Data on US profits for the second quarter of this year are well worth studying, not only for what they say about the health of the corporate sector, but also for what they reveal about the structure of our economic system and the priorities of our policy makers.
Commerce Department figures show that after-tax profits rose 3.9% from the first quarter and a staggering 26.5% from the same quarter in 2009. This year-to-year percentage growth is the highest ever recorded by the Commerce Department without factoring for inflation. (The figure is even more impressive given that virtually none of the growth is due to inflation over the last year!)
Perhaps even more telling is the percentage of national income accounted for by profits. Well over 9% of national income in the second quarter of 2010 counted as profits, the 3rd highest portion since 1947. Interestingly, the percentage of national income was only marginally higher in two quarters of 2006 when the unemployment rate was 4.6% at the peak of the last economic expansion.
Analyzing the data, The Wall Street Journal (10-4-10) concluded that those corporations making up the Standard and Poor’s top 500 corporations – the core of monopoly capital – actually grew by 38%, returning $189 billion or 15.6% of all after-tax profit.
WSJ analysts underline the profit trends by noting that profits are up 10% over 2008 though revenues are down 6%. Monopoly corporations now make 8.4 cents on every dollar of revenue, when they made only 7 cents on every dollar in 2008.
The Winners’ Circle
For corporations, the numbers are spectacular. They indicate a complete recovery of the profit momentum lost in 2008 and 2009. Since the early 1980’s, after-tax profits - as a percentage of total national income - have marched upward and onward, indicating that more of the wealth created in the US has been distributed to the corporate sector. At the beginning of the 1980’s, less than 5% of national income found its way to corporations as profits. Today, that percentage appropriated by corporations, especially monopoly corporations, has increased to nearly 10%.
Several interrelated factors have contributed to this shift of wealth to corporations from the rest of us.
First, the rate of exploitation – the relation between the share of wealth appropriated by the ownership class and the share left to the workers - has increased dramatically. Labor’s bargaining power has diminished with the decline of both union density and militancy. Hourly wages in the US have been stagnant or declining throughout most of the last thirty years while productivity has increased consistently. The average hourly wage (adjusted for inflation) for production and non-supervisory employees has hardly budged since 1978. Indeed, nearly two-thirds of ALL workers average hourly wages have stagnated since 1978. At the same time, benefits have been cut, shifted or eliminated for most workers. Given the growth of the national income in this period, it follows that more of society’s wealth is available to the corporate sector, its managers, investors, and parasitic minions.
Secondly, the growing significance of financial instruments and the financial sector has prodded corporate profits to new heights. With the stagnation of mass purchasing power brought on by rapacious exploitation, the financial sector has established borrowed money as the vehicle for improved living standards for most US citizens, given that capitalists have the money and the rest of us do not. Consumer debt – mortgages, credit cards, student loans, home equity loans, etc. – has replaced wages as the means to a better life for the vast majority of those outside of the ownership class. Consequently, more and more of corporate profits were represented by deferred, projected, or even hypothetical wealth – the wealth that would be accumulated when all debt is eventually cleared. The financial sector went even further and through the creation of financial exotica (instruments derived from the real-world contracting of debt) claimed further profits from the buying and selling of these artificial creatures. Of course it was the collapse of this debt house-of-cards that brought the world economy to its knees in 2008 and 2009. And yet the share of total corporate profit attributable to the financial sector remains over 40% despite this destruction of deferred, projected, and hypothetical profit.
Thirdly, the actions of policymakers – lawmakers of both parties and their technocratic vassals – have aided and abetted the corporate drive for profits. By privatizing and commodifying many public assets, they have widened the arena of profit taking. By turning a blind eye to corporate migration to low-wage labor markets, they have pressured wages to the level of the lowest competitive nation. And through removing socially responsible restrictions on corporate activity, they have allowed corporations to escape the costs of compliance, even at enormous social costs born by the majority.
The creation of public-private partnerships by lawmakers and enthusiastic administrators has transferred enterprise risks to the public while subsidizing private profit taking. Likewise, tax policies have shifted to remove nearly all burdens from corporations. Conversely, policymakers have weakly submitted to an extortionate con game of credits and infrastructure subsidies to keep old businesses or attract new plants, warehouses, or other private investors. Local, state and regional authorities are caught in a vicious competitive spiral of ever more generous bids to retain or attain a business. The game ends when the last competitor falls exhausted. And often the winner lives to regret the enormous costs of success.
And, of course, the government has embarked on a massive and unprecedented bailout of financial institutions and other major industries over the last two years, a bailout that brought these corporations from their knees to new heights of profitability. Likewise, the widely heralded stimulus program channeled vast sums to private firms – unlike the public works programs of the New Deal – further propping up profits with little impact upon employment.
These three processes – intense exploitation of labor, the dominant role of the financial sector and the subservience of policy to the interests of capital – combine to explain the explosive growth of that share of US national income flowing to corporate coffers. They also explain the cracking of the foundations of our economy over the last few years.
Conjuring Consensus
The explosive growth of after-tax profits as a share of national income over the last three decades was hardly a secret; it was not a closely held conspiratorial plot; nor were the events and policies that enabled this development out of sight of the public. Nonetheless, the corporate onslaught met feeble resistance.
Thanks to a corporate-friendly media, a compliant punditry, and a public diverted by entertainments besting the most elaborate Roman circus, the profit gouging agenda became the widely accepted road to general prosperity.
Sure, the early Reaganite slogan of “trickle down” growth – the notion that the success of the wealthy would seep down into the lower classes – was met with significant skepticism, even derision. But by the time of the Clinton administration, this idea was deeply embedded in mass consciousness. Captured by the more colorful metaphor that “a rising tide lifts all boats,” the idea that the success of the most favored, the most advantaged, would bring a general rise of social good planted deep roots in the public psyche. For most US citizens, it became an obvious truth that corporate success - growth, increasing profits, and stock appreciation - led to employment and rising living standards. We might express this “truth” with the simple formula: corporate profits→growth→jobs→general welfare.
It was this thinking that bolstered the notion in the labor movement that workers should support “their” corporations – US-based corporations – against “foreign” corporations, despite the fact that the modern monopoly corporation knows no borders. Similarly, people came to believe that government should guarantee the health and profitability of their employers in order to secure and create jobs and, in due course, generate a rising standard of living for employees. In turn, if profitability is accepted as the sole, decisive factor in social progress, then employee concessions often become a necessary evil that smooths the road to further progress.
The triumph of the sovereignty of profits left little room for alternative thinking that might cast corporate profits in a different light. This identification of profits and general prosperity smothered considerations of public ownership and the operation of socially beneficial enterprises, redistributive policies, democratic governance of corporate activity, or even an open discussion of the biblical notion of a “fair profit.”
The Chain is Broken
Despite the brutal economic facts of the last decade, few have shown the vision or courage to admit that the key links between profits and prosperity have been shattered. Economists acknowledge that the upturn after the recession of 2001 was decidedly a “jobless recovery,” a recovery with little to offer the majority of working people other than more debt. Moreover, the profit recovery since the 2009 economic nadir has accompanied a stubborn, unmoving near-depression level of unemployment. The volcanic rise in profits (206% for the S&P 500 in the last quarter of 2009 against the same quarter in 2008) stands in sharp contrast to an equally dramatic change in the misery indices: declining incomes, greater inequality, rising poverty rates.
Even those deafened by the constant media babble or blinded by political flimflam should now see through the humbuggery of placing human advancement in the hands of profiteers. The old argument that corporate avarice, through the unbiased operation of the market, will benefit us all must surely be retired.
Economists concede that the next decade - called by some, a "lost decade" - promises, at best, a feeble recovery with likely persistent unemployment, greater impoverishment, a retreat of social securities, and ominous uncertainties for most outside of the ownership class. Thus, the first two decades of the twenty-first century will have featured a decided retreat from the prosperity promised by a profit-driven market economy. Many, if not most of the people will have experienced the better part of their adult life in the shadow of these tribulations. The hopeful notion that the next generation will do better is severely threatened, maybe shattered. Indeed, it is now apparent that few boats are lifted with a rising tide driven by profits.
The responsibility for exposing the failure of profit-centric economic policy falls squarely on the US left. While the US left is small and with a narrow circle of influence, it alone can begin to project and popularize an alternative economy that reduces or eliminates the decisive role of profits. It alone can offer a road apart from the path paved by corporate self-interest.
Some falsely counter pose organizing and agitating for a just, democratic alternative economy – to my mind, socialism – with political work on the margins of mainstream politics. For decades, this argument has surfaced time and again with every election cycle or legislative session. The struggle for socialism, the argument goes, is distant and difficult, while we – the left - might have an impact on the immediate issues and options at play in the two-party charade. This is, I believe, a dangerous brew of egomania and complacency. The reality is that the left has neither the bucks nor the bodies to shift the balance in the big show (nor is engagement welcome, except at the price of any left identity). And when left engagement does threaten to upset the political trajectory (for example, the Nader campaigns), these same “soft” left advocates roundly condemn the effort.
But in the end, it is possible to do both: one can, if one likes, participate energetically in the big game – primaries, legislative lobbies, etc. – with the hope of moving the ball incrementally forward. And one must fervently engage our foes on every level, whether it be in the neighborhood or around individual issues. At the same time, one can and must organize and agitate for an alternative to the profit-centric dogma. Without a determined effort to spark and fan the embers of extraordinary, fundamental change, we are doomed to see our future sink in the face of corporate power and greed.
Zoltan zigedy
zoltanzigedy@gmail.com
Sunday, October 31, 2010
Tuesday, October 19, 2010
A Prize or a Bad Joke?
Many see the Nobel Prize as the Super Bowl of intellectual life. But more and more, it appears to be like another championship belt in the World Wrestling Federation. Where awarding the “Peace” prize to the Commander-in-Chief of the world’s most war-mongering power tarnished the award, the recently awarded prize for economics brings the contest down to the level of American Idol.
“Economic science,” as its practitioners refer to it, has moved in two directions at once: further away from the reality of economic life and closer to self-sustained scholastic exercises understood and appreciated by the few who work in those same close quarters. Yet never does it travel too far from the ranch of apologia for the holy scriptures of capitalism.
Capitalist triumphalism – the view that all deep questions about the fundamentals of economic structures and activity have been settled – dominates and informs recent academic research in the field. If one suspects a parallel with the religiously driven dogmas of Ptolemaic cosmology, it is there to be found. The world of modern academic economists assumes, with no need to prove it, that economic activity is and can only be understood with the basic units of markets, individual actors and their sets of interests, acquisitive motives, and private ownership. This is the game and the only game. Outsiders – Marxists and renegades from economic scholasticism – are not allowed to play, since they fail to abide by the rules.
But sometimes reality intercedes with brute economic events that challenge this smugness. As the often-brilliant John Strachey wrote in 1935 during the midst of the Great Depression:
Today, we are in the throes of a similar crisis and economists are similarly fumbling for explanations and solutions.
In the spotlight of today’s crisis is the seeming intractability of extremely high unemployment, a problem even more embarrassing to capitalist apologists in light of record-setting profits.
Thus, many, even far outside of the academic world, expectantly turned with great interest to the announcement that three economists would share the $1.5 million Nobel Prize for purportedly insightful work on unemployment. Peter Diamond, Dale Mortensen, and Christopher Pissarides won the 2010 prize for their “groundbreaking ideas that help explain why unemployment remains stubbornly high in the US and other developing countries,” as hailed by The Wall Street Journal.
Sadly, any such expectations would be quickly shattered. The core problem addressed by the three scholars is not the unemployment of the moment, but the relatively high unemployment associated with the European economies of the 1980s and 1990s. At that time, France, Germany and other advanced economies enjoyed strong growth, rising living standards, viable social welfare benefits, but relatively high unemployment – high relative to the theoretical fundamentals of economic dogma. Conventional thinking dictated that growth and rising standards should motivate Europe’s unemployed to seek the available jobs, but instead many chose to obstinately accept the benefits of the social welfare system while settling for a measure of leisure in an abundant society. Essentially, they were redundant, but without courting starvation, some choosing to write poems or backpack through Europe like the sons and daughters of the idle rich. In the eyes of those benefiting from the imposition of strict discipline upon labor, the unemployed were not victims, but outlaws.
Not only did this violate the logic of market forces, but it also challenged the culture of the post-feudal work ethic as explained so well by Max Weber. Since jobs were available, economists - like the three laureates - took on the task of explaining this phenomenon and thus providing policy tools to restore order to economic orthodoxy. The intellectual contributions of the three came to be called “search theory” – an explanation of how the buyers and sellers of labor power can fail to match up. In other words, they sought to account for why workers were not automatically and always herded into jobs despite the assumption that work was necessary to survive. They postulated that “frictions” – inhibiting factors – allowed for jobs to be unfilled while workers were idle. Their “frictions” were hardly novel or earthshaking: “tough” labor regulation restricting firings, “generous” unemployment benefits, inadequate or inappropriate skill sets, and geographical distance between jobs and workers, for example.
It should not escape notice that none of these “frictions” touch on the fundamental friction between workers and employers, namely, the fight for the distribution of the economic surplus. None of these “frictions” address the kind of employer-friendly unemployment that pressures workers into pay cuts and concessions or increases the rate of exploitation. To state the obvious, isn’t it possible that workers do not take available jobs because the available jobs simply do not pay enough? Is this not a street-corner answer to “search theory”?
But these are answers to different questions, questions of little interest to academics accustomed to seeing employees as numbers in calculations or variables in complex equations. Moreover, workers or their organizations do not fund academic research or make generous awards to economists.
Does the Nobel-award-winning research help us understand or overcome the current crisis of unemployment as The Wall Street Journal proclaims?
No, not at all. It is irrelevant and, should it influence policy, potentially disastrous. The current tragic unemployment rate is the result of two years of uneven class war over the carcass of a severely wounded economy. Unemployment is the casualty count of the working class. Profits are the war booty of the employers. Government and its policy makers have sided decisively with the profit-seekers.
Unlike the period in Europe studied by the three economists, there are far too few jobs available today. (The Wall Street Journal in its article hailing the awarding of the prize provides a deceptive chart that shows a growth in available jobs since the worst moment of 2009, a growth that does not even account for those newly entering the job market.) The unfavorably geographical distribution of jobs today is not a matter of leaving home for another city or state, but leaving for an entirely different time zone! Witness the thousands who travel overnight to attend job fairs or apply for a few dozen jobs. The mounting foreclosures, the explosion of food stamp applications, and the growth of unclaimed medical prescriptions hardly point to “generous” unemployment benefits offering a cushy life. And of course there are no “tough” job regulations that restrained the cruel, massive layoffs of the last two years.
At its core, “search theory” finds no fault with the reigning economic system. It identifies no “friction” between the needs of people and the relentless drive for profit. It is blind to a decade of slow or non-existent job growth coupled with growing concentration of wealth and the quickening rise of after-tax profits as a portion of national income. “Search theory” dares not search in this territory.
Instead, this “groundbreaking” theory seeks to motivate the unemployed to try harder, move to low wage areas or retrain for subsistence jobs. It justifies the limiting of unemployment benefits. For all its theoretical sophistication, “search theory” is simply the latest version of the carrot and the stick – in today’s world, a shriveled carrot and a heavy stick.
Zoltan Zigedy
zoltanzigedy@gmail.com
“Economic science,” as its practitioners refer to it, has moved in two directions at once: further away from the reality of economic life and closer to self-sustained scholastic exercises understood and appreciated by the few who work in those same close quarters. Yet never does it travel too far from the ranch of apologia for the holy scriptures of capitalism.
Capitalist triumphalism – the view that all deep questions about the fundamentals of economic structures and activity have been settled – dominates and informs recent academic research in the field. If one suspects a parallel with the religiously driven dogmas of Ptolemaic cosmology, it is there to be found. The world of modern academic economists assumes, with no need to prove it, that economic activity is and can only be understood with the basic units of markets, individual actors and their sets of interests, acquisitive motives, and private ownership. This is the game and the only game. Outsiders – Marxists and renegades from economic scholasticism – are not allowed to play, since they fail to abide by the rules.
But sometimes reality intercedes with brute economic events that challenge this smugness. As the often-brilliant John Strachey wrote in 1935 during the midst of the Great Depression:
The capitalist world… has its experts, its economists. The phenomena of crisis lie, however, outside the scope of their science… They have evolved a science of economics which seems to explain the exact workings of the capitalist system, and (incidentally) justifies those workings in every respect. There is only one difficulty. The system periodically refuses to work… (The Nature of Capitalist Crisis, p.8)
Today, we are in the throes of a similar crisis and economists are similarly fumbling for explanations and solutions.
In the spotlight of today’s crisis is the seeming intractability of extremely high unemployment, a problem even more embarrassing to capitalist apologists in light of record-setting profits.
Thus, many, even far outside of the academic world, expectantly turned with great interest to the announcement that three economists would share the $1.5 million Nobel Prize for purportedly insightful work on unemployment. Peter Diamond, Dale Mortensen, and Christopher Pissarides won the 2010 prize for their “groundbreaking ideas that help explain why unemployment remains stubbornly high in the US and other developing countries,” as hailed by The Wall Street Journal.
Sadly, any such expectations would be quickly shattered. The core problem addressed by the three scholars is not the unemployment of the moment, but the relatively high unemployment associated with the European economies of the 1980s and 1990s. At that time, France, Germany and other advanced economies enjoyed strong growth, rising living standards, viable social welfare benefits, but relatively high unemployment – high relative to the theoretical fundamentals of economic dogma. Conventional thinking dictated that growth and rising standards should motivate Europe’s unemployed to seek the available jobs, but instead many chose to obstinately accept the benefits of the social welfare system while settling for a measure of leisure in an abundant society. Essentially, they were redundant, but without courting starvation, some choosing to write poems or backpack through Europe like the sons and daughters of the idle rich. In the eyes of those benefiting from the imposition of strict discipline upon labor, the unemployed were not victims, but outlaws.
Not only did this violate the logic of market forces, but it also challenged the culture of the post-feudal work ethic as explained so well by Max Weber. Since jobs were available, economists - like the three laureates - took on the task of explaining this phenomenon and thus providing policy tools to restore order to economic orthodoxy. The intellectual contributions of the three came to be called “search theory” – an explanation of how the buyers and sellers of labor power can fail to match up. In other words, they sought to account for why workers were not automatically and always herded into jobs despite the assumption that work was necessary to survive. They postulated that “frictions” – inhibiting factors – allowed for jobs to be unfilled while workers were idle. Their “frictions” were hardly novel or earthshaking: “tough” labor regulation restricting firings, “generous” unemployment benefits, inadequate or inappropriate skill sets, and geographical distance between jobs and workers, for example.
It should not escape notice that none of these “frictions” touch on the fundamental friction between workers and employers, namely, the fight for the distribution of the economic surplus. None of these “frictions” address the kind of employer-friendly unemployment that pressures workers into pay cuts and concessions or increases the rate of exploitation. To state the obvious, isn’t it possible that workers do not take available jobs because the available jobs simply do not pay enough? Is this not a street-corner answer to “search theory”?
But these are answers to different questions, questions of little interest to academics accustomed to seeing employees as numbers in calculations or variables in complex equations. Moreover, workers or their organizations do not fund academic research or make generous awards to economists.
Does the Nobel-award-winning research help us understand or overcome the current crisis of unemployment as The Wall Street Journal proclaims?
No, not at all. It is irrelevant and, should it influence policy, potentially disastrous. The current tragic unemployment rate is the result of two years of uneven class war over the carcass of a severely wounded economy. Unemployment is the casualty count of the working class. Profits are the war booty of the employers. Government and its policy makers have sided decisively with the profit-seekers.
Unlike the period in Europe studied by the three economists, there are far too few jobs available today. (The Wall Street Journal in its article hailing the awarding of the prize provides a deceptive chart that shows a growth in available jobs since the worst moment of 2009, a growth that does not even account for those newly entering the job market.) The unfavorably geographical distribution of jobs today is not a matter of leaving home for another city or state, but leaving for an entirely different time zone! Witness the thousands who travel overnight to attend job fairs or apply for a few dozen jobs. The mounting foreclosures, the explosion of food stamp applications, and the growth of unclaimed medical prescriptions hardly point to “generous” unemployment benefits offering a cushy life. And of course there are no “tough” job regulations that restrained the cruel, massive layoffs of the last two years.
At its core, “search theory” finds no fault with the reigning economic system. It identifies no “friction” between the needs of people and the relentless drive for profit. It is blind to a decade of slow or non-existent job growth coupled with growing concentration of wealth and the quickening rise of after-tax profits as a portion of national income. “Search theory” dares not search in this territory.
Instead, this “groundbreaking” theory seeks to motivate the unemployed to try harder, move to low wage areas or retrain for subsistence jobs. It justifies the limiting of unemployment benefits. For all its theoretical sophistication, “search theory” is simply the latest version of the carrot and the stick – in today’s world, a shriveled carrot and a heavy stick.
Zoltan Zigedy
zoltanzigedy@gmail.com
Wednesday, October 6, 2010
Had Enough?
Frustration with the Obama administration has reached a new level with only 45% of US citizens polled approving of the job that the administration is doing and 39% voicing approval of the administration’s policies on the economy (see Wall Street Journal/NBC telephone polls, 9-7-10). The overall mood is pessimistic: 65% of those polled believe that the US is in a period of decline; 59% of the polled population thinks that the country will be the same or worse in five years.
Only 30% of poll participants believe that the country is headed in the right direction. This is a negative assessment not seen since the tail end of the Bush administration.
In a normal election cycle – the give-and-take of the two Parties – this would signal enthusiasm for the party out of power: the Republican Party. However, among Republicans, only 30% have a positive view of their own party, the lowest number recorded since before 1990.
These numbers express a smoldering anger about where we have arrived since the 2008 election and where we are heading.
The only major new force on the political scene reflecting this angry mood is the Tea-Party phenomenon–-- a faux populist movement backed by extreme-right money and fueled by the ultra-right media.
Facing an interim election in November, all of the healthy forces in US political life are scrambling to establish a posture towards these elections. Bitterness, backbiting, and confusion abound. The Internet is abuzz with the anger of scorned liberals who feel betrayed by two years of, at best ineffectual, at worst, malign administration leadership. As the Administration positions itself for the coming months, it reflects this mood by jettisoning three of its leading economic lights: Peter Orszag, Christina Romer and Lawrence Summers. The exit of Rahm Emmanuel, Obama’s chief of staff, has passed the rumor level and is now a fact, as is likely the departure of many other prominent members of the administration. Despite their fealty to the corporate financial sector, Obama has suggested that he is seeking economic advisors that are more comfortable communicating with the corporate world.
Some in liberal circles cling to lingering hopes that the “real” Obama will soon be revealed. With all the enthusiasm of a revival meeting, they are awaiting a political rapture – a fulfillment of the “change” and “hope” themes of the election campaign. But my angry local letter carrier sees it differently. She says that people mistook “hope” for “dope,” a succinct declaration of her own frustrations.
Indeed, all signs point to a reshuffling of the administration in an even more conciliatory-to-the-right, pro-business direction. As the Wall Street Journal reports, “Part of the president’s task will be to ‘reset’ relations with the business community, not only to ease working in a divided Washington but also to smooth his path to re-election” (9-23-10). There is little room in this scenario for the revelation of a progressive, pro-working-class agenda. The WSJ cites senior White House officials as saying, “the president could concentrate on finding common ground on deficit reduction, education and immigration while guarding his achievements, from health care to student lending to financial regulation.”
The Political Crisis
All polls agree that approval ratings for the President have sunk substantially since his inauguration. And approval ratings for Congress hover at an embarrassing low level, a level that has been maintained since a time deep into the Bush Administration. Polls also show that both Parties are generally unpopular. Whether one bought the Obama message or not, it should have been apparent that his administration was meant to change the national mood of dissatisfaction and the international scorn brought on by the previous administration. They have failed in that task. And the political crisis continues.
The distance between the legislative actions of elected officials and the needs and desires of the electorate has never been greater. And the Obama Administration suffers inordinately from this distance because they promised so much in the presidential campaign. This distance was shown most recently with the issue of allowing the Bush tax cuts for the wealthy to expire. Initially, Obama and the Democratic leadership proposed maintaining the cuts for all but the very wealthy, a move that would have brought a measure of fairness to tax policy and generated $700 billion over 10 years in extra Federal revenue. The Republicans mounted a hysterical and demagogic campaign based on the inflammatory charge of tax increases. When opinion polls showed that the tax increases for the rich were popular (mid-September, CBS/New York Times - 53-38%), especially in key “battleground” states, the Republicans backed down. But, immediately, 31 Democratic Representatives voiced their public opposition to taxing the rich. Consequently any decision on the Bush tax cuts will be deferred until after the November elections. Every signal points to Congress maintaining the Bush tax policies for another two years.
Why is there such distance between popular issues and legislative action?
Many pundits employ vague, cloudy concepts like “gridlock” or blame a new-found intransigence or incivility. But the truth is simpler, but deeper: Elected officials are, for the most part, owned by monopoly capital. To a very great extent, the course of political success is greased with money and the opportunity to forge a successful and long political career is dependent upon corporate friendliness. Of course this is not new, but it has reached a new level of prevalence, demonstrating strikingly that the state – its structures and personnel – is dominated by and serves the interests of monopoly capital; that is, our reigning socio-economic system is state-monopoly capital.
Thus, there is no exit, without some radical surgery, from the political crisis that grips the US.
Moreover, the results of the November elections – regardless of the outcome - will have no dramatic impact on our profound political crisis. This does not mean, however, that there is nothing to be gained in the election. There are independent candidates – Greens, for example – who could open cracks in the corrupted two-party system. There are also some independent-minded Democrats who could, though only with a strong prod from progressive constituents, mount a meaningful challenge to the ossified, corporate-coddling Party leadership. And there would be advantages, advantages with a shrinking relevance, to maintaining a balance of forces favoring the Democrats. However, the ever-growing distance between the Democrats and the needs of the populace dampens any enthusiasm for fighting for this advantage.
Therefore, there is a deep and deadly contradiction embedded in the two-party system, a contradiction that will only be overcome with the emergence of independent movements unwaveringly committed to principled, progressive politics.
Going forward, we can expect the Obama Administration to focus on the 2012 Presidential election. The Obama team will maneuver rightward, leaving many of the now-distant campaign promises like EFCA or immigration reform in its wake. The hints referenced above signal an aloof presidency, above the fray, though ever sensitive to the needs of the corporations and their generous campaign contributions. Like Bill Clinton, Obama will seek a presidential posture dissociated from any ideological position, but portraying civility, bi-partisanship, likeability and managerial competence – a posture appealing to the non-ideological center thought to be crucial for re-election.
Needed: A Break from the Past
Undoubtedly, these observations may not come as news for many, especially many of the 65% of those polled who think the US is in decline. The widespread mood is anger and disappointment. But little will come from moods if no useful conclusions are drawn, if patterns remain unseen, if events are misunderstood. Far too many see the political crisis in terms of flawed personalities, individual values or ideological caricatures. The long-term trend of wealth and income inequality; the ever-growing concentration of power and influence in the hands or corporations, especially the financial sector; the growth of political corruption and the role of money and media in electoral politics; the ascension of the callous, anti-social culture of individualism assailing “entitlements” or common benefits; the repeated aggressive military missions to deny any barriers to international capital--- all these phenomena interact and decisively cause the deepening political crisis. These are not moments of bad judgment, occasionally flawed policies, or aberrations. They are features of the logic of capitalism, a capitalism that brought on an equally profound and closely related economic crisis.
Not everyone yet makes these connections, but they ignore them at great peril. While there is a widespread sense that we are at a decisive moment, there is an unfounded faith that the old solutions will suffice. Some pine for an imaginary time of social harmony and cultural unity while conveniently ignoring those left out of their idyllic fantasy – a world without immigrants, embracing segregation and racism, and willfully ignorant of the crude exploitation of labor. Others embrace liberal values associated with an imaginary kinder, gentler capitalism, but turn away from the reality that the profit-hungry modern corporation stands firmly and powerfully against this dream.
Politics will become real only when we face the truth that the modern monopoly capitalist corporation stands as the adversary to all but the very rich. That understanding will lead to the further understanding that only a broad anti-monopoly strategy will solve the crises of our economy and our politics.
It’s a curious, but telling, fact that political discourse has shifted from the extreme-right-imposed cultural battlefield of abortion, gays, and guns dominating the last decade to the issues of the economy and the role of the state. The Right has entered this new battlefield under the banner of fiscal austerity and hostility to government. Led by tea-bagger foot soldiers, they rail against government spending, regulation, and social programs. If they succeed in selling this line to voters, they will bring pain and devastation not only to working people, but also to the whole economy and social fabric.
Sadly, the Democratic Party leadership has shown little or no interest in engaging the right on this battlefield. They concede that government spending should be restrained, regulation should be minimal and non-antagonistic to business interests, and social programs must be trimmed. It is left for Democratic-friendly labor leaders and party loyalists to defend this blatant coincidence of political outlook. They must excuse this conjunction of Democratic views with Republican ideology as a tactical retreat or they must argue that Democrats will inflict the pain of austerity more compassionately. Neither excuse is credible with angry, frustrated voters who continue to thirst for effective change.
This is the great tragedy of the November elections. Indeed, there is much at stake, but the Democrats refuse to fight a credible battle, a battle that would require at least a modest rebuff to their corporate masters. As things stand, the election will turn on how much fear of a return to Republican leadership can be generated rather than what the Democrats would accomplish with a victory.
Last week’s giant rally in Washington, DC only underlines these contradictions. Committed people came in droves to express both an outrage at where we are heading and a determination to join others in changing course. Hopes were high that leaders would energize the causes that inspire people to action, such as fair labor legislation, employment opportunities, peace, immigration reform, racial equality, help for the poor and disadvantaged, and mortgage and other debt relief. While speakers readily chronicled the evils produced by a system of inequality and injustice, they were hesitant to speak its name: capitalism. Instead, most urged those who came on buses, trains, planes, and cars to work for the election of Democrats in November.
This constant cycle of placing all the hopes for a better future in the hands of corporate-owned Democrats must be broken. This is not a call for those fearful of a Republican victory in November to sit on the sidelines or boycott the elections, but, rather, for them to further commit to establishing independent voices, voices that will demand that all elected officials choose between corporate fealty and the causes of the people.
For too long, many progressive and left leaders have posed supporting the Democratic Party against any initiative that might upset or provoke Democratic leaders. They narrowly and rigidly limit political action to the electoral campaign and reject any challenge to Democratic Party leadership as heretical and divisive. Such an approach has led us into the current political crisis and offers no way out. This false tactical finesse smothered the anti-war movement and tolerated the evisceration of health care reform, the expansion of imperialist aggression, the coddling of the financial sector, and the criminal neglect of the unemployed, the underemployed and the poor. It is time to reject it and move on.
There is no easy escape from our political crisis. But it begins by building movements outside of and often apart from the ineffective Democratic Party.
Zoltan Zigedy
zoltanzigedy@gmail.com
Only 30% of poll participants believe that the country is headed in the right direction. This is a negative assessment not seen since the tail end of the Bush administration.
In a normal election cycle – the give-and-take of the two Parties – this would signal enthusiasm for the party out of power: the Republican Party. However, among Republicans, only 30% have a positive view of their own party, the lowest number recorded since before 1990.
These numbers express a smoldering anger about where we have arrived since the 2008 election and where we are heading.
The only major new force on the political scene reflecting this angry mood is the Tea-Party phenomenon–-- a faux populist movement backed by extreme-right money and fueled by the ultra-right media.
Facing an interim election in November, all of the healthy forces in US political life are scrambling to establish a posture towards these elections. Bitterness, backbiting, and confusion abound. The Internet is abuzz with the anger of scorned liberals who feel betrayed by two years of, at best ineffectual, at worst, malign administration leadership. As the Administration positions itself for the coming months, it reflects this mood by jettisoning three of its leading economic lights: Peter Orszag, Christina Romer and Lawrence Summers. The exit of Rahm Emmanuel, Obama’s chief of staff, has passed the rumor level and is now a fact, as is likely the departure of many other prominent members of the administration. Despite their fealty to the corporate financial sector, Obama has suggested that he is seeking economic advisors that are more comfortable communicating with the corporate world.
Some in liberal circles cling to lingering hopes that the “real” Obama will soon be revealed. With all the enthusiasm of a revival meeting, they are awaiting a political rapture – a fulfillment of the “change” and “hope” themes of the election campaign. But my angry local letter carrier sees it differently. She says that people mistook “hope” for “dope,” a succinct declaration of her own frustrations.
Indeed, all signs point to a reshuffling of the administration in an even more conciliatory-to-the-right, pro-business direction. As the Wall Street Journal reports, “Part of the president’s task will be to ‘reset’ relations with the business community, not only to ease working in a divided Washington but also to smooth his path to re-election” (9-23-10). There is little room in this scenario for the revelation of a progressive, pro-working-class agenda. The WSJ cites senior White House officials as saying, “the president could concentrate on finding common ground on deficit reduction, education and immigration while guarding his achievements, from health care to student lending to financial regulation.”
The Political Crisis
All polls agree that approval ratings for the President have sunk substantially since his inauguration. And approval ratings for Congress hover at an embarrassing low level, a level that has been maintained since a time deep into the Bush Administration. Polls also show that both Parties are generally unpopular. Whether one bought the Obama message or not, it should have been apparent that his administration was meant to change the national mood of dissatisfaction and the international scorn brought on by the previous administration. They have failed in that task. And the political crisis continues.
The distance between the legislative actions of elected officials and the needs and desires of the electorate has never been greater. And the Obama Administration suffers inordinately from this distance because they promised so much in the presidential campaign. This distance was shown most recently with the issue of allowing the Bush tax cuts for the wealthy to expire. Initially, Obama and the Democratic leadership proposed maintaining the cuts for all but the very wealthy, a move that would have brought a measure of fairness to tax policy and generated $700 billion over 10 years in extra Federal revenue. The Republicans mounted a hysterical and demagogic campaign based on the inflammatory charge of tax increases. When opinion polls showed that the tax increases for the rich were popular (mid-September, CBS/New York Times - 53-38%), especially in key “battleground” states, the Republicans backed down. But, immediately, 31 Democratic Representatives voiced their public opposition to taxing the rich. Consequently any decision on the Bush tax cuts will be deferred until after the November elections. Every signal points to Congress maintaining the Bush tax policies for another two years.
Why is there such distance between popular issues and legislative action?
Many pundits employ vague, cloudy concepts like “gridlock” or blame a new-found intransigence or incivility. But the truth is simpler, but deeper: Elected officials are, for the most part, owned by monopoly capital. To a very great extent, the course of political success is greased with money and the opportunity to forge a successful and long political career is dependent upon corporate friendliness. Of course this is not new, but it has reached a new level of prevalence, demonstrating strikingly that the state – its structures and personnel – is dominated by and serves the interests of monopoly capital; that is, our reigning socio-economic system is state-monopoly capital.
Thus, there is no exit, without some radical surgery, from the political crisis that grips the US.
Moreover, the results of the November elections – regardless of the outcome - will have no dramatic impact on our profound political crisis. This does not mean, however, that there is nothing to be gained in the election. There are independent candidates – Greens, for example – who could open cracks in the corrupted two-party system. There are also some independent-minded Democrats who could, though only with a strong prod from progressive constituents, mount a meaningful challenge to the ossified, corporate-coddling Party leadership. And there would be advantages, advantages with a shrinking relevance, to maintaining a balance of forces favoring the Democrats. However, the ever-growing distance between the Democrats and the needs of the populace dampens any enthusiasm for fighting for this advantage.
Therefore, there is a deep and deadly contradiction embedded in the two-party system, a contradiction that will only be overcome with the emergence of independent movements unwaveringly committed to principled, progressive politics.
Going forward, we can expect the Obama Administration to focus on the 2012 Presidential election. The Obama team will maneuver rightward, leaving many of the now-distant campaign promises like EFCA or immigration reform in its wake. The hints referenced above signal an aloof presidency, above the fray, though ever sensitive to the needs of the corporations and their generous campaign contributions. Like Bill Clinton, Obama will seek a presidential posture dissociated from any ideological position, but portraying civility, bi-partisanship, likeability and managerial competence – a posture appealing to the non-ideological center thought to be crucial for re-election.
Needed: A Break from the Past
Undoubtedly, these observations may not come as news for many, especially many of the 65% of those polled who think the US is in decline. The widespread mood is anger and disappointment. But little will come from moods if no useful conclusions are drawn, if patterns remain unseen, if events are misunderstood. Far too many see the political crisis in terms of flawed personalities, individual values or ideological caricatures. The long-term trend of wealth and income inequality; the ever-growing concentration of power and influence in the hands or corporations, especially the financial sector; the growth of political corruption and the role of money and media in electoral politics; the ascension of the callous, anti-social culture of individualism assailing “entitlements” or common benefits; the repeated aggressive military missions to deny any barriers to international capital--- all these phenomena interact and decisively cause the deepening political crisis. These are not moments of bad judgment, occasionally flawed policies, or aberrations. They are features of the logic of capitalism, a capitalism that brought on an equally profound and closely related economic crisis.
Not everyone yet makes these connections, but they ignore them at great peril. While there is a widespread sense that we are at a decisive moment, there is an unfounded faith that the old solutions will suffice. Some pine for an imaginary time of social harmony and cultural unity while conveniently ignoring those left out of their idyllic fantasy – a world without immigrants, embracing segregation and racism, and willfully ignorant of the crude exploitation of labor. Others embrace liberal values associated with an imaginary kinder, gentler capitalism, but turn away from the reality that the profit-hungry modern corporation stands firmly and powerfully against this dream.
Politics will become real only when we face the truth that the modern monopoly capitalist corporation stands as the adversary to all but the very rich. That understanding will lead to the further understanding that only a broad anti-monopoly strategy will solve the crises of our economy and our politics.
It’s a curious, but telling, fact that political discourse has shifted from the extreme-right-imposed cultural battlefield of abortion, gays, and guns dominating the last decade to the issues of the economy and the role of the state. The Right has entered this new battlefield under the banner of fiscal austerity and hostility to government. Led by tea-bagger foot soldiers, they rail against government spending, regulation, and social programs. If they succeed in selling this line to voters, they will bring pain and devastation not only to working people, but also to the whole economy and social fabric.
Sadly, the Democratic Party leadership has shown little or no interest in engaging the right on this battlefield. They concede that government spending should be restrained, regulation should be minimal and non-antagonistic to business interests, and social programs must be trimmed. It is left for Democratic-friendly labor leaders and party loyalists to defend this blatant coincidence of political outlook. They must excuse this conjunction of Democratic views with Republican ideology as a tactical retreat or they must argue that Democrats will inflict the pain of austerity more compassionately. Neither excuse is credible with angry, frustrated voters who continue to thirst for effective change.
This is the great tragedy of the November elections. Indeed, there is much at stake, but the Democrats refuse to fight a credible battle, a battle that would require at least a modest rebuff to their corporate masters. As things stand, the election will turn on how much fear of a return to Republican leadership can be generated rather than what the Democrats would accomplish with a victory.
Last week’s giant rally in Washington, DC only underlines these contradictions. Committed people came in droves to express both an outrage at where we are heading and a determination to join others in changing course. Hopes were high that leaders would energize the causes that inspire people to action, such as fair labor legislation, employment opportunities, peace, immigration reform, racial equality, help for the poor and disadvantaged, and mortgage and other debt relief. While speakers readily chronicled the evils produced by a system of inequality and injustice, they were hesitant to speak its name: capitalism. Instead, most urged those who came on buses, trains, planes, and cars to work for the election of Democrats in November.
This constant cycle of placing all the hopes for a better future in the hands of corporate-owned Democrats must be broken. This is not a call for those fearful of a Republican victory in November to sit on the sidelines or boycott the elections, but, rather, for them to further commit to establishing independent voices, voices that will demand that all elected officials choose between corporate fealty and the causes of the people.
For too long, many progressive and left leaders have posed supporting the Democratic Party against any initiative that might upset or provoke Democratic leaders. They narrowly and rigidly limit political action to the electoral campaign and reject any challenge to Democratic Party leadership as heretical and divisive. Such an approach has led us into the current political crisis and offers no way out. This false tactical finesse smothered the anti-war movement and tolerated the evisceration of health care reform, the expansion of imperialist aggression, the coddling of the financial sector, and the criminal neglect of the unemployed, the underemployed and the poor. It is time to reject it and move on.
There is no easy escape from our political crisis. But it begins by building movements outside of and often apart from the ineffective Democratic Party.
Zoltan Zigedy
zoltanzigedy@gmail.com
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