Why Next to No Political Reaction to the Second Gilded Age?

Mark Thoma comments on Why Next to No Political Reaction to the Second Gilded Age?, by Brad DeLong.

DeLong asks:

But the political economy of Gilded Ages? Why the first Gilded age produces a Populist and a Progressive reaction and the second, so far, does not? There I throw up my hands and say that my economic historian training betrays me. I have no clue as to what is going on here.

Thoma's response is:

I think it matters a lot whether we think of inequality as arising from a problem in the system as a whole, or as the result of individual failures. When people think it's the system as a whole — the rich and powerful are scheming to hold everyone else down (e.g. robber barons) — mass movements are more likely than when it is viewed as simply the failings of individuals.

I think both DeLong and Thoma miss several important points:

• The populist movements of the early 20th Century arose as a reaction to several trends:
• The great depression of the 1890's
• The rapid industrialisation of the USA from 1890 to 1930 as agriculture gave way to industry as the main employer
• Rise of Socialist thought (among which was Marxism and the various strands of Anarchism)
• The rapid growth and radicalisation of the union movement in response to these trends
• In the past 30 years, the union movement has been defeated again and again. The main defensive weapon of the workers is now in a much weaker state now than a century ago.
• In the 1930's, there was a serious alternative to the Capitalist system in the form of the USSR. Ideologically and economically, Communism was seen as superior to Capitalism especially during the Great Depression.
• The fall of the USSR has removed that alternative from the public consciousness.
• There have been several significant mass movements over the past 15 years:
• The Anti-Globalisation movements starting in Seattle in 1999.
• The Anti-War movements of 2003. (See 15 February 2003)
• The various Occupy movements starting in 2011.
• The Arab Spring starting in 2012

I think the populist movements alluded to be DeLong and Thoma were the last real chance of the Capitalist system to bribe the workers away from Communism. The advent of neo-liberalism has destroyed that project once and for all.

There is a political reaction to the second Gilded Age, but it is muted as the traditional expressions of popular will have been emasculated.

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The 12 Step Program for Recovery From Stupid Capitalism

Ted Rall offers his The 12 Step Program for Recovery From Stupid Capitalism.

Among his steps are:

6. Understand that radical change is usually impossible without revolutionary overthrow of the state and the destruction of the ruling class and the stupid capitalist system that sustains it.

7. Accept that revolutionary movements require a combination of nonviolent and violent tactics in order to have a chance of succeeding.

8. Make common cause with anyone and everyone opposed to the existing order, no matter how repugnant, because nothing else matters until we have emancipated ourselves.

Point #8 is problematic because, during a revolution, the situation is very fluid. Having the wrong ideas can lead one into a dead end which may be impossible to get out of.

Trotsky, in his History of the Russian Revolution re-iterates time and again that the revolutionary party must have the confidence of the revolutionary masses. The party can only gain that confidence by having:

1. Correct assessment of the situation;
2. Correct actions for the situation

The second depends on the first. The second is very difficult to achieve, and mistakes will be made. The important thing, however, is recover quickly from those mistakes.

In the Russian Revolutions of 1917, the Bolshevik Party initially failed in both cases. It had failed to assess the situation of the February Revolution correctly and thereby take the correct actions.

It was not until Lenin returned, and started agitation for a realignment that the Bolshevik Party started to make a correct assessment. This was not enough to gain the confidence of the revolutionary masses because the Party had failed to act correctly during the February Revolution.

This came to a head during the defeat of the July Days. The Party had finally gained the correct assessment, and came with a programme of action which was rejected by the revolutionary masses.

But, it was this defeat that started the long process of building confidence of the revolutionary masses in the Bolshevik Party and in itself. This process made the October Revolution possible.

I would have to reject Rall's point #8 in general, but we can use a weaker version called the United Front in which aims are shared, and general principles are agreed. It is not possible to for a Bolshevik type party to join forces with another party that espouses racist policies and actions. Although the aims may be similar, the versions of society we are trying to build are anathema to each other.

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Workers burn boss to death

Workers burn boss to death in India. The police say that the workers are quite open about admitting what they did.

The proximate reasons for these murders (of the boss and his wife) are given as:

• Police have reported the situation escalated when management asked some workers to leave their accommodation
• The bosses had allegedly taken church land
• The bosses were also accused of being rude, especially to the women
• One female worker said that They deserved to be killed as the planter has exploited us for a long time and tortured us for petty things.

Once again, the women lead the way in fighting back against oppression that is sexual and economic. This was also the case in the French and Russian Revolutions. Even the birth of the Roman Republic was said to originate in the backlash by the Roman populace against the sexual abuse by the Etuscan rulers.

What amazes me is how unafraid the workers are of the police. The workers were freely admitting what they had done. The instruments of state oppression are clearly not working to protect the scum of the Capitalist class.

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'A Conservative Case for the Welfare State'

Mark Thoma comments on A Conservative Case for the Welfare State, by Bruce Bartlett, Commentary, NY Times at 'A Conservative Case for the Welfare State'.

Thoma comments that:

If conservatives want to support the welfare state out of the desire to defend capitalism from "socialists and communists" -- to defend it against the instability that high degrees of inequality cause -- no problem, though it's interesting that they would acknowledge that the system itself can lead to societal inequities that are so dangerous the government needs to intervene to fix them.

Emphasis Mine

Thoma is pointing to the contradiction in the conservative's position. This is the realisation that there is a flaw in the capitalist model through its instability and inequality. Yet, Marx said that this is the fundamental law of Capitalism: Wealth concentrates naturally under Capitalism.

However, Bartlett contends that American conservatives are blind to this. They are fervent believers in the functioning of the market to solve all of societal ills despite having no empirical evidence that it does.

Yet, Bartlett does not examine the primacy source of wealth that underpins the welfare state of Western Europe — third world debt. This debt funnels wealth from the Third World in order to bribe the proletariat into accepting the current state of affairs. This is also the reason that debt forgiveness is never going to be achieved under Capitalism. The stability of the system is too dependent on the harsh exploitation of the rest of the world.

Thoma's own opinion on why government intervention is required is that:

I prefer the efficiency argument (which is not to say that the other argument has no merit, it does).

Here, Thoma sidesteps the political meaning of Government intervention by appealing to efiiciency. This is a neutral term to cover the brutal reality of the welfare state.

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Deacons for Defense

Dan Little reflects on the tension between self-defense and non-violence in Deacons for Defense.

Most of the story we remember of the Civil Rights movement of the 1950s and 1960s centers around the philosophy of non-violence espoused by Martin Luther King, Jr. and the major civil rights organizations like the NAACP and the SCLC. A few historians give emphasis to a very different part of the movement in the South, however — a movement that was based on armed self-defense by local people.

Little notes that the history of the Civil Rights movement in the USA is silent about self-defense of communities against the violence of white people. He speculates that:

But there is no discussion of the self-defense movement in Mississippi and the ideas that underlay the philosophy of self-defense that were the core of the Deacons for Defense. One possible reason for this has to do with how the narrative was framed at the time. The mainstream civil rights movement itself did not approve of the self-defense movement, and its leaders shaped the narrative towards moral protest and the philosophy of non-violence.

Another possible reason for neglect of the self-defense organizations that emerged in the South early 1960s is the idea that these organizations were harmful to the progress of the struggle for political and civil rights, and that violent conflicts between police, national guard, klansmen, and deacons were likely to lead to a bloodbath throughout the black population. … The idea here is that the balance of power so greatly favored the forces of white supremacy that armed self-defense was likely to produce horrible retaliation.

Emphasis Mine

Little concludes that:

There is a clear logic to the idea that the non-violent movement needed support from men and women who were willing to face armed attackers with their own guns, and Hill offers a number of strong examples of incidents where klan and police thugs were forced to back off.

The question of non-violence centres about the moral superiority of non-violence overcomes the actual violence of the oppression.

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Masdar – The First Green City (Video)

Juan Cole posts about Masdar – The First Green City (Video).

Masdar City is a new city in Abu Dhabi.

The things I found interesting about the video were:

• The ambition is to have the entire city powered by renewable energy.
• The city is generating far more power now than it needs—so it is exporting to the rest of the country.
• This is a government project with central planning
• Design is a key feature of reducing energy requirements
• The designers are revisiting historical solutions to problems of cooling
• The government is clearly focused on a future beyond cheap oil
• The project is using research results from earlier stages to design better solutions

In Australia, we could have the same chance to do something similar in Port Augusta with Port Augusta’s solar thermal future:

No city has more to gain from this shift to renewable clean energy than Port Augusta.

It has first rate resources of solar power, dependable sea breezes and an existing high capacity grid connection … all of the ingredients to become an energy hub.

Solar thermal plants are baseload solar power, which use mirrors to concentrate the sun’s energy to create heat. In turn, that heat is stored to generate electricity 24 hours a day.

Solar thermal plants are a commercial off-the-shelf technology, so they are ready to go now. The materials required are concrete, glass and steel, of which this nation has an abundance.

Because they are thermal plants they have the same turbines and generators as coal-fired plants. But it would be best to commence with a greenfield site.

They can be air-cooled so will use about a tenth of the water of coal-fired plants.

In Australia, this drive towards renewable energy has to be community-led rather than by the Government is still beholden to the Coal Mining industry.

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How Coal Brought Us Democracy, and Oil Ended It: Lessons from the New Book “Carbon Democracy” « naked capitalism

Yves Smith posts an article about How Coal Brought Us Democracy, and Oil Ended It: Lessons from the New Book “Carbon Democracy”. This is a review of Carbon Democracy Political Power in the Age of Oil by Matt Stoller.

Stoller writes that:

Everything in our politics flows through dense carbon-based energy sources, and has for three to four hundred years.…[Winston] Churchill supported this occupation not just because he wanted Iraq’s oil, but because he wanted to defeat democratic forces – particularly militant coal miner unions – at home. Churchill and conservative elites running through British history (most recently Margaret Thatcher) understood that as long as the British power grid, and more importantly the military, was dependent on radical coal miners, his left-leaning labor opponents would be able to demand higher wages, social insurance, voting rights, and a share of the economic gains of the British economy. He preferred to have the British economy running on oil, so he sought imperial strategies to ensure access to resources without being reliant on his political opponents. Globally, in fact, the switch from coal to oil was a fight about labor.

Emphasis Mine

This puts Imperialism into a different light to the normal Marxist story as I understand it. Here Imperialism is used to acquire super-profits which enable the Capitalists to placate the Proletariat in the Imperial countries through higher wages and benefits. This buying off of the workers helps to align the working class with the Imperial project and breaks the international solidarity of workers.

Stoller goes on:

…England began using coal to fuel its economy, leading to substantial economic growth and imperial strength. Coal, though, presented a challenge to the governing elites, since the characteristics of coal, with its labor intensive extraction methods, were quite vulnerable to strikes. Coal was hard to transport, and miners operated underground in a collaborative manner. Once on the surface, coal had to be moved by fixed networks of trains. There were multiple bottlenecks here, and in the late 19th century, for the first time, the energy system of the industrialized world was reliant on workers who could withhold their labor and block a key resource. This translated directly into political power.

This political power manifested itself in greater democratic rights for workers. It was the production of oil that was used to drive the neo-liberalism project of rolling back the gains of the working class. Now, the advent of Peak Oil threatens this project by removing the energy source.

The post comes close to a class analysis but veers towards the idea that energy is the driving force behind world history instead of class warfare. I think it relies too much on the miners for an explanation of democratic growth.

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Tyranny of Merit

Samuel Goldman, at the The American Conservative, reviews the book Twilight of the Elites: America After Meritocracy, by Christopher Hayes, in Tyranny of Merit.

His conclusion is that:

Hayes mounts a powerful critique of the meritocratic elite that has overseen one of the most disastrous periods of recent history. He lapses into utopianism, however, when he suggests that we can do without elites altogether. Like the poor, elites will always be with us. As the word’s original meaning suggests, the question is how they ought to be chosen.

Goldman's perspective is that the unruly masses have always needed a master to keep them in line. He cannot conceive of fully formed human beings being able to select their own rulers and sit in judgement of them regularly. For Goldman, true participatory democracy is an utopian ideal.

What Goldman is worried about is the radicalisation of the so-called upper middle class where this utopian ideal may take root:

Yet Hayes is optimistic about the prospects for egalitarian reform. He places his hopes on a radicalized upper-middle class. As recently as a decade ago, people with graduate degrees and six-figure incomes could think of themselves as prospective members of the elite. While the income and influence of the very rich has zoomed ahead, however, the stagnation of the economy has left the moderately well-off at risk of proletarianization.

Emphasis Mine

This radicalisation is reflected in both the Tea Party and the Occupy Movement.

But, this proletarisation was predicted by Marx as a natural consequence of the development of Capitalism. The accumulation of riches by the Capitalists, for whom the elites work, was also predicted by Marx. And yet, people are surprised that it is happening.

The Tea Party and the Occupy Movement are not the same thing. The Tea Party is a proto-fascist movement in which the petite bourgeoise seeks to defend itself against proletarisation. And the Occupy Movement is a nascent movement that could lead to participatory democracy and the overthrow of Capitalism.

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Chris Hedges: Hear the 99% Roar

Yves Smiths posts an interview with Chris Hedges: Hear the 99% Roar on TVO. He answers some questions about his latest book, Days of Destruction, Days of Revolt, and the Occupy Movement in general.

Hedges sees the Occupy Movement as the genesis of a revolutionary movement. He sees parallels with the Solidarity and other East European movements of the 1980's as well as the Civil Rights movement of the 1960's.

Hedges says that the revolutionary movements develop from the declasse intellectuals favoured by Mikhail Bakunin rather than the proletariat promoted by Karl Marx. My understanding is that some intellectuals will separate themselves from the ruling class and align themselves with the oppressed class in order to articulate what the oppressed are feeling. The oppressed classes lead the revolution, not the intellectuals.

The Tea Party in the USA is seen by Hedges as a proto-Fascist movement. He gives a checklist rather than a class analysis of the movement. My own opinion is posted at Proto-Fascism in the USA back in 2005.

Hedges sees the Black Bloc movement as disruptive and divisive in the Occupy Movement because they allow the police and media to discredit the Occupy Movement as violent, and so alienate it from the main-stream. This goes against the non-violence that Hedges is promoting as a necessary prerequisite for a successful revolution.

Hedges sees the Bolshevik Revolution in November 1917 as a putsch rather than a social revolution. I see this as a canard to discredit the Bolshevik Party.

I think Hedges sees revolution as a change in the power structure. He would see that a corrupt elite is replaced by a more liberal one. I see revolution as a change in the social relations. Serfs would become workers. Or workers would become owners.

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The Promise and Circumscribed Potential of Worker-Owned Businesses « naked capitalism

Yves Smith writes about The Promise and Circumscribed Potential of Worker-Owned Businesses

While our prolonged economic downturn is concentrating power and wealth in fewer and fewer hands, it is also stimulating efforts to create more democratic business models.

Smith thinks that the standard reference model of the Mondragon Corporation is successful because it may in part be a reflection of Basque culture which did not have a Feudal system.

One city, Richmond, California, is promoting worker co-operatives. The main difficulty is that these co-operatives cannot find funding. Banks are suspicious of such ventures.

Smith quotes from the Financial Times:

According to the US Federation of Worker Co-operatives, these businesses are mostly in urban areas, at businesses such as restaurants and cab companies. In other industries, such as home healthcare, co-ops have helped to prevent employee attrition and provide more reliable care for the elderly. “The worker co-op takes a profession that is low pay, low morale, and high turnover and makes people worker-owners so they’ve got a vested interest in that business,” says Liz Bailey, interim chief executive of the National Cooperative Business Association.

Emphasis Mine

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Israeli court throws out family's lawsuit over death of US activist Rachel Corrie

Israeli court throws out family's lawsuit over death of US activist Rachel Corrie:

Corrie's family had accused Israel of intentionally and unlawfully killing their 23-year-old daughter, launching a civil case in the northern Israeli city of Haifa after a military investigation had cleared the army of wrongdoing.

The principal reason for the decision is that Israel was at war:

In a ruling read out to the court, judge Oded Gershon called Corrie's death a "regrettable accident," but said the state was not responsible because the incident had occurred during what he termed a war-time situation.

Since Israel has always been at war with the Palestinians, then there can only be “regrettable accidents” for which the Israeli state is not responsible, no matter what the IDF does.

What I find most disturbing in this article is:

Few Israelis showed much sympathy for Corrie's death, which took place at the height of the uprising in which thousands of Palestinians were killed and hundreds of Israelis died in suicide bombings.

So much for Israel being a light unto the nations of the Earth.

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Mobilizing the masses

Dan Little reflects in Mobilizing the masses on the book called Mobilizing the Masses: Building Revolution in Henan by Odoric Wou.

Little reflects on the supposed differences between the Russian and Chinese Revolutions:

Here I want to focus on Wou's title itself: Mobilizing the Masses. Both parts of the title are important: the idea that the Chinese revolution was a mass-based revolution, and the idea that the Chinese Communist Party succeeded because it pursued successful strategies of mobilization. The Russian Revolution, by contrast, was not mass-based; Lenin's revolutionary group was able to seize power without mass support, and the Bolsheviks did not develop effective strategies of mass mobilization. So the Chinese Revolution is different. We have historical examples of revolutions that did not involve the masses in contemporary society; and perhaps we could imagine a mass-based revolution that succeed without the deliberate strategies of mobilization that emanated from a revolutionary party.

Emphasis in original

My Emphasis

I find the comment highlighted in red above incredulous. I have been reading Ten Days That Shook the World by John Reed and History of the Russian Revolution by Leon Trotsky.

If Little's thesis is correct, then the counter-revolution of 11 November 1917 should have succeeded. The reactionary forces controlled several army barracks, centres of communication, ministries, supply depots, etc. Surely, there were more than enough resources to put down by the coup by the Bolsheviks. And yet, the Bolsheviks were able to mobilise the population and garrisons of St Petersburg to defend the October Revolution.

Trotsky notes in Chapter 25: Could the Bolsheviks Have Seized the Power in July? that the masses were not ready to hold onto power after taking it, if they had done so in July 1917:

But nevertheless the leadership of the party was completely right in not taking the road of armed insurrection. It is not enough to seize the power—you have to hold it. (p.406)

Thus the state of the popular consciousness—a decisive factor in revolutionary policy—made impossible the seizure of power by the Bolsheviks in July. (p.409)

The value of a close-knit vanguard was first fully manifested in the July Days, when the party—at great cost—defended the proletariat from defeat, and safeguarded its own future revolution. (p.417)

Trotsky had come to see Lenin's strategy of aligning with the workers and peasants while raising their class consciousness as correct. This was the successful basis of the October Revolution and survival through the Russian Civil War.

Little concludes the Chinese Communist Party pursued a stategy based on class and nationalism, and:

These details are of interest chiefly because they illuminate the nuts and bolts of radical social change in a large country. It is plainly not enough to observe that a large group of people have interests that are in conflict with the policies and social relations of their country or region. In addition, several things are needed: a sustained and locally implemented strategy of mobilization and a revolutionary organization that acts intelligently and opportunistically as the balance of forces shifts at various times.

With regards to class and nationalism, Reed records an exchange between a student and a soldier:

We sallied out into the town. Just at the door of the station stood two soldiers with rifles and bayonets fixed. They were surrounded by about a hundred business men, Government officials and students, who attacked them with passionate argument and epithet. The soldiers were uncomfortable and hurt, like children unjustly scolded.

A tall young man with a supercilious expression, dressed in the uniform of a student, was leading the attack. “You realise, I presume,” he said insolently, “that by taking up arms against your brothers you are making yourselves the tools of murderers and traitors?”

“Now brother,” answered the soldier earnestly, “you don't understand. There are two classes, don't you see, the proletariat and the bourgeoisie. We—”

“Oh, I know that silly talk!” broke in the student rudely. “A bunch of ignorant peasants like you hear somebody bawling a few catch-words. You don't understand what they mean. You just echo them like a lot of parrots.” The crowd laughed. “I'm a Marxian student. And I tell you that this isn't Socialism you are fighting for. It's just plain pro-German anarchy!”

“Oh, yes, I know,” answered the soldier, with sweat dripping from his brow. “You are an educated man, that is easy to see, and I am only a simple man. But it seems to me—”

“I suppose,” interrupted the other contemptuously, “that you believe Lenin is a real friend of the proletariat?”

“Yes, I do,” answered the soldier, suffering.

“Well, my friend, do you know that Lenin was sent through Germany in a closed car? Do you know that Lenin took money from the Germans?”

“Well, I don't know much about that,” answered the soldier stubbornly, “but it seems to me that what he says is what I want to hear, and all the simple men like me. Now there are two classes, the bourgeoisie and the proletariat—”

“You are a fool! Why, my friend, I spent two years in Schlüsselburg for revolutionary activity, when you were still shooting down revolutionists and singing 'God Save the Tsar!' My name is Vasili Georgevitch Panyin. Didn't you ever hear of me?”

“I'm sorry to say I never did,” answered the soldier with humility. “But then, I am not an educated man. You are probably a great hero.”

“I am,” said the student with conviction. “And I am opposed to the Bolsheviki, who are destroying our Russia, our free Revolution. Now how do you account for that?”

The soldier scratched his head. “I can't account for it at all,” he said, grimacing with the pain of his intellectual processes. “To me it seems perfectly simple-but then, I'm not well educated. It seems like there are only two classes, the proletariat and the bourgeoisie—”

“There you go again with your silly formula!” cried the student.

“—only two classes,” went on the soldier, doggedly. “And whoever isn't on one side is on the other…”

Reed, John (2011-03-17). Ten Days That Shook the World (Kindle Locations 2499-2519). Kindle Edition.

A simple soldier explaining why he is on the side of the Bolshevik Revolution despite all of the lies told about Lenin being a German agent. The soldier has sided with the Poletariat in the class war.

Little misses out on the vital need for a disciplined and democratic revolutionary party in the Leninist model to sustain and lead a Communist revolution to a successful conclusion. This was the critical thesis from Lenin's theses of April 1917.

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Verdict in Corrie Lawsuit Postponed

The International Middle East Media Center posts Verdict in Corrie Lawsuit Postponed on 11 April 2012 by Rachel Corrie Foundation.

The announcement of a verdict in the civil lawsuit against the State of Israel for the killing of peace activist Rachel Corrie, which was scheduled for late April, has been postponed due to delays in the filing of closing arguments. A new verdict date has not yet been scheduled by the court, but is likely to be months away.

This has been going on since 2005. At least, the family got a hearing in an Israeli court and the government has provided witnesses.

After more than nine (9) years since her death, I can recall the sarcastic comments by co-workers about her death. Bravery in the face of hegemonic power is always ridiculed. Whereas bravery in service of the same is feted and lionised.

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Randy Wray: The Job Guarantee and Real World Experience

Yves Smiths reposts Randy Wray's post about The Job Guarantee and Real World Experience in Argentinia.

To deal with the looming crisis and skyrocketing unemployment and poverty rates, the Argentinean government implemented a limited job guarantee program called Plan Jefes y Jefas de Hogar Desocupados (Program for the Unemployed Male and Female Heads of Households, or simply Jefes). Participation in the program grew quickly, to about 5% of the population, and about 13% of the labor force.

Italics in original

The program seems to be suffering from feminization in a macho society. The women wanted to participate in the program for the following reasons:

1. they felt (or would feel) useless sitting at home,
2. they felt like they were helping the community when they were working,
3. there is dignity in working,
4. they were meeting their neighbors and
5. they were learning new skills.

In other words, working allows people to become more human. Working allows people to become contributors to the societal good.

This type of program allows for community building through work. The people involved see themselves as building society.

Wray argues that:

The first great demand of a better social order…is the guarantee of the right, to every individual who is capable of it, to work—not the mere legal right, but a right which is enforceable so that the individual will always have the opportunity to engage in some form of useful activity and if the ordinary economic machinery breaks down through a crisis of some sort, then it is the duty of the state to come to the rescue and see that individuals have something to do that is worthwhile—not breaking stone in a stoneyard, or something else to get a soup ticket with, but some kind of productive work which a self-respecting person may engage in with interest and with more than mere pecuniary profit.

Emphasis Mine

This is a direct challenge to the use of unemployment as a bludgeon to the workers to keep wages low in a Capitalist economy. The right to work challenges the Capitalist right to crush workers.

Wray concludes:

In a sense, the jobs guarantee/employer of the last resort program really is targeted “to the bottom” since it “hires off the bottom”, offering a job to those left behind. Its wage and benefit package is the lowest, setting the minimum standard that private employers can offer. It does not try to outbid the private sector for workers, but rather takes those who cannot find a job. Further, by decentralizing the program, it allows the local communities to create the projects and organize the program. The local community probably has a better idea of the community’s needs, both in terms of jobs and in terms of projects. However, actual project formulation must be done on a case-by-case basis.

Emphasis Mine

Sounds like Socialism to me. To have communities decide on the tasks to be undertaken is a good first step towards to having popular democracy direct investment and economic activity.

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Argentina nationalises Spanish oil giant

On 16 April 2012, the government of Argentina nationalises Spanish oil giant (Federal Petroleum Deposits (YPF)).

Altogether, 51% of Spanish oil multinational Repsol's 57% stake in YPF has been claimed by the Argentine government.

[Argentine President Cristina] Kirchner said the move was justified by the intransigence of Repsol-YPF. Repsol has reduced investment in oil and gas extraction and refining since taking full control of the previously state-owned company in 1999.

As a result, oil imports cost Argentina US$9.4 billion in last year, more than double the cost in 2010.

This has raised Argentina's trade deficit at a time when it has little access to international credit markets, due to its default on international debt to groups such as the IMF in 2002.

The government has said one goal of the nationalisation is to return Argentina to an exporter of fossil fuels. Recent discoveries have given Argentina the third-largest reserves of shale oil and gas in the world.

When the interests of the business conflicts with that of the people, the people have to act.

… Venezuelan President Hugo Chavez said the decision “aligns with the principle of sovereign control over natural resources”.

The article concludes that:

Ultimately, it seems that both sides had little choice. Repsol is bound to the corporate principle of investing in the most profitable ventures available. This did not include providing affordable natural gas and petrol, under a scheme of price caps, to the people of Argentina.

Given the failure of Kirchner's policy of price controls, nationalisation was the most feasible way to maintain affordable access to energy for the population while seeking to end dependency on oil imports.

Emphasis Mine

Corporate interests and national interests are not aligned. However, the state in this case went against the interests of a foreign company to satisfy Argentine interests.

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Wall Street has always been War Street

Mickey Z writes that Wall Street has always been War Street.

The pursuit of profit long ago transcended national borders and well… anything resembling justice, community, solidarity, or morality.

He stresses that:

Please allow me to repeat: Wall Street has always been War Street.

Calling war "possibly the oldest, easily the most profitable, sure the most vicious" racket of all, infamous U.S. Marine Brigadier General Smedley D. Butler declared (back in the 1930s): "It is the only [racket] in which profits are reckoned in dollars and losses in lives … I spent 33 years being a high-class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer for capitalism."

This is the same General Smedley who was approached by a group of US businessmen to stage a coup against the US Government of FDR. The subsequent Congressional inquiry supported his allegations, but no action was taken against either the general or the businessmen involved.

The examples given by Mickey Z. also reflect on the lawlessness of corporations during the Second World War. The class nature of the state is revealed. The state serves the ruling class.

This is why reformism ultimately fails. The state cannot be reformed against the interests of the ruling class.

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Down with particle physics, up with Big Energy Research!

Noah Smith argues for Down with particle physics, up with Big Energy Research! because we are facing an imminent crisis in fossil fuels. Instead of building ever larger particle accelerators, Smith argues for energy research:

Yes, I think it is very important to push the boundaries of our understanding of fundamental physics. But our society is facing huge, immediate problems - most pressingly, the imminent end of the fossil fuel era.

The blog post at the The Economist by Buttonwood that Smith refers to above argues that the persistently high oil prices are a result of a constraint in supply, not through the actions of oil speculators. There is a suggestion that oil supply has been stagnent since 2005, and that excess supply will disappear in 2015 due to rising demand. This is a manisgestation of the Peak Oil Theory.

Buttonwood sees a problem with the energy return on energy invested, or EROEI:

“What is the minimum EROI that a modern industrial society must have for its energy system for that society to survive?” ask Carey King and Charles Hall in a recent paper [“Relating Financial and Energy Return on Investment”, October 2011.]. The academics’ answer: “Complex societies need a high EROI built on a large primary energy base.”

This is an argument echoed in The Collapse of Complex Societies by Joseph A. Tainter. Tainter argues that complex societies fail, in part, when the increasing complexity overwhelms the ability to maintain that complexity.

Buttonwood concludes that:

This issue is not much considered by mainstream economists, who are too busy focusing on monetary policy, the impact of fiscal austerity or the need for labour-market reforms. But just as the industrial revolution was built on coal, the post-second-world-war economy was built on cheap oil. There will surely be a significant impact if it has gone for good.

Emphasis Mine

Buttonwood does not see the societal collapse that Tainter posits. Whereas Smith concedes the possibility when he further warns that:

At its most apocalyptic, the fossil fuel crunch threatens to yank back most of the gains our species has made in the last three centuries. Even a more reasonable assessment puts us in danger of shrinking economies, transportation breakdowns, declining living standards, and technological stagnation. And as for global warming, the only way we are going to halt climate change is by inventing clean energy sources so cheap that we simply leave coal and shale oil and tar sands sitting in the ground.

Emphasis Mine

Smith is arguing for a free-market solution to the peak oil and the climate change problems through massive government investment in energy research:

But if we are going to replace fossil fuels, we are going to have to do one or more of these hard things. There is just no other option. It's Big Science or bust. Our nation needs to be spending many, many billions of dollars - tens of billions each year, at the very least - on Big Energy research to create better solar power, better biofuels, and better nuclear power.

Italics in original

And we are expected to achieve this in thirteen (13) years. Smith expects society to retrain physicists from particle research to energy research almost instantaneously. They will have to unlearn decades of knowledge acquired and retrain from scratch. Subsitution of knowledge is not easy.

The problems are so large and imminent that the free market is unable to cope. We need a radical solution in which popular democracy directs societal investment at a cost it is prepared to pay.

Read more!

The end of capitalism?

James Adonis contemplates The end of capitalism? He writes that:

Modern-day capitalism is in trouble. Once mighty nations, such as Spain and Greece, are on the verge of collapse. Wealth gaps between the rich and poor are getting bigger. And more people are shouting about the unfairness of the economic system, as evidenced by the Occupy movement. All of which raises the question: is there an alternative?

The conclusion is that the only alternative is to more strictly regulate Capitalism:

“Capitalism will have to be re-regulated again for it to survive,” [Bill Mitchell] says. “Governments will have to mediate the class struggle.”

Professor Stephen King from Monash University agrees on the need for tighter laws. “What the GFC has taught us is that market economies need sensible, strong banking regulation,” he says.

“Unfortunately, here in Australia, we have missed this lesson.”

Emphasis Mine

I love how the apologists for Capitalism always come to the conclusion that there is no alternative (TINA). They say that Capitalism is the only way forward as all other alternatives, Socialism, Communism, etc., have failed.

The highlighted phrase above reveals a fear of the ruling class. They want protection from the class warfare now emerging from the ruled. They are rightly worried.

Or, perhaps they are worried that unrestrained class warfare from the Capitalists could provoke a violent reaction from the workers. They are certainly worried about what directions the Occuppy movement could take.

Adonis lists the major criticisms from critics, such as the Occupy movement, as:

Critics of capitalism are quick to point out its failures. Three of the most common include the promotion of greed and inequality; the unsustainability of perpetual growth; and the overwhelming power of corporations, which now constitute half of the world’s 100 biggest economies.

Yet these are the consequences of the Capitalist system. Greed is not the main driver behind the inequality.

Capitalism is about the reproduction of Capital through investment. Capital has to grow continously — it cannot stand still. And this growth comes about through increased exploitation of natural resources and through the concentration of ownership of Capital as less successful firms are destroyed.

And yet, apologists, like Adonis, wants us to believe that governments are neutral in this process. The state serves the interests of the ruling class. And the interests of the ruling are geared towards to increased capital accumulation instead of survival.

It is time that workers understand the workings of the Capitalist system in order to change it into something that benefits workers instead of Capitalists.

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The whispering revolution

Ai Weiwei writes about The whispering revolution in China. He describes the terror tactics of the government:

At midnight they can come into your room and take you away. They can put a black hood on you, take you to a secret place and interrogate you, trying to stop what you're doing. They threaten your family, saying: “Your children won't find jobs.”

It could be worse — he could be a Muslim living in the USA, UK, Australia, Canada, etc.. He could be taken to a secret place like Guantanamo Bay Naval Base.

Meanwhile the US Government is spying on its citizens to unprecedent extent by having The NSA Is Building the Country’s Biggest Spy Center (Watch What You Say):

Under construction by contractors with top-secret clearances, the blandly named Utah Data Center is being built for the National Security Agency. A project of immense secrecy, it is the final piece in a complex puzzle assembled over the past decade. Its purpose: to intercept, decipher, analyze, and store vast swaths of the world’s communications as they zap down from satellites and zip through the underground and undersea cables of international, foreign, and domestic networks. The heavily fortified $2 billion center should be up and running in September 2013. Flowing through its servers and routers and stored in near-bottomless databases will be all forms of communication, including the complete contents of private emails, cell phone calls, and Google searches, as well as all sorts of personal data trails—parking receipts, travel itineraries, bookstore purchases, and other digital “pocket litter.” It is, in some measure, the realization of the “total information awareness” program created during the first term of the Bush administration—an effort that was killed by Congress in 2003 after it caused an outcry over its potential for invading Americans’ privacy.

Emphasis Mine

If Ai Weiwei thinks the West is anymore freer than China, he is in for a big shock. The Capitalists are just as paranoid about correct thinking by its citizens as the Chinese government.

Ai concludes that the Chinese state:

…still hasn't come to the moment that it will collapse. That makes a lot of other states admire its technology and methods. But, in the long run, China's leaders must understand it's not possible for them to control the internet unless they shut it off - and they can't live with the consequences of that. The internet is uncontrollable. And if the internet is uncontrollable, freedom will win.

It is amazing how doublethink operates in a supposedly liberal newspaper. One can condemm tyranny and censorship as long as you are talking about an official enemy. Indeed, you are celebrated and feted for doing so. But talk about crimes committed by the US and its allied government, you are cast into the shadows with the possibility of disappearing.

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A Kid With Skittles

John Howard Kunstler opines about race in A Kid With Skittles. He says that the USA talks:

…about [race] all the live-long day, just not very honestly.

Kunstler believes that the conversation over race is narrow because of the uncomfortable truths in there somewhere:

The reason the race conversation remains so constricted in America is because the central question makes everyone so uncomfortable. That question is: what accounts for the failure to thrive of such a large percentage of black America? It is uncomfortable for whites (especially Progressives) because it implies a failure of the social justice movement itself, and in particular the watershed civil rights struggles of the 1960s. It's uncomfortable for blacks because it stirs up immense anxiety over the stigma of racial inferiority.

Nowhere does Kunstler consider that the structural nature of racism which economically and politically oppresses non-whites. Whites do not see it because they are like fish who do not see the water they are swimming in. Because whites benefit from the current system, there is no need to question or examine the system.

Kunstler blames black separatism for the lack of progress. He does not consider why such a movement should exist at all. It just appeared in a historical vacuum:

The expectation was that the removal of legal obstacles to full citizenship would hasten economic justice and cultural equality, but just then something curious happened: the youth revolt of the late 1960s was underway and young black America immediately opted for separatism.

And, of course, the demon of multiculturalism is to blame. Instead of a single American culture, apparrently anything goes.

I believe the black separatist movement of that time derived largely from anxiety around the issues of cultural assimilation - that is, of black and white America forming a true and complete common culture. In any case, it was at this moment of history that the multicultural movement presented itself as an "out" for white America. Multiculturalism allowed white America to pretend that common culture was not important. It also promoted the unfortunate idea that we could have a functioning civil society with different standards of behavior for different ethnic groups. It has left the nation with the unanswered question of black America's self-evident failure to thrive, and an enormous body of narrative affecting to explain it away as "structural racism."

Kunstler then goes on to blame black men for getting arrested in such large numbers and ending up in gaol. Techers are blamed for not teaching black children to speak proper English.

And, Trayvon Martin was to blame for being shot by being scary:

Do white people fear black males who affect to act as if they are dangerous? Maybe black men should stop trying to scare people. Are these "racist" observations or exercises in reality-testing?

Or, should we consider that blacks act this way in order to stop white people from attacking them?

It is very hard to get people to see something as wrong from which they benefit. White people get better jobs, better housing, better education, and better treatment because they are white. Who wants to be treated as a black person? Why should white people give up these niceties for justice towards a fellow human being.

We can only be fully human when we treat other people as human beings. Isn't that enough to surrender our privileges as white people?

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Bill Black: Green Slime Drives Our Financial Crises

Yves Smith reposts Bill Black: Green Slime Drives Our Financial Crises .

The reference to the green slime about the pink slime which was secretly added to meat for human consumption.

Black appears to argue that the cycle of financial crises is due to insufficient regulation.

Lenin, in Imperialism: The Highest Stage of Capitalism (Penguin UK. Kindle Edition), says that:

Bourgeois scholars and publicists usually come out in defence of imperialism in a somewhat veiled form, and obscure its complete domination and its profound roots; they strive to concentrate attention on partial and secondary details and do their very best to distract attention from the main issue by means of ridiculous schemes for ‘reform,’ such as police supervision of the trusts and banks, etc.

(Kindle Location 1753-1756)

The real problem is the existence of financial Capitalism, itself.

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Ten Pillars of Economic Wisdom

Barry Ritholtz reposts Ten Pillars of Economic Wisdom. I take issue with three (3) of these pillars, mainly to do with wealth creation.

There are some of these rules I want to take issue with.

The first is about creation of wealth:

4. The only way to create wealth is to move resources from a lower-valued to a higher-valued use. Corollary: Both sides gain from exchange.

Here we have the old canard about wealth being created in the exchange by increasing the use-value. Instead, Marxists believe that value is added by the application of labour-power. People create things of higher value by working on them. A car is worth more than a lump of iron ore, sap of a rubber tree, etc. because human beings worked to turn them into something more usable.

The second is about value again:

7. The value of a good or a service is subjective.

The value of a good or a service is determined by its exchange value. In Marxist terms, there is no profit to be made in exchanging commodities for money. In this way, the exchange value is subjective, but becomes objective through a large number of such transactions.

It is possible for someone to exploit arbitrage by finding people with different subjective exchange values for the same commodities. The free market is supposed to eliminate such discrepancies through the free flow of information.

The third is about wealth creation vesus jobs:

8. Creating jobs is not the same as creating wealth.

Yes and no. There are jobs that do not add to the value of a commodity. These are usually policing roles such as supervisors, managers, regulators, etc.

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The Solar Envelope: How to Heat and Cool Cities Without Fossil Fuels

The Oil Drum considers how to use The Solar Envelope: How to Heat and Cool Cities Without Fossil Fuels. The problem is to make cities livable once cheap fossil fuels go away.

The current architectural knowledge is quite advanced for solar heating and cooling of individual buildings. The next stage is to design cities with the same attributes:

Designing a single, often free-standing, passive solar house is quite different from planning a densely populated city where each building is heated and cooled using only natural energy sources. And yet, if we want passive solar design to be more than just a curiosity, this is exactly what we need. Modern research, which combines ancient knowledge with fast computing techniques, shows that passive solar cities are a realistic option, allowing for surprisingly high population densities.

The key to designing such low-energy use cities is the concept of the “Solar Envelope”:

[Ralph] Knowles developed and refined a method that strikes an optimal balance between population density and solar access: the "Solar Envelope". It is a set of imaginary boundaries, enclosing a building site, that regulate development in relation to the sun's motion — which is predictable throughout the seasons for any place on Earth.

Buildings within this imaginary container do not overshadow neighbouring buildings during critical energy-receiving periods of the day and the season, and assure solar access for both passive and active solar systems. On the one hand, the solar envelope allows architects to design with sunlight without fear that their ideas will be cancelled out by future buildings. On the other hand, the solar envelope recognizes the need for development and high population densities, by defining the largest container of space that would not cast shadows off-site at specified times of the day.

Anyone who lives in Sydney knows about how inhabitable the CBD is in Winter with the parks always in shadow and therefore cold. And the buildings built right up to teh boundaries so that the streets become wind tunnels in moderate breezes. I suppose it is one way to get the homeless out of the CBD during Winter!

The article concludes with:

Density is a pet subject of environmentalists, who argue that densely populated cities are the solution to lower the energy requirements for transportation. On the other hand, the solar envelope shows that above a certain treshold, density can also raise energy requirements, in particular those of heating, cooling and daylighting buildings.

This means that it would probably be wise to aim for a compromise. If we would take the highest densities reached under the solar envelope as an upper limit, we could create cities where the critical functions of buildings can be met without fossil fuels, while still retaining (more than) high enough densities to make public transportation, bicycling and walking attractive.

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You Can’t “Grow the Movement” by Dissing the Kids: On Chris Hedges and Occupy

Ted Rall has a post about You Can’t “Grow the Movement” by Dissing the Kids: On Chris Hedges and Occupy from Katherine M Acosta. Chris Hedges is apparrently trying to purge the Occupy movement of Anarchists and other undesirables.

The main issues appears to be:

Central to the dispute between Hedges and the anarchists who helped to found Occupy is the issue of violence versus nonviolence – and how those are defined. In general terms, anarchism refers to the absence of rulers (hence, the “leaderless” Occupy movement). The idea is not lawlessness or general chaos, but rather, freedom from hierarchical authority and ruling power enforced by violence. Anarchism has a long history in the United States and many anarchists were involved in the early labor movement. Then, as now, anarchists sought to push back against police brutality. One contemporary method for doing so is the black bloc.

Emphasis Mine

I find this issue of non-violence comes up every time a movement starts to become successful. Detractors says that violenece by the demonstartors, strikers, or others reduces support among the ‘nice’ people whose support is needed for the movement to succeed.

Fuck these ‘nice’ people! They support a system that is always violent to the less fortunate. They profit from this legalised violence. They do not want to lose their privileges under the current system.

Violence in the exercise of self-defence threatens the system. The system relies on sullen compliance. Once you shake off the shackles of living with the system, the system begins to lose its legitimacy. It is no seen as the only alternative.

And when the system goes, so does the privileges of the ‘nice’ people. This is why they are so concerned about the violence of the oppressed. They seen a lot of lamposts whit nooses hanging from them in their future. They know what awaits them for their class colloboration. They are not going to be part of a movement that deprives them of their ill-gotten gains.

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Anti-War Means Anti-War

Mickey Z argues that Anti-War Means Anti-War. The whole electoral system supports the war aims of the Capitalist classes.

Mickey Z argues that the high level of spending on the US military is a severe constraint on social services (54% of the US Government discretionary budget by some estimates). The targeting of the US military is seen as essential to developing the occupy movement especially through targeted protests. Mickey Z continues:

While I can understand any concern that such a gesture could alienate some sectors of the general population, I feel it's become far more urgent to drive home the point that anti-war doesn't just mean anti-Republican.

"Anti-war" isn't a useful mask to wear at an election season costume party. This label signifies one as being against all war (except class war) no matter what political party has commenced the invasion, the bombing, the sanctions, or the covert operations.

Therefore, the Occupy movement must remain guided by a deep-seated anti-war sentiment to avoid playing into the hands of the 2012 two-party (sic) game... a game with no long-term winners.

I think the occupy movement needs to develop its class consciousness about the reasons that a large military is required. The reasons are about maintaining the monopoly positions throughout the world. It is a requirement of this stage of Capitalism.

Yet, there is a tension between including everybody in the Occupy movement, and the realisation that extending the movement means the dilution of the aims of the movement. Instead, the movement has to return to its original ideals of forcing change. In doing so, it needs to seek out people who want to change the system. Not everyone of the 99% wants to change the system — a substantial minority is doing quite well out of supporting the system. These people should not be in the Occupy movement.

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Why Washington’s Iran Policy Could Lead to Global Disaster

Juan Cole argues Why Washington’s Iran Policy Could Lead to Global Disaster: What History Should Teach Us About Blockading Iran. The conclusion is:

As the sanctions morph into a virtual blockade, they raise the specter that all blockades do — of provoking a violent response. Just as dangerous is the specter that the sanctions will drag on without producing tangible results, impelling covert or overt American action against Tehran to save face. And that, friends, is where we came in.

Cole argues that the Iranian leadership has consistently argued that nuclear weapons are immoral and against the Islamic religious precepts. This has been a consistent position of the Islamic Republic of Iran since its founding. Yet, the sanctions are changing Iranian public opinion:

Only a few years ago, a majority of Iranians disapproved of the idea of having an atomic bomb. Now, according to a recent Gallup poll, more support the militarization of the nuclear program than oppose it.

The sanctions exist as a sop to the Israelis in order to stop them from taking military action against Iran. Cole argues that these sanctions could cripple Western economies through higher oil prices despite assurrances from the Saudis about replacing lost Iranian oil production.

These sanctions are actively undermined by China and India who are getting discounted oil for their economies, and boosts to their economies as they pay for the Iranian oil in their own currencies.

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Why Are Americans Killing More Cops?

Ted Rall asks Why Are Americans Killing More Cops? His conclusion is:

Harsh sentencing laws are killing police officers.

He says that:

Violent crime in general is decreasing. But more cops are being killed in the line of duty. According to the FBI, 72 police officers died under fire in 2011. That’s up 25 percent from 2010 and up 75 percent from 2008.

The Honour Roll of the NSW Police lists all of the police officers killed on duty since the formation in 1862. In the past ten (10) years, four (4) police officers have been killed by offenders escaping arrest:

Date	Name	Manner of Death
3 Apr 2002	Const Glenn McEnallay	shot by an offender following a pursuit (posthumously awarded Commissioner's Valour Award)
11 Nov 2006	Sen Const Gordon Wilson	struck by motor vehicle at a vehicle stop
9 Sept 2010	Det Const William Arthur George Crews	shot during the execution of a search warrant in Bankstown NSW. (Posthumously awarded Commissioner's Valour Award).
2 Mar 2012	Senior Constable David James Rixon	shot whilst conducting a traffic stop in Tamworth NSW. (Posthumously awarded Commissioner's Valour Award).

Rall argues that due to the “three-strikes” laws in place, crimminals are no worse off if they do shot at police officers. The law has lost its deterrent effect due to its harshness.

Rall continues:

Another factor that authorities and “tough on crime” politicians fail to consider is how the increased militarization of civilian police forces dehumanizes them in the eyes of the public. Police outfitted in riot gear respond to peaceful protests attended by families with swinging batons and pepper spray. Traffic cops dress like they’re patrolling the Sunni Triangle rather than the suburbs, scowling at the taxpayers who pay their salaries as they sweat under their Kevlar vests.

We have now entering the realm of Fourth Generation Warfare where the state is at war with its citizens. Marxists would call it the intensification of the class war. The capitalists have become more ruthless in their exploitation of the workers.

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PRESS RELEASE: Occupy the East End Rejects MoveOn.org Takeover Attempt

Ted Rall reposts PRESS RELEASE: Occupy the East End Rejects MoveOn.org Takeover Attempt:

We had been silent. We had hoped that the organizations that are attempting to co-opt and dilute the Occupy Wall Street movement would stop. The Occupy movements across the country are fighting for better lives of the 99% of Americans who work for a living. We had hoped that these interlopers would recognize that what they are doing is wrong.

These interlopers, such as moveon.org, can never see their actions as wrong because they firmly believe in the system as it stands. They see the fundamentals of the system as sound and just. Any current problems are just an aberration that requires people to more fully commit to working within the system.

The press release concludes that:

Occupy the East End is in no way affiliated with MoveOn.org, nor does it wish to become so. The attempt to take over OEE is a hostile takeover attempt to capitalize on the Occupy movement as a whole. Occupy Wall Street and Occupy the East End as a movement rejects the political system as a broken structure that needs to be overhauled from the bottom up.

So we see a move to recognise the political system as broken. But there is no awareness of the economic system that requires such a political system. Still, these are still early times.

The consciousness of the masses cannot be forced to change quickly. The people have to learn by their own experiences.

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Fault Lines – Occupy Wall Street: Surviving the Winter

Yves Smith reposts a viedo from Al Jazeera about the Fault Lines – Occupy Wall Street: Surviving the Winter.

Even if the camps were cleared, it’s clear that Occupy considered as a movement changed the discourse to include 7ldquo;income inequality” (class), has not (perhaps not yet) been co-opted, has not (perhaps not yet) been successfully demonized by our famously free press, and has also built up social capital, and not in bowling leagues or rotisserie baseball, either.

There is a conflict between the Occupy Wall Street (OWS) and the unions. The report sees the tension between organised activities of unions and the free-wheeling politics of the OWS.

The overall aim of the OWS people interviewed is reformist. They are hoping to influence the current system without understanding the class nature.

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Three Corporate Myths that Threaten the Wealth of the Nation

Yves Smith reposts a post by William Lazonick about Three Corporate Myths that Threaten the Wealth of the Nation. He proposes that large corporations are actually owned by the public and challenges three (3) myths about them:

• They are not “private enterprise.”
• They should not be run to “maximize shareholder value.”
• The mega-millions in remuneration paid to top corporate executives are not determined by the “market forces” of supply and demand.

I was stunned by the concentration of corporate power in terms of number of employees and payroll:

The wealth of the American nation depends on the productive power of our major business corporations. In 2008 there were 981 companies in the United States with 10,000 or more employees. Although they were less than two percent of all U.S. firms, they employed 27 percent of the labor force and accounted for 31 percent of all payrolls. Literally millions of smaller businesses depend, directly or indirectly, on the productivity of these big businesses and the disposable incomes of their employees.

Emphasis Mine

In Imperialism: The Highest Stage of Capitalism, Lenin describes the concentration of German industrial power in the last century in terms of power consumed as well. He calculates that these large industrial firms consume 75.3% of all steam output, and 77.2% of electrical output.

Lenin also compares USA concentration in terms of output. I have tabulated these figures as follows for comparison with those of Lazonick (first row):

Year	Threshold for large enterrpise	Percentage of all firms	Percentage of the workforce
2008	10,000 employees	<2%	27%
1904	USD 1,000,000	0.9%	25.6%
1909		1.1%	30.5%

Lazonick argues that since public enterprises have shares that can be owned by anyone, they are fundamentally different from private enterprises whose ownership is not on the open market. This seems to be the democratisation of capital. Here the ordinary person can participate in the ownership of the means of production. In other words, anyone can become a capitalist as long as they have the money.

Lenin argues against this democratisation of capital by saying that the capitalists and their apologists (Finance Capital And The Financial Oligarchy):

But the monstrous facts concerning the monstrous rule of the financial oligarchy are so glaring that in all capitalist countries, in America, France and Germany, a whole literature has sprung up, written from the bourgeois point of view, but which, nevertheless, gives a fairly truthful picture and criticism—petty-bourgeois, naturally—of this oligarchy.

Paramount importance attaches to the “holding system”, already briefly referred to above. The German economist, Heymann, probably the first to call attention to this matter, describes the essence of it in this way:

“The head of the concern controls the principal company (literally: the “mother company”); the latter reigns over the subsidiary companies (“daughter companies”) which in their turn control still other subsidiaries (“grandchild companies”), etc. In this way, it is possible with a comparatively small capital to dominate immense spheres of production. Indeed, if holding 50 per cent of the capital is always sufficient to control a company, the head of the concern needs only one million to control eight million in the second subsidiaries. And if this ‘interlocking’ is extended, it is possible with one million to control sixteen million, thirty-two million, etc.”

As a matter of fact, experience shows that it is sufficient to own 40 per cent of the shares of a company in order to direct its affairs,[4] since in practice a certain number of small, scattered shareholders find it impossible to attend general meetings, etc. The “democratisation” of the ownership of shares, from which the bourgeois sophists and opportunist so-called “Social-Democrats” expect (or say that they expect) the “democratisation of capital”, the strengthening of the role and significance of small scale production, etc., is, in fact, one of the ways of increasing the power of the financial oligarchy. Incidentally, this is why, in the more advanced, or in the older and more “experienced” capitalist countries, the law allows the issue of shares of smaller denomination.

Emphasis Mine

Lazonick concludes that:

We have to elect politicians who will take on corporate power rather than shill for corporate power-brokers. We have to support labor leaders who recognize that gaining a voice in corporate governance is the only way to ensure that corporations will invest in workers and create good jobs. We need teachers at all levels of the education system who understand what business corporations are and what they are not. We need the responsible media to escape from the grip of corporate control. And we have to put in place business executives who represent the interests of civil society rather than those of an elite egotistical club.

This is not a true democraticisation as the wealth is not distributed evenly throughout the society.

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Lynn Parramore: Capitalism’s Dirty Secret: Corporations Don’t Create Jobs, They Destroy Them

Yves Smith reposts Lynn Parramore: Capitalism’s Dirty Secret: Corporations Don’t Create Jobs, They Destroy Them:

For the last four decades, U.S. corporations have been sinking our economy through the off-shoring of jobs, the squeezing of wages, and a magician’s hat full of bluffs and tricks designed to extort subsidies and sweetheart deals from local and state governments that often result in mass layoffs and empty treasuries.

Passmore strongly believes that government exists independently of the Capitalists and is able to enforce benevolence upon the corporations. She sees the problem with corporations as the short-term focus on profits:

Bad things happen when corporations are unconstrained by strong national policies that force players to think long term, behave decently, and refrain from dumping their short-term costs on the rest of us. They tend to focus single-mindedly on maximizing profits for shareholders at the expense of all else – including jobs. Executives set their sights on a path to short-term boosts in share prices paved with layoffs, wage cuts, and jobs moved overseas, while slashing research and development and investing in the skills of their employees.

Passmore correctly says that the corporations owe their success to the social investment made in education and other public utilities:

Corporate executives have lost the sense that they owe anything to the public. They have forgotten that the 99 percent, as taxpayers, have made huge investments in them. They fight to lower taxes as if all the money “belongs” to the companies. They fight regulations as if the public doesn’t have the right to interfere in their business.

Passmore also points the link between worker's income and consumption. No wages, no profits.

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Ken Jacobson: Whose Corporations? Our Corporations!

Yves Smith reposts Ken Jacobson: Whose Corporations? Our Corporations! An argument is made that corporations are not about profits, but:

Historically, corporations were understood to be responsible to a complex web of constituencies, including employees, communities, society at large, suppliers, and shareholders. But in the era of deregulation, the interests of shareholders began to trump all the others. How can we get corporations to recognize their responsibilities beyond this narrow focus? It begins in remembering that the philosophy of putting shareholder profits over all else is a matter of ideology which is not grounded in American law or tradition. In fact, it is no more than a dangerous fad.

Emphasis Mine

The obvious answer is public ownership under Socialism. Ownership is critical in controlling the production in a society. Private ownership means the private objectives of the rich are pursued. When these objectives diverge from that of the society at large, then we get the problems we currently see.

Jacobson says that the conception of profit maximization is a recent fad, and:

This narrow conception of corporate purpose has become predominant only in recent decades, however, and it flies in the face of a longer tradition in modern America that regards the responsibilities of a corporation as extending far beyond its shareholders. Owen D. Young, twice chairman of General Electric (1922-’40, 1942-’45) and 1930 Time magazine Man of the Year, told an audience at Harvard Business School in 1927 that the purpose of a corporation was to provide a good life in both material and cultural terms not only to its owners but also to its employees, and thereby to serve the larger goals of the nation

Emphasis Mine

This view seems to conveniently ignore the gilded age of the robber barons that existed up to the start of the second World War. The end of the nineteenth century and the beginning of the twentieth century was a time of great economic crises and bitter battles. This was when troops (public and private) turned their guns upon the workers in the mines of Colorado, factories of Detroit and Chicargo, and elsewhere.

The success of the Russian Revolution challenged the supremency of the Capitalists. This challenge was met with the furour of Fascism or the comforts of the Welfare State. Corporations became part of this Welfare State in order to ensure their survival in a Capitalist society.

The need for this survival declined as the threat of a Communist revolution in the West receded as the 1970's and 1980's saw the start of the neo-Liberal onslaught against the Welfare State. It was no longer necessary to buy the workers off as the workers suffered defeat after defeat.

Jacobson concludes that:

An important step toward countering their influence can come in refusing to accept the legitimacy of shareholder primacy. Up to now, this fad has had the power to neutralize opposition in part because it has obscured the tool needed to challenge it: a clear understanding of the economic realities. For this reason, we must learn what contributions all stakeholders – not just the shareholders, but all the others as well – make to the corporation, and the extent of the risks and rewards those contributions truly entail. We must learn about the interrelation of business and government in all its complexity, going far beyond the headlines about taxes and regulation to discover who needs whom for what, and who does what for whom. And we must learn what rights corporations legitimately hold, what privileges they enjoy, and what duties they are obliged to carry out.

Emphasis Mine

Again I say that public ownership is the only way to align the productive capacities of corporations with the needs of the society at large. The next question is how align the decision making bodies responsive the needs of the public at large.

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Burma Election 2012

There are two (2) differing reactions to the recent elections in Burma:

1. A useful political exercise but no real transfer of power from the military;
2. A step to a liberal democracy with business opportunities opening up.

Giles Ji Ungpakorn writes that there are Two sides to Burma's elections:

Elections are important political events that can be used to advertise policies, can often give encouragement and can be used to mobilise activists outside parliament. For these reasons the elections in Burma in early April were extremely important for the democratic movement. …

However, we must not fall into the trap of thinking that these elections are a “first step” in some top-down designed “road map” towards democracy. Instead they are a desperate attempt by the Burmese junta to find legitimacy for the continuation of the dictatorship. No doubt the generals were well aware of the uprisings in the Middle East and needed to shore up their authoritarian rule.

Peter Hartcher disagrees with the second point in his analysis of Despair and hope in the tale of two tyrannies. He see a genuine attempt to get economic progress going in Burma:

…because of Burma's membership of the Association of South-East Asian Nations, the military dictators got to travel frequently to other capitals in the region and saw the prosperity and success in Singapore, Jakarta, Bangkok and elsewhere. They “grew more comfortable” with the concept of political power-sharing and economic liberalisation, [Nicholas Farrelly] posits.

Giles Ji Ungpakorn would reply that this is an example of setting up democracy for economic exploitation:

Right-wing analysts always state that democratic transition comes from the actions of the ruling elites and Western governments “designing” gradual steps towards democracy. We can see what this means in the case of Iraq and Afghanistan. Western rulers do not give a fig about democracy and human rights. What they, and authoritarian governments like China, want to stress is “stability” for making profits with a thin veneer of legitimacy thrown in for good measure.

True democracy cannot be obtained through the elections in a Capitalist society because Giles Ji Ungpakorn says that:

Elections under capitalist democracy never lead to state power changing hands because many important elements of the capitalist state are not subject to elections or even accountability. For example, we never get to elect capitalists who make important investment decisions that affect millions of peoples’ lives. In addition to this, judges, military and police commanders, top civil servants and those who control the media are never elected. But that does not mean that we should ignore elections.

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New Kickstarter Project: “Congratulations! You Have Overthrown the Government of the United States of America”

Ted Rall wants to write a book on starting a revolution in the USA through a New Kickstarter Project: “Congratulations! You Have Overthrown the Government of the United States of America”.

I am a bit doubtful that anyone could write a prescription for a revolution given the experiences of the Bolshevik Party during the February Revolution when the party found itself way behind the mood of the people. This was a party who had studied the 1905 Revolution, the Paris Commune, and other revolutions. And they could not keep up with the people.

The study of revolutions held the party in good stead through the counter-revolutionary attacks in the middle of 1917. And they were able to prepare the people for a successful Communist revolution in November 1917.

It was only in the consummation of the revolution that the intense study was useful, not in setting the process going.

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How American Corporations Transformed from Producers to Predators

Yves Smith reposts a post about How American Corporations Transformed from Producers to Predators:

Corporations are not working for the 99 percent. But this wasn’t always the case.

William Lazonick retells the pretty story of how the corporations were once concerned with their employees and the broader society:

A generation or two ago, corporate leaders considered the interests of their companies to be aligned with those of the broader society.

He blames the ‘financialization’ of the firms starting in the 1960's through mergers, then acquistions for the purpose of asset stripping. Fincialization means that:

…executives began to base all their decisions on increasing corporate earnings for the sake of jacking up corporate stock prices.

He sees the problem as:

When a corporation becomes financialized, the top executives no longer concern themselves with investing in the productive capabilities of employees, the foundation for rising living standards for all. They become focused instead on generating financial profits that can justify higher stock prices – in large part because, through their stock-based compensation, high stock prices translate into megabucks for these corporate executives themselves. The ideology becomes: Corporations for the 0.1 percent — and the 99 percent be damned.

One solution he proposes is to:

Recognize that taxpayers and workers bear a significant proportion of the risk of corporate investment, and put their representatives on corporate boards where they can have input into the relation between risks and rewards.

Sounds like the start of Socialism to me.

My problems with this analysis are that:

• The characterisation of corporations as changing over time;
• The absence of the influence of the fall of Communism in 1989;
• The decay of unions in the 1970's and later

Corporations have always been about the maximization of profit. That is the reason for their existence. They reproduce capital in the shortest time possible.

In earlier epochs, this was achieved through technical innovations such as mechanisation, electrification, automation, and computerisation. This required investment of large amounts of capital, and the replacement of manual workers with intellectual (or knowledge) workers to support these innovations.

Unfortunately, these innovations lowered the percentage of labour power that could be exploited for profits. Thereby lowering the long term rate of profits. So, we have the classical Marxist description of the decline in the rate of profits due to the replacement of labour with machines.

Once this rate of profit falls below the minimum requirement of Capitalists for the reproduction of capital, the amount of investment falls. To restore the rate of profits, the Capitalists relied on the neo-Liberals such as Thatcher and Reagan to crush the unions thereby allowing for greater exploitation of workers. Once the exploitation could not be increased in the First World countries, the factories moved off-shore so that profits could be increased further.

Other firms faked profits through financial means. This is what Lazonick is mainly concerned about. But profits are still profits, no matter where they come from.

This exploitation was further expanded with the collapse of Communism in 1989. Countries that were outside of the Capitalist system were suddenly available for exploitation. There was an added benefit of the the discrediting of Communism as an alternate system. Capitalism was put forward as the winner of the historical struggle. The ideological impediment to greater exploitation was removed.

For the means of production that is currently owned by the corporations to serve the interests of the society at large, we must place the ownership of these assets in public hands. We must overturn the power of the Capitalist class by stripping them of their private property. Public benefit requires public ownership.

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Billionaire bashing: the new class war

Paul Sheehan writes of Billionaire bashing: the new class war in that:

Class war is back. On both sides of the Atlantic. The consequences have a long way to run.

I disagree. The class war has never gone away. It is a permanent feature of Capitalism.

What has happened instead is that the class war has become visible to the general public despite the best efforts to deny its existence. This is something that is obvious to both right-wing and left-wing popular movements:

Last year, the Tea Party movement and the Occupy Wall Street demonstrations pointed to a percolation of social anger. Occupy Wall Street did leave one indelible phrase in the public consciousness - “the 1 per cent” - a term which now routinely crops up in public dialogue. It is shorthand for the unprecedented concentration of wealth in the hands of the top 1 per cent of the population in the capitalist system, against the share of the remaining 99 per cent. It is a theme resonating in troubled Europe and also applies in China.

Here the class war is portrayed as the inequality in the distribution of wealth. Nowhere is the analysis of the reasons that give rise to the inequality.

The inequality is a natural consequence of the capitalist mode of production in which the surplus production accrues to the owners of the means of production, instead of to the producers of the commodities.

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