Why Does No One Speak of America’s Oligarchs?

Yves Smith asks Why Does No One Speak of America’s Oligarchs?

The current narrative about Cyprus portrays the country as a tax-havern for the Russian oligarchs. Smith challenges this narrative.

Smith asks:

…But see another implicit part of the story: that Russia’s oligarchs and “dirty money” are a distinctive national creation. Do you ever hear Carlos Slim or Rupert Murdoch or the Koch Brothers described as oligarchs? To dial the clock back a bit, how about Harold Geneen of ITT, which was widely known to conduct assassinations in Latin America if it couldn’t get its way by less thuggish means? (This is not mere rumor, I’ve had it confirmed by a former ITT executive).

Smith makes the point that the oligarchs in the USA are called elites instead. She writes that Simon Johnson clearly described in his important 2009 Atlantic article, The Quiet Coup, that American was in the hands of oligarchs:

Now Johnson carefully laid the bread crumbs, but so as not to violate the rules of power player discourse, pointedly switched from the banana republic term “oligarch” to the more genteel and encompassing label “elites” when talking about the US (“elites” goes beyond the controlling interests themselves to include their operatives as well as any independent opinion influencers). Yet despite his depiction of extensive parallels between the role played by oligarchs in emerging economies and the overwhelming influence of the financial elite in the US, there’s been a peculiar sanctimonious reluctance to apply the word oligarch to the members of America’s ruling class. Some of that is that we Americans idolize our rich, and the richer the better. No one looks too hard at the fact many of our billionaires started out with a leg up, parlaying a moderate family fortune (for instance, in the case of Donald Trump) into a bigger one, or having one’s success depend on other forms of family help (Bill Gates’ mother having the connection to an IBM executive that enabled Gates to license MS-DOS to them).

Smith concludes:

Confucius said that the beginning of wisdom was learning to call things by their proper names. The time is long past to kid ourselves about the nature of the ruling class in America and start describing it accurately, as an oligarchy.

But the question remains: how does an oligarchy arise from Capitalism?

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What is "critical" about critical realism?

Dan Little asks What is "critical" about critical realism?

Little lists three (3) elements of "critical" philosophy:

1. Critical thinking as emancipatory: This meaning is reflected in Marx's eleventh thesis on Feuerbach. "The philosophers have sought to understand the world; the point, however, is to change it."
2. Critique as illusion-destroying: Another dimension of the idea of criticism in the Marxist tradition is the idea of "critique" -- focused intellectual effort to uncover the implicit (and misleading) assumptions of various schemes of thought and policy.
3. Critique as self-creation: This involves the feature of "reflexiveness" that obtains in the social world. We constitute the social world, for better or worse. And the forms of knowing that we gain through the social sciences also give rise to forms of creating of new social forms -- again, for better or worse.

The third point is really a really a realisation of the maxim that the subjective influences the objective, and the objective influences the subjective.

In essence, we are to use critical realism to uncover the reality behind the scenes and change that reality for the betterment of humankind.

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Inequality, Evolution, & Complexity

Mark Thoma excerpts from Chris Dillow's post about 'Inequality, Evolution, & Complexity'.

The key question is:

Why has mainstream neoclassical economics traditionally had little to say about the causes and effects of inequality?

The real answer is that you don't bite the hand that feeds you. As Lenin says:

The task of a bourgeois professor is not to lay bare the entire mechanism, or to expose all the machinations of the bank monopolists, but rather to present them in a favourable light.

Imperialism: the highest stage of capitalism (p.52)

Anyway, the bourgeois professors think the problem is:

…that the blindness is inherent in the very structure of the discipline. If you think of representative agents maximizing utility in a competitive environment, inequality has nowhere to come from unless you impose it ad hoc…

Nice one, Capitalism! You have created a superstructure so effective that the wrong answers cannot be found as the question does not arise.

But no fast, the bourgeois professors think that by reverting to the original political use of the theory of evolution, they can come up with an answer:

…If we think of the economy as a complex (pdf) adaptive system…then inequality becomes a central feature. This is partly because such evolutionary processes inherently generate winners and losers, and partly because they ditch representative agents and so introduce lumpy granularity.

Emphasis Mine

So we are back where we were 150 years ago, the theory of evolution is being used to justify inequality.

But then, this leaves the Capitalists in a quandry: which system do they choose to build the superstructure on? Are they going with Creationism or with Evolution? Or are they going to reconcile the two?

I think reconciliation is out of the question because of the ongoing civil war within the Capitalist class for which the battle between Creationism and Evolution is a proxy.

Communists will have to side with Evolution because it is scientificly based, and leads to more progressive outcomes than does Creationism.

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Men Who Kick Down Doors: Tyrants at Home and Abroad

Ann Jones posts about Men Who Kick Down Doors: Tyrants at Home and Abroad.

Jones connects the dots between domestic violence and war-mongering:

It was John Stuart Mill, writing in the nineteenth century, who connected the dots between “domestic” and international violence. But he didn’t use our absurdly gender-neutral, pale gray term “domestic violence.” He called it “wife torture” or “atrocity,” and he recognized that torture and atrocity are much the same, no matter where they take place -- whether today in Guantanamo Bay, Cuba, Wardak Province, Afghanistan, or a bedroom or basement in Ohio. Arguing in 1869 against the subjection of women, Mill wrote that the Englishman’s habit of household tyranny and “wife torture” established the pattern and practice for his foreign policy. The tyrant at home becomes the tyrant at war. Home is the training ground for the big games played overseas.

The violence engender by the system is all-pervasise. You cannot eliminate the violence within the domestic sphere without eliminating the violence inherent in the system. The only way to eliminate inherent violence is to replace the system.

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John Pilger: The new propaganda is 'liberal'

John Pilger: The new propaganda is 'liberal'.

Of the world of blogging, tweeting, and social media, Pilger writes:

Edward Said described this wired state in Culture and Imperialism as taking imperialism where navies could never reach. It is the ultimate means of social control because it is voluntary, addictive and shrouded in illusions of personal freedom.

Today's “message” of grotesque inequality, social injustice and war is the propaganda of liberal democracies. By any measure of human behavior, this is extremism.

The conservatives are correct when they say that the mainstream media is liberal. But they misunderstand what the word 'liberal' means. They are led to believe that it means progressive and radical, whereas the meaning imparted by the capitalists is freedom for them to exploit others while hiding this exploitation.

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Us vs, us

Seth Gogin asks who wins in a game of Us vs. us.

For Communism to suceed, we need to raise our consciousness from the individualism that Capitalism that moulded us into, to a higher level:

When we steal or disrupt or game the system of a community we care about, we hurt everyone we say we're connected to, and thus hurt ourselves.

Communism requires a permanent revolutionary mindset:

Online communities are quick to form, but they're just as quick to fade, to become less open and to become less trusting because sometimes we have a cultural orientation toward taking, not giving. We forget to feed the network first, to take care of those we care about.

We have to throw away the profit motive for evaluating which choices to make:

Here's a possible standard: is it open, fair and good for others? If it's not, the community asks that you take your selfish antics somewhere else.

Godin concludes with:

Call me naive, but I think it's possible (and likely) that the digital tribes we're forming are going to actually change things for the better. But not until we embrace the fact that we are us.

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Mechanisms of racial disparities

Dan Little describes some Mechanisms of racial disparities.

Little's conclusion is:

In short, there seem to be a great number of mechanisms of racial differentiation that are at work in American society that don't generally presuppose explicit racial antagonism, but that work to channel black individuals into worse outcomes than their white counterparts. These are structural factors that the population faces, not personal factors; and they have pronounced effects when it comes to generating racial disparities in a number of crucial social dimensions.

These mechanisms include:

• The provision of essential social services, like education, health care, and public transport, by local government.
• The access to health care is also tied to employment.

• Actual racial prejudice in hiring practices

Since local governments are heavily depenendent on the local tax base in US society, the quality of public services varies greatly depending on the locale. Racial differentiation leads to economic differentiation which leads to differentiation in the provision of these public services.

The lack of public transport means people are trapped within their locale. Thus, they have limited chances of employment, and therefore access to health care.

Poor public services means poor education which, in turns, leads to reduced job oppportunities.

Even if they manage to overcome all of this, they still face discrimination during the hiring process.

So, racism has a structural basis in tying public services to local government and health care to jobs. But, there is still racial prejudice to stop anyone escaping those traps.

As Malcolm X said, "You cannot have Capitalism without Racism!"

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Communication is a path, not an event

Seth Godin says that Communication is a path, not an event.

Communication for revolutionaries occurs at many levels:

• Propaganda
• Slogans
• Agitation
• Mass rallies

Propaganda is what Godin would say is a waste of time if it is used wrongly. It is unidirectional communication, but the purpose should be:

Don't sell us anything but the burning desire to follow up. The point of his talk wasn't to get a new customer (impossible), nor was it to get through the talk and get it over with (silly and selfish). No, the point of the talk should have been to open the door to have a better, individual conversation soon.

This individual communication is what is known as agitation. It is the dialogue between the cadre and the public on at the personal level. It is at this level that recruitment into the party takes place.

The slogans are short, precise communications that allow the party to quickly get feedback about the public is prepared to mobilise around. The effect of these slogans is measured directly at the mass rallies.

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Remembering Rachel Corrie, 10 Years Later

Juan Cole Remembering Rachel Corrie, 10 Years Later.

Supporters of Greater Israel succeeded in having the performance of a play based on her life cancelled in New York, but it has gone on to play elsewhere, and she and her legacy have not been erased, as the extreme nationalists would have liked. In some ways the controversy over the play led to the founding of the influential blog Mondoweiss, which has done much to create spaces in which hard line Jewish nationalism can be critiqued.

Emphasis in original

To remember is to resist.

Meminisse resistere.

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Oz the Great and Powerful

The movie, "Oz the Great and Powerful", is a propaganda film that extols:

• The usual Disney myth of the correlation between beauty and goodness;
• The capitalist hero myth;

The younger sister, Theodora, prefers to keep her ugliness as a manifestation of the hate she feels inside.

The eldest sister, Evanora, does not have a political program to explain her rule. Why did she overthrow her father? Why did she think she was a better ruler of Oz than her father.

Her political program of control is profess the myth of a liberator, while portraying herself as the defender of Oz.

She has the caste of flying monkeys to terrorise the countryside. She has an official enemy to blame all of the acts of terror on. Thus, she would justify her rule as protector against the terror she creates in the chaos after the death of her father.

I would have to assume that she wanted power and wealth for herself. Terror is a means to an end.

The younger sister believes the propaganda. It is only when Oz betrays her that is converted to the dark side, as it were.

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Bankistan Vanquishes America

Barry Ritholtz watches as Bankistan Vanquishes America and issues a call to arms to liberate America. Wolverines!.

Ritholtz still has not caught with Lenin's idea that Imperialism: the highest stage of capitalism. Of particular interest, chapter 3 "Finance Capital and Financial Oligarchy" has the quotes:

It is characteristic of capitalism in general that the ownership of capital is separated from the application of capital to production, that money capital is separated from industrial or productive capital, and that the rentier, who lives entirely on income obtained from money capital, is separated from the entrepreneur and from all who are directly concerned in the management of capital. Imperialism, or the domination of finance capital, is that highest stage of capitalism in which this separation reaches vast proportions.

(Kindle Location 929-932)

And, the big four (4) countries were, prior to the First World War, Great Britain, United States, France, and Germany.

Together, these four countries own 479,000,000,000 francs, that is, nearly 80 per cent of the world’s finance capital. Thus, in one way or another, nearly the whole world is more or less the debtor to and tributary of these four international banker countries, the four ‘pillars’ of world finance capital.

(Kindle Location 954-956)

One hundred years later, the only thing that has changed is the ordering at the top. Lenin wrote:

Thus, the beginning of the twentieth century marks the turning point from the old capitalism to the new, from the domination of capital in general to the domination of finance capital.

(Kindle Location 707-709)

Does Ritholtz really think that financial capitalism is a recent innovation? If he does, then the ideological state apparatus has been extraordinarially effective. Lenin writes that:

The task of a bourgeois professor is not to lay bare the entire mechanism, or to expose all the machinations of the bank monopolists, but rather to present them in a favourable light.

(p.52)

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"You've got ping, but they've got no pong"

Seth Godin ponders what to do when "You've got ping, but they've got no pong".

You can take a great deal of responsibility for creating this mutual enthusiasm, and you can put the effort into creating an environment and a story where it's likely to happen.

Connection requires energy and insight and enthusiasm from both sides, and if your partner isn't responding, look hard at why. Of course, if you can't bring your half, stay home.

This is an interesting problem for revolutionaries. New recruits have lots of enthusiasm and ideas, but the daily grind of facing apathy and hostility wears them down.

Enthusiasm is cheap, commitment is expensive. It is in the interest of the ruling elites to keep it so.

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2 Year Anniversary of Fukushima

Barry Ritholtz posts on the 2 Year Anniversary of Fukushima.

The list of articles presented is disturbing. Nuclear power is so bloody dangerous.

The article concludes:

We don’t mean to pick on Japan. After all, the American government is dictating nuclear policy in Japan. American reactors are even more dangerous than Fukushima. And a secret report confirms that Southern California Edison knew of major problems at the San Onofre nuclear plant… but let the slipshod expansion and remodeling project continue anyway.

As the article, United States: A Fukushima-style disaster is waiting to happen, notes:

The US is just as likely to see a devastating “perfect storm” as Japan.

Another claim is that US nuclear regulators are much more stringent than Japan. But that rings hollow in the face of the facts.

A 2010 study of nuclear plant safety by the Union of Concerned Scientists (UCS) found US plants experienced at least 14 “near misses” last year. The report overview explained that “many of these significant events occurred because reactor owners, and often the NRC, tolerated known safety problems”.

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The four corporate industries that rule Australia

The four corporate industries that rule Australia are:

1. Mining
2. Banking
3. Superannuation
4. Gambling

These four (4) industries are able to direct government policy at all levels through campaign donations, media campaigns, and threats to withold investments.

The only really productive industry is the first: mining. Banking and superannuation are financial capitalists. While the last (gambling) is just a parasite—it adds no real value to the Australian economy.

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A Disgusting TV Ad in Favor of Gay Marriage

Ted Rall is against A Disgusting TV Ad in Favor of Gay Marriage.

Rall argues for the abolition of marriage as it …causes untold misery and reinforces outmoded systems of patriarchy, hierarchy and capitalism.

But more importantly, [o]ppressed peoples should support one another rather than rely on the oppressors to grant rights to one section of the oppressed.

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The Bolsheviks and the Soviets

Chapter 35 of History of the Russian Revolution by Leon Trotsky covers The Bolsheviks and the Soviets.

In this chapter, Trotsky explains the shifting focus on the slogan, All Power to the Soviets!.

Although the soviets of the soldiers and the workers were set up in 1905 and again in 1917 as the expressions of popular will, Trotsky contends they lagged behind the masses in the expression of the popular will. This was most clearly seen in the July Days when the soviets came out against the people's uprising.

Lenin's argument was to move the focus of Bolshevik political activity closer to the worker and the soldier. It was only on this basis that an insurrection could suceed.

The soviets had been captured by the Compromisers for the Capitalists, and so, had to be fought against.

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What became of Detroit?

Dan Little asks What became of Detroit?

Little thinks that White racism is the root cause:

If I had to single out a single fact out of this complicated story as the most important factor that led to these toxic changes, I would identify the mechanisms of racial residential segregation that Detroit has embodied for almost a century. For decades Eight Mile represented a key racial division in the city, and a plethora of mechanisms of exclusion conspired to maintain this division. If the city could have settled into a racially and economically mixed pattern of residence in the 1940s, much of this story would have been different. Population exit would not have reached crisis proportions; businesses would have been less likely to relocate out of the city; and a schooling system that was very successful in the 1950s could have maintained its effectiveness. This implies that Detroit is victim to the continuing tragedy of America's inability to heal its racial divisions and antagonisms.

Emphasis Mine

And yet, Little ignores the vital role racism plays in Capitalism. This role is that of control. Racism is control both blacks and whites in order to make them fearful of each other.

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De-escalation

Seth Godin promotes De-escalation .

There are revolutionaries who want the big finish of the General Strike, the barricades, the storming of the Winter Palace:

The goal then is to create tension, to escalate need, to amplify conflict until action is taken. Escalation causes us to commit to our original need, by reinforcing it.

The cultural norm is always to sharpen the conflict.

Godin proposes:

De-escalation creates connection, not commitment to previously made choices. It trades the short-term battle for the long-term relationship.

Taking our time and letting air in (and heat to escape) might be precisely the best way to build the relationships we need for the long run. It leads to better decisions, less shrapnel and work that truly matters, without regret.

An interesting idea of building Socialism quietly through relationships, instead of conflicts.

It is always tempting to avoid conflicts especially in light of the state's prepondernace of force and brutality. This would leave the workers defenceless against attacks.

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Hugo Chavez, undefeated! Why the rich and powerful hated Chavez

Hugo Chavez, undefeated! Why the rich and powerful hated Chavez.

The rich and powerful of the world did not hate Chavez because he was a dictator. Deep down the sentient among them know he wasn't.

They hated him because he was symbolic of a threat to the dictatorship of Capital, a figurehead of a continent alive with social movements and millions of people conscious of their political power.

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Hugo Chavez presente!

Hugo Chavez presente! Hugo Chavez is dead.

Time will tell how deeply Socialism has taken in Venezuela. I think Chavez has done a good job of bringing prosperity to the poor of his country. Literacy and health has improved dramatically.

The Capitalist press screams "Dictator!" when he won 63% of the vote.

The prolonged period of dual power in Venezuela is going to wear people down.

In Venezuela and the Middle East after Chavez, Juan Cole criticises Chavez for:

The foreign policy of late Venezuelan leader Hugo Chavez imagined that socialism and anti-imperialism are the same thing, and that he could lead a new sort of socialist international. These considerations shaped his Middle East policy in ways that were contradictory and hypocritical.

In Chavez's defence, it could be said that Venezuela was a country under imperialist attack, and Chavez sought allies wherever he could find them.

The BBC posits Hugo Chavez: A divided and divisive legacy?.

He gave a voice and identity to the poor, not just at home but also on the international stage.

He was a determined advocate of South-South dialogue, building close relations with ideologically like-minded presidents across Latin America.

He raised the profile of Venezuela into that of an international player, forming alliances with anyone who opposed the US (Iran, North Korea, Libya under Muammar Gaddafi).

"Within his administration he gave opportunities to people who would never have had them otherwise," said political analyst Carlos Romero.

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Resisting the EduFactory: Education for liberation

Some reflections on Resisting the EduFactory: Education for liberation.

I think the key argument is:

Student activists fight austerity and restructuring not because they feel entitled to study, but because society benefits from spaces for free thought. The university can and should be a place that drives social knowledge and development, not just train cogs for the economy. Everyone should benefit from every new vaccine that is researched, every groundbreaking novel, or revolutionary idea that helps lead to a new more sustainable and democratic society.

Despite what vice-chancellors or advertising executives might say, the university is not a brand. The university is the space for society’s critical consciousness.

It is all about developing human beings. We cannot develop ourselves if are slaving at dreary jobs and are burden with unpaid labour such as childcare, housework, and caring for others.

Each human being deserves the right to be able to better themselves. We must have an economic and political system that allows this.

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Karl Marx (5)

Following on from my post on Karl Marx, I want to argue against the idea that automation has changed the way Capitalism works.

Since before Capitalism emerged from Feudalism, machines were part of the landscape. The machines automated simple tasks like hammering or weaving. These machines could be crafted by a tradesman.

As machines grew more complex with the addition of steam power, the Capitalist came into their own by supplying capital that was beyond the means of a single tradesman.

The expense of machines gave rise to the factory system to defray the cost.

Automation is a natural outcome of this trajectory of economic development. It is nothing new. It is not radical.

What is radical is the disappearnce of labourers from Department II.

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Karl Marx (4)

Following on from my post on Karl Marx, I want to argue against the idea that there is no longer any distinction between workers and owners.

This is the political philosophy of the ownership society. The idea was to get all people to become supporters of the Capitalism system through:

• Home ownership
• Share ownership

This is the basis of the claim that there is no longer any distinction between workers and owners. The argument is that everyone can become an owner by participating in the share and housing market.

This political philosophy started with Margaret Thatcher and Ronald Reagan. This was to garner political support for:

• Breaking up the uniosn
• Lowering taxes
• Reducing welfare

Unfortunately, this political philosophy fell afoul of the concentrating tendencies of Capitalism. Wealth accumulates into fewer and fewer hands. This is one of the laws of motion of Capitalism.

This was demonstrated time after time with the share market crashes of 1987, 2000, and 2008. There was the Savings and Loans crisis (and the building society crisis) of the 1980's, and the Great Financial crisis of 2008.

Capitalism cannot, by itself, extend the ownership class. More and more people must be reduced from owners to workers.

The politcal nature of Capitalism means that the ruling elite must become smaller and smaller as Capitalism becomes more and more successful.

The owners are becoming workers, not the other way around.

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Karl Marx (3)

Following on from my post on Karl Marx, I want to argue against the idea that Capitalism will not fail because it has not failed yet.

Nassim Taleb would call this the “Turkey Problem”. It is the problem of predicting the future based on past behaviour. Tha turkey knows that the farmer has treated it well for the past few years. Based on that experience, the turkey can confidently predict that the farmer will continue to do so. This works until the farmer kills the turkey in order to sell to the meat processor.

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Karl Marx (2)

Following on from my post on Karl Marx, I want to argue against the idea that Capitalism is the only system that allows individuals to develop themselves.

In Capitalism, the only people who can develop their full potential are the Capitalists. They have the independent means to own the means of production. This gives them the freedom to develop themselves.

The workers, on the other hand, have their individuality crushed so as to be better integrated into the production process. What the boss says, goes.

Thus for everyone to be able to develop themselves, everyone has to own the means of production. This is the basis of Communism.

However, the productive forces has to be developed to such an extent that the people involved no longer have to be crushed to fit into the system.

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Karl Marx

Just watched a TV program about Karl Marx which is part of the Masters of Money TV series.

My problems with the program are:

• Capitalism is the only system that allows individuals to develop themselves
• Communism is all about enforced collectivism
• Capitalism will not fail because it has not failed yet
• Communism oppressed the workers
• There is no longer any distinction between workers and owners
• Automation has changed the way Capitalism works

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Friedrich Hayek (4)

Continuing my thoughts about Friedrich Hayek directly from my previous post here.

My third objection to the central thesis of Hayek is that the lack of understanding does not preclude intervention.

I think Hayek believes markets to be a natural phenomenon. I disagree with this idea of markets being natural. Markets are an artificial construction. Humans have constructed markets. They obey rules perculiar to humans.

Yet, the essence of Hayek's objection to government intervention in the workings of markets is that noone understands how markets work, and therefore any intervention is likely to be incorrect.

This seems to be an argument that academic knowledge is superior to practical knowledge and therefore must precede it. Nassim Talebi in his book, "Antifragility", argues strongly against this superiority of academic knowledge. He woild argue that practical knowledge is superior and precedes the emergence of acadamic knowledge.

Talebi seems to argue that intervention must be justified in that benefits must exceed the cost of doing nothing. Talebi's argument against intervention is based on cost-benefit analysis rather than ignorance in Hayek's argument. Talebi would argue that intervention would work under conditions of ignorance.

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Capitalism is so broken it can’t be fixed

Yves Smith points to Capitalism is so broken it can’t be fixed.

The amazing thing is this an article in the Wall Street Journal! Are Capitalists doubting Capitalism?

The question raised is:

This obsessive short-term thinking is capitalism’s biggest problem, and a huge one for America. But nobody wants to ask the hardest question of all: If capitalism is America’s core problem, why save capitalism?

But what is this Capitalism the article rails against? It would be that the idea of Capitalism is self-evident to the readers.

The author does not delve into what Capitalism is. Not like what Karl Marx did. In order to understand what Capitalism is, one must define it in its essentials. Marx said that the essence of Capitalism is the cycle of converting Money (M) into Commodities (C) which are converted to Money (M'). Hopefully, the quantity of Money (M) starting out is less than the quantity (M') ended up with. That is, a profit was realised as a result of the investment in the production of the commodity (C).

Once one has a definition of Capitalism, one can see that what people sees as problems in Capitalism is the result of what Capitalism. These problems are not caused by the improper implementation or having the wrong people involved.

The problems with Capitalism arise from the realisation of profit. A capitalist who makes a profit has more money and is therefore able to make greater profits in the next investment cycle. So, the wealth accrues to smaller and smaller fractions of the population. Inequality results from the natural functioning of Capitalism.

This rising inequality results in underconsumption by the rest of the population. They lack the means to purchase the commodities produced, so profits cannot be realised as readily. Thus, a bust follows. Hence the business cycle.

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Friedrich Hayek (3)

Continuing my thoughts about Friedrich Hayek directly from my previous post here.

There I asserted that markets are not optimal determiners of prices or demand.

Say that there a market of 100 people each with $1. And 90% want product A and the remainder want product B. So, the efficient allocation of investment would be 90% for production of A and 10% for production of B. In reality, nearly all investment would be for the production of A leading to an oversupply of A and a shortage of B.

Now assume that ten (10) people have $10 each, and the rest nothing. Of the ten (10), nine (9) want product B and one (1) wants product B. Of the rest, 81 wants A and nine (9) wants B. This is the same proportion of people who prefer product A or B as in the previous example. Now, the efficient allocation of investment is 90% for production of B, and 10% for A—a reversal of the previous example. In reality, we would get an oversupply of B and a shortage of A. This is contrary to the wishes of the population.

The disparity of wealth in the market leads to distortions in investment allocation.

Even if the market starts with equal distribution of wealth, disparities in wealth develop over time as the people who make more profitable investment decisions accumulate wealth at the expense of others.

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Fredrich Hayek (2)

Continuing my thoughts about Friedrich Hayek directly from my previous post here.

Five years ago, I made a more extensive comment at "Who’s Afraid of Friedrich Hayek?".

Yesterday, I asserted that governments serves the interests of the ruling class.

Hayek seemed to be saying that governments are a foreign element in the market economy. He says that it is the intervention of governments that inhibit the efficient working of markets. The origin of this inefficiency is the inability for anyone to completely understands how markets work.

Under Capitalism, the mythology is that the government sits in a Bonapartist position of mediating between competing interests. These interests are assumed to be between business, unions, and the public. In fact, the government mediates between factions of the Capitalist class. The relative strength of these factions determines the direction of government policy.

Any policies that seem to benefit persons outside of the Capitalist class are bribes to keep the non-Capitalists quiet.

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Friedrich Hayek

Some comments about Friedrich Hayek.

I have watched a TV program about Hayek. The gist of his ideas presented in that program is that the government should let the markets be free of all interference because the economy is too complicated to be understood fully.

Some of my objections to Hayek's central ideas are:

• Governments serves the interests of the ruling class.
• Markets are not optimal determiners of prices or demand.
• Lack of understanding does not preclude intervention.

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Is mathbabe a terrorist or a lazy hippy? (#OWS)

Cathy O'Neil asks if Is mathbabe a terrorist or a lazy hippy? (#OWS).

O'Neil contends that the Occupy Movement is “scary” because;

It’s our ideas that threaten, not our violence. We ignore the rules, when they oppress and when they make no sense and when they serve to entrench an already entrenched elite. And ignoring rules is sometimes more threatening than breaking them.

This setting aside of rules was part the ethos of the Occupy Movement which O'Neil says were:

• that we must overcome or even ignore structured and rigid rules to help one another at a human level,
• that we must connect directly with suffering and organically respond to it as we each know how to, depending on circumstances, and
• that moral and ethical responsibilities are just plain more important than rules.

It is interesting that the State had to respond with violence against the Occupy Movement. The system had run out of ideas to counter the movement. And, yet, this is not the first time the State has done this:

• The Civil Rights Movement (see Deacons for Defense).
• The Anti-War Movement of the 1960's and 1970's
• Rachel Corrie

In 2005, I had posted a table about four (4) non-violent protests with their outcomes in Trucker Blockades - One Day On. The interesting one for me has always been the Rosenstrasse protests which succeeded against the Nazi regime. But that protest was not a clash of ideas. The regime could live with the outcome.

The ideas raised by the Occupy Movement threaten the Capitalist system. Other ideas in the past did the same when the social conservatives sought to maintain the status quo. The Unhappy Marriage of Capitalism and Conservatism reflected on the tension between the political and economic forces within the Capitalist elite. In many times in the past, Capitalism has successfully absorbed these new progressive forces after trying to violently supress them.

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Of Flying Cars and the Declining Rate of Profit

Barry Ritholtz points via his 10 Friday AM Reads to the case “Of Flying Cars and the Declining Rate of Profit” by David Graeber in The Baffler.

Graeber wonders:

Where, in short, are the flying cars? Where are the force fields, tractor beams, teleportation pods, antigravity sleds, tricorders, immortality drugs, colonies on Mars, and all the other technological wonders any child growing up in the mid-to-late twentieth century assumed would exist by now? Even those inventions that seemed ready to emerge—like cloning or cryogenics—ended up betraying their lofty promises. What happened to them?

In contrast to The Unhappy Marriage of Capitalism and Conservatism, Graeber argues that the social conservative nature of Capitalism is holding back break=through innovations such as listed above. Instead, the Capitalists are providing incremental improvements as an illusion that Capitalism is a progressive force.

Defenders of capitalism make three broad historical claims: first, that it has fostered rapid scientific and technological growth; second, that however much it may throw enormous wealth to a small minority, it does so in such a way as to increase overall prosperity; third, that in doing so, it creates a more secure and democratic world for everyone. It is clear that capitalism is not doing any of these things any longer. In fact, many of its defenders are retreating from claiming that it is a good system and instead falling back on the claim that it is the only possible system—or, at least, the only possible system for a complex, technologically sophisticated society such as our own.

In other words, Capitalism is running out of ideas that keep the current social order while maintaining the impetus of historical changes that Capitalism has unleashed. The concentration of wealth means that the spread of ideas among the elite is restricted by the small numbers involved and their defensive attitude towards wealth retention. They do not want to rock the boat, yet they must fight off anyone who tries to climb aboard.

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Government & Big Banks Join Forces to Violently Crush Peaceful Protests

Barry Ritholz reposts an argument that Government & Big Banks Join Forces to Violently Crush Peaceful Protests is the manifestation of Fascism in the USA:

The definition of fascism used by Mussolini is the “merger of state and corporate power“. Government and the big banks are in a malignant, symbiotic relationship. And our economy now exhibits a merger of state and bank power.

This is a different definition from that given by Trotsky (see Fascism: What it is and how to fight it):

At the moment that the "normal" police and military resources of the bourgeois dictatorship, together with their parliamentary screens, no longer suffice to hold society in a state of equilibrium -- the turn of the fascist regime arrives. Through the fascist agency, capitalism sets in motion the masses of the crazed petty bourgeoisie and the bands of declassed and demoralized lumpenproletariat -- all the countless human beings whom finance capital itself has brought to desperation and frenzy.

The article reposted by Ritholtz indicates that the instruments of State oppression are still functioning to hold dissent in place by successfully crushing the Occupy movement.

Yet, as I argued in Proto-Fascism in the USA, Fascism could still arise if the Capitalist system fails the petite-bourgeoisie.

What is being described in this post is not Fascism, but merely the naked expression of state power in support of the Capitalist system. Fascism could still develop out of the Tea Party.

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The Unhappy Marriage of Capitalism and Conservatism

Barry Ritholtz's 10 New Year’s Eve Reads points to The Unhappy Marriage of Capitalism and Conservatism by Nancy Folbre who writes that:

The economic interests of capitalists (defined as those who earn most of their income from capital) are beginning to diverge significantly from the interests of social conservatives (defined as those who prefer traditional gender relations and oppose government efforts to promote racial and ethnic equality).

As recounted by Folbre, this has always been the case during the history of Capitalism. The social conservatives have always sought to defend their existing privileges gained through an earlier stage of Capitalism against those who have gained from economic changes. The political struggle has always been about the alignment of political power with economic reality.

Folbre lists three (3) areas where the conflict between conservatism and Capitalism has occurred:

1. One of the most beneficial consequences of a pattern of capitalist development shaped by political democracy was a growing demand for human capital that helped members of previously disempowered groups compete effectively for economic success and political leadership.
2. …the polarization of income itself reflects the evolution of a partly denationalized form of capitalism in which our largest companies create more jobs in other countries than at home and minimize their tax payments in overseas tax shelters.
3. …the role that the powerful banking sector played in the recession highlighted growing divisions within the business community.

I think Folbre misses the point that Capitalism is a dynamic system as opposed to slavery or Feudalism. By its very nature, Capitalism is always seeking new ways to make profits. Any Capitalist who becomes a conservative dooms themself.

It is this dynamic of Capitalism that has confounded Communists who followed the dictum that revolutions tend to occur when the political superstructure does not match the economic reality. The Communists had expected the revolutions to overthrow Capitalism, not sustain it as in the following crises:

• The growth in political power of the union movement through the rise of the Labour Parties in the late 19th and early 20th centuries;
• The extension of suffrage, in stages, to:
• All white men
• All white women
• All adults
• The creation of the welfare state as seen in 'A Conservative Case for the Welfare State'
• The Civil Right's Movement
• The Land Right's Movement
• The Women's Movement

All of these covulsions have been absorbed into the Capitalist system. The danger for the Capitalist system is when it is no longer willing to absorb these changes. Such changes that need to be absorbed are:

• Gay Marriage
• Refugee Rights
• Climate Change
• Third World Debt

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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.

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