Monday, November 24, 2008

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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Sunday, November 23, 2008

His Masters Voice


Two Lame Ducks. Harper and Bush. One has a minority government the other a lame duck administration. Bush will be leaving in less than sixty days. Harper will continue to listen to his masters voice and be the ventriliquists dummy for Bush. It is a strange case of political seance, Harper continues to channel his inner Bush promoting free trade as the solution to the capitalist crisis. In a unabashed and unashamed bit of historical revisionism he claims that protectionism caused the Great Depression, failing to mention that while this exasperated the capitalism melt down the real solution was state intervention rather after the so called free market failed to self correct.

"Removing protectionist barriers and easing trade restrictions was a big factor in ushering in this extraordinary era," said Harper, referring to recent years of unparalleled economic growth. "We cannot allow ourselves to turn back." Harper said the Great Depression was prolonged by poor managerial choices on the part of governments that included shrinking the existing banking systems, raising interest rates and building barriers in a failed attempt to save jobs. These are the kinds of practices that need to be avoided in the present economic climate, he said, and Harper also urged other countries to take a look at their pasts when making decisions on how to move forward. "As we enter a period we have not seen in the memory of virtually anyone alive today, we must be good students of history -- and not just recent history," he said.

Harpers decision to push for a Free Trade deal with Colombia is another example of continuing on the Bush agenda, despite his masters own failure to succeed in pushing a similar American deal through congress. And Harper will have a fight when he brings it to parliment for approval. Colombia's record of human rights violations, state attacks and murder of political and trade union activists, their support for right wing death squads cannot be reformed by bi-lateral trade deals. Colombia's largest export is cocaine, the irony of a free trade deal with the Law and Order Harpocrites is delicious.

"In a time of global economic instability free trade is more important than ever," Harper said in a statement.
"By expanding our trading relationship with Colombia, we are not only opening up new opportunities for Canadian businesses in a foreign market, we are also helping one of South America's most historic democracies improve the human rights and security situation in their country."
U.S. President George Bush, arriving in Lima Friday, has made a free trade agreement with Colombia a priority for his last two months in office.
Harper acknowledged that Colombia faces many challenges, particularly in security. Colombia is the world's biggest supplier of cocaine according to the CIA, despite efforts from both their government and the United States.

Colombia's ties with the US could be severely damaged if Congress does not approve a planned free trade deal, the country's vice-president has warned. Francisco Santos Calderon told the BBC that a US failure to sign the pact would be a "slap in the face" to a strong ally.
The trade deal was signed two years ago by leaders of the two nations.
But US Democrats oppose the deal and have used their Congressional majority to block its passage. Mr Santos told the BBC that he did not believe that the deal would be passed during the remaining days of the Bush administration - and that he was not optimistic for its future under President-elect Barack Obama.
He said it was critical that the incoming administration saw US-Colombia relations "not in the context of what special interest groups want but in the light of our long-term relationship".
"Not approving the free trade agreement would be certainly a slap in the face to the strongest strategic ally that the US has in the continent," he said.
But Mr Santos played down the significance of the "Plan Colombia" US military aid package - worth more than half a billion dollars annually - aimed at fighting drug production

And China too has signed a Free Trade agreement with Colombia, which simply proves bireds of a feather and all that, both regimes are autarchic, militarist. In China's case it is her imperialist objective to act as a trading partner with whomever the U.S. fails to or takes exception too.

China, Colombia agree to strengthen cooperation

And let us not forget that we have been through all this before. Free Trade exasperates the crisis of capitalism it is not a solution to that crisis as Herr Doctor Professor Marx explained 160 years ago.

ON THE QUESTION OF FREE TRADE

Public Speech Delivered by Karl Marx

before the Democratic Association of Brussels January 9, 1848

We have shown what sort of brotherhood free trade begets between the different classes of one and the same nation. The brotherhood which free trade would establish between the nations of the Earth would hardly be more fraternal. To call cosmopolitan exploitation universal brotherhood is an idea that could only be engendered in the brain of the bourgeoisie. All the destructive phenomena which unlimited competition gives rise to within one country are reproduced in more gigantic proportions on the world market. We need not dwell any longer upon free trade sophisms on this subject, which are worth just as much as the arguments of our prize-winners Messrs. Hope, Morse, and Greg. For instance, we are told that free trade would create an international division of labor, and thereby give to each country the production which is most in harmony with its natural advantage. You believe, perhaps, gentlemen, that the production of coffee and sugar is the natural destiny of the West Indies. Two centuries ago, nature, which does not trouble herself about commerce, had planted neither sugar-cane nor coffee trees there. And it may be that in less than half a century you will find there neither coffee nor sugar, for the East Indies, by means of cheaper production, have already successfully combated his alleged natural destiny of the West Indies. And the West Indies, with their natural wealth, are already as heavy a burden for England as the weavers of Dacca, who also were destined from the beginning of time to weave by hand. One other thing must never be forgotten, namely, that, just as everything has become a monopoly, there are also nowadays some branches of industry which dominate all others, and secure to the nations which most largely cultivate them the command of the world market. Thus in international commerce cotton alone has much greater commercial than all the other raw materials used in the manufacture of clothing put together. It is truly ridiculous to see the free-traders stress the few specialties in each branch of industry, throwing them into the balance against the products used in everyday consumption and produced most cheaply in those countries in which manufacture is most highly developed. If the free-traders cannot understand how one nation can grow rich at the expense of another, we need not wonder, since these same gentlemen also refuse to understand how within one country one class can enrich itself at the expense of another.”

SEE:

Colombia Deal Dead

Armes sans frontières

The New Market States

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Saturday, November 22, 2008

Back To The Fifties


Deflation in Canada in the late 1950's led the Bank of Canada to create the floating Dollar. Now it's sinking.

Biggest inflation rate fall since 1959 raises deflation concerns
Economists fear deflation because consumers and businesses are more likely to delay purchases hoping that prices will fall further, slowing economic activity and business investments.
But more importantly, CIBC World Markets economist Avery Shenfeld said deflation often appears as the final nail in the coffin of a dying economy.
"Typically the only way you get deflation is if you've had a massive recession that has high unemployment rates and a lot of economic slack, so the conditions in which you get deflation are certainly not welcome," he explained.
One factor that may offset the potential for deflation is a recent drop in the value of the Canadian dollar. After starting the year near to parity with its American counterpart, the loonie, as the Canadian currency is popularly known, fell below 80 United States cents this week.





SEE:

Here Come the Seventies

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Recession Hits Alberta

I love it when folks who are in charge of the eonomy claim that they didn't see the recession coming, or they didn't expect it or they are shocked by it.

There is little doubt this week's developments signalled a change in the economic conditions affecting the province -- and in the messages coming from the Stelmach government, said political scientist Peter McCormick of the University of Lethbridge.
"I do think Alberta thought it was flying pretty high -- 'Recessions might hit lesser economies but they can't hurt us because we're oil, and oil never hurts,' " he said Friday."This is completely new territory for the government."


Oh please Peter gimme a break. There was the recession and oil crash of the seventies when the Tired Old Tories first took power. Then there was the oil boom and crash of the late seventies and early eighties which occured while the rest of Canada went into recession, by 1982 the oil market collapsed and Alberta followed the rest of the country into a downward spiral. Then there was the recession and debt/deficit crisis of the ninties. And through out it all the Tired Old Tories were in charge. So this ain't new territory.

Indeed the rose coloured blinders of the oil boom that the Tired Old Tories wear are the same ones they wore in the seventies and eighties. And now the recession has hit Alberta, we still have a budget surplus, just as we did in the ninties. But like the ninties, watch for the Tired Old Tories to start belt tightening and attacking the public sector while giving royalty holidays to their pals in Big Oil.

Indeed, the economic woes have hit on a number of fronts: the stock market slide has hammered Calgary-based petroleum producers; Alberta's housing market is slowing; retail sales are down; a handful of jobs have been cut.
While Ontario's manufacturing sector has been feeling the pain for months, the downturn in commodity markets -- particularly for crude oil -- is squeezing Alberta.
"We have been living in a bit of a dream world for the last little while. Things have not been well in other parts of the country," noted University of Calgary economist Ken McKenzie. "Until recently, we've been relatively removed from that because of high oil prices."

Much of the concern stems from just how quickly economic conditions, including commodity markets, have changed.
Resource revenue is still on pace this year for a record $14.6 billion, but it's about $4.3 billion less than what was predicted only three months ago.

Banks predict the Alberta economy will grow 1.9 per cent this year, gearing down to 0.3 per cent in 2009 -- the slowest since 1986.
"A $2-billion surplus is not a catastrophe compared to other provinces," Bernard said Friday. "There are a lot of positives, I think, for the Alberta economy, but for sure the drop in commodity prices is going to hurt."
McCormick agrees the province is faring better than other parts of the country where deficits are now being calculated. However, the government is trying to manage expectations by talking about tough times ahead.
"It's directed at universities, hospitals, school boards and government employees who are thinking about salary negotiations coming up -- that's who they are talking to," he said. "They are trying to get rid of boom-talk and boom-mentality now."


Alberta veers on royalties
Financial crisis forces energy-rich province to back down on its demands for a "fair share" from the development of its resources; New transitional rate for oil and gas wells will cost government $1.8-billion over the next five years.

It's the second time this year Alberta backtracks on the new policy, launched when energy prices were thought to rise forever. Last April, it backed off royalty increases affecting gas wells deeper than 2,500 metres and oil wells deeper than 2,000 metres.
The changes won't be the last.


SEE:
Black Gold
Steady Eddie Runs Away
Lougheed Spanks Klein
Don Getty's Legacy
You Won't Have Me To Kick Around
Lack of Planning Created Skills Shortage in Alberta
Laundry Workers Fight Privatization


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Auto Solution II

Up the road without a map
KEN LEWENZA
national president, Canadian Auto Workers union
November 20, 2008
Your editorial demands CAW concessions as part of any deal to restructure the North American auto industry (Keeping A Foot In The Car Door - Nov. 19).
The CAW was the first major player in the North American industry to respond pro-actively to the devastating effects of the financial crisis and credit crunch. Our new three-year contract freezes wages, suspends cost of living protection, and introduces, once fully implemented, savings totalling $300-million per year (or more than $10,000 per worker, per year) for Canadian auto makers.
Auto labour costs are significantly lower in Canada than in the U.S., Germany and Japan - yet our productivity is higher (at least 10 per cent better than in America).
We didn't write the free trade deals, we don't manage the companies, we don't design the vehicles - we just build them. The best thing we can do as auto workers is to keep building vehicles in the most efficient, high-quality plants in the hemisphere, at competitive costs.


CAW Ken Lewenza says; "We didn't write the free trade deals, we don't manage the companies, we don't design the vehicles - we just build them." And that's the problem. The solution to the auto crisis is not more concessions from the workers, thats been tried and it hasn't worked. Just as federal provincial aid have not helped because we lack a made in Canada Industrial strategy.

Jim Stanford, chief economist at the CAW, said newly signed contracts between the union and the Canadian arms of the Detroit automakers include several unprecedented givebacks, such as an 18-month suspension in cost-of-living increases.
A lack of policy attention from governments in both Canada and the United States have contributed to Detroit's collapse as much as anything else, he said.
"In Japan and Germany and Korea and now China, governments proactively nurture and support high-value export industries like autos. In North America, for the last two decades, we haven't bothered."


Rather the solution is right in front of all of us the workers should control auto manufacturing in Canada they should manage and design the cars not just 'build them'.

Ken if you don't want to discuss concessions then you better start talking about workers control of the means of production.


If there is to be a bailout, let it be for us, the workers. Who dare say we’re unqualified? In the 1920s Italian workers at Fiat and Alfa Romeo took over the plants, and they made cars without bosses. Even as we speak, workers in Venezuela are taking over plants and running them.

And I would add to that the Paris Revolution of 1968 and the Hot Autumn of 1969 when auto workers in France and Italy along with student radicals took over factories and universities and put them under worker control.

Capitalism is in a crisis it is time to socialize capital under workers control.

November 20, 2008
A suggestion for Big Three and UAW (updated)
Michael Nadler
My conceptual solution to the auto company bailout question is as follows:
The federal government makes a one-time only injection of the requested $25 billion into the Big Three in return for a proportionate ownership stake in the companies. Based on the current market capitalization of GM and Ford and my estimate of the market value of privately-held Chrysler, that would give the government about 80% ownership in the 3 companies. (A discount from the market price could be justified for such an investment, providing a higher ownership stake.)
The $25 billion cash injection is conditioned on the United Auto Workers (UAW) accepting a gift of the 80% (or higher) ownership stake from the government, giving the UAW absolute control of the 3 auto companies which will then be exempted from any anti-trust restrictions on consolidations, etc. The fate of the Big 3 and its workers will then be entirely in the hands of the UAW, which could strike the appropriate balance between compensation and competitiveness, as well as the many other issues that will determine the fate of the auto companies it now owns, the jobs they provide and the workers it represents. In that regard, the obligations of the PBGC might be limited as part of this grand bargain.



Workers' control of the means of production?
One of the most influential books on my political outlook when I was first getting politically aware was Geoff Hodgson's The Democratic Economy, published by Pelican Books in 1984. In it he advocated an economy predominantly consisting of worker-owned enterprises: market collectivism, to use a phrase of Jaroslav Vanek. In a Market Collectivist economy, argues Hodgson(p.177), "The workers are self-managed: they do not work under the direct or indirect control of a capitalist...the workers (collectively) own the product of their labour, which they bring to the market for sale."

SEE:
We Own GM
Auto Solution


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NDP the New Reform Party

Reasearch just published on the results of the October Federal election shows that the new party rising in the West to challenge the Ottawa power base is the NDP. Even in Alberta, where the NDP won a seat they came in second place across the province over all. After all the original reform party of the west was the CCF; the NDP's predecesor. With a seat in Quebec and Alberta the NDP is now a national party unlike the Liberals.

Liberals ran third behind the NDP in every last western province. While New Democrats came second in 46 western ridings, Liberals came second in only 24 ridings. And, again in 24 western seats, Liberals placed fourth behind the Greens and Independents. Of 42 seats up for grabs in Alberta and Saskatchewan, Liberals won just a single seat -- belonging to veteran Grit Ralph Goodale.

SEE:
Liberals Gain Third Party Status
Populism and Producerism


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