoisie).
The gains from trade and economic reforms have to be lost now; it's a painful process to the monetary consensus (commonly referred to as the Washington consensus). Most predictions have been that, socialism is the end process of development.
The very reason why now governments are taking over the banking institutions is to recover from this mess of laissez faire ordinarily, government control (regulation) of the economy is a preserve of the socialist economies (in fact a major characteristic of socialist economies is government ownership of means of production).
The structural adjustment programs and the neo-liberal economic policies, no longer hold as we talk because they are based on the very market model of deregulation (what some called man eat man society), where market participants behave as if they are in a jungle paving way for survival for the fittest-Darwin's theory in retrospect.
We are beginning to see a shift in capitalist architects moving towards the left (embracing government control of the economy) due to the worst economic crisis since 1930's. The new world order ushered in after world war two may be heading for u-turn.

What remains from the Communist Manifesto in 2008, one hundred and sixty years after its publication? As David Harvey observes in his brilliant preface to this edition, the present financial crisis corresponds in an astonishing way to the predictions of Marx and Engels: “ the society of the ‘too much’, of ‘overproduction’ and excessive speculation, has plainly broken down and reverted, as it always does’ to a ‘state of momentary barbarism”.

In many respects, the Manifesto is not only current, but more current today than 160 years ago. Let’s take for example its diagnosis of capitalist globalisation. Capitalism, say the two young authors, is in the process of forging a process of economic and cultural unification of the world under its leadership: “The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of Reactionists, it has drawn from under the feet of industry the national ground on which it stood. (...) In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations. And as in material, so also in intellectual production.”
It is not only about expansion but also domination: the bourgeoisie “compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilisation into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image." Indeed, in 1848 that constituted much more an anticipation of future tendencies than a simple description of contemporary reality. It is an analysis which is much truer today, in the epoch of “globalisation", than 160 years ago, at the time of the editing of the Manifesto.
In fact, capital has never succeeded as it has in the 21st century in exerting a power so complete, absolute, integral, universal and unlimited over the entire world. Never in the past was it able, as today, to impose its rules, its policies, its dogmas and its interests on all the nations of the globe. International financial capital and multinational companies have never so much escaped the control of the states and peoples concerned. Never before has there been such a dense network of international institutions - like the International Monetary Fund, the World Bank, the World Trade Organisation - devoted to controlling, governing and administering the life of humanity according to the strict rules of the capitalist free market and of capitalist free profit. Finally, never at any time prior to today, have all spheres of human life – social relations, culture, art, politics, sexuality, health, education, sport, entertainment - been so completely subjected to capital and so profoundly plunged into the " in the icy water of egotistical calculation".
Add to this that the Manifesto is much more than a diagnosis - now prophetic, now marked by the limits of its time – of the global power of capitalism : it is also and above all an urgent appeal for international combat against this domination. Marx and Engels had perfectly understood that capital, as a world system, can only be vanquished by the world historical action of its victims, the proletariat and its allies.

The return of the prophet
In decades past, a crisis on this scale would have presented an immediate opportunity for the 'left'; but the 'left' as it is- defeated, tamed and fragmented- is in no position, as yet, to rise to the occasion. As Paul Gillespie observed:
Note that most of these leaders are from the centre right, not the centre left. Centrism is resurrected from the wreckage of radical right-wing deregulation, more than is the left. The argument is about re-regulation rather than redistribution, the public rather than the private interest, transnational against national sovereignty.So far, that is. The traditional left has had little operational purchase on the crisis other than I-told-you-so utterances about their inherently cyclical nature. Confronted with this international convulsion, "the Left" is for the most part as weak and tame as it certainly is in Ireland. Popular anger here and in the US, for example, is far more radical, but not expressed in such vocabularies. This is a real challenge and also an opportunity for the left - just as it was for Marx and Engels 150 years ago.But does the left refer to traditional social democracy, which accepts market capitalism but seeks to equalise it; to the "third way" variety popularised by Blair and Brown; or to the "democratic socialism" of post-Stalinist parties? What of more recent green socialism? How to classify the rump of traditional Stalinist parties in Europe, India and elsewhere? Should Chinese and Vietnamese one-state authoritarian capitalisms led by such communist parties be included? Where do the left of South Africa's ANC and the burgeoning variety of Latin American left-wing movements fit in? Is the US Democratic Party part of that family? How do all of these relate to the growing radical or far-left tendencies and social movements drawing on previous bottom-up revolutionary traditions such as Trotskyism and anarchism?
It is despite this present weakness and incoherence of the left that Gillespie makes a remarkable suggestion, implicit in which is the notion- fully supported by recent events- that the ideas of the 'free-market' right wing have been bankrupted by the capitalist crisis; hence the key ideological struggle of the near future will be between, on the one hand, socialists who utilise the ideas of Karl Marx and Friedrich Engels, and on the other hand, 'social democratic' supporters of a 'refounded', moderated version of capitalism, utilising the ideas of various other 'big names'. The Irish Times article concludes:
Big events revive these debates, but they need to be reinvented for new times. Conventional sociological post-industrialism accounts rendering left ideologies and movements redundant badly need revision in the light of falling living standards and growing inequalities. So does Fukuyama's notion of the end of ideology and the triumph of market capitalism - as he now admits. Big names too: Keynes, Polanyi, Kondratieff, Galbraith and now Paul Krugman are deployed by social democrats against those who want to resurrect Marx and Engels.
If it is true that the new main battle of ideas is to be fought between the social democrats (who wish to ressurect a moderated capitalism in order to save capitalism) and the Marxists (who wish to abolish capitalism), then the ideological success of the former will in large part depend on their practical ability to, in Gillespie's words, "create a 'refounded capitalism' more capable of withstanding such cyclical shocks by better global regulation"; as we shall see, not only better global regulation would be required in order for such a new-model capitalism to be better at withstanding 'cyclical shocks', but a reversal of the "falling living standards and growing inequalities" which characterise the contemorary model of capitalism would also be required if future crises on a similar scale to our current ongoing crisis- or even worse- are to be avoided.If such a radically different 're-founded capitalism' cannot be achieved, the Marx-inspired socialists will begin to make serious headway.So, is it possible that a new-model capitalism can arise in the course of, or subsequent to, the efforts of governments to cope with the current crisis? This is a matter on which a consideration of 20th Century history, and of the underlying causes of the present crisis, can both offer some guidance.Changing spotsFor proof that it could be possible to re-found capitalism on a different basis, we can look to the period following the catastrophic slump of the 1930s, particularly after World War Two, in the developed capitalist countries. For an extended period, the gap between rich and poor was steadily narrowed, the living standards and economic security of of working class people vastly improved, and cyclical shocks were minimised.
Marx had not predicted that such a development would be possible without the revolutionary overthrow of the capitalist system; and it seemed that the prediction of the non-Marxist social democrats, that capitalism could be reformed so thoroughly as to provide a much better and improving life for the majority of people, was vindicated.Then in the 1970s, a major economic crisis did occur; but it did not appear to resemble the 19th Century crises so vividly described by Marx, or indeed the crises of the early 20th Century, which broadly followed the same pattern. The main economic symptom of the crisis of the 1970s, as identified by the establishment experts of that time, was rising inflation (caused to some extent by rapidly increasing wages); and in order to defeat inflation (involving of course the defeat of the trade unions which had succeeded in raising wages faster than the increase in industrial productivity), the Western governments deliberately caused a rise in unemployment. That explanation of the economic disturbances of the time was far closer to the reality, which anyone could observe, than anything which could be found in the pages of Capital.Thus orthodox Marxism in the developed capitalist countries was already in ideological retreat, even before the events of 1989 to 1991. Since when, enthused by the defeat of inflation, the defeat of the trade unions and- that crown of glory- the defeat of the socialist regimes in Eastern Europe and the USSR; capitalism has returned, by leaps of privatisation, bounds of ending progressive taxation, and accelerating global deregulation- to a modernised, turbo-charged version of its former self.So, along comes the immense and frightening crisis; the basic nature of which- as anyone, even a president or a finance minister, can observe- can be understood with the help of volumes 1 to 3 of Capital. Indeed, Marx's dissections of the crises of the old-model capitalism of the 19th Century show remarkable similarities to the processes of our current debacle. Consider this, for example:
In a system of production, where the entire continuity of the reproduction process rests upon credit, a crisis must obviously occur — a tremendous rush for means of payment — when credit suddenly ceases and only cash payments have validity. At first glance, therefore, the whole crisis seems to be merely a credit and money crisis. And in fact it is only a question of the convertibility of bills of exchange into money. But the majority of these bills represent actual sales and purchases, whose extension far beyond the needs of society is, after all, the basis of the whole crisis. At the same time, an enormous quantity of these bills of exchange represents plain swindle, which now reaches the light of day and collapses; furthermore, unsuccessful speculation with the capital of other people; finally, commodity-capital which has depreciated or is completely unsaleable, or returns that can never more be realised again. The entire artificial system of forced expansion of the reproduction process cannot, of course, be remedied by having some bank, like the Bank of England, give to all the swindlers the deficient capital by means of its paper and having it buy up all the depreciated commodities at their old nominal values. Incidentally, everything here appears distorted, since in this paper world, the real price and its real basis appear nowhere, but only bullion, metal coin, notes, bills of exchange, securities. Particularly in centres where the entire money business of the country is concentrated, like London, does this distortion become apparent; the entire process becomes incomprehensible; it is less so in centres of production.
On the political effect of capitalist crises, Marx noted:
Modern bourgeois society, with its relations of production, of exchange and of property, a society that has conjured up such gigantic means of production and of exchange, is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells [...] It is enough to mention the commercial crises that, by their periodical return, put the existence of the entire bourgeois society on its trial, each time more threateningly.
Among the many very pertinent aspects of Karl Marx's work is his insistence that all value is created in the productive sectors of the economy- the sectors which, since the start of this present crisis, the commentators have begun to call the 'real economy'- and that the wealth which is supposedly 'created' in the stock exchange and the financial sector is a combination of: (a) value which is transferred into that sector from the 'real economy' (in Vols. 2 and 3 of Capital, Marx goes into some detail about the mechanisms by which this takes place), and (b) fictitious value, resulting from speculation, the illusory nature of which is suddenly exposed when the inevitable crisis ensues.
On 21st October, Chris Dillow, a columnist for the Investors Chronicle, was sufficiently emboldened by his passing aquaintance with the works of Karl Marx, and no doubt also by his equal knowledge of the backgound of our current crisis, to write a blog article on which sought to refute the applicability of Marx's analysis to the present debacle. The article, entitled 'Marx: less relevant' was duly promoted in the electronic editions of the Guardian and the Daily Telegraph.Dillow conceded that:
On many things, Marx was right. He was right to show that capitalism was a force for great growth and great instability; right to show that profits arose from exploitation; right to stress that technical progress determines social conditions; right on alienation and primitive accumulation.
But, he claimed:
To Marx, crises originated in the real economy [...]Instead, this crisis originates in the financial system. To Marx, however, finance was not so much a cause of capitalist crises - and for that matter of capitalist growth as well - but a mere accelerant of them. It’s the petrol, not the spark. Credit, he wrote (vol III, p572), “accelerates the violent outbreaks of this contradiction, crises…” Accelerate, note, not cause.
It is important to evaluate this claim. If the current crisis is purely or mainly the creation of the financial system, and the devastating effects on the 'real economy' are merely the fallout from the financial crisis, then one can at least envisage that a 'refounded capitalism', by enforcing stricter regulation on the financial sector, by repressing speculation and fraudulent dealings, could thereby- and without addressing the issues of 'real economy' production and the living standards of the masses- prevent the emergence, in future, of such major crises.So let's put to one side (only for a moment) what has been taking place in the financial sector, and look at what has been taking place in global 'real economy' production, and in the incomes of the masses of the people, in the period leading up to our current crisis, in terms of Marx's insistence that: "the ultimate reason for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit".What do we find? We find that globally, the production of goods for sale has been increasing, while the incomes of the majority of the people have been held down. How has that gap been bridged? It was bridged by the phenomenon of rising debt. Two great countries appear as opposite poles of the modern process of globalisation: so let us take them as our examples- China and the USA.China, the world's biggest country by population but a poor country by its per-capita income, has for almost three decades, by means of foriegn investment and the import of technology, been increasing its manufacturing production at a rate of between 10% and 15% annually. In a typical period, the five years from 1998 to 2003, China's output of manufactured products rose by 91%. The average incomes of people in China have also been rising- but by a significantly lower rate. Advanced on the one hand by the country's huge trade union movement, depressed on the other hand by the influx of workers from the countryside, real wages in China have been rising at around 8% annually. In any case, too rapid a growth in wages would have made China a much less attractive destination for foreign investment, and would have undermined China's price advantage in selling its products abroad. During the nine years from 1997 to 2006, taking urban and rural incomes as a whole, the mean average household income in China rose by 72%- a very respectable figure, but far less than the increase in manufacturing output.Thus the vastly rising volume of goods made in China could not possibly be purchased by the Chinese; but this was not a problem, because a high proportion of the Chinese-made products were created in order to be sold abroad, to much richer countries. The biggest destination for China's exports was the world's most lucrative consumer market, and still, despite China's relative rise, the world's biggest producer of goods by dollar value, the United States of America. In 2007, approximately 20% of exports from China went to the USA.Now, the majority of people in the US can hardly be described as poor, or as suffering from restricted consumption, when considered against global average living standards. Yet, due to the decline in trade union power and various other factors including the re-location of industrial production by US corporations to other countries where the labour costs are much lower (China, for instance), the real hourly wage rate of the median average worker in the USA has been held down to such an extent that it is no higher now than it was in the mid 1970s. Yet production in the USA, despite the transfer of industry abroad, continued to increase with the introduction of new technology. In the non-financial corporate sector, productivity has been increasing by an average of between 2% and 4% annually, resulting in a cumulative increase of 45% in hourly production per worker in the United States between 1992 and 2005. During this time, production processes have of course become increasingly globalised, and not everything made in the USA has to be consumed in the USA- but it has to be consumed somewhere. To take for example the fastest growing sector of US industry, the computer and electronics sector: a high proportion of its products are components, which require for their manufacture very advanced levels of production technology and skill; these are sent to low-wage countries such as China, where they are assembled, combined with other components which require lower levels of skill and production technology- and the resultant finished products are then sent to the USA and other developed countries to be sold to the final consumers.And, despite the stagnation in their hourly pay, the masses in the United States have until very recently kept on increasing their spending, thus squaring the gap between production and consumption.
For a while, two means were available to achieve this. The first was by increasing the number of working hours per family: men began to have a longer average working week, there was a big increase in the number of women in the workforce, and it became common for people to hold two or even three jobs. But this, of course, raises the amount of material products and services which need to be sold. Also, in the end, there are physical and social limits to the average number of working hours per household. By the start of the 21st Century, the increase in working hours had come to a halt; and the continuing rise in mass consumption was facilitated exclusively by the second available means of increasing spending: rising debt. As Edward Luce noted in the Financial Times:
Between 2000 and 2006, the US economy expanded by 18 per cent, whereas real income for the median working household dropped by 1.1 per cent in real terms, or about $2,000 (£1,280, €1,600). Meanwhile, the top tenth saw an improvement of 32 per cent in their incomes, the top 1 per cent a rise of 203 per cent and the top 0.1 per cent a gain of 425 per cent.
Edward Luce added:
According to Emmanuel Saez at the University of California, Berkeley, the distribution of income today almost exactly matches that of 1928 on the eve of the Wall Street crash. In 1928, the top 1 per cent of Americans took in 24 per cent of national income, compared with 23 per cent today. Between 1940 and 1984 their share never exceeded 15 per cent and it was in single digits for most of the 1960s and 1970s.
However, the big rise in incomes at the top could not compensate for the stagnation or decline in incomes at the middle and the bottom; because, unlike nearly everybody in the lower social strata, the richer people do not spend all their money: they invest much of their income; and that investment goes either into the 'real economy' locally or abroad (thus further increasing production) or into the various kinds of financial speculation.The debt bubbleIn an article entitled 'The Household Debt Bubble', published in the May 2006 issue of Monthly Review, John Bellamy Foster observed:
...for households in the bottom 60 percent of the income distribution in the United States, average personal consumption expenditures equaled or exceeded average pre-tax income in 2003; while the fifth of the population just above them used up five-sixths of their pre-tax income (most of the rest no doubt taken up by taxes) on consumption. In contrast, those high up on the income pyramid—the capitalist class and their relatively well-to-do hangers-on—spend a much smaller percentage of their income on personal consumption. The overwhelming proportion of the income of capitalists (which at this level has to be extended to include unrealized capital gains) is devoted to investment. It follows that increasing inequality in income and wealth can be expected to create the age-old conundrum of capitalism: an accumulation (savings-and-investment) process that depends on keeping wages down while ultimately relying on wage-based consumption to support economic growth and investment.Under these circumstances, in which consumption and ultimately investment are heavily dependent on the spending of those at the bottom of the income stream, one would naturally suppose that a stagnation or decline in real wages would generate crisis-tendencies for the economy by constraining overall consumption expenditures.
But, even after the 'dot.com' stockmarket crash in 2000, that 'age-old conundrum of capitalism' did not manifest itself in a major crisis; following that stockmarket crash, the US government cut interest rates, after which, as John Bellamy Foster noted in 2006:
...overall consumption has continued to climb. Indeed, U.S. economic growth is ever more dependent on what appears at first glance to be unstoppable increases in consumption.
This was made possible by a huge increase in personal debt- some on credit cards, but the largest part through the mortgaging and re-mortgaging of houses; a seeming safe bet, given the steep rise in house prices (fuelled in large part by the low interest rates), and which also appeared to be unstoppable. Average outstanding consumer debt, which had crept up from 62% of consumer disposable income in 1975 to 96.8% in 2000, splurged to 127.2% of disposable income in 2005.It has been made clear to all, since the credit first began to crunch in the summer of 2007, that the US government, by reducing interest rates, relaxing controls on lending, and allowing the financial sector to 'regulate' itself, had thereby facilitated the production of both the 'raw material' and the 'tools' by which an enormous volume of debt-based speculation was created in the financial sector. Less attention has been paid to the other main effect of these debt-inducing measures: that of delaying the onset of the crisis.We have taken the USA as our developed country example; and although it is the biggest and richest of the developed countries, it might be argued that it is an extreme example, given that hourly wages in the USA have been held flat for more than thirty years. However, a not dissimilar phenomenon has occurred in the other main rich countries. The average annual real wage increase in 13 OECD countries (as shown in figure 1.2 in Andrew Glyn's book 'Capitalism Unleashed') which had been running at between 3% and 5% through the 1960s and mid-1970s, fell by the 1980s to between 1% and 2% and has remained at those low levels; and the burden of personal debt in Britain, Germany, Japan and the other major developed countries has been rising inexorably.The jitters in the financial markets first appeared in August 2007, as the revenue streams which supported the values of the various debt-based financial instruments, in which the banks and hedge funds had invested trillions of dollars, began to be revealed as less reliable than had previously been surmised. And whence was this revenue supposed to stream? From the incomes of the increasingly indebted mortgage and credit card holders, particularly those in the USA- incomes which were stagnant or even declining, while their burden of debt, and the payments due on that debt, were rising steeply.
At the time it had been little reported in the mainstream press, especially outside the United States; but already by the spring of 2007, mortgage defaults in the USA, especially in the sub-prime sector, were increasing to an alarming scale. The enormous inevitable crash was beginning to emerge.And where could this crisis lead? On 28th October, one respected analyst, Martin Wolf of the Financial Times, speculated on the possible medium-term consequences if further radical measures are not taken immediately to address the financial meltdown:
...the idea that a quick recession would purge the world of past excesses is ludicrous. The danger is, instead, of a slump, as a mountain of private debt – in the US, equal to three times GDP – topples over into mass bankruptcy. The downward spiral would begin with further decay of financial systems and proceed via pervasive mistrust, the vanishing of credit, closure of vast numbers of businesses, soaring unemployment, tumbling commodity prices, cascading declines in asset prices and soaring repossessions. Globalisation would spread the catastrophe everywhere.Many of the victims would be innocent of past excesses, while many of the most guilty would retain their ill-gotten gains. This would be a recipe not for a revival of 19th-century laisser faire, but for xenophobia, nationalism and revolution. As it is, such outcomes are conceivable.
Western governments, argues Martin Wolf, must- without delay- slash interest rates, increase state debt, insist that the banks lend money to those businesses which some chance of survival, provide financial assistance to the 'emerging economies' of the poorer countries, and pressurise countries in 'strong financial positions' to 'expand domestic demand'. He concluded with a swipe not only at those who do not endorse such immediate measures, but also at those who are already considering the lines of a new and improved global capitalist order:
Decisions made over the next few months may well shape the world for a generation. At stake could be the legitimacy of the open market economy itself. Those who view liquidation of past excesses as the solution fail to understand the risks. The same is true of those dreaming of new global orders. Let us first get through the crisis. The danger remains huge and time is short.
This is incorrect in terms of political tactics. The people are now witnessing the consequences of the current global order, and, even if the programme which Martin Wolf proposes is implemented in full, we will now undergo a period of seriously increased suffering. If the 'open market economy' (ie, capitalism) is not to lose further legitimacy, then the prospect must be held out of a 'refounded capitalism' which would be able to minimise and withstand economic 'cyclic shocks'.

And now for some refreshing Revolutionary Anarcho-Leftism
Hope in Common
by David Graeber
We seem to have reached an impasse. Capitalism as we know it appears to be coming apart. But as financial institutions stagger and crumble, there is no obvious alternative. Organized resistance appears scattered and incoherent; the global justice movement a shadow of its former self. There is good reason to believe that, in a generation or so, capitalism will no longer exist: for the simple reason that it’s impossible to maintain an engine of perpetual growth forever on a finite planet. Faced with the prospect, the knee-jerk reaction -- even of “progressives” -- is, often, fear, to cling to capitalism because they simply can’t imagine an alternative that wouldn’t be even worse.

The first question we should be asking is: How did this happen? Is it normal for human beings to be unable to imagine what a better world would even be like?
Hopelessness isn’t natural. It needs to be produced. If we really want to understand this situation, we have to begin by understanding that the last thirty years have seen the construction of a vast bureaucratic apparatus for the creation and maintenance of hopelessness, a kind of giant machine that is designed, first and foremost, to destroy any sense of possible alternative futures. At root is a veritable obsession on the part of the rulers of the world with ensuring that social movements cannot be seen to grow, to flourish, to propose alternatives; that those who challenge existing power arrangements can never, under any circumstances, be perceived to win. To do so requires creating a vast apparatus of armies, prisons, police, various forms of private security firms and police and military intelligence apparatus, propaganda engines of every conceivable variety, most of which do not attack alternatives directly so much as they create a pervasive climate of fear, jingoistic conformity, and simple despair that renders any thought of changing the world seem an idle fantasy. Maintaining this apparatus seems even more important, to exponents of the “free market,” even than maintaining any sort of viable market economy. How else can one explain, for instance, what happened in the former Soviet Union, where one would have imagined the end of the Cold War would have led to the dismantling of the army and KGB and rebuilding the factories, but in fact what happened was precisely the other way around? This is just one extreme example of what has been happening everywhere. Economically, this apparatus is pure dead weight; all the guns, surveillance cameras, and propaganda engines are extraordinarily expensive and really produce nothing, and as a result, it’s dragging the entire capitalist system down with it, and possibly, the earth itself.
The spirals of financialization and endless string of economic bubbles we’ve been experience are a direct result of this apparatus. It’s no coincidence that the United States has become both the world’s major military (”security”) power and the major promoter of bogus securities. This apparatus exists to shred and pulverize the human imagination, to destroy any possibility of envisioning alternative futures. As a result, the only thing left to imagine is more and more money, and debt spirals entirely out of control. What is debt, after all, but imaginary money whose value can only be realized in the future: future profits, the proceeds of the exploitation of workers not yet born. Finance capital in turn is the buying and selling of these imaginary future profits; and once one assumes that capitalism itself will be around for all eternity, the only kind of economic democracy left to imagine is one everyone is equally free to invest in the market -- to grab their own piece in the game of buying and selling imaginary future profits, even if these profits are to be extracted from themselves. Freedom has become the right to share in the proceeds of one’s own permanent enslavement.
And since the bubble had built on the destruction of futures, once it collapsed there appeared to be -- at least for the moment -- simply nothing left.
We are clearly at the verge of another mass resurgence of the popular imagination. It shouldn’t be that difficult. Most of the elements are already there. The problem is that, our perceptions having been twisted into knots by decades of relentless propaganda, we are no longer able to see them. Consider here the term “communism.” Rarely has a term come to be so utterly reviled. The standard line, which we accept more or less unthinkingly, is that communism means state control of the economy, and this is an impossible utopian dream because history has shown it simply “doesn’t work.” Capitalism, however unpleasant, is thus the only remaining option. But in fact communism really just means any situation where people act according to the principle of “from each according to their abilities, to each according to their needs” -- which is the way pretty much everyone always act if they are working together to get something done. If two people are fixing a pipe and one says “hand me the wrench,” the other doesn’t say, “and what do I get for it?”(That is, if they actually want it to be fixed.) This is true even if they happen to be employed by Bechtel or Citigroup. They apply principles of communism because it’s the only thing that really works. This is also the reason whole cities or countries revert to some form of rough-and-ready communism in the wake of natural disasters, or economic collapse (one might say, in those circumstances, markets and hierarchical chains of command are luxuries they can’t afford.) The more creativity is required, the more people have to improvise at a given task, the more egalitarian the resulting form of communism is likely to be: that’s why even Republican computer engineers, when trying to innovate new software ideas, tend to form small democratic collectives. It’s only when work becomes standardized and boring -- as on production lines -- that it becomes possible to impose more authoritarian, even fascistic forms of communism. But the fact is that even private companies are, internally, organized communistically.
Communism then is already here. The question is how to further democratize it. Capitalism, in turn, is just one possible way of managing communism -- and, it has become increasingly clear, rather a disastrous one. Clearly we need to be thinking about a better one: preferably, one that does not quite so systematically set us all at each others’ throats.
All this makes it much easier to understand why capitalists are willing to pour such extraordinary resources into the machinery of hopelessness. Capitalism is not just a poor system for managing communism: it has a notorious tendency to periodically come spinning apart. Each time it does, those who profit from it have to convince everyone -- and most of all the technical people, the doctors and teachers and surveyors and insurance claims adjustors -- that there is really no choice but to dutifully paste it all back together again, in something like the original form. This despite the fact that most of those who will end up doing the work of rebuilding the system don’t even like it very much, and all have at least the vague suspicion, rooted in their own innumerable experiences of everyday communism, that it really ought to be possible to create a system at least a little less stupid and unfair.
This is why, as the Great Depression showed, the existence of any plausible-seeming alternative -- even one so dubious as the Soviet Union in the 1930s -- can turn a downswing into an apparently insoluble political crisis.
Those wishing to subvert the system have learned by now, from bitter experience, that we cannot place our faith in states. The last decade has instead seen the development of thousands of forms of mutual aid association, most of which have not even made it onto the radar of the global media. They range from tiny cooperatives and associations to vast anti-capitalist experiments, archipelagos of occupied factories in Paraguay or Argentina or of self-organized tea plantations and fisheries in India, autonomous institutes in Korea, whole insurgent communities in Chiapas or Bolivia, associations of landless peasants, urban squatters, neighborhood alliances, that spring up pretty much anywhere that where state power and global capital seem to temporarily looking the other way. They might have almost no ideological unity and many are not even aware of the other’s existence, but all are marked by a common desire to break with the logic of capital. And in many places, they are beginning to combine. “Economies of solidarity” exist on every continent, in at least eighty different countries. We are at the point where we can begin to perceive the outlines of how these can knit together on a global level, creating new forms of planetary commons to create a genuine insurgent civilization.
Visible alternatives shatter the sense of inevitability, that the system must, necessarily, be patched together in the same form -- this is why it became such an imperative of global governance to stamp them out, or, when that’s not possible, to ensure that no one knows about them. To become aware of it allows us to see everything we are already doing in a new light. To realize we’re all already communists when working on a common projects, all already anarchists when we solve problems without recourse to lawyers or police, all revolutionaries when we make something genuinely new.

SEE
His Masters Voice
Auto Solution II
Stiglitz On Market Fundamentalism
FDR and the origins of State Capitalism
Business Unionism Offers No Solution To Capitalist Crisis
No Austrians In Foxholes



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Not So Free Dubai

Like Halliburton, everyone is moving to Dubai the free enterprise zone of the Middle East. Unfortunately when it comes to a free press Dubai has allowed its commercial and trade interests with Pakistan to dictate policy. After all free speech and free enterprise do not necessarily go together. Capitalism can function without democracy. And visa versa.

Two of Pakistan's leading private television networks, ordered off air during emergency rule, said on Saturday they had been forced to close down altogether after being ordered to halt transmissions via the United Arab Emirates.

Geo, Pakistan's biggest television network, and ARY One World, both have offices and studios in Dubai Media City, from where they broadcast news.

"We have been told by the (Dubai) Media City that our transmission will be shut down," Imran Aslam, president of Geo News, told Reuters. "This is all I can say at the moment." The channel’s web site said it was shut down “

SEE

Musharraf's Coup

Capitalism and Islam

Freedom and Democracy Where?


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Cooperative Commonwealth=Free Market

There is a lot of talk of Shareholder or Stakeholder democracy, politically and economically, of late. The reality is that the Shareholder is not an individual but an institution like a pension fund, run by managers. Shareholders have been at odds with the company management since the founding of Joint Stock Companies.

The corporate model of capitalism is not the only model of a market economy, nor is it inherently democratic. Instead the real democratic mode of economic development of the market was the Cooperative Commonwealth. History of the Co-operative Movement

Utopian Communities

Although they date to the earliest days of U.S. history, Utopian communities, intentional communities created to perfect American society, had become institutionalized in American thought by the 1840s. Various groups, struggling under the pressures of urbanization and industrialization, challenged the traditional norms and social conservatism of American society. Their desire to create a perfect world often lay in sharp contradiction to the world in which they lived, one in which capitalism, the INDUSTRIAL REVOLUTION, immigration, and the tension between the individual and the community challenged older forms of living.

The first American Utopias grew out of Robert Owen's attempt to create a model company town in New Lanark, Scotland. In the United States, Owen organized the New Harmony Community along the Wabash River in western Indiana in 1825. There the residents established a socialist community in which everyone was to share equally in labor and profit. Just months after the creation of a constitution in January 1826, the thousand residents at New Harmony divided into sub-communities that then disintegrated into chaos. In 1825 Francis Wright established another Owenite community at Nashoba in Tennessee. Wright had hoped to demonstrate that free labor was more economical than slavery, but Nashoba attracted few settlers, and the community closed its doors within a year.

It was this movement of Utopias that Anarchism in the United States began with Joshiah Warren and Lysander Spooner.

Ironically those who oppose state capitalism from the right fail to understand the history of cooperatives and how the capitalist state did act against them which is detailed in Hjalmar Petersen of Minnesota: the politics of provincial independence

Suppose that Mr. Schweickart were right that cooperatives greatly exceed in efficiency standard-model capitalist firms. Nothing prevents cooperatives from developing on the free market and (if Mr. Schweickart's view about their superior efficiency is right) supplanting firms owned by capitalists. The fact that this has not happened suggests that cooperatives are not the paragons of efficiency that Mr. Schweickart imagines.

Mr. Schweickart's response (besides calling me a mean-spirited reactionary) is obvious. He will counter that the capitalist-controlled state and banking system would strangle an incipient cooperative commonwealth in its cradle. In point of fact, precisely the opposite is the case. In spite of large tax advantages cooperatives have never succeeded in making much headway in capitalist economies. It is not necessary to confront fantasies of capitalist resistance: cooperatives characteristically fail to rise to the level at which such resistance would have a point.

The problem here is that capitalism was not a level playing field. The joint stock companies, Trusts and Banks opposed authentic shareholder control. And so despite the above authors exhortation of Von Mises and Hyaek's theories to the contrary, the reality of corporate capitalism was that it never was modeled on shareholder democracy nor shareholder responsibility.

Economic counter-institutions, unfortunately, work within the framework of a larger corporate capitalist economy. They compete in markets in which the institutional culture of the dominant firms is top-down and hierarchical, and are in great danger of absorbing this institutional culture themselves. That's why you have a non-profit and cooperative sector whose management is indistinguishable from its capitalist counterparts: prestige salaries, middle management featherbedding, bureaucratic irrationality, and slavish adherence to the latest motivational/management theory dogma. The problem is exacerbated by a capitalist financial system, which extends positive reinforcement (in the form of credit) to firms following an orthodox organizational model (even when bottom-up organization is far more efficient)

As recent work on Scottish Banks and Joint Stock Companies, shows Joint Stock Companies and Banks were not controlled by the shareholders but by the managers. Supported by their State and their control of the laws allowed them to define the market as capitalist while maintaining their mercantile monopolies.

'Shareholder Democracies?' Corporate Governance in Britain, c. 1720-1844

Transparency and Accountability in the Governance of British Stock Companies 1740-1845'

Our paper is based on the constitutions of a sample of 90 companies established in the period 1739-1844 - 30 canal and dock companies, 30 railways and 30 banks - which is part of a larger, ongoing project on the governance of joint-stock companies in Britain in the period. The canals, docks and railways in the sample were all incorporated, the banks all unincorporated. Their constitutions made various provisions for the auditing of accounts, and they granted shareholders differing degrees of access to company books. Through detailed typologies of audit provisions, procedures for presentation of balance sheets, and shareholders’ rights to inspect documents, we compare the three sectors, and consider differences between companies of different sizes, and changes over time. We show that, whereas in many incorporated companies the books of account were, in theory, open for inspection by shareholders ‘at all seasonable times’, in the banking sector a culture of secrecy operated to the extent that shareholders were often not even permitted to inspect the company deed of settlement. This calls into question Pratt and Storrar’s recent generalisation that ‘[u]ntil at least the middle of the 19^th century, shareholders were considered to have an inherent right to inspect their companies’ books of account’.[1] In the banking sector, it was standard procedure to provide for an ad hoc internal audit by a shareholders’ committee of inspection if required. By the 1840s railway companies were beginning to provide for permanent audit, and were moving away from the universal right of access that had characterised earlier incorporated companies. This reflects the tendency, identified by Timothy L. Alborn, for joint-stock companies to become less ‘democratic’ in this period.[2]

---

[1] Ken C. Pratt and A. Colin Storrar, ‘UK Shareholders’ Lost Access to Management Information’, Accounting and Business Research 27 (1997), 205.

[2] Timothy L. Alborn, Conceiving Companies: Joint-Stock Politics in Victorian England (1998).

Technological Change and Corporate Governance: the case of early 19th Century Coastal Shipping'

The internal politics of corporate governance in British joint-stock companies have recently begun to attract the attention of historians, partly with a view to increasing our understanding of the extent of democratic practice in nineteenth-century Britain, and partly to improve our knowledge of the historical roots of the current debate on modern corporate governance. The focus of this paper is on the governance issues which arose in Scottish coastal shipping companies during the early nineteenth century as they grappled with the central problem of making a successful transition from sail to steam technology. Two questions are addressed in particular: the extent of shareholder participation in the affairs of their companies, and the supposed dichotomy between the ‘economic’ and ‘financial’ motivations of shareholders. It is concluded that, through a number of devices, directors were generally able to overcome any shareholder discontent and manage the companies as they saw fit. Despite the ostensibly democratic features of the shipping company constitutions, ‘shareholder democracy’ in practice was effectively sidelined. This mirrored the experience of stock companies in other sectors during this period.

The result was that new model of market economics was needed and thus the cooperative movement was born.The shareholders, producers and consumers, met in an economic organization that saw itself as the model of social democratic political organization. Not necessarily a political party but a political and economic movement for a different kind of market.

At the turn of the 20th Century various counter economic schemes were developed by those looking for alternatives to capitalism and state socialism. Arising out of Proudhon's Mutualism and later Guild Socialism, the idea of the Cooperative Commonwealth a producer's ideology was born. It gave birth also to Distributism, Social Credit and ultimately in Canada the Cooperative Commonwealth Federation or CCF, and in the United States the Populist Party and localized farmer worker populist parties.


As the IWW motto suggests they were movements to; build the new society within the shell of the old. They were the new utopian's. Today that utopianism has been superseded by the politics of the pragmatic around the public good and politics or the possible. That means the right wing talks about minimizing government while the left talks about extending taxpayer funded social programs. Both are of course two sides of the same coin.

The real Utopian socialism of the Cooperative Commonwealth was a view of a different future one under the direct control of producers/workers and consumers. The move towards parliamentary politics, the politics of the pragmatic was a move towards irrelevance for the movement, real reform which came from the grass roots was diverted to electoral politics, while this was defensive against the vested interests of big capitalist government, it resulted in the slow death of the movement.

That movement to build a new society within the shell of the old is revived by social movements even today as we face the forces of capitalist globalization and the sterility of electoral politics. Workers cooperatives, farmer cooperatives in the third world, calls for socialized self management as an alternative to the capitalist market are the return of the ideals of the cooperative commonwealth. Socialism without the state.

Preamble of the Regina Manifesto

The CCF is a federation of organizations whose purpose is the establishment in Canada of a Co-operative Commonwealth in which the principle regulating production, distribution and exchange will be the supplying of human needs and not the making of profits.

We aim to replace the present capitalist system, with its inherent injustice and inhumanity, by a social order from which the domination and exploitation of one class by another will be eliminated, in which economic planning will supersede unregulated private enterprise and competition, and in which genuine democratic self-government, based upon economic equality will be possible.

The present order is marked by glaring inequalities of wealth and opportunity, by chaotic waste and instability; and in an age of plenty it condemns the great mass of the people to poverty and insecurity. Power has become more and more concentrated into the hands of a small irresponsible minority of financiers and industrialists and to their predatory interests the majority are habitually sacrificed.

We believe that these evils can be removed only in a planned and socialized economy in which our natural resources and the principal means of production and distribution are owned, controlled and operated by the people.

New Rules Project - Resources - A New Cooperative Commonwealth

It is an honor and a privilege to be able to address this group this morning. Especially about a subject so near and dear to my heart. Fifty-four years ago next month 130 delegates from around Canada gathered in Regina, Saskatchewan, to establish the principles for what they called a Cooperative Commonwealth. It was a moment in history when the every-man-for-himself ethic had led to disaster. The free enterprise capitalist system was on the verge of collapse. Millions were hungry. Millions more were being forced off their farms or out of their houses. Economies were actually shrinking. The system wasn't working. In the United States, at the same historical moment, Franklin Delano Roosevelt's New Deal Congress had just finished up its first 100 days in office, a three-month frenzy of legislation that restructured much of our economy and and our national government.

The crisis was stark and deep, but the rhetoric was optimistic. There was a sense that by acting together we could right the system. A time when government was the solution, when collective decision making was encouraged, when the nation took responsibility for its own and cooperation was the touchstone and guiding principle of public policy.

Workers were given the right to bargain collectively, as a group. Rural electric cooperatives were rapidly expanded with the aid of substantial federal financing. Credit unions flourished under the new federal credit union laws. The savings and loan institution was reinvented as a community-based, community-owned and community-oriented institution. We all remember that lovely moment in the movie, It's a Wonderful Life when Jimmy Stewart climbs up on the teller's counter and tells the townspeople that their money isn't in the vault because it has been lent to their neighbors.

The 1930s was a time when place and community mattered and government used its powers to create the conditions for cooperation.

But the government didn't simply provide opportunities for cooperation. It also developed protections for those who took advantage of those opportunities.

Workers were not only given the right to organize but the National Labor Relations Board prevented employers from firing individuals who tried to organize their co-workers. Cooperatives and small businesses were not only helped but the unfettered power of large corporations to unfairly compete with these community-based and cooperative enterprises was reined in. For FDR private power was the enemy of the public interest. "Among us today a concentration of private power without equal in history is growing", he warned America.

Congress enacted laws to stop electric-utility holding companies from manipulating markets and plundering the assets of individual utilities. Firewalls were constructed between the speculative and the asset based parts of the financial system.

To stop people from having to compete with each other at a time of when an oversupply of labor and productive capacity was driving prices and wages and living standards down, Congress established standards for a minimum level of decency for the entire community.

In 1938 the Fair Labor Standards Act established a minimum-wage and maximum-hour standard. The minimum wage was set at about 80 percent of the average wage. It was, in other words, a living wage. And that, according to the President of the United States, was only right. For as FDR declared, "No business which depends for its existence on paying less than living wages to its workers has any right to continue in this country."

To get the people off the dole, Congress created a huge workfare system. But rather than pay the private sector to hire individual workers to do the work of private business, the federal government created a vast program to enhance the public realm. Public works programs brought water systems to rural America and trees to bare hillsides. Public arts programs brought murals to bare walls and theater to working class communities.

The government further tied the nation together and defined it as a caring community by establishing a social security system. To our everlasting regret, an accompanying proposal for a universal health system was defeated.

In the 1930s the economic crisis was fought by the community as a whole acting on behalf of individual communities of workers, of farmers, of neighborhoods.

Introduction to Cooperative Commowealth

Into this complex, changing environment, rural Minnesotans introduced cooperatives to bring democracy to the marketplace. Yet these democratic assemblages could not escape the turmoil of change--indeed, they helped to shape it. Given this turbulence, it is not surprising that rural cooperation took many twists and turns and did not quickly find one stable, universal form in Minnesota. It is important to remember that from 1859 to 1939 the very meaning of the term "democracy" was taking twists and turns of its own.³

A rural cooperative was a business in a free-market economy, but it remained a democratic institution with its own internal politics. Though a business, it often shaped farmers' adaptations to new forms of agriculture. Committed to neutrality in partisan politics through its bylaws or customs, it often could not escape the politics of agrarian protest. Membership in any given cooperative was usually open to anyone, but members often belonged to the same ethnic group, and the cooperative preserved ethnicity as effectively as the reading society or mutual-aid association. Its membership was so large as to make it a community institution almost as important as the rural church in cementing social ties. (Business came first; a cooperative's minutes almost never included discussions of political, ethnic, or religious topics.)

Because of these social, ethnic, political, and economic roles, the term "cooperative" must be carefully defined. Economist Richard B. Heflebower defined a cooperative as "the means whereby members by-pass the market adjacent" to them--the market where "they would otherwise make individual arms-length transactions with investor-owned enterprises."⁴ Instead, they make transactions with themselves--not arm's-length ones. Members deal with a company they own. The cooperative seeks not to accumulate profits but to maximize its members' income or to minimize their expenses. Such is the economists' definition of a cooperative's economic functions. A cooperative is also a polity governing its own affairs. Democratically, it conducts meetings, elects officers, and writes constitutions. In a social sense, it is characterized by mutual expectations: the cooperative will treat each customer-owner equally and fairly, and each will be loyal to the cooperative.

In this study cooperation is defined to include businesses lacking one or two technical characteristics. Where customers combined to own and manage a business through which they bypassed private firms, where this business was democratically operated and characterized by expectations of egalitarian solidarity, the business was accepted as being a cooperative. Nevertheless the importance of certain cooperative principles is not minimized. As early as the 1860s, some Americans felt that the cooperative principles developed in 1844 by the weavers of Rochdale, England, best preserved the democratic, cooperative character of a customer-owned business. Rochdale rules were seen as vital for Minnesota's rural cooperatives (though some cooperators criticized the Rochdale system). They can be summarized as:

1. One person, one vote.
2. Membership open to anyone interested.
3. Political and religious neutrality.
4. Limits to returns based on stock ownership.
5. Limited number of shares owned by one person.
6. Emphasis on returning net margins to customers based on their patronage.
7. Cash sales at market prices.

These principles were designed to ensure that the business would be run in customers', rather than investors', interests. To secure capital, Rochdale-style cooperatives sold shares, but they guarded against an investors' faction interested in maximizing its returns at customers' expense. Democracy was the means to keep customers in control; presumably customers would outnumber investors. The rule of one vote per member rather than one vote per share kept the cooperatives egalitarian and democratic.

Rural cooperatives varied in the degree to which they adopted Rochdale principles. Even without all the Rochdale rules, customers and not investors tended to control cooperatives, for few rural cooperatives were attractive investment opportunities. Rural cooperatives often performed an economic function that private investors had found unpromising; cooperatives might have to create a marketplace in rural areas that had none. Even where the Rochdale rules were ignored or unknown, the democratic ethos in many farm communities tended to preserve democracy and customers' control.

Occasionally the phrase "democratic coordination" appears in this study to describe the cooperative way of coordinating economic transactions. The phrase is an adaptation of a concept Alfred D. Chandler, Jr., used in The Visible Hand: The Managerial Revolution in American Business. Chandler argued that "an increase in volume of activity" during the nineteenth century highlighted the inefficiencies of purely "market mechanisms." Managers used an "administrative coordination" of transactions that "permitted greater productivity, lower costs, and higher profits than coordination by market mechanisms."⁵ Chandler narrowly focused on the railroads and other high-volume, high-speed industries. Yet consumers and farmers also discovered the market's inefficiencies and organized democratically to coordinate transactions, decrease their expenses, and increase their incomes. Democratic coordination seemed as viable an option as administrative coordination in the rural United States in the mid-nineteenth century. Why the latter finally triumphed must be discovered in the historical record, not in some a priori assumption that it was destined to win out.

  TOWARD THE COOPERATIVE COMMONWEALTH:
AN INTRODUCTORY HISTORY OF THE
   FARMER-LABOR MOVEMENT IN
     MINNESOTA (1917-1948)

           A THESIS
   SUBMITTED TO THE FACULTY
 OF THE UNION GRADUATE SCHOOL
which is now called  The Union Institute ( www.tui.edu )

               By
     Thomas Gerald O'Connell

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS
         FOR THE DEGREE OF
       DOCTOR OF PHILOSOPHY

        February  1979

The history of the Farmer-Labor Movement can
best be understood in four stages. In the first stage,
EMERGENCE (1917-24), two broad based organizations, the
Farmer's Non-Partisan League, and the Working People's
Non-Partisan League joined forces to challenge
Minnesota's ruling Republicans by taking them on in the
primaries. Though their immediate aims were different,
the two movements found little trouble agreeing on a
political program. Both opposed the state's business
and political elites who controlled the agricultural
markets, and viciously fought workers' attempts to
organize unions.  Both favored programs to curb corporate
powers through state regulations and public ownership.

In the Fall of 1917, organizers from the Farmer's
Non-Partisan League crisscrossed the state, signing up
50,000 farmers on an anti-monopoly program patterned
after the successful effort of North Dakota farmers the
year before.  From the beginning, opposition was intense.
League organizing took place during the heat of U.S.
involvement in World War I.   Main Street "patriots"

busted up meetings and ran organizers out of town. The
Republican administration carried on a campaign of
harassment, branding both farm and labor militants as
disloyal, and jailing leaders for sedition.

Still, the organizing continued.  In 1918,
Congressman Charles Lindbergh, father of the famous
aviator, came within 50,000 votes of defeating Governor
J. A. A. Burnquist in the primary.  The Farmer-Labor
coalition elected a respectable number of state
legislators and firmly established itself as the second
most powerful political force in the state--well ahead
of the hapless Democrats.

In 1920 and '22, the two leagues continued their
coalition with even better results, strengthening the
hands of those who favored merger of the two leagues
into a genuine third party.  In 1924 the two
organizations rounded the Farmer-Labor Federation-
renamed the "Association" the following year.  This
event marked the beginning of the second stage of
Farmer-Labor history, CONSOLIDATION (1924-30).

The development of a genuine Farmer-Labor Party
did not result in any dramatic improvement in Farmer-
Labor fortunes--at first.  In 1924, the charismatic
Hennepin County Attorney, Floyd Olson fell short in
his bid to win the governorship. Throughout the rest

of the decade the Association found itself swimming
upstream, keeping its "loyal opposition" status in the
legislature, but unable to catchup with the Republicans.

Unlike many third party efforts, however, the
organization held together, less a "movement" now with
all the unfettered energy and participation the term
implies, but a viable organization--nonetheless.  The
continued support of the AFL and the widespread network
of ideologically committed Farmer-Laborites from both
city and country kept the program and spirit alive.

In 1930 the steady work payed off.  Floyd Olson
was elected governor, beginning the third and most
successful period of Farmer-Labor history, the HIGHTIDE
(1930-38).  The immensely popular Olson was elected
governor three times and was a shoe-in for senator
before he died of a stomach tumor in 1936.  Olson's
success was paralleled throughout the organization.
Dues paying membership in the Association rose to almost
40,000 as organizers setup clubs across the state.
Hundreds of Farmer-Laborites held elected offices at
all levels of government--from city council to U.S.
Senate. In 1936 Farmer-Laborites captured five of
eight Congressional seats, the governorship, and a solid
majority in the Minnesota House of Representatives.

Political success was buoyed by the spectacular
re-emergence of mass movements.  The Farm Holiday
Movement revived the dormant populist spirit of
Minnesota farmers as thousands participated in strikes
and direct action tactics to resist foreclosures. In
Minneapolis the Teamsters faced down the Citizens
Alliance, the country's most notorious anti-labor
organization and won an epic strike battle that opened
up the state's largest city to the labor movement.  In
1936-38 the newly organized C.I.O. set the Iron Range
on fire with militant campaigns among the lumberjacks
and iron ore miners.

Labor and farm organizing was complemented by
other efforts as well.  The Workers Alliance set up
councils of the unemployed across the state, leading
the fight for adequate relief and modern social security
programs.  Coops of all kinds sprung up in town and
country alike: electric power coops, food coops,
marketing coops, hardware stores, gas stations, grain
elevators, . . . . All of these movements allied
themselves with the Association, often times formally,
as affiliated organizations.  The Association became
the political extension of the great social movements
of the '30s.

But, the '30s ended, and with them, the glory
days of the Farmer-Labor Movement.  In 1938, Floyd
Olson's successor, Elmer Benson, was overwhelmingly
defeated by a reform Republican named Harold Stassen.
The inability of successive Farmer-Labor administrations
to solve the economic problems of the Great Depression;
the people's weariness of class confrontation politics;
a systematic anti-Semitic and anti-Communist campaign
from both within and outside the Association; and
serious divisions within the Association itself, were
all factors in the overwhelming Farmer-Labor defeat.
The period of DECLINE (1938-48) set in.

The careers of George W. Norris of Nebraska and Tommy Douglas of Saskatchewan, two extraordinary Prairie progressives, cover nearly a century of political activism, and tell us something about both what was possible and what was never even considered in Great Plains (1). That their seemingly different heritages, one a dyed-in-the-wool Republican from Ohio and one a Scots Labourite, should result in similar solutions to the problems of European-style agriculture on the Great Plains illustrates the significance of geography, independent of ideology, in determining the lifestyles that will work for a region.

Recovering Our Roots: Mutualism, Mutuals and the ALP

The Labour Movement is sometimes said to have stemmed more from Methodism than from Marx. In reality, Labour owes less to either Methodism or Marx than to Robert Owen. Owen endowed the early Labour Movement with a guiding philosophy - a philosophy which energised and inspired its adherents, and enabled them to overcome immense obstacles and, at a later date, gave rise to the Labor Party. Its name was mutualism. 1

The founders of the Labour Movement - driven as for the most part they had been from the land by the enclosures and clearances, and reduced in the new industrial towns to extremes of poverty, destitution and degradation such as are today all but unimaginable - embraced mutualism as an alternative to the rampant free market capitalism of their day. Mutualism was expressive of the fundamental Labour Movement truth, that more by far can be achieved by working together for common objectives than in isolation from one another. It was encapsulated in that greatest of all Labour Movement rallying cries "one for all and all for one".

Practical, hands-on mutualism became the means whereby the oppressed and excluded - in Franz Fanon's stark phrase "the wretched of the earth" - obtained through self-help the necessities of life which otherwise would have been unavailable or higher priced. For example, the Rochdale Pioneers - the twenty-eight poor cotton weavers who established their co-operative store in Rochdale near Manchester in 1844 - were responding to an urgent community need for affordable household requisites such as food and fuel.

Credit co-operatives were a response to the need for affordable carry-on loans for smallholder farmers and later for affordable household credit. Friendly societies were initially a response to the need for funeral benefits, and, later, for unemployment benefits, sickness benefits and medical and hospital care. Access to affordable life assurance was offered by mutual life assurance societies, as was access to affordable home loans by building societies.

Agricultural processing and marketing co-operatives met a pressing need on the part of farmers to capture value added to their produce beyond the farm gate. Worker co-operatives responded to the need on the part of workers for secure employment by enabling them to own their workplaces and jobs. Trade unions were originally mutualist bodies or co-operatives formed by employees in response to a pressing need to obtain better working conditions and a just price for their labour.

Saskatchewan: The Roots of Discontent and Protest

Populist Socialism

The late Max Scherr, Editor of The Berkeley Barb, holding court in the Mediterraneum coffee house in the '60s, used to maintain that there were roughly eight different kinds of socialism in the American political experience. With the possible exception of the Black Panther Party, which received the brunt of the CoIntelPro operation attacks during the late sixties and early seventies, it is fair to say that the form of socialism in America that historically received the most deadly treatment and suffered the most persecution, even to the suppression of their literature, was the movement known as the Non-Partisan League (1915 to 1922) that developed into the Farmer-Labor Party of Minnesota. This is ironic, because the League was not an armed movement at all.

The Non-Partisan League, like Jazz, was a purely American accident. As Jazz was a melding of Cajun (Acadian, Scotch-Irish, and French) fiddle music with Afro-American field hollers and African thumb-harp music in the melting pot of Louisiana at the mouth of the Mississippi River, so the League was a produce of the miscegenation in the upper MIssissippi Valley of an indigenous, American, Jeffersonian radicalism descended from the American revolution, with the first wave of Fabian-Socialist ideas that hit these shores from England, Scandinavia and the Continent, and penetrated into the Midwest, beginning in the 1880s.

The League, first organized in 1915 in North Dakota by several socialist organizers who had left the Socialist Party because it did not adequately address the needs of the farmers, organized quietly and almost unnoticed for several months. Formulating a Five-Point Platform, the League as a "non party" party, vowed to support any candidate of any party who would support their platform and to work against any candidate who would deny or oppose their platform. The platform, which called for state-owned grain elevators, a state bank, and state-owned hail and fire insurance companies (for the spring wheat) was clearly the reflection of the agrarian concerns of the farmers of North Dakota.

It was also the most radical and revolutionary state platform that has ever been formulated and effectively written, enacted into law in all of American history. From inauspicious beginnings "with an idea and a Ford," in the sub-zero tundra of North Dakota in the winter of 1915, the Non-Partisan League grew and organized and quickly became a force. A marvelous book Political Prairie Fire by Robert Morlan, published by the Minnesota Historical Society, is must reading for all organizers who would learn the secrets of the amazing growth of this movement.

In the populist socialism of the Non-Partisan League and the Farmer-Labor Party, traditional monetary concerns about who controls credit and who issues the money, central to any understanding of Jeffersonian and Lincoln-Greenback radicalism of the nineteenth century, merged, with the near-Marxist, class-conscious, and anti-plutocratic language of early socialism. This was before "socialism" had become a dirty word. To the Farmer-Laborites, the first step towards achieving the "Cooperative Commonwealth," the earthly paradise, was to nationalize credit and the Federal Reserve Bank.

In 1913 Socialist Party (SP) leader Morris Hillquit contended that the United States had embarked on the path toward socialism. He argued that the "modern principle of control and regulation of industries by the government indicates the complete collapse of the purely capitalist ideal of non-interference, and signifies that the government may change from an instrument of class rule and exploitation into one of social regulation and protection." He then asserted that like "the industries, the government is being socialized. The general tendency of both is distinctly towards a Socialist order." This fit with his under standing of the stages a nation underwent as it progressed first from a society with little to no state involvement in the economy, to a social democracy with state regulation of corporations and protections for workers, to, finally, a socialist state where a government which the people elected managed the economy.

FROM NEW DEAL TO COLD WAR: THE RISE AND FALL AND PARTIAL RISE OF ECONOMIC PLANNING
by David Ciepley

Alongside these changes in party government, and really underlying them, were changes in the relation of the federal government, or “state,” to the economy. Only in these years, for example, was the principle finally established, both in the popular mind and, after a struggle, on the Supreme Court, that the federal government, not the state
2
governments, bears ultimate responsibility for managing the economic system. This was a dramatic change in principle, and one for which progressives had long fought. But it left unanswered the question of how the system would be managed—with what instrumentalities and to what ends. It is here that a revision of the received wisdom is needed.
The New Deal is conventionally understood as the culmination of fifty years of progressive reform efforts. It did in fact start out this way. But it ended up institutionalizing a dramatically foreshortened progressive agenda. The impression that it was a culmination thus says more about the contraction of reform aspirations in this period than about their satisfaction. Enough changes were made to make the federal government the focus of economic and political attention. But if one compares state-economy relations in the United States at the end of this period with the state-economy relations prevailing, or soon to prevail, in all other industrialized and industrializing countries, one cannot fail to be struck by the conservatism of the American formula. All other countries, whether belonging to the First World of democratic countries, the Second World of communist countries, or the Third World of developing countries, embraced some degree of “collectivism” after the war. The Europeans, for example, developed what they termed “mixed economies,” partly market-driven and partly governmentalist. This generally included the nationalization of basic industries (gas, coal, steel, rail, and sometimes even banking), and might also include doses of central economic planning (as undertaken by the French Commissariat Général du Plan) and corporatist government-business-labor bargaining (as in the German “social market”). The Europeans supplemented these structural changes with thick social safety nets, providing social insurance against all the major disruptions of industrial life—unemployment, disablement, illness, old age, and childbirth. Third World countries, for their part, could hardly match Europe’s generous safety nets, but they could and did overmatch Europe in their embrace of national
3
economic planning. As for the communist countries, their embrace of national economic planning goes without saying. In contrast, the United States, alone among the world’s nations, threw off its wartime economic controls and fully reembraced the principle of free enterprise.

Seymour Martin Lipset and Gary Marks

It Didn't Happen Here

An excerpt

For radicals, "American exceptionalism" meant a specific question: Why did the United States, alone among industrial societies, lack a significant socialist movement or labor party? This question bedeviled socialist theorists from the late nineteenth century on. Engels tried to answer it in the last decade of his life. The German socialist and sociologist Werner Sombart dealt with it in a major book published in his native language in 1906, Why Is There No Socialism in the United States? The question was addressed by the Fabian H. G. Wells in The Future in America, which came out the same year. Both Lenin and Trotsky were deeply concerned with American exceptionalism, for it questioned the inner logic of Marxism, expressed by Karl Marx in the preface to Capital: "The country that is more developed industrially shows to the less developed the image of their future." And there is no questioning the fact that, from the last quarter of the nineteenth century on, the most developed country has been the United States.

In trying to explain the absence of a socialist movement, many socialist writers have described America in terms not dissimilar from those of Tocqueville. The great Frenchman had noted in 1831 that the United States is "exceptional," qualitatively different in its organizing principles and political and religious institutions from those of other western societies. Features of the United States that Tocqueville, and many others since, have focused on include its relatively high levels of social egalitarianism, economic productivity, and social mobility (particularly into elite strata), alongside the strength of religion, the weakness of the central state, the earlier timing of electoral democracy, ethnic and racial diversity, and the absence of feudal remnants, especially fixed social classes. In this introductory chapter, we examine the way socialist intellectuals have seen the country when trying to explain the weakness of their movement.

The ultimate source of authority in the American polity can be found in the Preamble of the Constitution, which starts with the words "We, the people of the United States." Populism is constrained, however, in the American experience, by constitutionalism. The Revolutionary Americans, having defeated a tyrannical king, feared the power of a unified, central state. They sought to avoid tyranny by checks and balances, dividing power among different political bodies, all subject to a Bill of Rights limiting government authority. The antistatist, antiauthoritarian component of American ideology, derived from Jefferson's Declaration of Independence, remains an underlying source of the weakness of socialism in the United States.

American radicals have generally been more sympathetic to libertarianism and to syndicalism than to state collectivism. Analyzing this tradition, historian David DeLeon notes that unlike Scandinavian social democracy, Fabian bureaucratic socialism, and Soviet communism, American radicalism has been permeated by suspicion, if not hostility, toward centralized power. The essence of this heritage—which has been expressed in both individualistic and communal forms—may be described as "antistatism," "libertarianism," or, more provocatively, "anarchism."

This heritage may be seen in the behavior of the American labor movement. The ideology of the American Federation of Labor (AFL) was syndicalist for much of its first half century. The AFL's radical competitor, the Industrial Workers of the World (IWW), was anarcho-syndicalist. Both the AFL and the IWW regarded the state as an enemy and felt that government-owned industry would be much more difficult for workers and unions to resist than private companies. Samuel Gompers, the leader of the AFL for four decades, emphasized that what the state can give, the state can take away, and concluded from this that workers must rely on themselves. Gompers and much of the old AFL were far from conservative. In 1920 Gompers described himself as "three-quarters anarchist." As Daniel Bell, the foremost student of American socialism, has noted, the AFL was more militant than European labor movements before and immediately after World War I, as reflected in its greater propensity to strike and engage in violence.

Richard Flacks, a founder and leader of Students for a Democratic Society (SDS) in the sixties, writing as a left-wing academic in the mid-nineties, has emphasized the ties between the radical, but nonsocialist, New Left and the antistatist tradition:

The dominant spirit in the 60s was neither social-democratic nor statist/ stalinist/leninist, but owed more to anarchist/pacifist/radical democratic traditions: Students and workers should claim voice in the institutions they inhabit; communities and neighborhoods should have democratic control over their futures; co-ops, communes, and collectives should be the places to try alternative futures and practice authentic vocation.... Here in short was a thoroughgoing critique of statism, advanced not by the right, but by young Black and White activist/intellectuals devoted to a decentralizing, devolutionary, radical-democratic politics.

There is a striking similarity between the orientation of the IWW and that of the New Left, both of which emphasized individualism and antistatism. The New Left's confrontational tactics, involving civil disobedience, also followed in the footsteps of the Wobblies. One of the most influential academic stimulators of the early New Left, William Appleman Williams, expressed his antistatism in his strong preference for Herbert Hoover over Franklin Roosevelt. He noted that Hoover did not propose to strengthen the power of the central state but favored "voluntaristic but nevertheless organized cooperation within and between each major sector of the economy."

Democracy and Agrarian Socialism

In 1944, the Cooperative Commonwealth Federation (CCF) came to power in the Canadian province of Saskatchewan. The CCF had been founded as an amalgam of farmer and labor movements and small political parties, some with a Marxist orientation. At its first national convention in 1933, the CCF adopted a socialist agenda. The Saskatchewan party was an outgrowth of the national party, though with an independent streak that reflected its particular environment.¹ Saskatchewan was then (and even now) a largely agricultural province dominated by wheat, sparsely populated, and ethnically diverse. Agrarian socialism was produced from this setting. When Seymour Martin Lipset became a graduate student at Columbia University, the CCF victory gave him an opportunity to explain why socialism could take root among wheat-belt farmers, including those in the United States, even though the United States itself could not generate a viable socialist party with a more traditional urban working class base.²

From instances like these Lipset is led to observe that democracy necessarily constrains what a government can do. This is particularly likely to happen when the government is opposed by entrenched interests, as in the case of health care, and the electorate itself seems largely indifferent to major changes. More generally,

The social changes introduced by democratic radical movements appear to result more from objective pressures in the society for such changes than from a small doctrinaire minority converting the majority of the population. The stronger a radical social movement becomes in a democracy, the less radical it appears in terms of the general cultural values.⁶

If the changes introduced seem relatively modest ones, that is because they are all the community can bear.

The question of why socialist legislation does not live up to socialist ideals is now answered in a way unanticipated by the original formulation. The answer that evolves from Agrarian Socialism is that socialism is constrained by democracy. But we should not conclude that democracy is necessarily a higher good, distinct from socialism. Instead, socialism (always in its democratic forms) is itself a higher form of democracy. In this sense the CCF could claim that its policies and programs were ways to produce a more democratic society.

The Republican Tradition

From Oklahoma Populism: A History of the People's Party in the Oklahoma Territory (Norman and London: University of Oklahoma Press, 1987)

Reprinted in William F. Holmes (ed.), American Populism. Problems in American Civilization Series. (Lexington, MA: D.C. Heath & Co., 1994)

The Populist Revolt was the product of the still-vital neo-republican mind of the late nineteenth century as it evaluated the results of the economic, political, and social revolutions of Gilded Age America. Throughout the late nineteenth century, spokesmen representing a series of egalitarian third-party movements put forth an apocalyptic critique of the Gilded Age's cosmopolitan ethos that was rooted in the ideology of the founding fathers. Third-party agitators were especially successful in mobilizing a following where economic and political conditions had discredited major-party spokesmen, as on the Great Plains and in the cotton-belt South during the late 1880s and 1890s.

Whether the course of late-nineteenth-century development constituted an advance of civilization or a degeneration toward barbarism became a major point of contention in America with the coming of the Populist revolt. Cosmopolitan elements looked back to the pronouncements of John Locke, who elevated property rights to an equal place beside human rights, for inspiration in judging contemporary events. These men pointed to such material factors as increased wealth, expanded production, and a proliferation of services as signs of the nation's advance. They were, in essence, system-oriented. They saw the plight of individual victims as a small price to pay for the significant advances of the nation as a whole.

The republican ideal of the founding fathers, which informed the Populists' assessment of late-nineteenth-century events, viewed the protection of individual liberties as the ultimate goal of society. The role of government was to promote social conditions that would aid the individual's God-given right to self-fulfillment. This humanistic orientation was moral in nature and based upon precepts of justice to the individual. It dictated the rejection of any social development that encouraged the debasement of any human. Such a viewpoint naturally had special appeal to those who saw themselves as victims of the contemporary system.

When railroads first appeared in a region, the almost universal response was enthusiasm for the new commercial and industrial world. Farmers and merchants alike wanted to believe that they were on the brink of the sustained prosperity that the philosophies of laissez-faire capitalism and social Darwinism promised. The more aggressive farmers bought machinery, fertilizer, and more land, all on credit, and quickly discovered that they were the most efficient producers of the age. Their agricultural production vastly outpaced the purchasing capacity of other Americans and even the world. Prices for agricultural commodities naturally plummeted. Railroad operators and other middlemen, however, took their profits regardless of the farmers' plight. In site of this, commercial elements proclaimed the emerging economic system just and laid the blame for agrarian problems on the farmer. He overproduced, they claimed. A crisis in agriculture occurred when mortgages were numerous, credit was tight, and transportation costs were more expensive.

As the economy of the Plains and the South worsened, farmers turned to their elected officials for aid. Government had provided tariffs to protect manufacturers, land grants to aid railroads, and deflation to help creditors. But when farmers put forth their claims upon the political process, they received little more than the worn out slogans of laissez-faire. The inadequate response of the Gilded Age's political elite to the plight of the farmer produced a political crisis in these outlying regions of the nation.

Many southern and western farmers had never completely committed themselves to the panaceas of Gilded Age enterprise. Although they had entered the world of commercial agriculture, they were primarily family farmers, not agribusinessmen. By the 1890s their operations often were only marginally profitable. Diversification, however, saved them from the worst effects of the late nineteenth century's agricultural crisis. This reaffirmed their commitment to the more traditional agrarian ethos. In the darkest days of the depression of the 1890s, many who had committed themselves to the dominant ideology of the era began to have second thoughts about their new commitment and searched for new answers. Frequently they found the ideology of the People's party more rewarding.

The cyclical interpretation of social development that late-nineteenth-century egalitarians inherited from the founding fathers lent positive connotations to the simplicity, equality, industriousness, and frugality of the developing society and a negative attitude to the hedonism, luxury, venality, and exploitation of a developed nation. Their Whiggish orientation caused them to see the latter as a triumph of power over liberty....

Late-nineteenth-century egalitarians believed that the principles handed down by the founding fathers were universal truths, valid for all times and conditions. Many of the economic and social developments of the Gilded Age, furthermore, appeared to be consistent with the inherited warnings of social degeneration. Lawmakers seemed to abdicate their responsibility for monetary policy to America's, and, worse yet, England's, banker elite. Government policies, such as the protective tariff and land grants to railroads, promoted the ultimate consolidation of wealth and power-monopoly. The gap between the rich and the poor widened distinctly. The process also destroyed the independent family farmer, the bulwark of liberty in a republic. Rather than using the power of government to stem this spreading cancer, Populists believed that America's Gilded Age political elite aided the process through unneeded extravagance, financed by bonding schemes likely to force future generations into economic dependence.

To return America to the path charted at the nation's founding, late-nineteenth-century egalitarians devised a series of remedies that, when combined, formed the Omaha platform of 1892. With the exception of the Alliance's subtreasury plan, each demand cataloged in the document had appeared in previous third-party manifestos. The People's party was only the largest and most successful of a series of late-nineteenth-century egalitarian movements that shared a common spirit rooted in the republican ideology of the American Revolution....

In the national arena Populists looked to an active government as the salvation of the nation. They called for elected representatives to restore monetary policy to popular control and then to reverse the trend toward concentrated wealth with the graduated income tax. Populists called for greenbacks to reflate the currency and provide needed credit in outlying regions of the nation. They favored postal-savings banks to secure the deposits of average citizens, who often lost everything through the speculations of bankers. Populist spokesmen also called for government ownership of the railroads, telephones, and telegraphs. They reasoned that such monopolies concentrated too much wealth and power in the hands of the few. Although this solution seemed to contradict the Populists' antipathy toward the proliferation of offices, returning the American people to their egalitarian heritage and popular control would make active government acceptable. To facilitate the return of popular control, Populists also advocated direct democracy through the initiative and referendum, plus popular election of the president and senators. Where Adam Smith had feared the power of the government, Populists feared the power of the few and saw popular control of an active government as their savior....

Populist anti-elitism also manifested itself in other ways. Third-party legislators generally opposed bills to professionalize what today are called the "professions." They believed that such preference amounted to granting a special franchise or establishing an aristocracy. More important, however, Populists wished to deny the Gilded Age elite's claim to special status. Such men were seen as wanting the government to grant them monopoly status because of their superior advantages, namely a better education....

How well most Populists understood the workings of the modem industrial economy can be questioned. Some third-party advocates clearly realized that many of the undesirable events in a modern industrial society resulted from the impersonal workings of a complex economic system rather than from conspiracies. Many others did not. Using the conspiracy metaphor, however, Populists could label their opposition immoral, which provided a stronger motivation for action than did appeals not invested with moral overtones. Still, Populists were not unique in their conspiracy mindedness. The so-called anarchist plots associated with the agrarian and labor troubles of the late nineteenth century played an equally important role in the minds of their cosmopolitan rivals, who might have been expected to know better. Industrialism was in its infancy, and most people struggled to understand the meaning of its impact. In large part, accusations of conspiracy were simply the level upon which politics was played in the 1890s.

Although Populists chose economic policy as their battlefield, morality was their cause. They looked backward to an earlier moral order for their inspiration. Populists did recognize, however, that commercial and industrial society was a permanent part of the American landscape. Instead of engaging in a frenzy of Luddite retrogression, they attempted to address problems within the context of their morally based mind-set. They accepted industrialism but demanded that it be made humane. The adoption of many of their solutions in the twentieth century attests to the practicality of their reforms. Populists wanted both the benefits of industrialization and a moral social order.

Various scholars have noted the almost religious fervor of the Populist appeal. For many, the People's party replaced the church as a vehicle for moral expression. The apocalyptic vision of Populism, however, encouraged a drive for quick victory. Third party disciples believed that the crisis of the age was upon them in 1896. The result would be either civilization or barbarism. Desperation caused many of Populism's oldest and most noted leaders to temporize their positions and accept the pragmatism of fusion with Democrats. Those not disheartened by this transition from justice to expediency finally lost heart upon the defeat of William Jennings Bryan.

The nomination of Bryan for president in 1896 saved the Democratic party from going the way of the Whigs. Three major parties vied for the allegiance of the American electorate in the 1890s. If men like Grover Cleveland had controlled the Democratic party in 1896, the People's party could well have replaced it as the GOP's major rival. If the People's party had survived as a major force in the political life of the nation, the American electorate would have been presented with a continuing debate over its commitment to capitalism. Instead, the great political debate of twentieth-century America has been over how best to save capitalism.

Public, Trade Union And Co-operative Enterprise In Germany

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