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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#OccupyMayDay: Give Class War a Chance

Mickey Z writes that #OccupyMayDay: Give Class War a Chance by having a general strike on May Day (1 May 2012):

…the distinct lack of discomfort with which OWS participants discuss and encourage class warfare is downright revolutionary, and -- best of all -- we will see this attitude taken to the streets on May 1.

Mickey Z is correct to assert that wealth creation comes from human labour (i.e. the workers, the 99%), not from the owners (the 1%):

The 1% can mock the OWS crowd for (allegedly) not having an agenda, but they won't be laughing if the subways and buses don't run, bank tellers stay home, food deliveries halt, airlines are grounded, garbage piles up on the streets -- and the nanny calls in sick... for the next month.

…

Ultimately, the 1% can mock the OWS crowd all they want, but they won't be laughing as they watch stock prices and corporate profits take an abrupt nose-dive.

It is only when the proletariat realises its power through strikes that their consciousness can grow and begin to challenge the lies of the bourgeoisie.

The travails of the GFC have opened some people's eyes to this already. But we have a long way to go.

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Colombia: The end for guerrilla warfare?

In Colombia: The end for guerrilla warfare?, the conclusion is:

An era of guerrilla warfare in Latin America is coming to an end. Exactly how the end game will be played out remains to be seen.

The primary reason for the failure of guerrilla warfare in Colombia is that the insurrection is against a domestic government that has maintained the veneer of legitimacy since the national war of liberation.

Instead, the origin of the guerrilla warfare was in the rural defense of the small farmers against the land grab of the large landlords. The decline in the insurregency appears to be the result of the migration of the small farmers to the urban centres.

What began as a civil war between the Liberal and Conservative parties became more and more clearly a war of the large landowners against the small landowners, especially those led by Liberal Party and communist self-defence forces in what came to be called the “independent republic”.

This urbanization led to the radicalisation of the urban poor. However, this radicalisation gave rise to recruits to the insurgency. This surge ran up against the material constraints of arms, food, and safety in the rural hinterland as the depopulation continues. So the insurgency cannot retrest to the countryside to be a Maoist one.

This is further complicated by the cocaine production which fueled both the insurgency and the repression as the land became valuable for production of cocoa leaves. Control of land and refining is valuable enough to kill for.

And the insurgency lost the political battle as:

…the FARC was more politically isolated than it had ever been before, and the ruling class of the country was more united than ever before in its determination to defeat the FARC. The Pastrana government had won the political victory it sought at the beginning of the negotiations.

And the military counter-insurgency succeeded because of technological developments as well as:

The offensive against the FARC also included an international component with three major goals: reducing sympathy for the FARC among the broad left in other countries, eliminating safe havens for FARC operations outside of Colombia and reducing FARC income from cocaine trading.

The end game is seen as:

Although the FARC still leads thousands of armed fighters and has the financial resources to continue fighting, the decimation of its leadership combined with its political isolation has brought it to the point of no return. It may enter into a new peace process with the government of Juan Manuel Santos, although it has little to bargain with. On the other hand, if it does not, the continued offensive against it by the Colombian military could result in its complete disintegration as an organised force.

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Class War: Low Wages and Beggar Thy Neighbor

Yves Smith posts a video by Dr. Heiner Flassbeck (in German) about Class War: Low Wages and Beggar Thy Neighbor.

The interesting point raised by Dr. Flassbeck is that he blames the current European crisis on class warfare: the clash between workers and Capital.

He says that the manisfestation of this is that Germany manipulated the Euro for its own benefit by getting employers to collude with the unions to keep real wages down. This enabled Germany to keep inflation below the target set for the Euro of 2% pa. This allowed German firms to achieve an export miracle at the expense of domestic demand.

The root cause is the victory of Capital over Labour in Germany. The domestic demand has not kept up thereby allowing Germany to run a very current account surplus with other members of the Eurozone. So Greece is unable to pay off its debts by selling things to the Germans because the latter have less real money to consume things with.

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Rogoff: Is Modern Capitalism Sustainable?

Mark Thoma refers via Rogoff: Is Modern Capitalism Sustainable? to Is Modern Capitalism Sustainable?, by Ken Rogoff, Commentary, Project Syndicate.

Rogoff lists five (5) problems with Capitalism:

First, even the leading capitalist economies have failed to price public goods such as clean air and water effectively. … Second, along with great wealth, capitalism has produced extraordinary levels of inequality. … A third problem is the provision and distribution of medical care… Fourth, today’s capitalist systems vastly undervalue the welfare of unborn generations. … Financial crises are of course a fifth problem, perhaps the one that has provoked the most soul-searching of late. …

The first four (4) problems all relate how the market is not calibrated properly. The Capitalist Economist fervently believes that with the correct parameters (aka prices) that the market system will produce the most beneficial outcomes. A much simpler approach would be a law that is unflinchingly enforced to achieve the same result.

Only the fifth problem aligns with Marx's view that crises are endemic to Capitalism. You cannot have Capitalism without periodic crisis.

Rogoff's conclusion is:

Will capitalism be a victim of its own success in producing massive wealth? For now, as fashionable as the topic of capitalism’s demise might be, the possibility seems remote. Nevertheless, as pollution, financial instability, health problems, and inequality continue to grow, and as political systems remain paralyzed, capitalism’s future might not seem so secure in a few decades as it seems now.

As Marx wrote, the future of Capitalism depends on its gravedigger: the proletariat.

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Global business chiefs fear poverty could destroy capitalism

Simon Mann writes that Global business chiefs fear poverty could destroy capitalism.

ncome disparity, resource depletion and potentially cataclysmic climate change were recognised by chief executives in a series of conversations conducted by Harvard [University Business School] as among the potential ‘disrupters’ of global prosperity. The financial meltdown of 2008 and, now, the Occupy movement are clear manifestations of those fears.

“And we'd expect more,” one of the authors, Joseph Bower, told the Herald. “Because people really feel outraged.”

These quotes are from Capitalism at Risk: Rethinking the Role of Business.

Marx saw Capitalism's main problem as the periodic crises. We are lurching from the 2008 GFC into the 2011/12 Euro-crisis. And then there will be the Sino-crisis followed by yet another one. Crisis upon crisis with no end in sight.

Marx says that these crises are unavoidable as they are part of the make-up of Capitalism itself.

To avoid these crises, we need to move to a better economic system: Socialism followed by Communism.

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Preparing for the breakthrough/calamity

Seth Godin says to stop Preparing for the breakthrough/calamity which never occurs, only that:

Products and services succeed one person at a time, as the word slowly spreads. Customers defect one person at a time, as hearts are broken and people are disappointed. Doors open, sure, but not all at once. One at a time.

Leon Trotsky writes, in his History of the Russian Revolution, that, during the build-up to the October Revolution:

At the same time, in the most faraway garrisons and the most remote parts of the front, the soldiers were speaking more and more boldly in the language of Bolshevikism, often enough never guessing it. The Bolsheviks in the regiments were only single individuals, but the Bolshevik slogans were penetrating deeper and deeper. They seemed to be coming up spontaneously in all parts of the country. (p.307)

Emphasis Mine

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Chris Dillow: The Importance of Class

Mark Thoma refers via Chris Dillow: The Importance of Class to Class, power & ideology, Stumbling and Mumbling:

“Nothing makes sense without class” says Owen Jones. He’s right, if we understand “class” in its Marxist sense.

An objective definition of class is given:

To Marx - though the idea was implicit in other classical economists such as Ricardo - class was not about lifestyle, but about one’s relationship to the economy. If your income comes from wages, you’re working class. If it comes from capital, you’re a capitalist.

I believe Marx defined the Proletariat as those can only earn their sustenance by selling their labour power. This allows the inclusion of the unemployed (or “reserve industrial army”) as part of the Proletariat while excluding the criminal elements (“Lumpenproletariat”). Although some Capitalists are wage earners, their major income comes from the return on Capital either through dividends or capital gains.

This objective definition is contrasted with a subjective definition of Middle Class:

You might reply that, by this criterion, we are almost all working class now. True. Even people who think of themselves as “middle class” are in many cases only a P45 away from poverty. They are objectively working class even if they are not subjectively so.

Dillow goes on to describe the distribution of power within a Capitalist economy:

What’s more, class in this sense is correlated with power: capitalists have it, workers don‘t*. This is because economic power flows to scarce resources and capital is scarcer than labor.

This is probably an over-simplification. The workers do have the power—mainly through the strike. The withdrawal of labour power inhibits the reproduction of capital. This is the reason that the Capitalist has to so restrict or even outlaw strikes. Collective bargaining is just too powerful to be allowed to be unchecked by the ruling class. It has the potential to bring the Capitalist order.

Dillow asks the question about the invisibility of class:

This raises the question. If class is so central to an understanding of the economy, why is it so little discussed?

The answer lies in another of Marx’s insights - that false consciousness prevents people from seeing how capitalist power operates. In this sense, the cognitive biases research program throws up some new theories that vindicate Marx. For example:

• the illusion of control causes people to over-estimate the chances of them escaping the working class through their own efforts, and so under-estimate the importance of collective class action .
• the in-group heterogeneity bias (which is the flipside of the out-group homogeneity bias) causes people in similar economic positions to exaggerate the differences between themselves and so fail to see their common class position.
• the just world effect causes people to think that victims are to blame for their fate - so, for example, the poor are thought to be stupid and feckless even if the cause of their poverty lies elsewhere.
• the optimism bias leads people to think they will succeed if only they work hard enough, and so blinds them to the possibility that their class position will prevent them getting the full fruits of their labour.

Dillow completely misses the importance of the ideological and coercive superstructures that exist to prevent workers from overcoming their exploitation. The ideological superstructure includes:

• Religion that tells workers that their reward lies in the afterlife and that God gives wealth to the rich because they are more deserving;
• Educational institutions that inculturate obedience and compliance;
• The Mass Media who hides protests by workers or casts them in a bad light.

The coercive superstructure includes the police (secret and not so-secret), criminal justice system.

Dillow concludes with:

And here, I part company with Owen. We cannot have a reasonable debate about class, because cognitive biases such as these are ubiquitous. Successful power structures persist in large part because the way in which power is exercised is hidden from us. The importance of class and the lack of discussion of it are two sides of the same fact.

The Capitalist system cannot admit that class exists unless the Capitalists are threatened with a tax increase. Then it is class warfare. As Warren Buffett says, “It is class warfare and my class is winning.”

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Inside the Trillion-Dollar Underground Economy Keeping Many Americans (Barely) Afloat in Desperate Times

Yves Smith refers to Inside the Trillion-Dollar Underground Economy Keeping Many Americans (Barely) Afloat in Desperate Times by Sarah Jaffe. This part of the US economy is estimated to be growing at 5% p.a..

Millions have dropped out of the job hunt and are trying to find other ways to sustain their families.

That's where the underground economy comes in.…—in 2009, economics professor Friedrich Schneider estimated that it was nearly 8 percent of the US's GDP, somewhere around $1 trillion.…Schneider doesn’t include illegal activities in his count-- he studies legal production of goods and services that are outside of tax and labor laws. And that shadow economy is growing as regular jobs continue to be hard to come by—Schneider estimated 5 percent in '09 alone.

This underground activity is still seen as Capitalist in that the same mode of production is used: people with money hire other people to work for them.

…Lisa Dodson stressed the way communities came together to help one another through tough times, often through off-the-books economic activity, in her book The Moral Underground: How Ordinary Americans Subvert an Unfair Economy.

In one passage, she tells the story of arriving in a small-town farmer's market in Maine, only to overhear a discussion between locals on “neighbors and the market erosion of common fairness.” She wrote:

Just then a middle-aged woman, who had been talking to friends, suddenly turned around to face other shoppers and asked, 'What’s happening to us? Why doesn’t the government do something?' A local farmer, sorting vegetables nearby, responded immediately, 'The government is the same as the oil companies. There’s no difference. We can’t wait for them to do anything.' A young mom holding a baby as she stood in line said, 'So what do we do?' There was no single response, but they were looking at each other to find it.

So, the US workers have a learned helplessness from the Capitalist system. They have been trained to look to the Capitalist class for initiatives. They do not realise that they the power in their hands. That is where wealth comes from—the hands of the workers.

No wonder the Capitalist ideologues ridicule the Labour Theory of Value. They realise that the status quo depends on the workers being aware of their considerable power.

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Why a Working-Class Revolt Might Not Be Unthinkable

Mark Thoma argues Why a Working-Class Revolt Might Not Be Unthinkable.

His conclusion is that:

We need a serious discussion of this issue, followed by changes that shift political power toward the working class. But who will start the conversation? Congress has no interest in doing so; things are quite lucrative as they are. Unions used to have a voice, but they have been all but eliminated as a political force. The press could serve as the gatekeeper, but too many news outlets are controlled by the very interests that the press needs to confront. Presidential leadership could make a difference, but this president does not seem inclined to take a strong stand on behalf of the working class despite the surprising boldness of his job-creation speech.

Another option is that the working class will say enough is enough and demand change. There was a time when I would have scoffed at the idea of a mass revolt against entrenched political interests and the incivility that comes with it. We aren’t there yet – there’s still time for change – but the signs of unrest are growing, and if we continue along a two-tiered path that ignores the needs of such a large proportion of society, it can no longer be ruled out.

Emphasis Mine

For a working-class revolt to occur, there has to be a self-consciousness within the the working class itself. That is, the working class has to be aware that it constitutes a class opposed to the capitalist class. The working class has to place itself within a historical context of a class struggle.

I do see any widespread awareness of the class struggle. The consciousness that exists is mainly based on racism, sexism, xenophobia, and homophobia. These are all devices that preclude the development of a true class consciousness.

I fear that the current economic distress will give rise to fascism instead and this will further consolidate the rule of the Capitalists.

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