Another Retreat in the Class War

Monday brought fresh news from the Class War Front. The stock market leaped forward nearly 500 points on news of another advance by capital. The president of the Securities Industry and Financial Markets Association – a spokesperson for big capital speculators – hailed the news: “For the first time in seven months, I can say they’ve done it right.”

What provoked this euphoria from markets and market players?

The Obama administration’s economic czar, Treasury Secretary Timothy Geithner, betrayed the majority standing on one side of the class divide and surrendered the government and the people’s resources to the banking industry. Of course Geithner disguised the massive betrayal as a necessary rescue of the financial industry, posturing the self-induced collapse of fictitious financial capital as the stumbling block for full recovery of the world economy.

Following the Bush administration and former Treasury Secretary Paulson, Geithner and Obama’s economic team locate the economic problem in the disposal of what, for lack of a better expression, economists have come to call “toxic assets”. While an odd choice of words, “toxic assets” does suggest that those responsible for creating them should be held responsible for eliminating them. But that would be logical and fair to the vast majority of the US citizens who had little to do with the financial mess. Instead, Geithner, dutiful to his corporate cronies, and enabled by a President either oblivious to the consequences or fully compliant, chose to socialize an enormous pile of crap created and unwanted by the private sector. The Geithner proposal would pull the virtually worthless paper residing in dusty corners of big financial corporations– untenable mortgages, securities constructed from these mortgages, and bets made on them - and place them back in the market place. As irresponsible as this may sound, Geithner would offer the big financial players bags of public funds to purchase this junk with the prospect of selling it at a later date for a profit. To reduce the risk to these players to next to nothing, the government would guarantee the loans secured for the purchase of this toxicity. As a result, those who would participate in this obscene plan would engage virtually no risk for the remote possibility of making a profit. Commentators agree that, at best, a private financial corporation participating in this scam would risk $7.00 for every $93.00 of public money. It’s no wonder that Wall Street and the financial sector have started their victory celebration. Cowboy capitalism is alive and well.

For details of this obscenity, one has only to turn to the writings of liberal economists Paul Krugman and James Galbraith. Their well-reasoned exposure of the Geithner deal is notable for its passionate and uncommon outrage at the plan’s audacity. Galbraith contends that there can be no other explanation for following the Geithner option other than political opportunism. The campaign contributions from the financial sector are simply too important to resist. The same could be said for the Administration and Senate’s tamping down of the outrage over the AIG bonuses. The good Senators are slinking away from answering the public anger and they’re doing it with the encouragement of Barack Obama.

The larger question is: When will this now one-sided class struggle be joined by forces equal to this challenge from capital? There should be no doubt that the outcome of the class war being waged mercilessly by capital will have consequences for working people that approach or surpass the damage from aggressive wars. Clearly there is a need for a movement on the scope of past anti-war mobilizations. Yet the organized labor movement has been unable to separate its cause from the rescue of capitalism, showing undeserved deference to the Obama economic team. Likewise, liberals have failed to find the energy to combat this economic assault on our future with the same fervor that they find for many of their single issues. Thus, the popular anger goes largely unorganized.

While this covert war on future living standards is masked by policy double-talk and technical jargon, a clear response is urgent: Geithner and his team must go!

Zoltan Zigedy

Contracts and Class

Contracts are the sacred glue that binds virtually all capitalist social, political and economic relations. Indeed, the contractual model stands as the basic ideological building block in virtually the entire edifice of social thought in bourgeois ideology. From Hobbes to Rawls, contracts are viewed as the basis for moral and legal legitimacy. Modern constitutions are taken to be social contracts between citizens and with their leaders. No idea is more central to the very existence of a market-based economy and its superstructure.

Thanks to the decline of class struggle unionism and its replacement – business unionism – the contract assumes a similar sacrosanct role in the relation between labor and capital. Where unions still exist, labor and management agree to a contract binding both parties to obligations that govern compensation, benefits, work rules and all other matters deemed important.

But like so much of capitalist mythology, the force of contracts is always trumped by the interests of the privileged and wealthy while sternly enforced against the weak and vulnerable.

Take, for example, the unionized auto workers. Their mutually agreed contracts with automakers have been challenged, attacked, and renegotiated persistently and aggressively for years. Their benefit packages, compensation and work rules have been assaulted by lawmakers, media pundits, and management. The contractual obligations to retirees have been sliced and diced through an onerous VEBA agreement followed by another demand to convert the employers’ obligations to virtually worthless stock. Despite a firm, consensual agreement, the autoworkers were extorted under the threat of plant closings and bankruptcy – moves that would have simply obliterated a contract thought to be the bedrock of labor/management relations. Of course these actions would benefit only management and shareholders. The same tactics stripped earlier contracts in the airline and steel industry. The workers’ contracts were firm and unbreakable until capital decide they weren’t.

Daily, the mouthpieces of big capital – the media and politicians – call for workers to forego management contractual obligations, in the interest of the economy, the company, the nation and their fellow citizens. No sacrifice – by workers – is too great to demonstrate patriotism and selflessness, in short, a greater good. Yet every worker knows that the mortgage, the car note, the credit cards, the school tuition – the obligations owed to capital - are sacrosanct, sealed by the holy bond of a contract.

Given this demonstrated hypocrisy, it should surprise no one that the AIG cabal and their ever helpful pals on Obama’s economic team – Geithner, Summers, et al – posture the obscene bonuses paid to AIG’s cowboy speculators as contractual obligations. We were told that denying bonuses to those who brought AIG –and the economy – to its knees would be akin to cracking the foundations of Western civilization. In this case, a contract is holy writ, to be worshipped with solemn reverence. This claim became challenged in the court of public opinion when management drug out the tired, risible argument that AIG’s derivative team was so indispensable that the managers’ exit would halt efforts to unwind the complex instruments that they foolishly contrived. Analogies abound: It’s like paying the thief a handsome bonus to tell us where he hid the money that he stole.

With the tortured explanation that these were retention bonuses, the public outrage increased. And this pathetic excuse evaporated when it was disclosed that many of the bonus recipients had already left AIG. How did they earn a retention bonus if they left? So much for the integrity of these sacred contracts.

But AIG did honor their insurance contracts (credit default swaps) with numerous firms like Goldman Sachs. In the spirit of the inviolability of contractual obligations, they paid out collateral obligations in full, preserving their high reputation and integrity with public funds obligingly supplied by Treasury Secretary Geithner, a protégée of former Goldman Sachs exec Robert Rubin.

In the face of public outrage, the rascals who looked away, aided and abetted, or encouraged the AIG fiasco turned on each other. Senator Dodd, chairman of the Senate Finance Committee, came in for harsh attack because he modified his amendment to the stimulus bill, weakening the restraints upon executive pay and bonuses. In the face of criticism, Dodd - dodging any personal responsibility in the time honored tradition of his class, the Senate and his father – quickly pointed his finger at the Treasury Secretary who, he alleges, told him to remove any containment of corporate remuneration.

Both Dodd and Geithner, throughout their careers, have been joined at the hip with the financial sector which they are charged with overseeing. Dodd has raised over $1.5 million for his Senatorial campaign from the securities industry over the last six years in addition to the $2.7 million it gave for his Presidential run. He was also the recipient of two questionable, favorable mortgages arranged by the former CEO of Countrywide Bank.

The public outrage at the AIG bonuses exceeds even the massive anger over the original Paulson stealth plan to bailout the banking industry. While it is both welcome and promising, we must not lose sight of the political hypocrisy enabling AIG arrogance. The overriding idea of obscene amounts of public funds dedicated to a second chance for a thoroughly corrupted discredited, and irresponsible financial sector while the working class struggles under growing unemployment, debt, foreclosures, and insecurity borders on the criminal. The urgency of the bank bailouts contrasted with the snail-like progress on the people’s agenda underscores the class bias of our policy makers and the compliant media. Two demands are urgent: Nationalize the banks! Out with Geithner and crew!
Zoltan Zigedy

Response to Davidson and Dr. Scotch

I received the following responses to The Nation "Tackles" Socialism. My comments follow:

Carl Davidson said...

I assure you, Zoltan, that both Ehrenreich and Fletcher are socialists. Unless you just want to use the term to mean what you pick for it.

Ehrenreich is a traditional Social-Democrat, rooted in DSA, with all its upsides and downsides.

Fletcher is part of the ML movement, although not of your trend. His groups views are readily available.

If you want to do polemics with them over socialism these days, it's quite relevant to do so. But instead of flippant dismissals, it would be better to examine the actual view they hold, and their organizations represent.

Otherwise, we just get more of the curious sectarianism your trend is often noted for.



Anonymous Anonymous said...

The French Revolution wasn't so bad.
Dr. Scotch

Carl Davidson may well be correct that Barbara Ehrenreich and Bill Fletcher, Jr. are, in their hearts, socialists. All the more reason to be critical of their The Nation contributions. The same could be said for Tariq Ali. He has certainly written frequently and militantly about imperialism and the evils of capitalism. But maybe my point was not as clear as I would like. Surely the opportunity afforded by the largest circulation liberal/left publication in the US conjoined with an economic catastrophe the likes of which none of us have seen in our lifetimes provides a unique opportunity to put forward a vision of socialism - not necessarily mine or Carl's - but some vision that might actually provoke some reader to consider or even advocate socialism.

Carl, do you think that anyone - say a young activist - would actually seek out socialists or socialist organizations after reading these articles? Do you think the commentaries inspired anyone to go to the library or the internet to find out more about socialism?

For generations, the non-Communist left has constructed models of socialism based primarily upon what they viewed as flawed with the Soviet Union or the Communist Party. The Soviet Union is gone and the Communist Party USA is little more than a liberal think tank. Today, A Communist or Socialist must tell people what they believe in and, hopefully, do it with some conviction. You're welcome to show my where you find this in The Nation pieces.

What is relevant here is not whether we engage in polemics on our various takes on socialism, but that, when given an opportunity, we make some kind of impassioned advocacy for some kind of socialism. We don't have to agree with other visions of socialism, Carl, but at least put 'em on the table!

Carl, you refer to their "actual views". Why should I have to research them? Why weren't they in the article?

As for the Anonymous Dr Scotch: Yes, the French Revolution wasn't bad. In fact, it was great, except for one small omission: It left out the sans coulottes - the property-less and those without influence or power. They did the fighting and dying, but with little material change in their miserable lives. That's why they rose again in 1848 and 1871. They are still trying to find a little justice after two centuries.

Zoltan Zigedy

The Nation "Tackles" Socialism

And now for the sixty-four thousand dollar question: What historical figure has been identified with socialism for the last century and a half? Yes, that’s right. Karl Marx! Bonus question: What has been the ideology of the movement for socialism in nearly the entire period? Right, again. Marxism!

You would never know this from reading the contributions in the current issue of the most popular, most influential publication on the US left, The Nation. In an issue headlined Reinventing Capitalism/Reimagining Socialism, The Nation editors call on “self-identified socialists” to discuss the prospects of socialism in the wake of a sinking world capitalist economy. To hedge their bets, the editors include an article by Joseph Stiglitz posing a strategy for saving capitalism from itself. I suppose we should applaud the magazine for raising a prospect that has long been absent from the pages of this journal that goes back almost to the founding of the First Workers’ International. Certainly, The Nation devoted much more attention to socialism in its first hundred years than they have in the last fifteen years – the era of capitalist triumphalism.

In the five articles featured in the March 23, 2009 issue, there are only two mentions of Marxism, including this derisive comment: “And we all know the joke about the Marxist economist who successfully predicted eleven out of the last three recessions.” Yes, I know that economist, too. But his or her confidence that capitalism periodically stumbles from its own internal logic strikes me as far more insightful than the correspondents who were caught completely unawares by the dimensions of the economic upheaval. So they dust-off their old socialist credentials and proffer musings on the prospects of socialism sans Marx – they re-imagine socialism.

The lead article by Barbara Ehrenreich and Bill Fletcher Jr. (Rising to the Occasion) is meant to “kick off a spirited dialogue”. One can imagine the Parisian Communards, Lenin, Mao, Fidel, or Hugo sitting in the rubble, in exile, on the Long March, in the Sierra Maestra, or in jail shouting: “Hey comrades, let’s kick off a spirited dialogue on socialism!” But, then, they were not twenty-first century US liberals.

Make no mistake about it; Barbara Ehrenreich and Bill Fletcher Jr. are good folks. Their dedication and service to democratic reforms and defense of the rights of working people is unmatched among progressives. But they ain’t socialists. They see no revolutionary potential in the current moment: “There was supposed to be a revolution, remember?” They can find nothing worthy of revolutionary expropriation: “In recent years, capitalism has become increasingly and almost mystically abstract” (What could “mystically abstract” possibly mean?).

Their vision is darkly pessimistic: “Can we see our way out of this and into a just, democratic…future? Let’s just put it right out on the table: we don’t.” If this were my view, I’d ask for a re-deal.

Instead of a vision of workers power, social ownership of the key economic sectors and an end to exploitation, Fletcher and Ehrenreich opt for “participatory democracy” and “solidarity” – two ideas that would draw approval across the political spectrum from soft liberals to raging anarchists. It would seem that after over two hundred years of suffering the whip of capitalism, the best answers the left can supply were inherited from the French Revolution.

Another contributor, Immanuel Wallerstein, postures a similar negative view. In the short run, Wallerstein advocates pressure on Obama and similar centrist or reform-minded politicians – a sane position, but hardly a step towards socialism. In the longer run, Wallerstein opines that “[s]ince no one really knows, practically from day to day, where the [economic] indicators will shift, no one can sensibly plan anything.” Again, it would be hard to imagine these words coming from the mouths of Marx, Lenin, Mao, Fidel, or Hugo.

“What can we do?” Wallerstein asks. “[W]e must be clear what the battle is about. It is the battle between the spirit of Davos… and the spirit of Porto Alegre. No lesser evil here. It’s one or the other.”

In the end, the left is advised to promote “intellectual clarity”, “experiment with all kinds of new structures…” and “encourage sober optimism”. I suppose these less than ambitious goals flow from the spirituality of Porto Alegre.

Writing from the perspective of environmentalism and climate change, Bill McKibben confesses he’s “not much of a socialist.” And he’s right. His legitimate environmental concerns lead him to claim that the moment for socialism has past since socialism dealt with the problem of growth. “The fuel for free-market fundamentalism and Marxism was fossil fuel, and we’re not going to have it.”, he adds. While I credit his argument for its absolute simplicity, I don’t think Marx or any of his followers ever claimed that the road to socialism was paved with fossil fuels. Nor does changing the consuming habits of people or lowering their growth expectations preclude putting an end to labor exploitation.

McKibben’s contribution shows not even a hint of class awareness. The people of McKibben’s world all seem to be solidly middle-class albeit infected with “hyper-individualism” and a lack of respect for “common good”. There is no mention here of the role of trans-national corporations in corrupting the environment or accelerating climate change. Rather, he scolds us all for our intemperance. I guess if you can’t recognize capitalism, you will surely see no need for socialism.

For Rebecca Solnit, the revolution has already begun! But, unfortunately it has little or nothing to do with socialism. In place of public ownership, universal social securities, effort-determined compensation, and a democratic workplace, Solnit gives us “gardens”, “child-care-coops”, “bicycle lanes”, and “farmers’ markets”. How revolutionary! Like McKibben, she lives in a world without massive unemployment, debt, inadequate or no health insurance, poverty, or insecurity – the world of the self-satisfied burgher. One wonders if she has offered this revolutionary program to unemployed autoworkers or Bolivian peasants. Surely they need bicycle lanes, too.

Dismissively, she cites the Sandinista revolution as the “last of its kind”. Like so many romantic – decidedly middle class – leftists, she shows a smug affinity for the Zapatistas, who remain a toothless icon of media-friendly opposition. Apparently, she has yet to hear of the revolutionary changes in Venezuela, Bolivia, Ecuador, and Paraguay, all of which aim for a socialist future.

Tariq Ali has. His contribution shows much respect for the question posed by The Nation editors as well as a measured historical perspective on the neo-liberal triumph and its current collapse. For Ali, the model that fills the void may well be the “radical social democracy that seeks to combine state, socialized, cooperative, small-scale private and individual enterprises” which he finds in the South American countries cited above. While Ali’s admiration (and defense) of the South American model is commendable, he is dismissive of the labor movement’s role in securing change. Instead, he opts for the Hispanic community as the agent for change in the US. But here he shares the thread of utopian detachment that runs through all of the contributions. There is little more than shared ethnic heritage that links our-Spanish speaking brothers and sisters with the inspiring example of Venezuela, Bolivia, etc. They are yet to be organized for effective progressive action, not to mention Chavez-inspired “twenty-first century socialism.” Besides, these South American movements would have made little progress towards their goals without the support of working people, peasants and many of their organizations. In the world of Saint Thomas More, God, fortuity, and reason will bring Utopia, but in our world, we will only get Jerusalem by organizing the unemployed and the unorganized, while bringing a commitment to socialism to the previously organized labor movement.

I confess to both anger and disappointment with The Nation initiative. Since the dawn of capitalism in its industrial incarnation, it has left thousands, then millions living on the edge, marginalized by its profit-churning logic that enriches its agents with unimaginable wealth. This is not or should not be news to anyone on the left. The persistent crises of capitalism – some “moderate”, some deep and profound – have devastated communities and families. Sure, capitalism has changed dramatically and resiliently, but whether it is dark, satanic mills or work cubicles or fast food restaurants, employees suffer the indignities and exploitation of the capitalist work place as well as the injustices of capitalist practices. These truths remain constant.

No doubt these truths strike different people, different strata, and different classes in different ways. A manual laborer in an Asian sweatshop, an autoworker in Detroit, and an academic or public intellectual may well feel the effects of capitalism in different ways, but all are capable of understanding the need for a system that provides decency, justice, and the absence of exploitation.

Since the dawn of industrial capitalism, the one solution that promises a complete and final break from capitalism is socialism. While there have been passionate debates over the contours of a socialist society, most advocates have offered homage to the pioneering work of Karl Marx, Frederick Engels and their adherents. Their legacy sustained and energized the movements for socialism, almost without exception. So why is it absent from The Nation’s discussion? With an economic crisis that offers opportunity unseen in most of our lifetimes, an opportunity to seize the initiative against a wounded capitalism, we deserve more than pessimism and bike lanes.
Zoltan Zigedy