Where have All the Profits Gone?

Mid September marked the fourth anniversary of the Lehman Brothers bankruptcy, widely viewed as the final trigger of the global economic collapse, a shock that remains the dominant factor in global economic life. Friday, October 19 brought a dramatic drop in US equity values, caused, commentators speculate, by dismal reports of US corporate earnings. The most observant of these commentators did not fail to point out that Friday was also the twenty-fifth anniversary of the largest US one-day percentage drop in stock values. The fact that such an anniversary came to mind reflects a general and widespread fear that more economic turbulence is forthcoming.

The growing gloom overshadows the glowing September report of retail sales released earlier in the week. Despite stagnant or slipping incomes, the US consumer turned to the credit card to boost purchases at retail stores, online, and in restaurants. Signs of an improving housing market also fueled optimism.

Opinions change quickly. A week earlier---Tuesday, October 9---the International Monetary Fund released its World Economic Report. While raising fears of a global downturn, the report cut the probability of a US recession by nearly a quarter from its April forecast!

Taken together, the sentiments of the last two weeks demonstrate widespread confusion and uncertainty.

Big Problems, Little Ideas

Most of the conversation about the global economy, about capitalism, is shaped by ideological bias, academic dogma, distorted history and wishful thinking.

The global economy has never “recovered” from the shock of 2008. Nor does it teeter on the edge of another recession. In fact, it is fully in the grip of a profound systemic crisis, a crisis that has no certain conclusion. In this regard, the crisis is very much like its antecedent in the 1930s. The popular picture of The Great Depression as a massive collapse followed by the New Deal recovery is myth. Instead, like our current economic fortunes, it was like climbing a metaphorical grease pole— repeatedly advancing a few feet and then slipping down. Serious students of the Great Depression understand that its “solution” was World War II, with its state-driven, planned, military “socialism.”

Of course war itself is no solution, but the organized, collective, and social effort that capitalism only countenances for violence and aggression is a solution. Similarly, the success of the People’s Republic of China in sidestepping the harsh edges of the 2008 collapse is due to the remaining features of socialism—public ownership of banks, state enterprises, and economic planning. Never mind that much of the PRC leadership hopes to jettison these features, the advantages are there for all to see. Yet few see.

Distorted history begets foolish theory. The two ideological poles that dominate economic discussion—classical liberalism and Keynesianism—both owe their claimed legitimacy to favored, but mistaken views of the source and solution to the Great Depression. While expressions of these poles are found across the political policy spectrum, classical liberalism—often called neo-liberalism—is generally associated with the political right. 

Political liberals and the left, on the other hand, often advocate for the analyses and prescriptions of the school associated with the views of John Maynard Keynes.

Since classical liberalism has been the dominant economic philosophy governing the global economy for many decades, common sense would dictate that, after four years of economic chaos and general immiseration, neo-liberalism would be in disrepute. But thanks to the tenacity of ruling elites and the profound dogmatism of their intellectual lackeys, the market fetish of neo-liberalism still reigns outside of Latin America and a few other outliers. 

But Keynesianism—broadly understood as central government intervention in markets—enjoys a growing advocacy, particularly with liberals, leftists, and, sadly, “Marxists.” Centrist Keynesians advocate intervention in markets from the supply side, most often through credit mechanisms and tax cuts that encourage investment and corporate confidence. Liberal and left interventionists argue for stimulating economic recovery and stability by generating consumption and expanding demand from government-funded projects or government-funded jobs.

The panic of 2008 turned most policy makers toward flirtation with supply-side intervention and generally meager demand-based stimulus, a fact that liberal Keynesians like Paul Krugman are fond of pointing out. Only China adopted a full-blown demand-oriented stimulus program. Yet that tact also brought a host of new contradictions in its wake.

Austerity versus Growth

Pundits like Krugman and politicians like Francois Hollande posture the theoretical divide as one between austerity and growth, a choice between rational growth stimulation and the irrationality of shrinking government spending to reduce debt. In an idealized classless world, this point would be well taken—austerity is an enemy of growth. However, it is naïve and misleading to fantasize such a world.

In our era of global capitalism, the idea of cutting government spending and lowering taxes makes all the sense in the world to the ownership class. The resultant transfer of value counts as a significant element in restoring profit growth and expanding accumulation. In a real sense, the popular and apt anti-austerity slogan-- “we will not pay for your crisis”-- tells only half the story. The other half should be “we will not pay for your recovery.”

In the end, it is profit that determines the success and failure of the capitalist system. Accumulation of economic surplus—the value remaining after the bills are paid--is the engine of capitalism, necessary for its motion and its trajectory. The dramatic drop in the Dow Jones industrial stock averages resulting from poor earnings this past Friday only underscores this point. Those who see consumption as the critical element in growth and recovery should recognize that this loss of momentum is independent of, as well as more decisive than, the September report of strong retail demand. 

The Tendency of the Falling Rate of Profit

The central role of profit, its growth and momentum in understanding capitalism and its recurrent structural crises has been overshadowed, even among most Marxists, by the infection of left thought with Keynes’ crisis theory. Theories of crisis that rest on underconsumption, overproduction, or imbalances reflect this infection and reduce political economy to the study of business cycles and avoidable and terminable economic hiccups—consumption can be expanded, production can be regulated, and balance can be restored. These are the assumptions of social democratic theory and what divides it from revolutionary Marxism.

Marx saw crisis as fundamentally embedded in capitalism’s structure. Processes in the capitalist mode of production unerringly bring on crises. And he locates the most basic of these processes is the mechanism of accumulation, a process that tends to restrain the growth of the rate of profit.

While it is good to see a rebirth of interest in and advocacy of Marx's law of the tendency for the rate of profit to fall, most of its worthy supporters remain needlessly confined to Marx’s expository formulae that serve well in revealing the anatomy of capitalism, but less so in exposing its disorders.

Yet the intuition behind Marx’s law is easily grasped. When unmediated by the encroachment of working class forces, the capitalists’ accumulation of surplus results in the extreme concentration of wealth, a concentration that reduces the opportunities to gather the expected return in the next and each successive cycle. Whether restrained by the physical limitations of workers, the potential length of the work day, diminished return on physical investment, rapacious competition, super-inflated investment reserves, or the myriad other possible forces or factors, the rate of profit is under constant and persistent duress.

Leading up to the 2007 economic slowdown that presaged the 2008 collapse, the enormous pool of capital available for profitable investment was acknowledged by all reporters. Its sheer volume alone depressed interest and profit rates in the face of limited productive investment opportunities. The desperate search for a rate of return drove investors toward riskier and riskier ventures that generated the financial collapse which has been well documented. It was the pressure on profits—an expression of the tendency—that drove the investor class to a lemming-like indulgence in arcane financial wizardry.

The neglect of Marx’s tendential law since the popularity of Keynes and underconsumption/overproduction crisis theories has retarded Marxist and Communist understanding of capitalist crisis while bolstering reformist policies within the Communist movement. Happily, there is a renewed interest in Marx’s law, though a full and satisfactory understanding of its application to and operation within contemporary capitalism is yet to be given.

At any rate, the decline of earnings now emerging in the latest financial news indicates that counter-crisis and counter-tendency measures are now exhausted in the US. Despite the euphoria of rising consumption spending and housing sales, the profit-driven engine of US capitalism is slowing, likely allowing the US economy to drift closer to the whirlpool already drowning the European economies.

Tough times are ahead, but a fertile period to plant the seeds of socialism. 

Zoltan Zigedy

zoltanzigedy@gmail.com   

Hypocrisy, Cynicism, Corruption and the Persecution of the Cuban Five

Toronto, Canada in late September was the setting for a Peoples’ Tribunal established to secure justice for the five Cuban patriots victimized by the US criminal justice system. Appropriately dubbed “Breaking the Silence,” the tribunal sought to bring attention to a gross injustice largely ignored or distorted by the North American media.

Held over the September 21-23 weekend, the tribunal drew several hundred participants to a review of the bogus case brought against five Cuban agents planted in the midst of the virulently anti-Communist, Miami-based Cuban defector community. As instruments of Cuban State Security, the Cuban Five were charged with ferreting out violent plots concocted to overthrow the Cuban government and harm the Cuban people and their friends. Necessarily operating clandestinely, they were essential counterweights to the US government's long established and deep engagement with organized criminal elements freely operating out of South Florida with CIA support.

To not employ all available means, including infiltration, would have been tantamount to abandoning the Cuban revolution. No honest person could but see the intervention of the five Cubans in the Miami cesspool of reaction and crime as anything other than an act of national defense and internationalist vigilance.

The Peoples’ Tribunal drove these points home. Speakers developed a detailed case supporting the existence of a dangerous nest of violent, reactionary ex-Cubans organizing in the Miami area with the knowledge and support of US security agencies. Reports to the tribunal established a long history of subversion and assassination on the part of Miami-based paramilitary organizations with the complicity of US officials. Testimony left little doubt of both the reasonableness and urgency of infiltrating these organizations. Nothing underscored the unchecked violence of the Miami murderers more movingly than the testimony of Livio Di Celmo, the brother of Italian tourist, Fabio Di Celmo, who was killed in a brutal bombing of a Havana hotel. The attack was orchestrated by the US government agent and career assassin, Luis Posades Carriles. Carriles bragged openly to the media that “The Italian was in the wrong place at the wrong time.” 

Further, tribunal witnesses exposed the hand of the US government in railroading these patriots with exaggerated charges, a polluted political atmosphere, extra-judicial pressure, and corrupted evidence. A clear picture emerged that nothing even approaching a fair trial landed the Five in Federal penal facilities, an unjust incarceration that has taken 14 years of freedom from them.

Speaker after speaker stressed the necessity of building an international campaign for their freedom. As Elizabeth Labañino, wife of imprisoned Ramón Labañino, stated so eloquently, “We don’t trust in this system, we trust in solidarity.”

Serving on a panel of “magistrates of conscience”-- de facto jurors-- in the proceedings were fourteen distinguished figures including leading US anti-war activist, Cindy Sheehan, and noted US filmmaker, Saul Landau. Adding gravity to the panel were leaders of the Canadian labor movement: Marie Clarke Walker (Vice-President of the Canadian Labor Congress), Denis Lemelin (National President of the Canadian Union of Postal Workers), Ken Neumann (National Director for Canada of the United Steelworkers), and Naveen Mehta (General Council of United Food and Commercial Workers Canada). Joining the panel from the UK was Tony Woodley (Former Joint General Secretary and current Head of Organizing of the 1.5 million members of UNITE the UNION). 

The panel asserted that “…this Peoples’ Tribunal concludes that the Cuban Five were unjustly detained, unjustly prosecuted, and unjustly sentenced, all contrary to international and U.S. domestic law including the U.S. Constitution.  This Peoples’ Tribunal proposes the convictions be quashed, and that Gerardo Hernández, Ramón Labañino, Antonio Guerrero, Fernando González Llort and René González be set free immediately, without any restrictions on their liberty.”

But the tribunal served as more than an urgent call for solidarity with the Cuban Five; it also exposed the corruption, hypocrisy and cynicism of the US government.

Judicial Corruption: The collusion of the highest levels of government with the judicial frame-up demonstrated what should be in no need of demonstration, namely, that the US judicial system answers to the needs of the rich and powerful. There are no broad interests of the US people served by maintaining a nest of violent anti-Communist thugs in Southern Florida. Nor do the US people support them anymore than they support an internationally abhorred, legally unsanctioned blockade of Cuba. Judicial rulings are fitted to conform to the interests of the US ruling class, just as they were in the Citizens United vs Federal Election Commission Supreme Court decision.

The Hypocrisy of “Terrorism”: The term “terrorism” has been appropriated by colonial and imperial powers to demonize the resistance of subjugated or weaker peoples. Whenever the oppressed rise up, they are labeled “terrorists.” Whether it was the anti-colonial Mau Mau movement, the Algerian National Liberation Front, or the African National Congress in South Africa, those audacious enough to defy British or French imperialism or colonial settlers were tagged as agents of terror. Perhaps the original “terrorists” were the aboriginal peoples of the New World who refused to acquiesce to those stealing their lands.

It is deemed “unsporting” of the weak to use extreme or unorthodox methods in the face of the powerful, overwhelming killing machines of bullies. Hence, they are guilty of terror!

It is another story when powerful states or their agents slaughter defenseless civilians or political adversaries. The North American and European media never saw terrorism when the Indonesian military killed over a million civilian Communists and their supporters. Nor do they see terrorism in the daily violence against Palestinian civilians by the Israeli Defense Force. And, of course, the capitalist media is incapable of finding terrorism in the acts of the Miami mafia and their bombings, assassinations, and intimidation at the behest of US security agencies. It was left to the Cuban Five to expose these dangers and work to prevent their realization. Every day the fear-mongering of a hypocritical “War on Terror” justifies another act of terror inflicted on innocent civilians in some far-away country by the US military.

The Cynicism of Human Rights: One of the most inviolable of rights is the right of self-defense, a right that applies equally to a person or a state. Through most of the twentieth century, aggression against another country, regardless of how illegitimate the government or how odious the country's internal policies, was recognized as a violation of the country’s sovereign rights. Conversely, any victim of aggression had a right to respond in self-defense. While Western “democracies” often fell short in aiding those exercising this right against aggression (Abyssinia, Spain, etc), they enshrined the doctrine as an essential condition of peace in both the League of Nations and the United Nations. Recently—especially since the demise of the Socialist bloc as a counter force—the US and its NATO allies have openly and often violated the right under the cynical and illegal excuse of “humanitarian intervention.” At the same time, the US shamelessly embraces its own right of self-defense with its global and perpetual “War on Terror,” a war that has brought death and destruction throughout Asia, Africa, and the Middle East.

But the violations of sovereignty in the former Yugoslavia, Libya, and Syria and other victims of Western “humanitarianism” are preceded by the example of Cuba. Since the revolution, the US and its Cuban-renegade mercenaries have used invasion, infiltration, bombings, assassinations, sabotage, and other forms of aggression to undermine and destroy the revolutionary government. The US and its allies have trampled Cuba’s right of self-defense, but the revolution has persevered. The judicial persecution of the Cuban Five is another instance of the denial of Cuba’s right to self-defense against outside aggression.

There is no excuse for the North American media silence or popular hesitation in defense of the Cuban Five. These brave, selfless and principled fighters have suffered 14 years of imprisonment for values that any fair-minded person would acknowledge. Their honor is secure, standing up to the corruption, hypocrisy, and cynicism of a ruthless imperial power.

Zoltan Zigedy

zoltanzigedy@gmail.com

An Electoral-Season Note to My Liberal Friends

Well into the silly season, the heat is turned up on the Left to fall in line and support the Democratic Party. On one hand, the independent Left is diminished by not being “in the game.” On the other hand, the Left is still excoriated for having been “in the game” with Nader during the Gore-Bush Presidential race of 2000.

Specious arguments pile on top of specious arguments for why the spurned progressive, liberal, and labor voter should reward those who have disregarded their interests and broken their campaign promises. The arguments come in every size and shape, but always from self-described “friends” and “committed leftists.” Oddly enough, they feel no compunction to explain why their past admonitions or their previous enthusiasms produced no real change in the political landscape when Democrats took power.

They smugly ask if independent-thinking leftists actually believe that there are no differences between the two parties. Only an idiot would respond defensively to this deceptive, distracting tact. Of course there are differences, just as there are differences between Pepsi and Coke. But the relevant question is: Are there any differences that matter, any differences that -- in the dynamics of two-party governing-- will effectively alter the plight of the majority of the US population for the better?

If the Democrats hold the Presidency, there is every reason to believe that they will do no more than they did when they had the rare dominance of all three governing branches. Indeed there is every reason to believe that Obama would relish compromising with the Republican agenda, an approach that he previously embraced even when he had no reason to do so.

On the other hand, should the Republicans gain the Presidency, the Democrats will, as they have in the past, show much more eagerness to demonstrate differences with Republicans and more vigorously attack Republican initiatives. They will offer a more leftward agenda since there is no danger of having to implement progressive policies. And they will embrace the Left insofar as it will mount the sharpest and most coherent attack on Republican policies, while doing so in a loud and demonstrative way.

A Democratic Party out of power is a belligerent, feisty party that will even spread some cash around to support left and progressive causes. Of course, that financial link secures a certain loyalty that perhaps explains the 

enthusiasm shown for the Democrats by many of our progressive brothers and sisters in every election cycle.

For decades, we have been warned of the dangers wrought by Republican victories: an unfriendly supreme court, an attack on welfare, Social Security, Medicare, and Medicaid, war mongering and aggression, etc. Yet despite the handing of power back and forth for nearly forty years, the dangers have continued to deepen—the US has suffered a constant rightward drift since the middle of the Carter administration. Apparently, the “Vote Democratic” argument is only an argument about the pace of that drift.

But the greatest victims of the Democratic Party love-fest are truth and honesty. Take Paul Krugman, for example. His soap box in The New York Times has served to excoriate the Obama administration for doing far too little to bring the US economy back from the grip of crisis. On many occasions, he has warned of the dangers of closing the stimulus program and embracing austerity, policies that he acknowledges Obama has endorsed. Reviewers of his new book note the dominant theme of political inaction and the dangers that ensue.

Yet Krugman holds his nose and delivers a ringing endorsement of Obama’s economic policies in a recent column: “But is the mess really getting cleaned up [by the Administration]? The answer, I would argue, is yes… So, as I said, the odds are that barring major mistakes, the next four years will be much better than the past four years… So Bill Clinton basically had it right: For all the pain America has suffered on his watch, Barack Obama can fairly claim to have helped the country get through a very bad patch, from which it is starting to emerge.”

Following the lead of the old huckster, Bill Clinton, Krugman dutifully salutes the President with approval of the Administration’s economic program contrary to his often-voiced disparagement. Krugman gets kudos for loyalty to the Party, but shame for despoiling honesty. If the next four years “will be much better” under Obama’s stewardship, then why should we take Krugman’s constant dire warnings at all seriously?

Democratic partisans will cry foul. For them, criticizing Krugman’s waffling is another example of left “purity.” But truth and honesty do not allow for shadings or gradations. The people deserve better. And they want better, as opinion polls consistently show.

The corruption of politics in the US is neither an aberration nor an accident. Instead it is the logical evolution of a political system in the era of state-monopoly capitalism operating freely and without the counter force of a strong, independent working class movement. The process of that evolution is revealing.

Looking Back

It is easy to forget that not so long ago there were currents and trends in the Democratic Party that represented more than the authority of markets, the interests of corporations, and the enthusiastic approval of military adventure. That is not to say that the Democratic Party was not a bourgeois party, a party of capitalism. It is and always has been. But there was a time when the party’s course was disputed terrain; a variety of interests wrestled for its direction.

The Democratic Party’s defeat in the 1980 election was presaged by an enormous fund-raising advantage by the Republicans. The Republican Party as a whole raised $130.3 million in the 1979-80 period over the Democrats' meager $23 million. Perhaps more than any other factor in the Reagan victory, this glaring inequity cast the mold for the future Democratic course. In addition, organized labor’s decline and the falling electoral participation of poor and working people spurred new rightist trends in the Party.

Going into the 1984 election, the Democratic Party found itself torn between three ideological currents. While all agreed that an answer to the successful extreme right victory in 1980 was critical, factions differed on how to respond. These differences were fought out in the primaries.

Walter Mondale represented old-school Cold War liberalism. While drifting to the right to accommodate Reaganism, Mondale claimed to uphold New Deal values, though without offering any new social programs. He drew support from the entrenched leadership of the New Deal coalition: labor, minorities and liberals.

A new trend emerged around the candidacy of Gary Hart. Appealing to the well-off middle strata that moved into the Democratic Party in large numbers after the Nixon debacle, Hart proposed a “third way” (prescient of the Blair/Clinton developments to come) between traditional liberalism and the Reagan/Thatcher rightist turn. Hart and his ilk saw themselves as social liberals and fiscal conservatives, combining lifestyle tolerance with corporate friendliness and market-based policies. This third way promised to retain the cultural veneer of liberalism while gutting its Keynesian, welfare-state directed policies that supported and bolstered the well-being of workers and the poor. A not inconsequential bonus was that business-friendly policies would draw greater campaign contributions from corporations and the wealthy.

Some in the Party recognized the rightward drift of the old guard and viewed the launching of the new Reagan-lite model with alarm. Jesse Jackson, in a letter to former progressive flag-bearer, George McGovern, wrote: “Too many Democrats have gone along with Republicans on every Reagan policy.” In response, Jackson launched a national primary campaign to win the Democrats away from the right turn that he correctly anticipated. With a base in the long-neglected African-American community, Jackson reached out to labor and other progressive constituencies.

Despite deeply embedded racism and Democratic Party sabotage, Jackson waged an impressive campaign garnering almost 20% of the vote and winning 5 primaries, all without substantial funding and Party support.

Nonetheless, Mondale won the nomination and went on to lose overwhelmingly to Ronald Reagan.

Ignoring  the strong showing of the progressive Left, the Democratic leadership moved forward with what The Nation magazine previously dubbed “Reaganism with a human face” (6-26-1982).

The new direction for the Democratic Party was sealed with the creation of a wide-ranging policy statement in August of 1986. Entitled “New Choices in a Changing America,” the slick, comprehensive document gave the imprimatur of the Party leadership to the path of economic conservatism, market-based policies, and limited government action. The Democratic leadership had heard the gospel of Reagan and found a way to call it their own. The answer to unemployment, poverty, and declining living standards was partnership with the private sector, rising worker productivity, and clearing the regulatory barriers to growth. While conceding that the working class and the poor had seen their living standards devastated since 1970 (including six years of Reaganism), the Democrats chose to march hand-in-hand with the Reaganauts.

Writing in September of 1986 (People’s Daily World), Si Gerson, the Communist Party’s long respected and experienced electoral expert, wrote:

Certain right-wing factions, supported largely by big money people, are particularly unhappy about the results [progressive wins in Senatorial primaries] and, above all, by the rising popular movement for peace and the increasing militancy of labor and its allies… They want the Democratic Party leadership’s rightward drift to be set in concrete… They have… codified it in a 71-page statement released last week by the Democratic Policy Commission. Entitled “New Choices in a Changing America,” the statement on basic questions simply parrots Reagan—even on points he has begun to mute somewhat… The underlying theory of the document is that the country has gone to the right and if the Democratic Party is to win the Senate in 1986 and the White House in 1988 it too must go to the right.

Gerson was correct to recognize this effort by the Democratic Party leadership to turn their party into a carbon-copy of Reagan’s party. He recalled a previous warning by a venerated figure among Democrats:

Perhaps the clearest answer to this manifesto was delivered months ago by someone who can hardly be called a left-wing Democrat. Arthur Schlesinger Jr., the historian who was a fixture in the Roosevelt New Deal, branded as “Reaganite fellow-travelers” those who say “me-too” to Reagan policies. Writing in the New York Times of July 6, Schlesinger said: “Today me-tooism is an infection within the Democratic Party. It finds expression in quasi-Reaganite formations like the Democratic Leadership Council and the Coalition for a Democratic Majority… One can only add that for the Democrats' me-tooism is a recipe for disaster,” 

Unfortunately, ”Me-tooism,” the strategy of shadowing the Republican Party and maintaining a position ever-so-slightly closer to the center, won the day and remains the approach of Democratic Party leaders to this day.

Notably, the Left mounted a noble effort in 1988, again behind the primary candidacy of Jesse Jackson. The campaign charged ahead, winning primaries and caucuses and surprising the old guard. But when the campaign began to draw significant and militant labor support, a stealth campaign of slander and racial fear diminished the outcome. Nonetheless, Jackson and the Left captured nearly seven million votes.

Like the quixotic Progressive Party campaign of 1948, the Jackson campaign was smothered by the effort of a Democratic Party resolute in following a path blazed by the extreme right and scandalizing the opposition with red- and race-baiting. Through fear and intimidation, Democratic leaders denied the emergence of a viable left bloc, a counter force to the domination of monopoly capital.

Lessons?

With the victory of corporate Democrats—fiscally conservative, socially liberal—the problem of fund-raising has been solved. In the 2008 election, corporate Democrats actually raised more than their corporate Republican counterparts. In this election cycle, they may well fall behind the Republicans. But they will never know again the vast inequity of 1980. Their fealty to monopoly capital ensures some measure of campaign-fund parity.

At the same time, the dominance of corporate Democrats and the Democratic Party leadership’s comfort with this relationship, denies any insurgency within the Party, not that rebellion would be countenanced in any case. Those who continue to argue for “inside/outside” strategies will continue to find themselves outside—neither “in the game” nor with a coherent political strategy.

The only viable force capable of changing this regular exercise in futility is the labor movement or some subset of it. Organized labor has the resources and apparatus to launch a new, independent political vehicle that would neither be beholden to corporate power nor restrained by false friends. Necessarily, labor must stop throwing these resources at the feet of the Democratic Party; labor leaders must reject their current vassalage to Democratic Party officials. It’s a tough challenge to work for these changes, but one far more worthy than hustling for political swindlers.

In the mean time, don’t bother asking, I’m enthusiastically voting for Jill Stein of the Green Party. She was arrested recently trying to stop home foreclosures in Philadelphia. And your candidate? 

Zoltan Zigedy

zoltanzigedy@gmail.com

 

Does Lenin's Imperialism Need a Makeover?

A quick tour of my book shelves produces many books and articles that promise a new look, a re-thinking, a fresh approach, a reconstruction, or an updating of Marxism. If I had the time or the patience, I would expose the short-sightedness, naiveté or sheer humbuggery that lurks behind most of these misbegotten projects. It is not that Marxism is scripture or that there are no new aspects or perspectives on Marxism; there are indeed many yet-to-be-revealed wrinkles and old, mistaken or inapplicable perspectives. But the core of the theory developed and elaborated by Marx, Engels, and Lenin has resilience and usefulness that defies the hubris of academically trained “specialists” impressed by the latest bourgeois school and its analytical tools or seduced by a passing “trend” identified by the business press or the media pundits.

We have seen them come and we have seen them go, with embarrassing regularity.

Think of the celebrations around the arrival of a book by Laclau and Mouffe. Or recall the heralding, not so long ago, of the Hardt and Negri book, Empire and its sequel. Or consider the celebrity “Marxist” flavor-of-the-day, Slavoj Zizek. Zizek’s prolix ranting, as with those who preceded him, will soon settle in the remainder bins and disappear into irrelevance.

Nothing discourages the curious from actually reading Marx more than an impenetrable tome by a self-important Marxist poseur. Nothing tarnishes the Marxist legacy like an “entertainment” laden with pretentious neologisms and paradoxical aphorisms.

One of the most common shell games is to invent a new “stage” of capitalism, a hitherto undiscovered direction signaling epochal change. When Lenin wrote Imperialism, he explained it neither as a departure from the evolutionary course of capitalism nor as a step away from its fundamental wellspring. Instead, he showed how capitalism’s core mechanisms evolve qualitatively new forms, in this case, the features associated with imperialism.

Over the last few decades, writers have professed to discover a new stage of capitalism that supersedes Lenin’s imperialism, generally based upon impatience with the course of history or an urge to become the next celebrity Leftist intellectual. In all cases, the new post-imperialism theories have sprung from a misreading of passing historic trends.

Some have fixed on the post-Soviet emergence of so-called “humanitarian intervention” on the part of the US, NATO, and other allies as the mark of the obsolescence of imperialism. Others take the proliferation of supra-nation institutions as signaling a new international order overshadowing the nation-state and hence rendering the theory of imperialism outmoded. And still others have interpreted the late-twentieth-century global expansion of investment and trade (so-called “globalization”) as indicative of new cooperative links incompatible with Lenin’s view of imperialism.

Driving all of these views is a general hostility to revolutionary Marxism and the political implications of Lenin’s theory. That is, the authors do not want anyone to take imperialism seriously.

Where argument may fail, events have largely rendered these theories irrelevant: “humanitarian intervention” is a thinly disguised cover for old-fashioned imperialism; one nation-state—the US—dominates nearly every international institution from the UN to the IMF while maintaining much of the world as client-states; and “globalization” was critically wounded by global economic collapse.

Yet proclamations of a new stage continue to crop up. The latest is a pretentious piece laden with tables, figures and neologisms posted on August 7 in the formerly Communist publication, Political Affairs. Authored by Greg Rose and entitled Beyond Imperialism? Have We Reached a New Stage of Capitalism?, the article promises a fresh challenge to imperialism.

Not to keep a reader waiting, Rose’s answer is a resounding “yes”! He says: “The four new features of the current stage of capitalism…have intensified capitalism’s contradictions and carry implications for revolutionary struggle as urgent as those of the features of Lenin’s Imperialism.”

Rose claims to identify new developments that “question whether the underlying model [Lenin’s imperialism] fits the current stage of capitalist development.” Taking them in order, they are:

Hyperfinancialization

“Financialization” is a term that labels, but fails to describe or explain the process that resulted in the financial sector’s domination of the US economy. Like the word “globalization,” it is a popular word used by those who lack an understanding or forego an explanation of the underlying process. Rose’s coinage of the exaggerated term “hyperfinancialization,” while an attention grabber, adds nothing to an already empty neologism.

In truth, the financial sector has grown by leaps and bounds, but its dominance of national economies has been limited largely to the US and the UK (and Iceland, by choice). Finance grew sharply and dominated in these economies precisely in step with the destruction of the manufacturing sector in the US and UK. As manufacturing began its migration to lower wage areas, both countries, but especially the US, shifted its economic “activities” toward finance and financial services. In effect, the unification of the global economy created the conditions for a new international division of responsibilities, with productive labor associated with emerging markets and financial markets associated with US and UK financial centers.

Following Michael Hudson’s theses on “fictitious capital” (From Marx to Goldman Sachs: The Fictions of Fictitious Capital), Rose reduces the global financial crisis to the fetish of compound interest. While there is a small, metaphorical kernel of truth to this observation, it makes a profound crisis of capitalism appear to be an exercise in fantasy on the part of investment banks and their financial colleagues. Matters are not that simple.

It was not fictitious capital that ended the capitalist boom, but real wealth exploited from productive workers and concentrated in the hands of capitalist investors. The enormous pool of capital, searching for investment opportunities and finding few risk-free, profitable avenues in the productive sector, gravitated to the bankers. Armed with Rube Goldberg investment innovations, the bankers promised safe and comforting returns. But the new vehicles broke down.

If fictitious capital alone were the culprit, then it could be regulated away and capitalism would merrily get back on course. But the villain was over-accumulation, a process inherent in capitalism and perpetually leading to crisis.

Rose links the austerity measures urged by many governments with “hyperfinancialization.” But this is to confuse policy with the imperatives of capitalism. Whatever pressures the bond scavengers may place upon governing bodies, social democratic and conservative politicians are not compelled to comply. No government or union (like the European Union) need accept the tyranny of bonds—they choose to do so.

In the end, the growth in significance of the financial sector in the US and the UK—whether dressed up in the fancy uniform of “financialization” or “hyperfinancialization” – hardly evidences a new stage in capitalism.

Fusion of Ownership and Management at the Highest Levels of Capital

Since the era of Berle and Means (1932), researchers have acknowledged the changing patterns of corporate control, ownership, and compensation. C. Wright Mills (1956) observed that management emerged from and was sustained as “the very rich.” Baran and Sweezy (1966) noted that “managers are among the biggest owners… Far from being a separate class, they constitute in reality the leading echelon of the property-owning class.” Undoubtedly the merging of ownership and management has continued—even intensified—over the last fifty years. There is nothing new in this process.

Rose sees this long established process of fusion as linked somehow to “hyperfinancialization,” a difficult thesis to maintain given their independent histories. He is shocked to see management “…make increasing stock price the principal objective of corporate operations.” And when was increasing the nominal value of the company alien to management?

In a curious non sequitur, Rose offers figures and data taken from a study by Fyrdman and Jenter (2010) that highlight two different measures of the effectiveness of CEO compensation. In the words of the two academics, they are trying to determine: “What is the right measure of the wealth-performance relationship?” They conclude: “The progress made by recent studies on all these dimensions is cause for optimism and suggests that answers may not be far off.”

And I might therefore ask: What is the relevance of their study to Rose’s thesis?

The fusion of management and ownership is old in origin and continuing. It suggests no new stage in capitalism.

Capitalism’s Cannibalism of Invested Public Labor through Privatization

Recapitulating Key Facets of the Earlier Process of Primitive Accumulation

Rose performs a service by underscoring the significance of the privatization of Soviet and Eastern European socialist property and the absorption of the workforce into the capitalist labor market. The privatization of publicly owned assets served as a basis for the creation of a national bourgeoisie in many countries and for fire-sale asset purchases by existing capitalist enterprises. But the destruction of European socialism had an even more lasting effect by opening up a new and very cheap labor market and a destination for global products. In a real way, the elimination of the socialist economic community cleared all obstacles to trade agreements and unfettered market relations; there was no longer an existing economic alternative.

But to advance this to a new form of “primitive accumulation” or its like is completely unwarranted.

Rose cites a passage from Rosa Luxemburg’s Accumulation of Capital to bolster his thesis, a passage that likens colonial domination (in the era of imperialism!) to the brutality and violence of the era of primitive accumulation “…at the end of the Middle Ages, when the history of capitalism in Europe began…” But where primitive accumulation jump-started capitalism in its time, colonial accumulation served to free land, resources, labor, and trade for capitalist exploitation.

There are two paradoxes here.

If Rose is right and modern privatization heralds an era of capitalism akin to Rosa Luxemburg’s account of colonial domination, then how is it different from Lenin’s near simultaneous and similar account of imperial (colonial) domination for land, resources, labor, and trade?

Secondly, if this is a new era of accumulation through privatization and the snatching of vast amounts of real value, then how can this claim be reconciled with the “financialization” thesis that stands on the foundation of “fictitious capital” and not real sweated value?   

While Rose offers some ideas of interest, Lenin’s theory of Imperialism remains safe.

Parenthetically, Rose’s pretentious borrowing of an esoteric expression from cellular biology – “autophagic accumulation”—to describe his modest insight is reminiscent of the petty academic practice of surrounding small ideas with a dense fog.

The Emergence of External, Environmental Constraints on

Capitalism’s Ability to Accumulate and Reproduce

Finally, Rose reminds us of the impact of environmental degradation. He offers a useful warning of both the finite limits of fossil fuels and the increasingly ominous impact of climate change. While peak oil is not as settled of an issue as Rose suggests, it certainly looms somewhere ahead on the time line. But climate change threatens with much more immediacy and with amplified influence on economic growth.

While climate change must be a central issue for any progressive program, it and the peak-oil question do not modify the logic or course of imperialism. Imperial policy has and remains focused on securing scarce resources. The human cost of climate change will no more deflect imperial policy than did the human cost of colonial invasion, occupation, and domination or world wars. To point to deaths from starvation, as Rose does in his article, no more influences the imperial agenda than pointing to the deaths in Libya or Syria.

In reality, one cannot be a serious environmental advocate without being an anti-imperialist. The enormous waste associated with maintaining, transporting, and unleashing an enormous war machine trivializes the commendable collective commitment to recycle or recover consumer goods. The scrap heap of weapons systems –their development, deployment and rapid obsolescence—counts as one of the greatest insults to the environment as well as a callous disregard for protecting and preserving our resources. Their actual use in destructive imperial adventures courts even greater environmental catastrophe.

However, this is not a new feature of imperialism, but a quantitatively greater assault on the environment, an assault that threatens first and foremost those weakest and poorest.

To argue that the great harm of reckless destruction of the environment is somehow inconsistent with or alien to Lenin’s theory of imperialism defies credibility. No social theory devised since the advent of capitalism consistently links essential features of the economic system to harm brought on the world’s people as do Marx, Engels, and Lenin’s theories of capitalist development. Other theories warn of dangers, setbacks, or potential tragic policies, but none demonstrate a logical connection between capitalism, imperialism and human suffering as do those theories.

It is not the inviolability of Lenin’s words that is at stake here; capitalism may well mutate to another stage beyond imperialism (hopefully a transition to socialism!). Instead, it is the integrity of our social science, its ability to account for and predict events, and its cumulative advancement that call for defense.

Rose errs in cavalierly violating these standards. His is not a challenge to Lenin’s theory, but a misunderstanding.

Zoltan Zigedy

zoltanzigedy@gmail.com

Death by a Thousand Cuts…

Many liberal and even radical economists have raised the prospect of a “double-dip recession.” By the phrase “double-dip,” they refer to a repeat of the sharp downturn in growth experienced by most countries in 2008-2009. The possibility of a recurrence, a violent contraction of economic activity, looms over the global economy as it stumbles and falters away from the shock of three years ago.

Since the capitalist economy has yet to expel the profound contradictions that produced the shock, the possibility of another sharp downturn cannot be ruled out.

However, an even worse outcome likely lurks ahead. Indeed, the economic diagnosis is so dire that a dramatic downturn might be welcomed in some circles as a release of the enormous pressures that impinge on the world’s economies. Such a downturn, destroying real and nominal wealth, consolidating productive means, and tragically devastating of living standards, might buy capitalism some breathing room and force policy makers to rethink their road map going forward.

Clearly, economists and politicians learned little or nothing from the 2008-2009 drama. In spite of the much acclaimed “death” of neo-liberalism celebrated in the depths of crisis by liberals like Paul Krugman and Robert Reich, the pre-crisis ideology of market sovereignty, minimal government, and monetary tune-up still reigns supreme. What policy makers have learned is to encourage Central Banks to administer a preemptive monetary transfusion at the first sign of a downturn. While this has yet to stem the bleeding, it has kept the patient from bleeding to death.

Instead of the feared “double dip” recession, we may instead experience something far worse: a grinding slowdown, an intractable stagnation, a kind of economic death from a thousand cuts.

Where the economic watchdogs were caught unawares in 2008, confident that capitalism would continue to show resilience and growth, policy makers are wary today of a similar “Lehman” moment, where markets seize, confidence plunges, and fear grips all economic activity. Thus, the chairman of the Federal Reserve, Ben Bernanke, stands vigilantly at the gate intently looking for any economic interloper, though with no guarantee that he has the weapons to contain it. This vigilance is particularly acute in an election year, when no economic czar wants to be perceived as influencing the election outcome.

Popular mythology, many economists, and far too many Marxists depict economic crisis only as a great shock wave that sends economic life into chaos. Certainly the panic of 1929 implanted that image. But that image is a caricature of the decade of decline and weak, tentative recovery that cycled throughout the Great Depression until interrupted by the buildup for the Second World War.

Today’s crisis mirrors that event in many ways, yet exhibits its own unique features as well. Some of the differences are especially menacing.

Signs of Decline

The economic decline that I identified and forecast in my January post, Summing Up/Taking Stock, continues unabated. The slowdown in the growth of US Gross Domestic Product persisted through the second quarter. Euro-zone growth has actually turned negative, especially and deeply in the Southern European region. The collapsing demand in this critical area has slowed the entire global economy, even the once fast-growing emerging market countries like China, Brazil, India, and Russia. The prospect of global economic growth is dim, stagnation likely, retreat very possible.

The key indicators from the capitalist point-of-view—earnings and productivity—stumbled in the first half of 2012 in the US. The burst of productivity growth that resulted from the harsh discipline imposed by unemployment, wage and benefit contraction, and speedup at the crest of the crisis produced an equally dramatic leap in earnings and the rate of profit. For the capitalist, this signaled “recovery,” though a recover only for the “swells.” Today the momentum from that intensification of exploitation has dissipated—profit and productivity growth is again slowing. The system cannot work for the capitalists without these measures showing healthy growth and hence systemic decline becomes an issue again for the capitalist class.

The European front of the global crisis continues to deteriorate, but at a faster rate. GDP growth is negative through nearly all of the Euro-zone and debt-mongers continue their aggression against bond interest rates, both squeezing sovereign debtors and securing ever higher interest payments from them. The most vulnerable national economies are caught in a vicious scissors’ crisis between escaping debt and restoring growth.

The Peoples’ Republic of China, the world’s second largest economy, has been racked by the global slowdown, dragging its growth prospects downward. Nearly all PRC economic indices are lower than for the same period a year ago. While domestic consumption is up, it is not at the impressive rate of a year ago. Nor is it as balanced as in 2011. Further, bad bank debt is up, private sector profits are down, and credit has slowed.

Other formerly vibrant emerging market economies are also slowing.

Of course the cold economic data mask the human costs of the economic crisis—a literal death by a thousand cuts. Unemployment, job insecurity, wage stagnation or decline, benefit cuts and cost increases, housing foreclosures, family dependencies and a host of other blows are bleeding all those without wealth and power.

Policy Paralysis

Choking any hope of recovery is the poverty of ideas shared by virtually all global policy makers. During the Great Depression, and unlike today, there were three new and radically opposed policy options that emerged as a response to the capitalist crisis (and imperialist war). First was the challenge of socialism. Both the isolation from the capitalist market and the successes of agricultural realignment, industrialization, and planning kept the sole socialist state, the Soviet Union, immune from crisis and enjoying unprecedented twentieth-century growth and development. Most notably in Europe, the appeal of socialism and the attraction of Communist Parties increased dramatically, especially in politically unstable countries like Italy, Germany, and Spain.

In response, rabid nationalism, fanatical anti-Communism, and a corporatist state combined to establish a new form of capitalist rule: fascism. The driving force behind the rise of fascism—its principle purpose—was destruction of the Communist left; it was essentially a counter-revolutionary movement. Fascism’s answer to the economic crisis was militarization, war, a collective tribal mentality, and the dismantling of the parliamentary system. It arose in an historic context, a historically unique moment. Though seldom acknowledged by scholarly accounts, fascism planted deep roots in other countries with significant working class and peasant left-wing movements, countries like Poland, Romania, Finland, and Hungary. Equally neglected by historians is the essential feature of anti-Communism, the feature that generates and animates fascism wherever it reappears.

Many point to the US New Deal as a third way and a less radical response to Communism, a moderate and modest social-democratic program that began as a quasi-corporatist approach (the National Recovery Administration) and morphed into a public sector-driven welfare and public employment project. That it brought relief to millions who would have otherwise suffered needlessly is indisputable. That it did not “solve” the crisis of capitalism is equally indisputable. As with UK Conservative Party governance of that time, the economy stumbled along until war and military spending stamped “paid” to the economic crisis.

Today’s ruling elites, political parties, and media pundits have no new approaches, no new programs to face the increasingly ominous economic challenges. They combine an embarrassing smugness with a near-religious devotion to neo-liberal dogma. Even those advocating a tentative growth model and elements of welfare-state relief are far removed from tackling the severity and the systemic failures of this crisis. From the austere, fanatical market disciplinarians like Paul Ryan and Angela Merkel to their more humane, flexible, and reformist counterparts like Paul Krugman and Francois Hollande, all share a confidence that private ownership and markets are indispensable to economic development and growth. All share the belief that the tools are at hand to steer the global economy back to the course it tracked before 2007; they simply differ on the tools. Even the mythically idealized New Deal vision of the state as the helmsman, directing capitalism-with-a-human-face is beyond the imagination of our contemporary leaders.

Facing a November election in the US, the two parties strive to stoke their respective bases with the predictable rhetorical flourishes. The Democrats hope to convince the electorate that the economy is on the road to recovery or, if voters don’t believe that lie, that it is Republican intransigence that stands in the way of that recovery. The Republicans, on the other hand, want to spin the idea that Democratic Party reckless spending stands in the way of recovery or, if voters don’t believe that lie, that returning to the gold standard will put capitalism back on the rails!

Answering the bell for the left is the usual motley crew that raise the specter of fascism and the banner of the lesser-of-two-evils (they try to have it both ways!). Never mind the lack of a Communist threat to spur fascism; never mind that last season’s lesser evil transforms into this season’s greater evil. As the center shifts inexorably to the right over decades of elections, the institutional left of think tanks, journals, the trade union bureaucracy, and NGOs knows only one answer: vote Democratic!

In France, citizens are living a déjà vu moment: Hollande is Barack Obama with a French accent—promising change and already sowing disappointment. His economic advisers remind the populace of the deficit crisis at every turn, an omen of even more disappointment ahead.

Only in Greece is there a Communist “threat” and only in Greece is there really the threat of fascism embodied in the Golden Dawn movement. Greek Communists—the KKE—present a revolutionary program for Greece’s revival, a program that is advocated by a mass party and is unique to Europe. ABC—the Anything But Communism left—is represented in Greece by SYRIZA, a popular alternative that offers the false option of militant posturing without any revolutionary sacrifice.    

The current leadership of Peoples’ China seems determined to dismantle some of the socialist safeguards that protected the country from the sharp downturn of 2008-2009. On one hand, they want to invite greater risk by reducing the state's semi-monopoly of the banking sector. On the other, they rely heavily upon credit market manipulation rather than careful, balanced planning to stimulate growth. As a result, there is disorder in investment initiatives: unfinished projects, waste, duplication, etc. While there has been a decided shift towards domestic consumption growth, the rate of growth has slowed noticeably since the first of the year. The recent high-profile symbolic blow to the Party’s left leaves many concerns about the PRC’s direction and ability to jump-start the global economy.

In short, the ruling elites throughout the world offer only stale and proven ineffectual policy solutions. They remain locked in the economic thinking that dominated the pre-crisis era. Neither the audacity nor the spirit of experimentation that characterized the Roosevelt administration has yet emerged, a level of response that might at least take the edge off the human cost of economic decline. Even the threat of falling off a “fiscal cliff,” as the Federal Reserve chairman and the independent Congressional Budget Office warn, brings no new ideas or re-thinking.

Some see this as irrational behavior on the part of rulers, but they fail to understand that the last few years have been quite kind to elites: profits rebounded dramatically after 2008-2009. And elites have every reason to believe, despite the current alarm over earnings, that they will continue to patch up their profit-making machinery and move forward thanks to the willingness on the part of the crisis victims to continue sacrificing.

Perhaps they are right, but the masses face a slow death from a thousand cuts; the vast majority will, as they have over the past four years, pay an enormous price to guarantee the health and profitability of monopoly capitalism.

The crisis continues unabated. The only question remaining is who will pay for the destruction in its wake. Ruling elites demand that working people—the masses—pay to restore capitalism to a healthy, profit-turning state. They need no new ideas or new programs to secure that result.

But for the rest of us, we desperately need ideas that will allow us to escape the crisis and the tyranny of monopoly capital. Socialism would answer that call.

Zoltan Zigedy

zoltanzigedy@gmail.com

What's theory got to do with it?

The history of this young nation has known but a few transformational developments since its revolutionary birth: the Civil War primarily, but also the New Deal reforms and the broadening of civil rights in the latter half of the twentieth century. The first transformation, the destruction of slavery, was the first and only change that profoundly restructured property relations in the US.[i]

The New Deal, on the other hand, expanded the human rights manifesto beyond the eighteenth-century bourgeois deification of property and freedom of action, an expansion that nonetheless remains contested to this day with the continual erosion of the welfare state.

Where the New Deal proffered the additional universal rights to a job, to belong to a union, to food, etc.—what philosophers have come to call positive rights—the civil rights movements of the twentieth century expanded the notion of a citizen to include all those—women, former slaves-- denied by the so-called founding fathers, the colonial elite.

Thus, the goal of establishing a bourgeois republic was not completed for nearly two centuries until the nominal full participation of women and African Americans was achieved with universal voting rights. Yet within two decades after the landmark voting rights legislation, any promise of popular and democratic expression had been decisively dashed by the powerfully persuasive role of money and media. The newer information and entertainment technologies afforded the rich and powerful an overwhelming counter to the creaky machinery of universal suffrage and the myth of voter autonomy. What the bourgeois republic gave in opportunity, the opinion-makers took back with their consensus factories.

Allergy to Theory

Without an understanding of our nation’s history, without theories that weave together events, without a broad and deep grasp of causes and effects, the past and the way forward are mystifying and disorienting. More importantly, without an over-arching theory that explains both the common and uncommon elements occurring in the course of US history, one can only despair at the future. Certainly no hope for altering that course can come without that understanding.

But searching for causes, making historical connections, and scrounging for general laws have seldom known popularity with our fellow citizens. Some, like Professor Richard Hofstadter, have attributed this allergy to theory to a long-standing anti-intellectualism. But the US overflows with intellectuals, both inside and outside of the universities. Pundits of every stripe dominate the daily background noise, the written word, and the sport of national politics; they may not be intellectuals to my liking, but they are intellectuals nonetheless.

No, the problem is an aversion to theory, an aversion born from both unique subjective and objective features of US history. To a great extent, the dynamism of the young nation – its continued expansion and shifting frontier, the influx of waves of immigrants, the broken links with the patterns of European development, the perception of unlimited opportunity, and a host of other “exceptional” features—gave rise to the creed of American Exceptionalism, a view that the US stands outside of the patterns of development shared by other nations. Put simply, the US is seen as making a new history apart from the old patterns; no theory is necessary to explain that which remains unsettled and indeterminate.

From this stance of unique, exceptional social, political, and economic development came adherence to the philosophical framework of pragmatism and empiricism—a concern for the practical and the immediacy of experience. In the US “theoretical” frame of reference, it is the individual, and not the family, neighborhood, work collective or any other social unit that stands at the center of the universe, a posture reinforced and made imperative by the rigors and discipline of an unfettered capitalism that trades on dissolving historically established social ties and identities. 

Except on those rare occasions when Marxist or other collectivist theory-driven movements arise and intrude, our intellectuals celebrate the individual and eschew recognition of any laws of social, economic, and political development. Social life and its history are merely a swirl of sentiments, decisions, accidents and spontaneity, all guided by a quasi-religious sense of destiny.

An Example

A recent study circulating among progressives on the Internet demonstrates the poverty of this prevailing intellectual method in the US. Krishna Savani, a business professor at Columbia University, and Aneeta Rattan, a psychology professor at Stanford University, have authored a paper “explaining” the wide-spread, counter-intuitive acceptance of material inequality in the US. The paper’s title, while couched in the academic idiom, clearly states their conclusion: “A Choice Mind-Set Increases the Acceptance and Maintenance of Wealth Inequality.” That is, the idea that outcomes are determined by choice and not circumstance, privilege, advantage, or prejudice trumps the indignity or sense of injustice people may have over material inequality. Thus, people are less likely to attend to material inequalities when they believe strongly that life’s outcomes are largely a matter of choosing wisely.

They conducted experiments, the results of which showed that:

…highlighting the concept of choice makes people less disturbed by facts about existing

wealth inequality in the United States, more likely to underestimate the role of societal

factors in individuals’ successes, less likely to support the redistribution of educational

resources, and less likely to support raising taxes on the rich—even if doing so would help

resolve a budget deficit crisis. These findings indicate that the culturally valued concept of

choice contributes to the maintenance of wealth inequality.

The professors’ conclusions neither surprise nor satisfy. Opinion polls show that US respondents vastly overestimate their relative position in society; in one poll, nearly two out of five believed that they are or will be in the top 5% of wealth holders, a view that is patently irrational and impossible of fact. Other polls demonstrate that US citizens have a vastly distorted picture of wealth and income distribution in the US, an ignorance that also informs their perception and valuation of inequality. While choice may be one element in the conceptual framework that devalues social justice, there are many others, including deception and simple factual error.

The radical empiricism and theoretical meagerness of the Savani/Rattan study implies that high estimation of individual choices is the decisive factor in the reluctance of US citizens to tackle the explosively growing inequalities in the US. Though the authors may not have intended it, the study leaves the pessimistic impression that the worship of choice (the preference of weighing opportunity over outcome) is deeply and perhaps intractably rooted in the US character.

As an example of social science practiced in the US, the study is impeccable: the numbers are transparent, the statistics are significant, and the experiments are replicable. But as a basis for policy or of robust understanding, the study is frustratingly spare and unhelpful.[ii] 

Most importantly, the study fails to answer the critical question: Would people really choose to place choice above other social values if they were fully informed and unbiased? Or is their embrace of the choice “mind-set” something foisted on them by tradition, peer pressure, media, or propaganda?

Choosing to Choose?

While millions of dollars and thousands of hours could be spent rigorously identifying the “mind-set” that allows citizens to shun policies that address wealth and income inequalities, such an effort would get us no closer to understanding how this mind-set came to be and how it can-- if it can-- be transformed.

But addressing these questions is not a career track for scholars looking for appointment or tenure at elite universities.

Since it would make no sense, all things being equal, for people to freely and knowingly prefer a value (freedom of choice) over other values (equality, for example) that are clearly in their and nearly everyone else’s best interest, we need a theory and not merely an experimental result to move forward. One such theory—the Marxist theory—invokes the notion of a ruling class with its own distinct and anti-majority interests. On such a theory, and in contrast with the study’s barren empiricism, most people elevate certain values above their own interests because still others, operating as a cohesive class, have the desire and means to impose their values upon the rest of us. They could and would, if necessary, impose their will through coercion, but they prefer to use persuasive mechanisms to achieve the appearance of consensus.

The Marxist theory takes it as axiomatic that the ruling class, enjoying a decided advantage in wealth and power, will fully exploit that advantage; it will exercise its wealth and power to market its own interests to those with conflicting interests. The ruling class addresses this project through the ownership of the means of mass persuasion and decisive control of the instruments of governance. Thus, for a Marxist, the monopoly of the media, the indirect, but decisive control of the educational system, and the dominance of political voices and the options they espouse allow the ruling class to plant, nourish, and harvest ideas among the masses, ideas that run counter to the interests of the vast majority. One such idea, among many others, is the notion that individual choice is threatened by any policy that promotes egalitarianism.

The “Consensus” Mechanism at Work

Since the end of the Second World War, the US ruling class has pressed its interests over all others by successfully raising the specter of Communism, in the first place, and the threat of Islamic Fundamentalism, today. Clearly, the anti-Communist hysteria was predictable as a gambit by the ruling class since Communists did indeed threaten to overthrow them. Subsequently, the success in portraying Communism as a threat to the nation, freedom, religion, and any other real or constructed value, allowed the ruling class to destroy any real domestic opposition and eviscerate the militant trade union movement. In a real sense, the left and the trade union movement in the US has yet to recover from this thorough and successful project of mass persuasion. And since the threat of Communism has lost its credibility at this time, the US ruling class saw the necessity of creating a new bogeyman in Islam.

Consolidation and monopolization of the mass media has enabled the deceptions and fantasies that were the building blocks of a false and alien world view shared by the majority of citizens even against their own interests. As new technologies arose and as they were more and more absorbed by giant monopoly media corporations, the bounds of independent thought grew narrower. Even non-conformity became a calculated and manipulated phenomenon. A casual examination of network news, newspapers, and news services shows an uncanny similarity in coverage and point of view. A closer examination shows that the common point of view nearly always coincides with the point of view of elements of the ruling class; that is, whatever diversity is found in the national dialogue simply reflects the diversity of opinion among the ruling elite.

By purchasing the two contesting major parties, the ruling class decidedly controls the electoral arena in the US. It is not necessary for the rulers to send instructions. By merely funding the lobbying effort and shifting campaign contributions, the US ruling class determines the limits of discussion and debate. As a result, a spectacle of largely -- but not exclusively-- white guys with professional degrees, expensive haircuts, near identical suits and ties, and flag pins gather to decide the direction of the country. Few see the bizarreness of this dance of puppets and even fewer recognize the puppeteers who pull their strings.

Theory and Change

The theory advocated here -- the Marxist theory -- has a long history back to its origins in the mid-nineteenth century. The fact that it captures and explains the behavior of many capitalist nations over many years bolsters its scientific credentials. The fact that it accounts for wars, economic crises, oppressive governmental acts, and massive transfers of wealth to the wealthiest – all counter to the interests of the vast majority—attests to its robust explanatory value. Those who have no theory have no explanation or answer for why a tiny minority can shape the course of history without regard to the interests of the majority and without resorting to coercion.

Rather than fueling pessimism and fatalism, the Marxist theory offers a way out. The profound economic crisis that surfaced in 2008 and continues unabated has damaged, disabled, or slowed the consensus mechanisms that have been operating smoothly and effectively for many, many decades; the mythologies created by these mechanisms are crumbling; and the tight grip on the “mind-set” of the US population is loosening.

While the political expression of these changes is retarded by habit, peer pressure, and sheer, naked opportunism, the underlying foundation of conventional political behavior is eroding. Consider the following:

●All of the institutions of governance are at all-time lows in credibility and confidence according to numerous opinion polls.

●Similarly, sectors of monopoly capital are viewed extremely negatively, especially the financial industry.

●Likewise, opinion polls show new lows for the credibility of the mass media.

●The idea that every generation of US citizens does better than its forebears is shattered. This has been a pillar of American Exceptionalism.

●The axiom that education is the key driver of occupational success is crushed in a vice of fewer and fewer high paying jobs and escalating educational costs.

●Income and wealth inequality is too apparent to hide or dismiss.

●Several generations of young people have moved beyond the pollution of anti-Communism. The socialist option now has credible showings in opinion polls, especially among young people.

Though these seeds of discontent are now deeply planted in the national “mind-set,” the ruling class works feverishly to counter their growth. Nonetheless, they will burst through. But we have no guarantee that the discontent will not be deformed by false populism, appeals to nativism, and personality cults. Those waiting for spontaneous risings may be shocked by what they get.

Instead, the moment is ripe for intensifying the battle of ideas. When politics lags behind the national sentiment, there is no better time to engage the ruling class and the false prophets. Regardless of how the forthcoming election turns out, this battle for shaping a genuine national interest remains. If we are serious about transformational change, we must follow the path of the abolitionists who came before. We must show the same persistence and zeal for our cause and not be deterred by electoral sideshows, compromise, and maneuvering.  

For a left largely irrelevant to the outcome of the coming US elections, the moment to inject new ideas—anti-capitalism, socialism---is now.

The pitchforks will eventually come out; it’s only a matter of who they skewer. 

i This is not to, in any way, discount the most important new world re-ordering of property relations: the wholesale expropriation of the property of the native inhabitants.

ii  Despite their “rigor,” they expose their own theoretical bias by contrasting acceptance of choice over taxing the rich to pay down the deficit. It never occurs to them that paying down the deficit might be viewed as a bogus reason to re-frame taxation!

Zoltan Zigedy

zoltanzigedy@gmail.com

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