CRIMINAL CAPITALI$M
Elon Musk accused of selling $7.5 billion of Tesla stock before releasing disappointing sales data that plunged the share price to two-year low


Fortune· Beata Zawrzel—NurPhoto/Getty Images
Christiaan Hetzner
Mon, Jun 3, 2024, 8:15 AM MDT3 min read

Elon Musk faces allegations that he illegally sold $7.5 billion worth of equity in Tesla in the fourth quarter of 2022, knowing that the business would disappoint after promising investors an "epic end of year."

In a lawsuit filed with a Delaware court late last week, shareholder Michael Perry accused both the CEO of deliberately unloading nearly 45 million shares in advance of poor vehicle sales data to prevent an estimated 55% hit in value, and almost the entire board of collectively violating their responsibility of directors toward shareholders.

“By disposing of $7,530,113,926 worth of Tesla stock in November and December 2022 while he was in possession of adverse, material non-public information, E. Musk exploited his position at Tesla, and he breached his fiduciary duties to Tesla,” the lawsuit claims, adding other directors were both “knowing and culpable” as well.

Unlike previous stock sales by Tesla insiders, however, these were not the result of a Rule 10b5-1 trading plan, which removes discretion over timing from an insider and hands them to a third-party broker.

Tesla shares slumped to a two-year low on Jan. 3, 2023, following the release of the car sales data.

He is asking for Musk’s illegal gains—which the plaintiff estimates at $3 billion—to be returned to the company via disgorgement, and is seeking damages from all eight directors at the time for their “reckless disregard.”

The insider trading claims are Musk's latest legal headache following the January ruling that voided his 2018 shareholder vote for a record compensation deal. Tesla is re-running the vote at the June 13 annual meeting.
'Ruthless measurers' at Tesla knew Q4 would disappoint

Core to Perry’s argument is establishing motive through the assertions that Musk knew, first, that he still needed to liquidate stock at as high a price as possible to cover a loan for purchasing Twitter; and second, that fourth-quarter sales trended well behind his bullish October 2022 expectations (Fortune even predicted as much at the time).

Just days after boasting about “excellent demand for Q4,” he slashed prices in China—the first of many cuts yet to come.

Musk may have been aware of softening sales because of what his former powertrain head Drew Baglino described last March as a corporate culture composed of “ruthless measurers,” all harnessing up-to-the-minute data to boost sales and optimize every aspect of Tesla’s business.

“I’m not sure there’s any company on Earth that has better real-time data than Tesla,” Musk said during the Q1 investor call last year. “Our finger on the pulse is real-time and does not have latency.”

Musk went so far as to say he personally examines the results of each price change to ensure production can continuously balance demand, rising when Tesla has too many orders and falling when it has too few.

“We see what happens immediately, and adjust course. We’re thinking about it literally every day,” he continued. “Seven days a week I look at that email and so does the rest of the team.”

Using his logic, the CEO would have known that Q4 would not meet market expectations and sold his shares anyway.

Perry’s lawsuit argued that it was reasonable to infer he did so to avoid losing money, having promised nothing short of an “epic end of year” only weeks earlier.

“Musk sold this stock before the non-public information in his possession could be publicly disclosed and affect the company’s stock price,” the suit claims.

This story was originally featured on Fortune.com

Exclusive-Tesla director Gebbia says he discussed selling house to Musk


Tesla CEO and Twitter owner Elon Musk attends the VivaTech conference in Paris·

Reuters

Mon, Jun 3, 2024,
By Rachael Levy

(Reuters) - Joe Gebbia, the Tesla director who exited a board committee that made key decisions about the car maker's future, told Reuters that CEO Elon Musk had discussed purchasing a house from his start-up and that he was concerned their friendship could be seized on to attack the committee's independence.

Gebbia, whose start-up Samara makes tiny prefabricated houses, was one of two directors that Tesla's eight-member board deemed independent enough to serve on a "special committee" that deliberated on the company reincorporating from Delaware to Texas.

The board formed the special committee after Musk called in January for Tesla to move its corporate domicile out of Delaware, where a court shot down his $56 billion pay package.

The special committee was initially comprised of Gebbia, an Airbnb co-founder, and Kathleen Wilson-Thompson, a former Walgreens Boots Alliance human resources chief, according to a regulatory filing.

Gebbia stepped down from the committee in March after its mandate was expanded from deciding on the redomestication to also considering what to do about Musk's pay package, the filing states. His exit left behind a special committee of one, an unusual corporate governance setup that has been criticized by some of Tesla's shareholders.

Gebbia left the special committee "out of an abundance of caution", citing his personal relationship with Musk and a "potential business transaction" involving Samara that was "currently on hold", according to the filing.

Gebbia told Reuters that the transaction the filing was referring to was about Musk potentially buying a house made by Samara.

"I did not want Elon's status as a potential customer of Samara to be used against the committee, so I disclosed that I had put that potential business transaction on hold," Gebbia said in a statement.

The special committee's lawyers at Sidley Austin concluded that Gebbia's ties to Musk did not constitute a conflict of interest that jeopardized Gebbia's independence, according to the regulatory filing. Gebbia, however, chose to step down from the special committee regardless.

"I believed I was and am independent, but decided to step down because I did not want my relationship with Elon to be used to unfairly attack the committee," Gebbia said in a statement to Reuters.

Tesla chair Robyn Denholm said in her own statement to Reuters that the board followed Delaware law in setting up the special committee, and that it was committed to strong corporate governance. "Whether and where to reincorporate was clearly a board decision, not a CEO decision," Denholm said.

Musk and Wilson-Thompson could not be reached for comment.

The previously unreported details on the circumstances of Gebbia's exit from the special committee shed new light on Tesla's efforts to counter criticism that many of its directors are beholden to Musk.

Convincing investors that its board can deliberate without influence from its larger-than-life CEO will be key to Tesla securing shareholder approval for its move from Delaware to Texas and for reinstating Musk's pay package in a vote at the company's annual meeting on June 13.

Proxy solicitor Glass Lewis and a group that represents the interest of workers invested in union pension funds last month questioned the special committee's findings and called on other Tesla shareholders to reject both moves. Institutional Shareholder Services, another proxy adviser, also recommended against reinstating Musk's pay package, but sided in favor of the move from Delaware to Texas.

"Several legal experts expect Texas to prove more forgiving to directors and executives when it comes to reviewing corporate acts such as the approval of pay packages," Glass Lewis wrote in its recommendation. Tesla's special committee, on the other hand, found that the litigation rights of investors are "substantially equivalent" in Texas and Delaware.

Wilson-Thompson, who also sits on the boards of drug wholesaler McKesson and footwear maker Wolverine Worldwide, made decisions for Tesla's special committee in consultation with several advisers she tapped, the regulatory filing shows.

Special committees are deliberative bodies responsible for deciding some of a company's thorniest issues independent of management or controlling shareholders. Having a special committee of one director is rare and could make the company more vulnerable to legal challenges, four corporate governance experts said in interviews.

"Tesla has employed something akin to corporate governance-lite... a board substantially comprised of the CEO's friends and family," said Adam Epstein, whose firm Third Creek Advisors advises company boards.

DELAWARE RULING

The Delaware judge who in January ruled that Tesla's $56 billion payout to Musk should be rescinded, because it was unfair to shareholders, questioned in her ruling the independence of the board that approved it.

"At least as to this transaction, Musk controlled Tesla," the judge, Kathaleen McCormick, wrote in her ruling, referring to the board's decision to grant Musk's pay package. The package was worth as much as $56 billion, but is now valued at about $43 billion based on Tesla's current stock price.

Since the approval of Musk's payout in 2018, five directors have remained on Tesla's board: venture capitalist Ira Ehrenpreis, former Twenty-First Century Fox Chief Executive James Murdoch, Denholm, Musk, and his brother Kimbal.

McCormick criticized Ehrenpreis, Murdoch and Denholm as beholden to Musk, and said she expected Musk's brother to be loyal to him. In its regulatory filings, Tesla has stated that JB Straubel, a Musk protégé and former Tesla chief technology officer who has since joined the board, owns a company that provides scrap materials to Tesla.

That left only two out of eight directors – Gebbia and Wilson-Thompson – as independent enough to serve on the special committee, well below corporate America's average of 85% of directors in a board deemed independent of the chief executive, according to corporate consulting firm Spencer Stuart.

PRECEDENT

Delaware courts have found that one-member special committees are permissible, if the director can be shown to be independent.

In November 2023, for example, a Delaware judge upheld drug distributor AmerisourceBergen's decision to form a one-member special committee to decide on litigation facing the company, ruling that the director involved was independent. In April, in a case involving online dating company Match Group, Delaware's Supreme Court ruled that every member of a special committee should be independent, showing that having more than one independent director does not shield the committee from legal challenges.

The corporate governance experts Reuters interviewed, however, said that staffing special committees with one director was a risky choice, because courts in Delaware have ruled that the sole member has to be above reproach "like Caesar's wife".

"The court is likely to be particularly suspicious of whether the single director was truly independent and acted with care and might allow, for example, more discovery into that issue if there is a suggestion of lack of independence," said Ann Lipton, a corporate law professor at Tulane University.

(Reporting by Rachael Levy in Washington, D.C.; Editing by Greg Roumeliotis and Diane Craft)

Trump Denies Ever Saying 

‘Lock Her Up.’ 

He Did… Several Times

Peter Wade

ROLLING STONE

Sun, June 2, 2024 

In an interview on Fox & Friends, filmed 48 hours after he was convicted on 34 counts of falsifying business records, Donald Trump attempted to re-write history. Now that he is facing legal consequences for paying hush money to adult film actress Stormy Daniels, the former president is denying he ever said, “Lock her up,” about Hillary Clinton, his 2016 opponent.

“You famously said regarding Hillary Clinton, ‘Lock her up.’ You declined to do that as president,” said Fox host Will Cain, implying that the president has control over who is prosecuted.

“I beat her,” Trump replied. “It’s easier when you win. They always said, ‘Lock her up.’ And I could have done it, but I felt it would have been a terrible thing. And then this happened to me, so I may feel differently about it. I can’t tell you, I’m not sure I can answer the question,” Trump hemmed and hawed.

He continued, “Hillary Clinton — I didn’t say, ‘Lock her up,’ but the people would all say, ‘Lock her up, lock her up.’ OK. Then we won, and I said pretty openly, I’d say, ‘Alright, come on, just relax. Let’s go. We gotta make our country great.'”

That is, of course, a lie. Trump not only beamed and nodded from the podium as his rally crowds chanted, “Lock her up,” he also said it himself, multiple times. He said it on Oct. 14, 2016, at a rally in Greensboro, N.C. As the crowd chanted the line, Trump said, “For what she’s done, they should lock her up.”

In fact, he said it numerous times on the 2016 campaign trail, and he carried the line forward during his presidency. He even said it of Michigan Gov. Gretchen Whitmer in October 2020. When the crowd chanted, “Lock her up!” about Whitmer, Trump responded with, “Lock them all up.” And that same month, he told a crowd of the Bidens, “You should lock them up. Lock up the Bidens, lock up Hillary.”

When a crowd chanted, “Lock her up!” about Dr. Christine Blasey-Ford, the professor who accused Supreme Court Justice Bret Kavanaugh of assaulting her when both were teens, Trump gave the crowd enthusiastic nods and a thumbs-up.

As recently as last August, Trump hinted he might attempt to lock up his opponents. In an interview with Glenn Beck, the host asked, “Do you regret not ‘locking her up.’ And if you’re president again, will you lock people up?”

“The answer is you have no choice, because they’re doing it to us,” Trump responded.

Even with his conviction, it is unlikely that Trump himself will be “locked up” for any period of time. He will almost certainly appeal, and a prison sentence is unlikely for someone convicted of falsifying business records. But even though he faces a vanishingly small chance of time behind bars, Trump is all of a sudden painting himself as soft on crime.

Washington Post Staffers Push Back on Sally Buzbee’s Sudden Exit as Executive Editor

Natalie Korach
Mon, June 3, 2024 

Washington Post staffers are concerned about the abrupt departure of their executive editor Sally Buzbee, after her resignation and newsroom restructuring were announced on Sunday.

Buzbee stepped down Sunday after three years leading the outlet, with Matt Murray taking the helm until the 2024 presidential election and Robert Winnett announced as his successor.

An all-hands meeting held by Washington Post CEO Will Lewis and Murray on Monday turned tense as staffers expressed concern about the sudden changes to the outlet, according to Vanity Fair special correspondent Brian Stelter. He wrote on social media that “Lewis bluntly told them to get with the program, so to speak.”

According to Semafor’s Max Tani, staffers questioned Lewis on the new leadership’s lack of diversity, citing Buzbee’s departure as the paper’s first female top editor.

In response to the departure and changes, The Washington Post Guild wrote in a new statement, “We’re troubled by the sudden departure of our executive editor Sally Buzbee and the suggestion from our Publisher & CEO Will Lewis that the financial issues plaguing our company span from the work of us as journalists instead of mismanagement from our leadership.”

“We are also concerned about the lack of diversity at the top levels of the organization,” they noted, citing leadership’s goal to reach new audiences while maintaining quality coverage.

According to the New York Times, Buzbee’s resignation was a result of Lewis’ restructuring of the Post. His choice to split the newsroom into three smaller departments “didn’t work for her.”

“I would have preferred to stay to help us get through this period, but it just got to the point where it wasn’t possible,” Buzbee said during an editorial call, according to the Times.

The restructuring comes just over a week after the paper announced it lost $77 million in the past year and planned to expand the use of artificial intelligence throughout its newsroom. The Post’s traffic has also been cut in half since its 2020 high, as news publishers across the industry continue to struggle with reader retention.

During Monday’s staff meeting, Lewis said it would be “nuts” to continue to operate on the business practices that contributed to the losses, according to NPR’s David Folkenflik.

“We are going to turn this thing around, but let’s not sugarcoat it: it needs turning around,” he said. “We are losing large amounts of money. Your audience is halved. People are not reading your stuff. I can’t sugarcoat it anymore.”

The post Washington Post Staffers Push Back on Sally Buzbee’s Sudden Exit as Executive Editor appeared first on TheWrap.

RIGHT WING WHITE BOY

Black scholars criticize white writer's 'dehumanizing' use of blackface to write book on U.S. race relations

CBC
Sun, June 2, 2024 

Canadian writer Sam Forster is facing heavy criticism for wearing blackface to write his book Seven Shoulders, which documents his experiences hitchhiking in various cities in the U.S. (Sam Forster/Instagram - image credit)


A Canadian journalist is defending his decision to travel the U.S. in blackface and write a book about racism, after facing a storm of criticism online.

"Last summer, I disguised myself as a Black man and traveled throughout the United States to document how racism persists in American society," Sam Forster, who is white, posted Tuesday on X, formerly Twitter. "Writing Seven Shoulders was one of the hardest things I've ever done as a journalist."

The reaction was swift and brutal, with X users expressing anger, amusement and confusion, and telling Forster he should have simply spoken to Black people to understand their experiences.

"It's hard to simultaneously draw the ire of black people, white people, conservatives, AND liberals… But I think you've just done it," rapper and podcaster Zuby replied on X.

Several Black scholars who study race relations and write about the Black experience told CBC News that Forster's use of blackface is dehumanizing and troublesome, regardless of the context. Forster himself defended the book and the methods he used to write it in an interview with CBC News.

'Why do we need a white person to do that?'

George Dei, director of the Centre for Integrated Anti-Racism Studies and a social justice professor at the University of Toronto, told CBC that Seven Shoulders feeds into questions around who has the authority to speak about the Black experience.

"There are Black scholars who write on these issues, and they have said all that needs to be said. So why do we need a white person to do that?" he said.

"We also need to question why we live in a society where people have to pretend who they are not in order to understand something."


Professor George Dei works at the University of Toronto's Faculty of Social Justice Education.

George Dei is the director of the Centre for Integrated Anti-Racism Studies and a social justice professor at the University of Toronto. (Gary Beechey)

Forster grew up in Edmonton and attended both the University of Alberta and the University of Toronto. He now lives in Montreal, and has written for various publications including The National Post.

He describes the self-published book as an homage to John Howard Griffin's 1961 book Black Like Me, and others who did "journalistic blackface" in the 1940s and 50s.

In Black Like Me, Griffin recounts the six weeks he spent travelling through the southern U.S. after darkening his skin to better understand what life was like for Black Americans under segregation.

John Howard Griffin was an American author who wrote about race and racial equality. In his 1961 book Black Like Me, he documented his experiences travelling in the southern U.S. after having darkened his skin to gain an understanding of what life was like for Black Americans during segregation.

In Seven Shoulders, Forster writes that his book offers a unique perspective on race in the modern era, because "for a short window, I became Black. I experienced the world as a Black man."

He goes on to write, "Nobody has an experiential barometer with respect to race, for that matter … nobody except for me," concluding, "My barometer is better than anyone else's."

Speaking with CBC News in a phone interview Thursday, Forster said he understands there's a distinction between a project like his and living one's entire life as a Black person — but he stands by his statement in the book summary on Amazon, where he calls Seven Shoulders "the most important book on American race relations that has ever been written."

"If I thought this would be the second best book, I wouldn't put it out," he said.

The book includes transcripts from two interviews with unnamed Black politicians — Forster says he didn't want to stigmatize them by attaching their names to the book — and says they were not aware of his blackface project.

Author wore contacts, makeup, afro wig

In the book, he describes his disguise as consisting of coloured contact lenses, makeup and an afro wig. He said no one recognized his disguise during his reporting.

Forster would not send a photo of himself in blackface, saying he wants the book to be taken seriously and not become a "minstrel show," in reference to the historical use of blackface by white comedic performers to disparage Black people.

"I went about it in a way that was thoughtful and creative, and I think the insights that can be gleaned from the book are tremendously valuable," he told CBC News.

Paul Lawrie, an associate professor at York University and Afro-America historian, says his initial reaction to Forster's announcement that he'd written a book about travelling in blackface was not one of outrage, but "bafflement."

Paul Lawrie, associate professor of History at the University of Winnipeg explained the historical differences between blackface and brownface. Paul Lawrie is an associate professor at York University and an Afro-America historian. (Lyzaville Sale/CBC)

He says the use of blackface is still troublesome, regardless of context.

"I think at the heart of it is the dehumanization of Black folks, because it's being able to say, 'We can inhabit your body, at will, to whatever effect we wish,' " he said. "And just because it's not a comic effect doesn't mean it's any less dehumanizing."

In the book, Forster poses as a hitchhiker in various U.S. cities, first as a white man and then later in blackface, which he says he wore for about three weeks last September. He writes that he is ultimately offered seven rides as a white man, and only one while in blackface.

He concludes that this is an example of subtle discriminatory behaviour, or what he calls "shoulder racism," named for the shoulders of the highways where he thumbed rides, but he dismisses broader notions of systemic racism.

Institutional racism (the anti-Black variety) is effectively dead," Forster concludes in the book. "Most of what's left of racism in this country are the few, socially narrow opportunities for soft interpersonal racism: shoulder racism."

A 'comically ahistorical' understanding of racism

Lawrie says Forster's conclusion reflects a misunderstanding of the connections between individual attitudes and broader societal issues, noting the actions of the dismissive motorists "don't exist in a vacuum."

As for Forster's claim that he's written the most important book on race relations in America, Lawrie says that shows a "comically ahistorical" understanding of the issue.

"To just disregard centuries of writing and thinking by scholars and individuals of all racial backgrounds on this issue is … wow," he said.

In Lawrie's view, Forster's approach ultimately perpetuates the notion of Blackness as a "problem" to be solved.

In the era when Griffin wrote Black Like Me, this was commonly called the "Negro problem," before the language shifted to the "race problem" in the 1960s. Lawrie says it's an idea that still exists today in various iterations.

"If you just continue to see a group of people or peoples as problems and objects of inquiry and things to be investigated, poked and prodded and questioned, where does that leave — not just their humanity — but where does that leave our actual understanding of various forms of Black lives?" he said.
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Why Michael Crichton's widow chose James Patterson to finish his 'Eruption' book

Marco della Cava, USA TODAY
Mon, June 3, 2024 

James Patterson has written around 200 books, often with famous co-authors ranging from President Bill Clinton to Dolly Parton.But his latest collaboration presented the perennial bestseller with a first: Write with an author who is no longer alive.

Patterson got a call in 2022 asking if he’d finish a manuscript by Michael Crichton, the creative mind behind “Jurassic Park,” “Westworld” and the TV show “ER,” who died from cancer at 66 in 2008.

Patterson’s keen “Yes!” to that question has yielded “Eruption” (out Monday), a volcanic man versus mother nature page-turner that, according to Patterson and Crichton’s widow, Sherri Crichton, will eventually be coming to a movie theater near you.


"Eruption," by James Patterson and the late Michael Crichton, leverages a story started years ago by Crichton, who died in 2008.

“We can’t say much about who we’re talking to, but we think this movie has the potential to be one of those raise-the-bar blockbusters like ‘Jurassic Park’ was,” says Patterson, demurring when asked if Crichton’s good pal – Steven Spielberg – was in the mix.

For Sherri Crichton, the book and the possible movie are nothing short of a miraculous return of a man who she married in 2005 and abruptly lost while carrying their now 15-year-old son, John Michael.

“We lost him too early,” says Crichton, tearing up. “He was not done. He was in his professional prime.”

For those unfamiliar with Crichton, the summary is: wildly prolific Harvard-educated doctor turned writer who leveraged real science to spin fantastic yarns that captured millions.

The late Michael Crichton, shown here in an undated photo, was a science lover whose passion for the natural world permeated his books, as is the case with "Eruption," a new book from James Patterson and Crichton who used Crichton's archives to complete the work.

Crichton famously is the only writer to have a No. 1 book, movie and TV show at the same time – twice. For the curious, that would be: In 1995, “The Lost World,” “Congo” and “ER,” and a year later a repeat with “Airframe,” “Twister” and “ER.”

Patterson, 77, may well have sold some 425 million books to date, but even he concedes his current co-author had some magic chops.

“The thing about Michael’s work is you always felt after reading it you had learned something, and a lot of people like that,” says Patterson. “I didn’t feel pressure so much as I felt dutiful. I had a responsibility, to Sherri and to Michael. I think it worked out. I defy anyone to figure out where (in ‘Eruption’) Michael’s work ends and where mine begins.”

Without spoiling anything, “Eruption” is the story of a gruff unlucky-in-love volcanologist, John “Mac” MacGregor, whose outpost on the Big Island of Hawaii suddenly becomes ground zero for a possible global Armageddon when one of the island’s two volcanoes gets set to erupt.


Author James Patterson used notes and files from the office of the late Michael Crichton to conjure his latest joint-project, "Eruption," about a deadly volcanic drama on the island of Hawaii.

The book is a classic summer beach read, with many of its 400 pages broken into two- or three-page chapters that each end in cliffhanger fashion. “Eruption” will revive the art of speed-reading. And Patterson is correct: the story is told with a singular voice that is a compelling amalgam of the two writers.

So how it is that “Eruption” was laying dormant for all these years? Crichton says after her husband died, she was eager to dive into his office archives, both digital and physical, as a way of bringing her closer to him. In that process, she unearthed countless hard drives and folders that hinted at myriad in-the-works projects.

But she soon realized Crichton was almost obsessed with the story of an impending volcanic disaster.

Her husband would detour often on trips to Hawaii to research Mauna Kea and Mauna Loa, the island’s twin dynamos, and their honeymoon to Italy included a stop in Pompeii, which was destroyed by the eruption of Mount Vesuvius in 79 AD.

“The manuscript he had started in 1994 was called ‘Vulcan’ at first, and later it was ‘The Black Zone,’ but when I dug deeper I could tell his research in this area went back to the 1970s,” she says.

Once she turned over the partial manuscript, notes and other research to Patterson, the two stayed in close touch. “The pages came fast from Jim," she says. "Michael also wrote fast. I could tell I’d made the right decision."

Patterson says other than hiring a few volcano experts as consultants, he dug into the work by himself. “It came naturally,” he says. “The science was a challenge for me, but I feel more and more comfortable with that.”

The 1993 blockbuster "Jurassic Park" was born out of the fertile mind of author Michael Crichton, who died in 2008 from cancer at 66. His other hits include books-turned-movies such as "Westworld," and screenplays such as "Twister."

The only time to two truly compared notes was in sections of the new book that tackle the sentiments of native Hawaiians vis-à-vis nature, science and white leadership on the islands.

“I just wanted to be sure that all that was handled carefully,” says Crichton. “We had to be sensitive to the culture, and Jim was very gracious about all that. It worked out well.”

One of the best parts about digging into her husband’s treasure trove was being able to share his meticulous thought process and story-outlining method with the couple’s teenage son.

“I would say look at how your father pieced things together,” says Crichton. “John Michael is 6-foot-5 and almost as tall as his father (Crichton was 6-foot-9), and he is a very good writer. I said to him, ‘Honey, your father left you all these pieces, maybe one day you can finish them.’ He said, ‘I could but I have my own ideas.’ I laughed and said ‘Touche.’”

In this undated photo, the late author Michael Crichton poses with his wife Sherri during a travel adventure. Sherri Crichton provided author James Patterson with extensive notes and files which has resulted in the new book, "Eruption."

Crichton says that there could well be more collaborative works coming out of her late husband’s archives, but she’s not focused too much on that just now.

“I’m simply pleased this worked out,” she says. “Michael didn’t read much fiction, but he did have two (Patterson) Alex Cross books in his library. So I just loved the idea of two of the most powerful storytellers of our time coming together.”

This article originally appeared on USA TODAY: For 'Eruption,' James Patterson revives a Michael Crichton manuscript

Lenin's State Monopoly Capitalism

THE THEORY OF STATE MONOPOLY CAPITALISM by Paul Wenlock

Nevertheless, the research focuses on Lenin and is not specifically concerned with the theory of state monopoly capitalism. Other contributors of note who ..

Whiterose.ac.uketheses.whiterose.ac.uk/370/1/uk_bl_ethos_291477.pdf

Sunday, October 21, 2007

Lenin's State Monopoly Capitalism

"The methods of Taylorism may be applied to the work of the actor in the same way as they are to any other form of work with the aim of maximum productivity."

_{Vsevolod Emilevich Meyerhold, 1922}

In my post on Battleship Potemkin I posted about the Kronstadt sailors revolt of 1921. At the 10th Party Congress of the Bolshevik Party Lenin declared; "Enough Opposition", and the Red Army crossed the ice and attacked the revolting sailors.

At the Tenth Congress, as the Kronstadt soviet was being crushed by arms and buried under a barrage of slander, Lenin attacked the radical-left bureaucrats who had formed a “Workers’ Opposition” faction with the following ultimatum, the logic of which Stalin would later extend to an absolute division of the world: “You can stand here with us, or against us out there with a gun in your hand, but not within some opposition. . . . We’ve had enough opposition.”

Ironically their demands were then used by Lenin to create his New Economic Program.

"Our poverty and ruin are so great that we cannot at a single stroke create full socialist production" Lenin

Lenin came before the Congress in March 1921 and proposed the NEP. The NEP was in essence a capitalist free market. The NEP stated that requisitioning of food and agricultural surpluses, a doctrine of War Communism, must be ended. Instead, the government would tax the peasants on a fixed percentage of their production. Trotsky had already proposed a similar policy, but it was rejected by his fellow colleagues, including Lenin. Basically, this promoted a free agricultural market in Russia.

Lenin's N.E.P.

The Bolshevik revolutionary takeover in October 1917 was followed by over two years of civil war in Russia between the new Communist regime (with its Red Army) and its enemies--the conservative military officers commanding the so-called White armies. The struggle saw much brutality and excesses on both sides with the peasants suffering most from extortionate demands of food supplies and recruits by both sides. The repressive and dictatorial methods of the Bolshevik government had so alienated the mass of peasants and industrial working class elements that the erstwhile most loyal supporters of the regime, the sailors at the Kronstadt naval base, rebelled in March 1921 (see ob19.doc) to the great embarrassment of senior Bolsheviks. Though the rebellion was mercilessly crushed, the regime was forced to moderate its ruthless impulses. The New Economic Policy (NEP) was the result, a small concession to the capitalist and free market instincts of peasant and petty bourgeois alike. Moreover, victory in the civil war was assured by this stage, thus allowing a relaxation of the coercive methods symbolized by the War Communism of the previous two to three years.

The New Economic Policy (NEP), introduced by Lenin at the Tenth Party Congress in March 1921, represented a major departure from the party's previous approach to running the country. During the civil war, the Soviet state had assumed responsibility for acquiring and redistributing grain and other foodstuffs from the countryside, administering both small- and large-scale industry, and a myriad of other economic activities. Subsequently dubbed (by Lenin) "War Communism," this approach actually was extended in the course of 1920, even after the defeat of the last of the Whites. Many have claimed that War Communism reflected a "great leap forward" mentality among the Bolsheviks, but desperation to overcome shortages of all kinds, and particularly food, seems a more likely motive. In any case, in the context of continuing urban depopulation, strikes by disgruntled workers, peasant unrest, and open rebellion among the soldiers and sailors stationed on Kronstadt Island, Lenin resolved to reverse direction.

Lenin's economic model was like Trotsky's transitional program. It was the creation of state capitalism to create the conditions for monopoly capitalism to occur in Russia. His socialism as he liked to call it was state capitalism with electrification, and just a dash of Taylorism.

“Communism is the Power of Soviets plus the electrification of the whole country!”

In fact Lenin was a Taylorist and recognized that modern capitalism required fordist production which is what is currently occurring in China. It's failure in the Soviet Union of the seventies and eighties, was due to its use for military production rather than for consumer goods. In other words Reagan did bankrupt the Soviet Union by creating a competition between the U.S. Military Industrial Complex and its Soviet counterpart. The result was not just the collapse of the Soviet Union, but its collapse into a basket case economy. It did not have the production models required for consumer goods required for a market economy.

In terms of its impact on world politics, Lenin's State and Revolution was probably his most important work. This was derived from the theoretical analysis contained in his earlier work, Imperialism, the Highest Stage of Capitalism (1916). Lenin's theory of imperialism demonstrated to his satisfaction that the whole administrative structure of “socialism” had been developed during the epoch of finance or monopoly capitalism. Under the impact of the First World War, so the argument ran, capitalism had been transformed into state-monopoly capitalism. On that basis, Lenin claimed, the democratisation of state-monopoly capitalism was socialism. As Lenin pointed out in The Impending Catastrophe and How to Combat It (1917):

“For socialism is merely the next step forward from state-capitalist monopoly. Or, in other words, socialism is merely state-capitalist monopoly which is made to serve the interests of the whole people and has to that extent ceased to be capitalist monopoly” (original emphasis, www.marxists.org/archive/lenin/works/1917/ichtci/11.htm).

Lenin’s perspective may be briefly expressed in the following words: The belated Russian bourgeoisie is incapable of leading its own revolution to the end! The complete victory of the revolution through the medium of the “democratic dictatorship of the proletariat and the peasantry” will purge the country of medievalism, invest the development of Russian capitalism with American tempos, strengthen the proletariat in the city and country, and open up broad possibilities for the struggle for socialism. On the other hand, the victory of the Russian revolution will provide a mighty impulse for the socialist revolution in the West, and the latter will not only shield Russia from the dangers of [feudal-monarchical] restoration but also permit the Russian proletariat to reach the conquest of power in a comparatively short historical interval.

Lenin unambiguously endorsed the view that the proletariat should use markets to prepare underdeveloped countries for socialism. It is common knowledge that his New Economic Policy used market mechanisms to stimulate economic recovery after the devastation of the Russian Civil War, but some do not realize that Lenin saw markets as more than just an expedient. He actually viewed market mechanisms as necessary for moving underdeveloped countries toward socialism. Lenin recognized that the economies of underdeveloped, agrarian countries in transition to socialism combine subsistence farming, small commodity production, private capitalism, state capitalism, and socialism, with small commodity production in the dominant role (1965, 330–31). These societies contain many more peasants than proletarians, and because peasants favor the petty-bourgeois mode of production, they tend to side with the bourgeoisie against the proletariat. It is tempting to argue that this situation calls for an immediate transition to socialism, in order to force the peasantry to cooperate with the proletariat in defeating the bourgeoisie. But Lenin did not believe this. He argued that the attempt to push agrarian countries directly into socialism, that is, to eliminate markets before the build up of the productive forces had converted peasant agriculture and small commodity production into modern, large-scale industries, was a mistake that would actually hamper economic development and thwart socialist construction. The solution he proposed was for the proletarian state to use capitalism, i.e., commodity production, free markets, and concessions with foreign capitalists, to promote the growth of the productive forces, and to eliminate the conflict of interest between peasants and industrial workers by converting agriculture into a large-scale industry and the peasants into proletarians (1965, 330–33, 341–47).

LENIN'S SOCIALISM

The starting point must be Lenin's conception of 'socialism': When a big enterprise assumes gigantic proportions, and, on the basis of an exact computation of mass data, organises according to plan the supply of raw materials to the extent of two-thirds, or three fourths, of all that is necessary for tens of millions of people; when raw materials are transported in a systematic and organised manner to the most suitable places of production, sometimes situated hundreds of thousands of miles from each other; when a single centre directs all the consecutive stages of processing the materials right up to the manufacture of numerous varieties of finished articles; when the products are distributed according to a single plan among tens of millions of customers.

....then it becomes evident that we have socialisation of production, and not mere 'interlocking'; that private economic and private property relations constitute a shell which no longer fits its contents, a shell which must inevitably decay if its removal is artificially delayed, a shell which may remain in a state of decay for a fairly long period ...but which will inevitably be removed Lenin, Collected Works, Vol.22, page 303.

SOCIALISM?

This is an important passage of Lenin's. What he is describing here is the economic set-up which he thought typical of both advanced monopoly capitalism and socialism. Socialism was, for Lenin, planned capitalism with the private ownership removed.

Capitalism has created an accounting apparatus in the shape of the banks, syndicates, postal service, consumers' societies, and office employees unions. Without the big banks socialism would be impossible.

The big banks are the state apparatus which we need to bring about socialism, and which we take ready made from capitalism; our task is merely to lop off what characteristically mutilates this excellent apparatus, to make it even bigger, even more democratic, even more comprehensive. Quantity will be transformed into quality.

A single state bank, the biggest of the big, with branches in every rural district, in every factory, will constitute as much as nine-tenths of the socialist apparatus. This will be country-wide book-keeping, country-wide accounting of the production and distribution of goods, this will be, so to speak, something in the nature of the skeleton of socialist society. Lenin, Ibid, Vol.26 page 106.

HEY PRESTO!

This passage contains some amazing statements. The banks have become nine-tenths of the socialist apparatus. All we need to do is unify them, make this single bank bigger, and Hey Presto, you now have your basic socialist apparatus.

Quantity is to be transformed into quality. In other words, as the bank gets bigger and more powerful it changes from an instrument of oppression into one of liberation. We are further told that the bank will be made even more democratic. Not made democratic as we might expect but made more so. This means that the banks, as they exist under capitalism, are in some way democratic. No doubt this is something that workers in Bank of Ireland and AIB have been unaware of.

For Lenin it was not only the banks which could be transformed into a means for salvation. Socialism is merely the next step forward from state capitalist monopoly. Or, in other words, socialism is merely state capitalist monopoly which is made to serve the interests of the whole people and has to that extent ceased to be capitalist monopoly Lenin, Ibid, Vol. 25 page 358.

State capitalism is a complete material preparation for socialism, the threshold of socialism, a rung on the ladder of history between which and the rung called socialism there are no immediate rungs. Lenin, Ibid, Vol. 24 page 259.

BUILDING CAPITALISM

This too is important. History is compared to a ladder that has to be climbed. Each step is a preparation for the next one. After state capitalism there was only one way forward - socialism. But it was equally true that until capitalism had created the necessary framework, socialism was impossible. Lenin and the Bolshevik leadership saw their task as the building of a state capitalist apparatus.

...state capitalism would be a step forward as compared with the present state of affairs in our Soviet Republic. If in approximately six months time state capitalism became established in our Republic, this would be a great success and a sure guarantee that within a year socialism will have gained a permanently firm hold and will become invincible in our country Lenin, Ibid, Vol. 27 page 294.

While the revolution in Germany is still slow in coming forth, our task is to study the state capitalism of the Germans, to spare no effort in copying it and not shrink from adopting dictatorial methods to hasten the copying of it Lenin, Ibid, Vol. 27 page 340.

Socialism or State Capitalism?

So what did the Bolsheviks aim to create in Russia? Lenin was clear, state capitalism. He argued this before and after the Bolsheviks seized power. For example, in 1917, he argued that "given a really revolutionary-democratic state, state-monopoly capitalism inevitably and unavoidably implies a step, and more than one step, towards socialism!" He stressed that "socialism is merely the next step forward from state-capitalist monopoly . . . socialism is merely state-capitalist monopoly which is made to serve the interests of the whole people and has to that extent ceased to be capitalist monopoly."³

The Bolshevik road to "socialism" ran through the terrain of state capitalism and, in fact, simply built upon its institutionalised means of allocating recourses and structuring industry. As Lenin put it, "the modern state possesses an apparatus which has extremely close connections with the banks and syndicates, an apparatus which performs an enormous amount of accounting and registration work . . . This apparatus must not, and should not, be smashed. It must be wrestled from the control of the capitalists," it "must be subordinated to the proletarian Soviets" and "it must be expanded, made more comprehensive, and nation-wide." This meant that the Bolsheviks would "not invent the organisational form of work, but take it ready-made from capitalism" and "borrow the best models furnished by the advanced countries."⁴

Once in power, Lenin implemented this vision of socialism being built upon the institutions created by monopoly capitalism. This was not gone accidentally or because no alternative existed. As one historian notes: "On three occasions in the first months of Soviet power, the [factory] committees leaders sought to bring their model [of workers' self-management of the economy] into being. At each point the party leadership overruled them. The Bolshevik alternative was to vest both managerial and control powers in organs of the state which were subordinate to the central authorities, and formed by them."⁵

Rather than base socialist reconstruction on working class self-organisation from below, the Bolsheviks started "to build, from the top, its 'unified administration'" based on central bodies created by the Tsarist government in 1915 and 1916.⁶ The institutional framework of capitalism would be utilised as the principal (almost exclusive) instruments of "socialist" transformation. "Without big banks Socialism would be impossible," argued Lenin, as they "are the 'state apparatus' which we need to bring about socialism, and which we take ready made from capitalism; our task here is merely to lop off what capitalistically mutilates this excellent apparatus, to make it even bigger, even more democratic, even more comprehensive. A single State Bank, the biggest of the big . . .will constitute as much as nine-tenths of the socialist apparatus. This will be country-wide book-keeping, country-wide accounting of the production and distribution of goods." While this is "not fully a state apparatus under capitalism," it "will be so with us, under socialism." For Lenin, building socialism was easy. This "nine-tenths of the socialist apparatus" would be created "at one stroke, by a single decree." ⁷

Lenin' State Monopoly Capitalism is the model being used by the former state capitalist regimes in Asia like China and Viet Nam. They are full filing Lenin's dictum. And ironically in China's case they have become a new Imperialist power.

Lenin: 1917/ichtci: Can We Go Forward If We Fear To Advance ...

Everybody talks about imperialism. But imperialism is merely monopoly capitalism.

That capitalism in Russia has also become monopoly capitalism is sufficiently attested by the examples of the Produgol, the Prodamet, the Sugar Syndicate, etc. This Sugar Syndicate is an object-lesson in the way monopoly capitalism develops into state-monopoly capitalism.

And what is the state? It is an organisation of the ruling class — in Germany, for instance, of the Junkers and capitalists. And therefore what the German Plekhanovs (Scheidemann, Lensch, and others) call "war-time socialism" is in fact war-time state-monopoly capitalism, or, to put it more simply and clearly, war-time penal servitude for the workers and war-time protection for capitalist profits.

Now try to substitute for the Junker-capitalist state, for the landowner-capitalist state, a revolutionary-democratic state, i.e., a state which in a revolutionary way abolishes all privileges and does not fear to introduce the fullest democracy in a revolutionary way. You will find that, given a really revolutionary-democratic state, state- monopoly capitalism inevitably and unavoidably implies a step, and more than one step, towards socialism!

For if a huge capitalist undertaking becomes a monopoly, it means that it serves the whole nation. If it has become a state monopoly, it means that the state (i.e., the armed organisation of the population, the workers and peasants above all, provided there is revolutionary democracy) directs the whole undertaking. In whose interest?

Either in the interest of the landowners and capitalists, in which case we have not a revolutionary-democratic, but a reactionary-bureaucratic state, an imperialist republic.

Or in the interest of revolutionary democracy—and then it is a step towards socialism.

For socialism is merely the next step forward from state-capitalist monopoly. Or, in other words, socialism is merely state-capitalist monopoly which is made to serve the interests of the whole people and has to that extent ceased to be capitalist monopoly.

To apply the Lenin's theory on state capitalism in the renovation cause of Vietnam 10:18 28-07-2005

 Role of the State in applying the theories of State capitalism in Vietnam 16:05 09-05-2005

From a review of Lenin's ideas and concepts of State capitalism and State capitalist economy as seen from Vietnamese perspective, the paper reaffirms an indispensable role of the State in the present development of market economy.

 The new Economic Policy of V.I. Lenin with the use of state capitalism in our country nowadays 10:21 28-07-2005

 The awareness of the socialist-oriented market economy in Vietnam 12:43 04-07-2006

Realizing the market economy under socialist regulation in Vietnam is a major content in the economic model in the transitional period toward socialism. The article analyzes and elaborates the theorical and practical sides of the socialist regulated market economy, through which to make the following conclusions. 1. In the context of globalization and international economic integration today. The model of the socialist regulated market economy which has been pursued since the IX National Party Congress is a correct policy both theoretically and practically. 2. However if we regarded the model of the socialist regulated market economy as Vietnam's creative policy, it would lead us to fall into subjective thinking. 3. Through theory and practice the author of this article concludes that. a. According to Marxist doctrine the view that socialism emerged after capitalism still remains scientific b. Human elements in socialism contradicts with those in the previous societies; as a result if the criteria that were applied to solve social problems of socialist society to be imposed on the period of market economy being in existence, it would naturally stand in the way of the development of market economy. c. The key for Vietnam at present is how to solve the relations between growth and development, in other words economic growth should go along with social development d. Vietnam's economy should be broken just into two sectors, namely, state run and private run. It should not be divided into 6 sectors as presently applied. e. The role of the private owned sector i!1 the national economy should be appreciated.

Even the right wing occasionally gets it right but for the wrong reasons. In this case another red scare, red baiting, reds under the bed, commies out to get us, article reveals;

In his "Report to the Fourth Congress of the Communist International," Lenin explained the basis for NEP. He said that Russia needed capitalism before it could have socialism. The form of capitalism Lenin advocated was called "state capitalism." As early as 1918 Lenin had stated, "State capitalism would be a step forward as compared with the present state of affairs."

By 1922, when Lenin delivered his report, state capitalism was still the order of the day. "This sounds very strange," admitted Lenin, "and perhaps even absurd." Russia was unready for socialism and lacked the strength to create communism. In his report Lenin said that socialism in Russia had been adopted "perhaps too hastily."

Does this mean Lenin, like the Chinese and Russian leaders after him, had abandoned the ultimate communist goal?

"I repeat," said Lenin in his 1922 report, "it seems very strange to everyone that a nonsocialist element should be ... regarded superior to socialism in a republic which declares itself as socialist republic. But the fact will become clear if you recall that ... the economic system of Russia [is backward]."

This exact formulation could be applied to communist China. In fact, this is the line that the Chinese Communist Party has adopted for itself. And what Mr. Lee Kuan Yew of Singapore has mistaken for China's commercial objectives, are actually communist objectives. Talk of a future war with America is not simply a question of Taiwan. China's leaders look ahead to a day when a socialist civilization will be possible -- thanks to what Lenin called "state capitalism."

The purpose of state capitalism, as it exists in today's China and Lenin's Russia, is to pave the way for socialism. "The state capitalism that we have introduced in our country is of a special kind," noted Lenin. "It does not correspond to the usual conception of state capitalism. We hold all the key positions."

Lenin emphasized that all land in Russia belonged to the state. "This is very important," said Lenin, "although our opponents think it of no importance at all."

This is a revealing statement. Politicians like Lee Kuan Yew seem to be clueless. China is a communist country that practices state capitalism. China is following the Leninist path. "We have already succeeded in making the peasantry content and in reviving both industry and trade," boasted Lenin. Furthermore, the communist form of state capitalism not only owns the land which the peasants use, but "our proletarian state owns ... all the vital branches of industry."

The market economists of all political stripes fail to understand that State Monpoly Capitalism results from the fact that all capital must create monopoly. There is no free market, there is a market and it is dominated by monopolies, or oligopolies. These can be owned privately or by the state it matters little since both are forms of capitalism. The neo-con political scientists, divorcing themselves as they do from economics, decry capitalist models that are not based upon their American model.

In this they fail to understand the historical development political economy of the 20th Century which was Fordism and Capitalist Monopoly. The later requires state intervention as the American Military Industrial Complex and the development of capitalism in South Korea shows. Something that Lenin reading Marx understood.

In practical life we find not only competition, monopoly and the antagonism between them, but also the synthesis of the two, which is not a formula, but a movement. Monopoly produces competition, competition produces monopoly. Monopolists are made from competition; competitors become monopolists. If the monopolists restrict their mutual competition by means of partial associations, competition increases among the workers; and the more the mass of the proletarians grows as against the monopolists of one nation, the more desperate competition becomes between the monopolists of different nations. The synthesis is of such a character that monopoly can only maintain itself by continually entering into the struggle of competition.
Karl Marx
The Poverty of Philosophy
Chapter Two: The Metaphysics of Political Economy

See:

40 Years Later; The Society of the Spectacle

China: The Truimph of State Capitalism

State Capitalism By Any Other Name