Stockman’s Rant

On the rare occasion, an article appears in the mainstream press that takes a deeper, more thoughtful view of human affairs, a document that gives a hint or glimpse of an unspoken truth beyond the pablum that occupies media puppets. Such an occasion was the publishing of The New York Times opinion piece entitled “State Wrecked: The Corruption of Capitalism in America” (3-31-2013) and authored by former Reaganite budget director, David Stockman.

Now Stockman is a renegade from corporate Republicanism; he actually believes in the ancient principles put forward by Adam Smith and other classical capitalist thinkers. While corporate Republicans cozy up to their party’s ugly, fascistic outliers, they always, in the end, make their bed with the rich and powerful. Stockman, on the other hand, actually embraces the mythical virtues of small business ownership and town hall democracy. In classical Marxist terms, he represents the ideology of the petite-bourgeoisie.

In the swamp occupied by Democratic and Republican politicos—the breeding ground for conventional politics—such views are unwelcome. Principled politics from the right or the left are alien equally to the snakes and the rats that prey on the cognitively weak and unwary.

Stockman is in a panic because he sees beyond the stock market euphoria and Pollyanna commentaries that have induced the mass delusions of the last several months. And what he sees angers him.

Stockman constructs an indictment, a list of charges against the current US economy: growth of output is woefully inadequate, jobs are both indecently scarce and low paying, the incomes and the net worth of “ordinary” citizens are dropping while poverty is on the rise. To anyone with a grip on reality, these are not signs of real economic recovery or systemic success. He notes that “we’ve had eight decades of increasingly frenetic fiscal and monetary policy activism intended to counter the cyclical bumps and grinds of the free market and its purported tendency to underproduce jobs and economic output. The toll has been heavy.” And yet imagine the toll if no remedial action had been taken! Surely, this unintended critique of eighty years of state-monopoly governance counts as a devastating charge against modern capitalism. If the era of state-monopoly capitalism can do no better than produce the sad state outlined by Stockman, it is decidedly a failure.

Stockman dares speak the truth so discomforting to liberals and social democrats: [World War II] “did far more to end the Depression than the New Deal did,” though he misleadingly praises the Eisenhower years for its “sound money and fiscal rectitude.” Perhaps he is too young to remember the massive increases in military spending, the ambitious interstate highway system, and the enormous growth of public spending brought on by the Cold War and the Sputnik panic. In any case, the dose of war socialism and the “frenetic… activism” of state-monopoly capitalism kept the capitalist ship afloat, though with fewer and fewer rewards for the majority of US citizens.

Stockman correctly sees that the remedies pursued by US state-monopoly capitalism directed more and more of the lubricant of public funds towards the financial sector over the last decades: the Greenspan “put,” the Long-Term Capital Management bailout, extended ultra-low interest rates, TARP, Fed purchases of bank junk, the support of federal bond prices, and support for equity markets. He calls this, not incorrectly, “Keynesianism—for the wealthy.”

And this is a salient point. It is commonplace to express the differences between Democratic and Republican policy makers since the Reagan era as pro- and anti-Keynesianism. But this is wrong. Ironically, it was only during the Clinton administration that growth of government spending was at all curtailed and today fiscal and monetary expansion remains a ready tool of the ruling class well after Reagan's departure. Certainly Keynesian pump priming has taken new and evolving forms over decades: direct job creation, military spending, massive space programs, infrastructure projects, public-private partnerships, repair of financial institutions, and stimulation of financial demand. While one or the other may be the favored priming tool of rulers at any given time, the similarities of the forms are far more important to recognize than their differences. State intervention in markets continues to be at the core of contemporary state-monopoly capitalism. Stockman sees this; others don't.

In Stockman's account, the enabler of pump priming in all of its forms has been debt. Borrowing or printing money is the means to continue the regimen of “frenetic fiscal and monetary policy activism.” But, in his view, this regimen is running out of steam. “The future is bleak.” And the “Fed has incited a global currency war (Japan just signed up, the Brazilians and Chinese are angry, and the German dominated euro zone is crumbling) that will soon overwhelm it...”

A bleak picture indeed, but one entrenched in reality.

So if modern capitalism-- in its state-monopoly form-- is a disaster, does that mean that Stockman advocates socialism?

Definitely not. Instead he holds out for a nostalgic return to the gold standard. Avoiding what he calls “end-state metastasis,” “would necessitate a sweeping divorce of the state and the market economy [the wholesale rejection of state-monopoly capitalism! ZZ]. It would require a renunciation of crony capitalism and its first cousin: Keynesian economics in all its forms. The state would have to get out of the business of imperial hubris, economic uplift and social insurance and shift its focus to managing and financing an effective, affordable, means-tested safety net.”

 In short, Stockman advocates going back to a conjured idyllic time before state-monopoly capitalism, a time imagined by the petite-bourgeoisie as one of healthy competition, entrepreneurship, and opportunity. For him, the golden age of capitalism would be the pre-depression era of small town USA, family farms, vibrant and expansive industry and foreign policy isolationism. Of course any pretense of continuity or viability of that era was dashed by the Great Depression. In fact, the policies decried by Stockman (and associated by Marxists with state-monopoly capitalism) served as a temporary backstop to the further contraction of the capitalist system produced by that fantastic era.

Stockman may wish for a return to an earlier time just as others may wish to time travel back to the court of Louis XIV, but it isn’t going to happen. Capitalism, like any organism, has its own life span, its own history. Saved from a critical illness, capitalism passed from its laissez faire period to a period of intensifying state intervention and management. Today, that phase of capitalism’s development—state-monopoly capitalism-- is also threatened with a critical illness. I would not be so bold as to predict capitalism’s imminent death, but certainly it will not be revived by reliving its past as Stockman fantasizes.

At a time when liberals and conservatives argue pathetically over the right mix of austerity and stimulus, Stockman is a welcome mainstream herald of the profound crisis pummeling global capitalism. His anxiety and anger reflect a deeper understanding of the contradictions of the moment. His rant, spiked with sarcasm and vitriol, stands in stark relief against the smugness of the lap dog punditry.

Krugman Strides into the Ring

 The Stockman screed generated a storm of opposition. Liberals and the fuzzy, mushy left were particularly affronted. Unlike Stockman, they would like to only turn the clock back to the early seventies, another supposedly “idyllic” time when business unionism was generating satisfactory contracts, the “Great Society” programs were blooming, and war in Vietnam was winding down (at least for US combatants). The fruits of the civil rights struggles and urban uprisings were realized in the creation of programs, bureaucracies, and other buffering agents against domestic insurgency. Jobs servicing the Great Society generated a stratum of social liberals who matured into the base of a social democratic left inside and outside of the Democratic Party. For them, the world turned evil and foreboding with the Reagan “revolution,” a movement they characterize as neo-liberalism.

In the dust-up with Stockman, Paul Krugman, columnist for The New York Times, assumed the role of savior and protector of their interests and perspective. Krugman, the darling of the “respectable” left, attacked Stockman for his audacious critique of the track record of state intervention in the capitalist economy. Anyone who follows Krugman knows that his response to the crisis is a simple solution: spend more public funds and spend freely until growth perks up. The soft left finds this an agreeable solution because it promises to save capitalism (and forestall socialism!) while creating a potential material basis for pet welfare programs. It is simply the fantasy of another New Deal. And never mind that Krugman doesn’t share the fantasy!

Apparently, the Stockman-Krugman battle merited a major media appearance before the Sunday morning gasbags, the big stage for what our media passes off as intellectual fare. While I lacked the stomach to watch the sparring between the two, refereed by the likes of Huffington, van Sustern, and Will, I would commend an entertaining account of the match by Mike Whitney in Counterpunch (Krugman vs. Stockman, April 11, 2013).

The merit of Stockman’s account is that he is righteously indignant with an economic system that has failed the great majority of people and inflicted great pain and uncertainty. He goes beyond the dominant rhetoric of “we are all in this together” and “we are all at fault” to find systemic rot in capitalism. He correctly places the blame for this at the doorstep of state-monopoly capitalism, the stage of capitalism evolved to rescue the system from the accumulated contradictions of laissez faire capitalism, contradictions brought to light by the Great Depression. But he cannot go where logic would take him. He cannot entertain options that would transcend capitalism. Thus, he is resigned to a pathetic nostalgia for a bygone era where the contradictions of capitalism did not appear in such sharp focus. While he stretches the bounds of mainstream thinking, he can not see beyond markets and private ownership; he cannot see socialism.

Krugman and most of the US left are thoroughly conventional in their thinking—they offer a more “enlightened” management of the economic system and a cheerful capitalism with a human face. They would be hard pressed to point to a period when capitalism bore a human face, however. Nonetheless, they are undaunted before a rising tide of interest in the socialist option. They are resolute in their fear and rejection of real socialism.

Pressured by five years of relentless economic crisis and increasing signs of favor towards socialism, especially with the young, our feckless left offers a cold plate of empty slogans of localism, anti-consumerism, platitudinous “participatory” democracy, cooperatives, and a vacuous “new” economy. As if these are answers to the $17 trillion dollar US multinational, monopoly capital behemoth. In truth, these are simply evasions and dissemblance. 

If Stockman is right and capitalism is “state-wrecked,” then its time to leave the wreckage and turn to socialism. 

Zoltan Zigedy

zoltanzigedy@gmail.com

Sixto and the Queen of Versailles

Seventy-five years ago, Christopher Caudwell’s Studies in a Dying Culture was published posthumously. Caudwell, a brilliant young British Communist writer and poet volunteered to fight for the Spanish Republic and was killed in 1937. If Caudwell’s assessment of capitalist culture was appropriate to the mid-twentieth century, that culture has reached a terminal phase in the second decade of the twenty-first century.

The artistic and personal liberties unleashed by the escape from the repressive, conformist 1950s and the energy and optimism accompanying the civil rights and anti-war movements were methodically and overwhelmingly suffocated by corporate cooption. Any and every new spring of creative originality—whether it be a new popular musical form or an original film director—has been damned and channeled by the monopoly entertainment industry. As a result, cultural products with any claim to broad popularity are reduced to either formulaic, safe entertainments or vapid, lifeless expressions of “high” culture.

This is not to demean the tens of thousands of talented cultural workers who struggle at minimum wage jobs while studying and exercising their craft for the few willing to step away from the corporately constructed temples of culture. They labor even more heroically than their predecessors who were occasionally able to hew some measure of independence from the grasp of cultural moguls and business accountants. That is less possible today when only unrestrained vulgarity and violence or unchallenging distraction and fantasy offer the keys to entering the cultural big stage.

In an age where the promise of hip hop has been reduced to a grinding pulse of swagger, violence, and selfishness and the freedom of independent commercial film predictably delivers time-released, regular spasms of ultra-violence, nudity, and sex, relief from the tedium is especially delicious. More and more that relief is coming from documentary film.

I have in mind two documentaries that expose the worst and best of the US. 

The Queen of Versailles

The best documentaries often rise to great heights on sheer dumb luck; the Irish film makers who, by happenstance, captured close-up the coup against Hugo Chavez and its aftermath were extraordinary examples of the film gods in action (The Revolution Will Not Be Televised). Similarly, Lauren Greenfield's 2012 documentary, The Queen of Versailles draws its drama from the impact of the economic crisis upon one of the richest families in the US. What begins as the capture of the excesses and embarrassing vulgarity of the nouveau riche devolves to a tale of blame, self-pity, and neglect, thanks to the impact of the unforeseen crisis.

On the way up, a fortune built around the hustle and shrewd entrapment of the time-share industry allows an orgy of self-indulgence, senseless consumerism, and smugness. David Siegel, the ruler of the empire, brags about his clandestine role in getting Bush elected President; he creates a glitzy tower in Las Vegas to signal his success, and he aspires to build the largest private home in the US to flaunt that success. Siegel embodies Marx’s infamous iconic capitalist: “… The less you eat, drink, and buy books; the less you go to the theater, the dance hall, the public house; the less you think, love, theorize, sing, paint, fence, etc, the more you save—the greater becomes your treasure which neither moths nor dust will devour—your capital.” But as Marx acknowledges, your abstinence and single-minded greed is rewarded, for your accumulated wealth can “appropriate art, learning, the treasures of the past, political power…” And Siegel does all of this.

But the 2008 economic collapse brings the Siegel family to its knees. Dead, unattended pets; dog feces on carpets; fast food; cranky, spoiled children; and sullenness and self-pity replace the former swagger. “It’s the banks, the rotten, greedy banks,” the Siegels exclaim. They angrily protest that “ordinary” people like themselves are victimized by selfish bankers.

As the empire totters, the Siegels scramble to adjust. On a visit to her childhood friends, wife Jackie must subject her children to their first flight on a commercial airline. “Why are these other people on our plane?” they wonder. Jackie asks the rental car agent for the name of the driver; he responds with a puzzled look. The rich are not like the rest of us.

Through their “ordeal,” David Siegel sulks, whines, and wallows in self-pity. While Jackie’s untamed consumerism remains pathological, she shows more character and resilience, serving as both the family’s anchor and morale-booster. This snap shot of the very wealthy in full bloom and under duress shows the shallowness of that life choice and the ugliness of conspicuous self-aggrandizement. It is hard to feel sympathy for the Siegels.

Searching for Sugarman

If the Siegels conjure contempt, even disgust, Sixto Rodriguez—the focus of the documentary, Searching for Sugarman—counts as a glorious expression of the best of us. Rodriguez, a discarded cultural worker, exudes nobility, humility, warmth, and intelligence, whether working in small, marginal clubs, laboring on excavation or demolition sites, raising his children, or enjoying a belated celebrity.

Others have written of his strange, magical journey from a quickly emerging and falling talent forty years ago to the re-discovered celebrity of today. In between, Rodriguez worked and raised his children like millions of others, but with uncommon dignity and strength. The film, Sugarman, attests to the man’s resilience, but also celebrates his incredible impact upon others.

Unmistakably, Rodriguez, himself a former autoworker and the son of an immigrant Mexican autoworker, is a legacy of the US multi-national working class—a living example of the best of working class values. He, like his co-workers interviewed in the film, has an unassuming intellect and unqualified respect for others.

And he and his music are consummately “political.” Not in any clumsy or preachy sense, but in a way that speaks to and for the disadvantaged, that resonates with those who seek change. Early in his career he associated in Detroit with John Sinclair, the political commissar of the proto-proletarian-punk group, the MC5. Later, when his music arrived in Australia, he opened in live performances for Australia’s most widely known politically outspoken rock group, Midnight Oil.

But the greatest testament to his strong politics is the curious and bizarre impact on South African youth. After Angolan independence at the end of 1975, South Africa intensified its military interventions in that country and Namibia. Over the next decade, conscription of white South Africans into the military met further and further resistance. For reasons that remain obscure, the music of Rodriguez, commercially a flop in the US, found a following in South Africa. Rodriguez became the voice of resistance and change for many young, white South Africans. His music created the sound track for the anti-conscription movement. And by the mid-eighties he inspired other musical groups to propel the End Conscription Campaign. The Kalahari Surfers, Cherry Faced Lurchers, and other alternative musical groups gave expression to disenchanted white youth (see Forces Favourites, Rounder Records, 1986). The resounding defeat of the South African military by the Angolan military and its Cuban internationalist ally, the growing militancy of the African National Congress and the South African Communist Party, and the disenchantment of white South Africans brought apartheid to its knees and paved the way to South African liberation.

In a real way, this modest worker in Detroit helped rock the foundations of the racist, repressive apartheid system in South Africa-- quite an accomplishment for an artist without recognition in his homeland. Quite an achievement for a talent initially crushed by the gears of an industry driven by immediacy and profit.

Where The Queen of Versailles drains the spirit with its celebration of accumulation and ostentation, Searching for Sugarman brings joy and inspiration. Both are revealing. Watch them both, one after the other. Hang your head in embarrassment with the decadence that the unbridled capitalist system has wrought. Raise your head with hope for the nobility that people like Rodriguez bring to us.

Zoltan Zigedy

zoltanzigedy@gmail.com      

Notes from the Brink: March 2013

More Workers’ Woes

If it seems like I’m picking on the United Auto Workers union, it’s only because its descent from its once lofty, exemplary stature as one of the most democratic and militant CIO unions has been the steepest. Last month, I wrote of the leadership’s complicity in the gutting of union wage and benefit standards, a gutting that has left starting wages often lower than for their non-union counterparts. I reported that UAW contracts were pressuring management at non-union Toyota to buy out older workers in order to establish a new, lower starting wage to compete with their unionized competitors. UAW union contracts are now the corporate tool for slashing labor costs!

But it’s even worse than I thought. A retired autoworker pointed out that my claim of two-tier employment at UAW shops was incomplete. At Ford, the UAW has acceded to a three-tier system! Below the “entry” level tier, Ford, with UAW agreement, has established a classification of “long term supplemental” that offers the $14-16 entry-level starting wage, but with no job security or benefits! In some suburban, high- income areas, fast food restaurants offer better wages and benefits than this!

Labor Notes Ken Paff reports on a shameful act of treachery against workers employed at a car-hauling company under a Teamster contract. As revealed by a National Labor Relations Board decision, Ford colluded with a UAW local to underbid the Teamster contract and award the work to a lower-paying competitor. The NLRB administrative law judge ordered the voiding of the UAW contract and the re-employment of the laid-off workers with full back pay. According to the decision, Ford arranged the sub-standard contract with the UAW beforehand to secure a lower bid. As a result, the Teamster members who had made about $20 an hour were replaced with workers employed under a UAW contract at $11-14 per hour. According to a leaked document, the collusion would save Ford $9.8 million a year. This sorry deal was known to the top union leadership.

Treachery of this dimension transcends class collaboration and business unionism and sinks to the level of scabbing. Those who gave their lives to organize the UAW must be turning in their graves. Their legacy deserves much better than this insult to labor solidarity.

Currency War

Why is the escalation of the global currency war by the Abe government in Japan significant?

Until now, the leaders of all of the leading capitalist countries have proclaimed open and unrestrained trade—free markets—as a mark of a new level of international cooperation. They have advertised the dramatic growth of international trade as establishing bonds of mutual dependence that strengthen relations and lessen tensions.
But these “interdependencies” were tenuous at best. They temporarily concealed the ever compelled, inevitable drive for competitive advantage, to win at the expense of competitors. Cooperation is alien to a system—capitalism—based upon ever greater accumulation. A deepening crisis quickly surfaced these tendencies.

It was not the Abe government that opened the currency wars, but the US. The doses of “quantitative easing” adopted by the US Federal Reserve cheapened the dollar, making US exports more attractive and foreign imports less so. As a result, there was a marked revival of US manufacturing. In short, US policy makers broke with international cooperation and set out on the road to securing national advantage.

The first to feel the bite from this unilateral policy were many economies in Latin America. Despite the justifiable complaint of their leaders, US investment money flooded these markets, disrupting capital markets, and attacking their exports. Two years ago, Brazil lodged loud complaints against US quantitative easing and its negative impact on Brazilian exports.

Other countries, like the Republic of Korea, Switzerland, and Israel, have acted to protect their currencies, while Australian manufacturing has been seriously slowed because it has refrained from reacting.

The already seriously wounded EU economy has been further disrupted by the currency wars, with the European Central Bank reluctant to retaliate. Germany, with its manufacturing largely immune to price competition, has successfully blocked any strong reaction. The rest of the EU has consequently felt the loss of competitiveness.
It was the Abe government in Japan that brought this escalating contest into the open. Their explicit determination to weaken the yen served as the basis for Abe’s election campaign.

Despite a frantic attempt to get some agreement among the G7 powers, the battle only promises to become more aggressive and destructive. The Brazilian Finance Minister was recently quoted in The Wall Street Journal: “The currency war has become more explicit now because trade conflicts have become sharper. Countries are trying to devalue their currencies because of falling global trade. So many of them are in a difficult situation.”

The tensions emerging in the currency war are leading to sharp military confrontations and threats, especially among Asian Pacific countries. The capitalist sharks are turning on each other.

Here We Go Again!

Signs are eerily pointing toward developments reminiscent of the 2008 crash. Once again an enormous pool of capital is accumulating and overflowing into riskier and riskier areas to find a return. As reported in the WSJ, $149 billion has channeled into money market funds since November of 2012. The Journal notes that these funds are increasingly accepting risk (for example, French bank debt) to secure better returns.

Cash is also flooding equity markets. In only four weeks in the New Year, $38.1 billion was invested in stock mutual funds, more than the previous record in February, 2000 (remember that moment?).

A recent bank of charts published in the WSJ tellingly demonstrates the many signs of an overheated, dangerously speculative economy:

● Issuance of high-yield corporate bonds below investment grade is nearly double what it was in 2007.

● Business loans not required to meet traditional standards have risen sharply (though still well below

2007).

● Total assets in US high-yield, junk bond funds and exchange traded funds are more than double what

they were in 2007.

● Iowa farmland prices are more than double what they were in 2007.

As if there were not enough danger signs in the global economy, another over-accumulation event approaches. Hold on to your hats!

Zoltan Zigedy

zoltanzigedy@gmail.com

The ABC of Bourgeois Politics

From the Russian Revolution until the demise of Soviet and Eastern European socialism, one dominant, uncompromising and persistent theme has obsessed ruling elites in the capitalist world and their allies: Anything but Communism (ABC). The ABC doctrine has led to the seemingly contradictory consequence of “champions” of democracy and human rights embracing anti-Communist despots and torturers. It has led the same celebrated values to be compromised in capitalist countries by the violent repression of Communists, leftists, and workers. The doctrine has placed arbitrary limits on the rights of self-determination for any emerging nation daring to flirt with a non-capitalist path. And when Communism threatens to breach the barriers constructed by the capitalist class, that class resorts to the most extreme form of Anything but Communism: fascism. 

For the left, ABC has often appeared to be an insurmountable hurdle to the goal of peoples’ power and socialism. Too often the task of overcoming ABC overwhelms the advocates of socialism, leading to compromise, concession and ideological dilution. Certainly, many of the formerly powerful Communist Parties of Western Europe succumbed to this lure. The self-described Euro-Communists, especially, hoped to convince their opponents that they were reliable and docile contestants unworthy of the class hatred embodied in ABC. They thought that by demonstrating their fealty to bourgeois standards of political conduct and by donning the trappings of civil parliamentarians, they would win the respect of their class foes. But the illusion of acceptance through “historical compromise” and electoral coalition proved to be just that—an illusion. Today, these parties have thoroughly demonstrated their “trustworthiness” by totally abandoning Communism for tepid class-neutral reformism.

ABC and Syriza

In the wake of the twenty-first-century crisis of capitalism, the need for a revolutionary movement of peoples’ power and socialism becomes both more apparent and more urgent with every passing day. The material conditions of most poor and working people have sunk to a level demanding far more radical solutions than those offered by the traditional bourgeois parties. Their failure to correct, or even address, the harsh deterioration of mass living standards over the last five years confirms their political irrelevance.

Nor are the romantic and spontaneous movements of the recent past of any use in the face of the ravages of a capitalist economic, social, and political crisis. Subcommandante Marcos or the leader-eschewing leaders of the Occupy movement are incapable of combating the ravages of a wounded capitalism despite the enthusiasm and encouragement of much of the US and European left.

Indeed, the objective conditions call for an organized movement determined to overthrow capitalism and replace it with peoples’ rule and the construction of socialism.

Yet the US left and much of the European left are still captured by the mentality of Anything but Communism. They subjectively hope to manage capitalism and yearn to return to the pre-crisis world of life-style advocacy, promotion of social harmony and tolerance, and incremental social welfare; they imagine class struggle without class conflict; and they share the make-believe hope of class justice without class domination.

This hope is found in the most recent celebrity of the Greek party, Syriza, and its attractive and agreeable leader, Alexis Tsipras. Syriza embodies the delusions of the US and European soft-left in the post-Soviet era: it advocates a noisy but vacuous anti-capitalist posture attached to a program of “enlightened” management of capitalism. Like its forebears in Social Democracy and Euro-Communism, it offers to appease the bourgeoisie while promising a distant goal with no more clarity than that of William Blake’s poetic Jerusalem.

Tsipras reveals the timidity and conservatism of the Syriza program in two recent documents: an interview with Bret Stephens of The Wall Street Journal published as a glowing opinion piece (The Conscience of a Radical) on January 28, 2013 and an article authored by Tsipras in Le Monde Diplomatique (The Greek Revival Plan, February 16, 2013).

The WSJ interview occurred when Tsipras visited New York to “meet with think-tank scholars, journalists and International Monetary Fund officials, and to be dined at the State Department,” to quote Stephens. It is hard to envision anyone frightening capitalism while maintaining this itinerary. As the friendly Stephens noted: “It definitely amused me to meet him in the breakfast room at his hotel, the Helmsley Park Lane on Central Park South. Not exactly the cafeteria of the proletariat.”  

The trusted spokesperson for monopoly capital, Stephens, found much to like in the spokesperson for Syriza. He concludes that: “If the radical in Syriza means a party capable of thinking for itself and posing the right questions, maybe the right answers won’t be far behind.”

Apart from this ringing endorsement, what answers does Tsipras offer to the growing devastation of Greece and the capitalist crisis?

Tsipras assures Stephens that he advocates neither a default on Greek debt nor an exit from the euro zone.

Instead, Syriza is committed to a “conference” with the European Union to discuss negotiating a restructuring of Greece’s debt (Tsipras writes of the “public debt” though he also calls for the recapitalization of Greek banks, presumably mainly private banks). The model for this maneuver is the 1953 conference called to renegotiate the debt of the Federal Republic of Germany (Tsipras fails to acknowledge that there were two Germanys in 1953!) where 21 countries agreed to reduce the FRG debt and invoke less onerous terms. Unsaid in his proposal is the Cold War context of the 1953 conference. Conferees remembered well the consequences for the world of the heavy reparations and debt imposed on Germany after World War I. They were equally anxious to draw the FRG into the Cold War (the FRG joined NATO IN 1955) and in need of the FRG’s growing industrial might. Nothing remotely like these considerations weighs on the other EU members in deciding Greece’s fate today.

But how would Syriza secure such a conference today? By moral suasion? By calling on historical parallels? Neither would move EU leaders or their Central Bankers to participate in a plan that they would perceive as disordering financial markets. To believe so is to vastly misunderstand the logic of contemporary capitalism. There is something remarkably naïve in believing that the Greek crisis can be solved by merely calling a conference of EU leaders.

Tsipras, in both his interview and article, blames Greece’s sorry state on corruption. He does not place the capitalist system, the capitalist crisis, inequality, or any other systemic element or process in Syriza’s sights; rather, he sees Greece declining because of corruption and cronyism. Surely the leader of a “radical left” party must recognize that capitalism breeds corruption just as surely as it generates crisis. Corruption is an inevitable byproduct of capitalism and will reappear and expand as long as capitalism exists. To attack it, one must attack capitalism.

But there is no attack on capitalism in Tsipras’ or Syriza’s plans. Instead, there is “…breaking with the past… working for social justice, equal rights, political and fiscal transparency—in other words, democracy.”

Fine. But these broad slogans are not socialist. They are not even anti-capitalist. In fact, they could be embraced easily by Social Democrats in Europe or even Democrats in the US.

For those who were quick to condemn the Greek Communists (KKE) for not joining with Syriza in an electoral coalition, Tsipras’ and Syriza’s program should cause pause to reconsider. Like previous appeasers of Anything but Communism, Syriza trades on its differences with Communists. It offers a pledge of fidelity to the bourgeois rules of the game. Like other appeasers, it sacrifices principled advocacy of socialism to political expediency, a sacrifice that gets us no closer to peoples’ power or to socialism. Once Syriza is compelled to come forth with a program, it is impossible to locate a common ground with revolutionary Communists.

Tackling global capitalism—essential to reversing the continuing devastation of this deep and profound crisis—requires more than a conference and a series of slogans. Real solutions are not to be found with those promising to guide capitalism out of an inhuman crisis of its own making.

Zoltan Zigedy

zoltanzigedy@gmail.com 

Notes from the Brink: The Economy in the Winter of 2013

Workers’ Woes

Workers at a non-union Toyota plant in Kentucky have been offered incentives to retire early in order for management to replace them with new hires at a lower starting wage. The labor cost advantages formerly enjoyed by Toyota—the non-union premium—is no longer available to non-union plants in the auto industry. It seems the wages and benefits long ago won by a more aggressive UAW have retreated to the extent that non-union plants must now secure lower compensation in order to compete!

Since the UAW has conceded starting pay in the unionized industry down to about $14-16 per hour, Toyota seeks to replace older workers making around $26 per hour in their Kentucky plant with new hires at $16 per hour. Thus, the union shops are paradoxically pressuring downward the wages and benefits of non-union employees .

As reported in The Wall Street Journal, industry experts claim that the non-union manufacturers enjoyed a $29 an hour competitive advantage in wages and benefits as recently as 2008. By the end of 2011, they report that non-union labor costs were about equal with General Motors and actually higher than Chrysler!

It is hard to imagine a more demoralizing consequence for the union movement in the US: if only the market, and not a fighting union, is to competitively determine wages and benefits, how does one entice workers to join the union? For the bankrupt UAW leadership, union growth comes only from striking a deal with the employers-- a deal that would promise collaboration and stability at the expense of workers’ pay and benefits.

The decimation of the living standards of US unionized auto workers came with the bailout and subsequent temporary stewardship of the auto industry by a Democratic Party administration. That same administration demanded plant closings and layoffs as a condition of the bailout.

With friends like these, workers are sadly in dire straits.

Clearly, radical changes are in order, changes that cry out for class struggle unionism and independent political action. Without a new direction, US workers will continue the descent towards Depression-era living standards.

Currency Wars 

The 1917 text of Lenin’s Imperialism projected intense struggles between rival capitalist powers. Written during an unprecedented total war between the most economically advanced countries, a war that when settled cost the lives of millions of  people, Lenin’s tract explained the First World War as a contest between empires seeking global advantage for the spoils of capitalist exploitation.

Less than twenty years later, the same empire-building forces were again unleashed to carve the world in a desperate attempt to secure markets and sources of strategic resources. World War Two further confirmed Lenin’s thesis that competing capitalist powers were unable to collaborate and cooperate for some greater, universal good. Instead, competition always begets aggression, national chauvinism, and war.

Many were dismissive of Lenin’s prophecies when witnessing the Cold War expediencies of inter-imperial cooperation against the emerging post-war socialist community. With well over a third of the world’s population in the socialist camp, the imperial rivals found a temporary basis of unity around fears and resistance to the success of socialist revolution. The survival of capitalism tamed the inherent rivalries for that moment.

The demise of that threat with the collapse of Eastern European socialism and the accommodation with capitalism by Asian Communists has unleashed the beast of imperial competition. The global economic crisis only serves to fuel the tensions and expose the rivalries.

I wrote in November of 2008 of the “global crackup”, noting that the US was no longer in a position to impose its will on the rest of the world, unable to slough its problems easily upon others. I drew attention to the logic of capitalist competition that, in the long run, denies any hope of cooperation and common solutions.

Today, that tendency— aggressive imperialist rivalry—has found its expression in a new war, a war waged around the relative value of national currencies.

Rulers understand that in a climate of stagnant or declining world trade, nation-states will draw an advantage from devaluing national currencies; by cheapening money—the medium of exchange— domestic enterprises will be able to offer their products at a more favorable price in international markets.

The US tepid “recovery” from the depths of the crisis has largely been won by hyper-exploitation of a docile work force and the dramatic expansion of exports through the Federal Reserve’s massive devaluation of the dollar via the printing press. The Qualitative Easing programs aim to suppress interest rates and remove the corporate garbage generated by the financial promiscuity of the period before the collapse of 2008. But they also have the not-so-unintended consequence of bolstering the competitiveness of US export manufacturing.

At the same time, US policy makers pointed an accusatory finger at the Peoples’ Republic of China, charging its leaders with currency manipulation. While the charge got little traction from those who closely studied these relationships, it served as a useful diversion from US policies and bolstered rounds of anti-China bashing by do-nothing politicians and labor mis-leaders.

European Union leaders, occupied with the desperate effort to save the Euro, offered little resistance to US currency manipulation.

But with the election of Shinzo Abe in Japan, the currency war was joined. Abe, a right-wing nationalist, exploited the Japanese public’s frustration with years of ineffective governance and economic stagnation to scorn cooperation and offer an aggressive economic program geared towards restoring Japanese competitiveness. Assuming the office of Prime Minister, he launched an aggressive campaign to devalue the Yen. His pressure on the Bank of Japan has already (in less than two months!) produced a drop of 10% in the Yen’s value against the dollar and 15% against the Euro. This means that Japanese products are enjoying a growing competitive advantage in international markets.

International bankers see these moves clearly as the opening salvos in a major escalation of the currency/trade wars. Politicians in countries throughout the world have quietly made similar moves to spur competitiveness, but never with the open audacity shown by Abe.

Perhaps even more disturbing is the unabashed belligerence and arrogant nationalism accompanying these economic moves. The Japanese government has provoked disputes with nearly every Asian Pacific government over barren islands claimed as part of Greater Japan. Imperial aggression is as great a danger today as it was nearly a hundred years ago when Lenin established it as a structural feature of mature capitalism.

A Hushed Mea Culpa       

Capital’s policeman, the International Monetary Fund, has offered a quiet confession of an arcane theoretical mistake of enormous consequence. As the leading cheerleader for decades of the “fiscal responsibility” approach to public programs, the IMF can take dubious credit for the policy of austerity as a general panacea for economic duress. A cursory look at the IMF legacy shows a constant, unrelenting enforcement of balanced budgets and meager public spending. Developing countries seeking IMF loans have felt the lash of austerity as a condition of relief.

A cornerstone of IMF thinking was a little discussed macro-economic assumption of the compounding effects of debt reduction. Where “unschooled” common sense might suggest that removing a dollar of public spending from economic activity would remove at least a dollar from a nation’s gross domestic product, the IMF postulated that it would reduce economic activity by only half of a dollar. That is, the “multiplier” for a reduction of public spending was only .5. The assumption, of course, is the neo-liberal axiom that the dollar spent elsewhere in the private sector MUST always be far more productive, must always be greater than unity and, therefore, must always outweigh the loss of “inefficient” public sector spending.

Unfortunately, the axiom is wrong. IMF empirical studies show that, in fact, the multiplier of public spending reductions ranges between .9 and 1.7. In other words, the negative impact of public spending cuts was underestimated by two to three times! The IMF confessed as much in its October report. Unstated, however, is the negative impact of this “error” on hundreds of thousands, perhaps millions, of people who have lost public benefits to the discipline of IMF imposed “fiscal responsibility”. Even more have suffered from the constraint on economic growth produced by the regimen of austerity.

And yet debt reduction through choking government spending remains a priority of political parties from the far right to the social democratic left.

The Sky is Falling, but not on Everyone yet!  

You would never know it from the Wall Street pundits loudly proclaiming the best January stock market in two years, but the US GDP shrank in the final quarter of 2012 (as it did in the UK, the EU, and even the seemingly bullet-proof German economy).

Generally, negative GDP panics investors and disrupts markets, but we live in special times. To the extent that labor remains quiescent and social movements fail to translate into anti-capitalist uprisings, investors and the capitalist class have made their peace with historically unacceptable unemployment and stagnating, but stable economic growth. It’s the earnings that catch the eye of the investors and the wealthy. And they have been holding up rather well so far.

In fact, they are creating the conditions for another round of risk-taking. Money market funds are flush with cash and seeking greater returns, securitization of debt is on the rise again (securities built on auto loans are greater than at any time since 2005), and banks are again growing their real-estate loan portfolios. Capitalism and the lust for ever greater accumulation never sleep!

Of course it is the very mechanism of accumulation, the search for yield on swelling capital (and the accompanying pressures on profitability), that announces the next round in the crisis.

Zoltan Zigedy

zoltanzigedy@gmail.com

    

   

    

Chile, a Revolution Denied

This coming September 11 will mark the fortieth anniversary of the coup overthrowing the elected government of Chile, a country that, at the time, enjoyed the longest enduring tradition of electoral stability in South America. Despite the uninterrupted existence of a constitutional parliamentary system from 1932, the Chilean military—aided by US covert services—overthrew the President, Doctor Salvador Allende Gossens, and violently suppressed his supporters, installing a military junta that ruled for 26 years.

What prompted the US government and its traitorous allies in the Chilean military to destroy the fabric of Chilean civil society in 1973? What “sin” could possibly warrant the installation of a murderous, fascistic regime under the leadership of General Pinochet and his collaborators?

The answer is found in one word: socialism. Not the grafting of a tepid welfare safety net to the fringes of capitalism as promised by social democrats, not the “socialism” of workers’ token participation in management, not the bad faith of class collaboration or the regulation and management of a voracious and predatory profit system, but the real and robust pursuit of revolutionary and transformative change.

For Salvador Allende and Popular Unity-- the coalition of Communists, Socialists, and other worker and peasant organizations that backed his election in 1970, the vote was the opening steps on the unique “Chilean road to Socialism,” a road that would hopefully lead to working class political power and social ownership superseding the private ownership of the leading economic enterprises and giant agricultural estates.

The Allende government pressed forward with its agenda, nationalizing key industries and creating new and parallel organizations and institutions of local and workplace power. Of course this did not go well with the wealthy and powerful in Chile or unnoticed by their North American allies. Millions of our tax dollars were devoted to funding counter-revolutionary groups and actions in Chile. Provocative strikes were organized by middle-strata shop keepers, transportation owners, and managers to disrupt the economy. Demonstrations were instigated to bring sections of the middle strata—the “momios”—into the street in protest. Sabotage and vandalism were pressed. Even neo-Nazi terrorist groups were encouraged and funded by the CIA. And, of course, the US government did everything it could to isolate the Popular Unity government from international assistance, credits, and trade.

In the face of these provocations, Allende and his supporters urged workers and peasants to step forward in defense of the economy and the bourgeois democracy. And they did, in great numbers.

Thus, the expected rejection of Popular Unity in the elections of March, 1973 never materialized. Despite an unprecedented destabilization campaign, the Right was unable to muster enough votes to depose Allende. The only path left open to the enemies of popular power was the military coup. Six months later, Allende was dead and tens of thousands were about to be killed, jailed, tortured, disappeared or in hiding.

The Guzman Chronicles

It is rare to have a vivid and detailed account of such an important and tragic historical process. But thanks to the hours of video documentation secured by film maker Patricio Guzman, we can trace the powerful people’s movement that coalesced around Salvador Allende, the excitement and empowerment of the masses as they forged ahead, the hopes and disappointments of workers and the poor, and the betrayal and destruction of national aspirations. Guzman was a partisan of Popular Unity, yet open to recording the views and movements of the opposition. He captures the euphoria of workers and peasants finding their voices, the explosion of meetings and discussions of the formerly powerless, and the new-found confidence of the liberated.

His trilogy, The Battle of Chile (The Insurrection of the Bourgeoisie, The Coup d’Etat, and Popular Power) is available on DVD (Icarus Films) along with the 1996 film (Chile, Obstinate Memory) of his return to Chile to show his work in the post-Pinochet era.

Guzman’s prescient sense of the significance of Popular Unity seemingly put him on every corner, in every demonstration, in the mines and factories, and in the seats of governance. The visual imagery of workers, peasants, and ethnic minorities in the tens of thousands rallying to the cause of Popular Unity is unforgettable. Conversely, the faces of the “momios” and the military leaders reflect the ugliness of both their fear and their arrogance. Nor will one will ever forget the footage of a camera operator filming his own death at the hands of a soldier.

Far better than the many written accounts of the Chile tragedy, Guzman’s films expose the truths of class and ethnic divisions without adornment. In most cases, one can identify whether an interviewee on the streets of Santiago supports or opposes Popular Unity before he or she even speaks. Class identity is transparent.

Yes, it is class war, conscious class war. But class war that the long-ruling oligarchs, the industrialists, landlords and their minions could only win with the intervention of the military and their powerful friends to the north.  

While the popular forces lost the battle of Chile, the collective memory of the peoples’ rising had to be extinguished before Chile could be returned to anything close to a “normal” bourgeois republic. For some time after elections were restored, Chile still lay in the shadows of the Generals, fearful of their return.

When Guzman arrived to present The Battle of Chile for the first time in his native land, he recorded the responses of a group of youth, both before the showing and after. Before the viewing and with only modest exceptions, the students mouthed the views received from Pinochet-era textbooks and documentaries. They showed some sympathy for the conditions of the very poor that might move them to support Popular Unity, only to charge the partisans with impatience, irresponsibility, or poor judgment. The views expressed were remarkably similar to those one might encounter in an upper-middle class suburban school in the US.

When the lights came on after the screening, the students were visibly moved—some were reduced to tears, others spoke openly for the first time of relatives who were repressed.  Despite the concerted effort to remove the memory of Popular Unity, The Battle of Chile shocked the young people into a sympathetic encounter with their own history. This moment is captured vividly in Guzman’s Chile, Obstinate Memory.

A Vital Source

But the events of these three years, as revealed by the film and other chronicles, constitutes more than the nostalgia of those of us who placed so much hope in Popular Unity. Rather, the Chilean experience was a case study of the struggle to throw off the yoke of imperialism and capitalism. This episode bore many features unique to the conditions existing at that time and the pathway chosen by the movement’s leaders. At the same time, the Chilean revolutionaries faced adversaries and obstacles that are universal in any profound social change. In short, we have much to learn from Chile’s tragedy.

Today’s militancy, emerging slowly, but inexorably from the crushing impoverishment and stark inequities spawned by the global crisis, constitutes a new and promising assault on wealth and power. However, a new generation of the angry and defiant risk failure and disillusionment unless it draws lessons from the successes and failures of the past. History is cruel to those who turn away from those lessons.

Only those who are terminally jaded can but admire the energy of the “Occupy” militants in the US and the “Indignados” in Europe. But any who view The Battle of Chile will quickly recognize that powerful ruling classes with far-reaching police, a sophisticated intelligence apparatus, and a modern military at their beck and call are not readily moved to surrender power and position to forces organized in open-air general assemblies or in urban street encampments. Nor will they accommodate demands issued with the nobility of moral authority. Chile’s legacy reminds us that transformational change is about overcoming the nexus of economic and state power.

Recognition of the fusion of economic and state power in our time—what Marxists call “state-monopoly capitalism”—is essential to any credible assault on the fortress of wealth and privilege. To reach for state power, the majority must begin to disable the economic might wielded by the few. But to accomplish this, the many must act to take the power of the state that preserves and protects the economic basis of the ruling elites. 

Solving these two challenges simultaneously is the task of revolutionaries. In Chile, Popular Unity hoped to meet the challenges by establishing loci of peoples’ organizations in neighborhoods and workplaces and nationalizing the heights of the economy. They understood that presidential power was only a fragile link to state power and far from sufficient to neutralize the economic might of the Chilean capitalists and their courtiers and attendants. Our modern day would-be revolutionaries are well-advised to grasp these realities.

The Battle for Chile is cold water in the face of so many erstwhile advocates of social justice who have turned to timid or utopian schemes to address a capitalist social system that has only become more aggressive and rapacious since the era of Chile’s interrupted revolution. While the loss of a counter-force to the US and its allies—the European socialist community—has vastly strengthened the hand of global capitalism, it neither excuses nor justifies a retreat from an anti-capitalist program. We see alternative schemes emerging from those disillusioned with the politics of reformism, but uneasy with revolutionary politics; they advocate motley theories of “radical democracy,” cooperatives, “The New Economy,” various strains of anarchism and kindred rejections of “hierarchies,” among others.

Marx and Engels anticipated these developments over a century and a half ago when they wrote in the Communist Manifesto:

Historical action is to yield to their personal inventive action; historically created conditions of emancipation to fantastic ones; and the gradual, spontaneous class organisation of the proletariat to an organisation of society especially contrived by these inventors. Future history resolves itself, in their eyes, into the propaganda and the practical carrying out of their social plans.

In the formation of their plans, they are conscious of caring chiefly for the interests of the working class, as being the most suffering class. Only from the point of view of being the most suffering class does the proletariat exist for them.

The undeveloped state of the class struggle, as well as their own surroundings, causes [activists] of this kind to consider themselves far superior to all class antagonisms. They want to improve the condition of every member of society, even that of the most favoured. Hence, they habitually appeal to society at large, without the distinction of class... For how can people, when once they understand their system, fail to see in it the best possible plan of the best possible state of society?

Hence, they reject all political, and especially all revolutionary action; they wish to attain their ends by peaceful means, necessarily doomed to failure, and by the force of example, to pave the way for the new social Gospel.

Such fantastic pictures of future society, painted at a time when the proletariat is still in a very undeveloped state and has but a fantastic conception of its own position, correspond with the first instinctive yearnings of that class for a general reconstruction of society…

They, therefore, endeavour, and that consistently, to deaden the class struggle and to reconcile the class antagonisms. They still dream of experimental realisation of their social Utopias, of founding isolated “phalansteres”, of establishing “Home Colonies”, or setting up a “Little Icaria” — duodecimo editions of the New Jerusalem — and to realise all these castles in the air, they are compelled to appeal to the feelings and purses of the bourgeois…

They, therefore, violently oppose all political action…; such action, according to them, can only result from blind unbelief in the new Gospel.

Revolutionaries must and will put these “castles in the air” behind them as the struggle for social justice sharpens.

And ahead are the many obstacles underscored by the Chilean events chronicled in Guzman’s film. Two critical problems of revolutionary theory that loom large in the battle for Chile are (1) the question of the military and other “security” organs and (2) the question of the “middle class.”

Clearly, Popular Unity failed to solve the problem of the military in 1973, though its leaders certainly recognized it. In our time, the near-coup in 2002 against President Hugo Chavez in Venezuela demonstrates the continuing dangers from those social elements holding a near monopoly on physical force: the military. Like the police and other organs of social control, the military invariably align with those opposing change. Without Chavez’s uniquely strong links to long-cultivated and sympathetic elements of the military, the coup would have undoubtedly led to a bloody and uncertain outcome. Any real quest for transformative change must wrestle with this question.

The question of the “middle classes” is really the problem posed by those who occupy the social space between the ownership class (the 1%) and those conscious of their diminished status resulting from employment by or servitude to the ownership class. While those who occupy this space are, in reality, also subservient to the rich and powerful, they see their status as above the poor and working class and identify their aspirations with the fate of those who rule. Labor leaders and other image shapers foster illusions about a broad and inclusive “middle class.” They offer the fantasy that auto workers and bus drivers have the same class interests as corporate lawyers and bond traders. In this imaginary world, their lives intersect at the shopping mall, the stadium, and the television set. Of course they really don’t. Even arch conservatives like Charles Murray have concluded that this view is nonsense, but the view persists widely in the mainstreams of both the US and Europe.

The dangers of these illusions are demonstrated well in The Battle of Chile. The “momios” who provided a mass base for the opposition to Popular Unity would, by and large, have eventually benefited from the Chilean road to socialism. But seduced by the lure of consumerism, vulgar culture, crass individualism and the delusional promise of joining the ranks of the privileged few, they proved to be an enormous obstacle to advancing the Popular Unity program.

In the more prosperous capitalist countries, the problem of the middle strata is even more acute today. While Marx’s judgment that the “…individual members of this class… are being constantly hurled down into the proletariat…” may be somewhat affirmed by the global economic crisis, the fact remains that the middle-class world view is resilient and will persist for some time. Belief in personal exceptionalism, like belief in spirits, is a difficult deception to shed.

“To be young and a revolutionary is a biological imperative” was a piece of graffiti scrawled on a wall in Santiago and translated for me by my friend Kay when we visited Santiago in the fall of 1990. After Pinochet, this was a welcome inspiration for those of us who placed hope in the Chilean revolutionary process. But biology will only take revolutionaries so far without a study of history. In fact, without heeding the lessons of history—in this case the Allende government and its violent suppression—the imperatives and energy of youth will dissipate and give way to cynicism and disappointment. The Battle of Chile offers these hard lessons, but also profound inspiration.

Zoltan Zigedy

zoltanzigedy@gmail.com