“Middle Class Revolution”: A New End of History?

The US is notoriously unkind to “intellectuals.” Popular culture portrays intellectuals as absent-minded, divorced from the everyday world, and obsessed with spinning useless, but harmless abstractions. They are good to keep contained in universities where they can give future cogs in the capitalist machine a taste, but not a passion for, impractical thought. Regrettably, those posing as intellectuals have gone far to earn contempt, favoring arcane, specialized languages and scholastic debates.

That's not to say that there is no room for thinkers in the US, but they are dubbed “pundits,” “experts,” “researchers” or “consultants,” words that ring with practicality and single-mindedness; they are purveyors of small, easily digested ideas and not the “big” ideas associated with intellectuals.

In the US, we are taught to distrust big ideas unless they are linked to religions. But then religion has been compartmentalized, shunted off to Sunday mornings or weddings and funerals. All the big ideas we need were decided with the ratification of the US Constitution.

We can thank corporate marketers and their masters for our continuing alienation from big ideas and taste for small ones. They prefer ideas that are easily and flashily packaged, readily digested, and quickly obsolesced. They select for us ideas that can go “viral,” grabbing the attention of not thousands, but millions. They select ideas that easily fit in a two-minute TV commentary or on 6 or 8 column inches of news print. Intellectuals didn't invent the term “sound bite.” Nor did they invent “twitter.” Corporate taste makers did. So what we get in the market place of ideas are small ideas, commodified ideas with shiny packages.

Thus, it may be hard to understand how Francis Fukuyama fits into the world of ideas. We know him for his celebrated 1992 book, The End of History and the Last Man, an ambitious intellectual tome designed to place triumphant capitalism and its attendant bourgeois democracy at the pinnacle of a long historical, dialectical process. A big idea indeed!

Of course it wasn't that difficult to conjure a motive for this rising star of the Right. On the heels of the fall of the Soviet Union and the European socialist countries, Fukuyama saw the opportunity to mark "paid” to the theoretical foundations of Marxism by co-opting the Hegelian “dialectics” that Marx was schooled in and replacing the socialist ideal with something that looked remarkably like the socio-economic system of late twentieth-century US capitalism. Moreover, since Fukuyama had discovered the “end of history,” we needn't worry about any serious future military conflagrations or rebellions because we were entering the blissful era of market justice, parliamentary democracy, and human rights.

Fukuyama's big ideas can take small credit for the pious military crusades led by the US ruling class in the Balkans, Iraq, Afghanistan, and recently in Libya and Syria, as well as the meddling in Eastern Europe, the Middle East, Latin America and Africa. Those who failed to accept the end of history soon felt the wrath of history's enforcer. At the same time, the resistance to Fukuyama's vision of history's end challenged his big idea. The intense confrontation between the US and peoples in the Middle East and Latin America shattered the idea that with the demise of the Soviet Union the world would rush to embrace the values of the US and Europe.

With the “end of history” forestalled by unforeseen events, Fukuyama knocked around the research institute/think tank/academic circuit, writing books and resisting the temptation to join the courtiers of the mass media trading in small, nasty ideas. He passed on the enormous earnings available to the likes of the O'Reilly's, Limbaugh's, or the other aristocrats of wind-baggery. Instead, he scoured the landscape to find new opportunities to float big ideas.

And now he's back with a new big idea.

Fukuyama won a think-piece in the June 28/29 weekend Wall Street Journal entitled “The Middle Class Revolution.” He argues that “All over the world, today's political turmoil has a common theme: the failure of governments to meet the rising expectations of the newly prosperous and educated.” Cognizant of the worldwide mass risings of recent years, Fukuyama chooses this moment to offer an explanation, a theoretical explanation for those risings, an explanation palatable and comforting to US elites.

He rightly understands that linking the most recent mass upsurges requires sizable ideas. While there are many similarities, there are many differences as well. Successful exposition of their common features would tell us much about the underlying processes and likely offer a glimpse into the future. In short, it would give us a theory of contemporary social change, a decidedly big idea.

Unfortunately, he gets it all wrong.

He builds his case around reflections on events in the streets of Tunisia, Egypt, Brazil, and Turkey, a mixed collection neither reflective of all of the mass activity of our time nor sharing many common features. Seduced by recent headlines and sensationalist accounts, Fukuyama finds the “middle class” as the revolutionary agent in all cases. Besides the elusiveness of the term, he offers no evidence beyond youth, cell phones, and the presence of a vaguely sensed entrepreneurial spirit to justify the assignment of this role. And he is equally slippery in explaining what constitutes a “middle class.” Instead, he considers a series of candidates: income ($6,000-30,000 year), relative income (the middle of a country’s income distribution), and relative level of consumption (greater than the subsistence level of the poor). Rejecting these, he settles on “education, occupation, and the ownership of assets,” none of which is produced as evidence regarding any of the particular countries under review. In fact, the demographics of the four “revolutions” fail to show common attributes; nor do they demonstrate a rising of the “middle class.”

When Mohamed Bouazizi, a fruit vender in Tunisia, set himself afire in December of 2010, he became the symbol for the uprisings that pundits have dubbed “the Arab Spring.” Tunisia, under Ben Ali, was one of the success stories of neo-liberalism, a poster child for corporate-friendly “competitiveness” and foreign investment. Its industrial and service economies were relatively well developed. 

While the neo-liberal regimen delivered growth, modest GDP/capita, some social benefits (education and welfare), it was rocked by the economic crisis and the scourge of high unemployment. The youth (constituting nearly half of the population) endured one of the world's highest unemployment rates: 30.7%. As in the US, Tunisian youth are relatively well educated, but denied access to meaningful employment. The relative affluence of Tunisian elites enjoying the fruits of a growing economy and the lack of opportunity for a youthful population spurred the overthrow of Ben Ali.

Egypt presents a different picture. While Sadat and Mubarak also embraced the tenets of neo-liberalism, they did so in the shadow of Nasser's legacy of anti-imperialism, public ownership and social welfare. Moreover, free market capitalism fared far worse in this country. Despite a large industrial base and due, in part, to a relatively large agricultural sector (56.5% of Egyptians live outside of urban areas), Egypt achieved a GDP/capita roughly only 2/3 of that of Tunisia. 

But Egypt shares with Tunisia an extremely youthful population with massive un- and underemployment. With little government educational expenditure, it is no surprise that Egyptians have a relatively low participation in higher education.

Egyptian professionals-- the social base for the Muslim Brotherhood-- could count as a “middle strata,” though they are a small part of the population. Most Egyptians, however, enjoy an income only marginally above poverty, marking membership in what would properly be considered the working class.

The global economic downturn only brought the plight of young Egyptians to the fore and prompted mass action and the deposing of Mubarak. The subsequent Morsi presidency brought a further disintegration of the economy and a spike in unemployment and poverty. The Muslim Brotherhood failed to attempt an exit from neo-liberalism and restored the foreign policy of Mubarak, even betraying the Syrian government to imperialism.

The people have again taken to the streets. In the words of Salah Adly, General Secretary of the Egyptian Communist Party, Egyptian Communists believe “that what happened on 30^th June is a second wave of the Egyptian revolution that is stronger and deeper than the first wave in 2011. It has taken place to correct the path of the revolution and seize it back from the forces of the extreme religious right...”

The street demonstrations in Turkey, a country that has one historic foot in the Arab world and a tentative one in Europe, is more a political struggle than an explosion of economic discontent. Turkey's demographics are similar to a European country, a poorer European country like Portugal or Poland, but with a much higher percentage of youth in the population. The Islamist president Erdogan represents cultural traditions that conflict with that of more secular youth. Of course others, including workers, who have economic demands, support the demonstrations, as do unemployed youth. But they do not challenge the structures of bourgeois democracy or monopoly capitalism. Turkish Communists recognize this fact. As Kemal Okuyan, a member of the Central Committee of the Communist Party of Turkey, states “... this is an outburst of a huge social energy. It is powerful in extent and effect. But there are some Marxist criteria for defining a situation as a revolutionary crisis. We are far from that. At least for now...”

Brazil, Fukuyama's final example of a “middle class” revolution, demonstrates its own unique demographics and weaknesses. Despite showing exceptional economic growth, Brazil counts as one of the most economically unequal countries in the world. Highly urbanized, Brazil's poverty is concentrated in city neighborhoods, with all of the attendant social problems of poverty intensified. The large and growing service sector affords enough jobs to contain unemployment below crisis levels. But grinding poverty and the contrasting extreme concentration of wealth produce a persisting tinderbox.

Brazil's social democratic government has shown occasional anti-imperialist spunk, standing up to US arrogance at different times. This, along with the government's competent management of the capitalist economy, and some social welfare initiatives, has spawned national pride. At the same time, support for the government is fragile because of its inability to dent the massive economic and social inequalities suffered by working people. This contradiction between national sentiment and contempt toward the working class was brought home by the mass objection to new soccer stadia, in a soccer-crazed country, expressed by the mass demonstrations.

Clearly what all of these countries do share is a popular response to the failure of leaders, institutions, and political parties to overcome the legacy and reality of colonialism, imperialism, and global capitalism. Fukuyama hides this failing behind the mythology of middle class dissatisfaction with the level of consumerism and cultural expression: they rebel because they want to be like us in Europe and the US. One would never guess that an almost unprecedented and persistent economic calumny has shaken the social and political foundations of nearly every country over the last five years. One would never guess that all four of the countries under discussion suffer from severe economic and political problems unsolved by their past and current leaders.

In Tunisia, Ben Ali's embrace of neo-liberal fundamentalism was a bankrupt answer to youth unemployment. In Egypt, corrupted leaders brazenly counted on the accommodation with imperialism to prop up their aloof rule over an abused people. Turkey's leader, like politico-theological leaders of other persuasions, overstepped the limits of governance and opened the door to airing the many grievances of the opposition, formerly trumped by religious commitment. And Brazil's social-democratic government learned the folly of attempting to manage capitalism while promising to rectify its inequities.

From the Indignados to the Occupy movement, from the revival of the Latin American left to the Arab Spring, authentic popular up-risings have emerged from the failure of capitalism to deliver the future and security so seemingly assured before the great crisis of 2008. Millions have been failed by the institutions, parties, and leaders that they formerly trusted. It's not as though they have been dealt a bad hand, but it is as though there is no good hand to be found in the deck.

Spinning theories based on such a corrupted sociological idea as the “middle class” guarantees failure. Of course one can't blame Fukuyama entirely for buying in on one of the great intellectual frauds of our time. Everyone, from the Chamber of Commerce to the misleaders of labor, likes to remind us that we are all members of a vast collection of people located economically between the rich and the poor. Within this distorted picture there is something for everyone. We all share home ownership, a good job, vacations, family, and comforting values, so the fantasy goes. The unfortunate poor are with us because they have failed, though they deserve our compassion and, perhaps, our charity. The rich are with us because they are successful and merit our respect. This harmonious picture is only disrupted when the rich get too greedy or the poor get rebellious.

This myth serves the ruling class, their political flunkies, and labor's class collaborationists in maintaining class peace and stability. But most importantly, it obscures the real class divide between employers and employees.

The divisions that spark genuine revolution are not between some muddy notion of a middle class at odds with an equally obscure specter of government, but between the power and dominance of capitalist corporations and the diverse and largely unrepresented workers who enrich them. This sharply drawn class division accounts for the fundamentally economic, but also cultural and spiritual alienation of youth. Whether conscious or not, this division generates discontent and outrage. Expressed in many ways, the conflict between the employers and their employees stands behind the conflicts of the twenty-first century. And only its resolution in favor of the employee class – the working class-- will bring these conflicts to a close.

It's not a new idea; it's a big, but not too big of an idea; and it’s an idea that promises an escape from the failure of capitalism: Socialism.

Zoltan Zigedy

zoltanzigedy@gmail.com

Storm Clouds?

As the panic over the destiny of the Federal Reserve's “quantitative easing” program reaches hysterical proportions, uncommonly bizarre economic anomalies are surfacing. In the last week of June, the news that first quarter US Gross Domestic Product growth report was reduced dramatically from 2.4% to 1.8% was met by an equally dramatic, but paradoxical positive jump in equity markets. Normally, a rather staggering drop in GDP estimates would trigger stock market losses-- investor confidence would be battered. But the opposite occurred. 

What's going on?

Pundits and investors hailed the bad news because they hope that it will keep the Federal Reserve committed to the $85 billion per month bond purchasing project dubbed “quantitative easing.” They believe that the Fed would not dare to relax the program in the face of poor economic performance. And they recognize that without the Fed’s foot firmly pressing the accelerator, the capitalist economy will stagnate or slow. The Federal Reserve program is truly a life-support system for our economy, and capitalism's apologists recognize that they are in deep trouble without it. Therefore, investors welcomed the fall in GDP growth!

Even Paul Krugman, the popular voice of social democratic theory in the US, has caught the contagion of fear. In a late-June appeal in The New York Times (Et tu, Ben?) to Federal Reserve head, Ben Bernanke, Krugman calls for the Fed to keep its foot aggressively on the gas pedal. A firm advocate of an alternative policy option, fiscal stimulus (spending on infrastructure, public works, etc), Krugman holds his nose and urges the continuation of the Fed's monetary stimulus program of printing money for bond purchases.

So why can't we just all agree to get along and urge the Federal Reserve to keep printing dollars?

In the first place, the Fed's policy of dollar-printing promiscuity is losing its healing powers. The effect of the purchase of government debt-- Treasury notes-- in order to restrain bond yields and interest rates has diminished since mid-2012. Moreover, the Fed remedy has lost its magic entirely in May and June of this year, with the yield on the 10-year Treasury note rising by two-thirds, mortgage rates jumping about 27% from March to the end of June, and the US and European (except Germany) bond market experiencing a sell-off. All of these indicators demonstrate that quantitative easing, as a stimulus policy, is simply losing its punch.

The Federal Reserve sees its injection of $85 billion into the economy every month as a hedge against the dreaded deflation, a sure companion to stagnation or negative growth. They watch to see when inflation crosses their target of 2% in order to slap on the brakes to avoid an overheated economy. But there is no reason for the Fed to fret: inflation is well below their target, a clear sign that without monetary stimulus we would be in a deflationary period. Corporations are hoarding cash rather than investing: they are holding 5.6% of their total assets in cash, against a forty year average of 4.4%. It was weak business investment, in part, that caused the first quarter GDP growth revision downward by 25%.

The Chicago Federal Reserve's three-month moving average National Activity index remained in negative territory, underlining the diminishing effects of quantitative easing.

Aside from its ineffectiveness, quantitative easing poses more serious, more fundamental problems: Fed monetary promiscuity distorts markets and masks underlying economic processes. Given that a capitalist economy is an enormously complex organism made up of mutually interactive actors, commodities and processes, manipulating some of the central elements such as interest rates, the money supply, debt growth, etc. can have unforeseen and damaging repercussions in other sectors of the economy. Mechanisms fail and balances are disrupted. A therapy becomes an injury. This is a lesson that the leadership of the Peoples' Republic of China is learning from the volatility created by its shadow banking sector. Even with majority public ownership of the biggest banks, the informal private sector distorts the impact of policy decisions.

In Marxist terms, the massive Federal Reserve intervention in financial markets violates the law of value. That is, it replaces the exchange of equivalent-for-equivalent in financial markets, with exchanges determined independently of market forces by the officers of the Fed. Those exchanges must, at some point, be reconciled; but in the meantime, they distort exchange relationships in other sectors of the economy. They create a disconnect between the financial sector and the signals sent to the productive economy. They distort the rate of profit in the financial sector, channeling capital into speculation and over-reliance on cheap credit. It’s no wonder that corporations hoard cash and seek higher returns on retained capital and easily available capital.

In reality, quantitative easing invites the very conditions that led to the 2007-8 collapse.

And we are now seeing omens in the economic data.

The exuberant 2013 stock market is suffering a retreat, but even more ominously, demonstrating growing volatility. Last year, the small investor jumped back in the market, a sure sign that a bear market was in sight. Much of the volatility comes from market manipulators exploiting the amateur day-traders. Like the swaggering Vegas weekend gambler, they are ripe for the picking. One can watch the picking by following the end-of-day trading; they don't know when to get in or when to get out.

US exports are pulling back.

The post-World War II record profits reported in 2012 are threatened. Of 108 companies scheduled to report profits in the second quarter of 2013, 87 offered negative guidance to their shareholders. Falling profits, contrary to underconsumption theorists, are a better predictor of a downturn than falling consumption. Consumption generally falls as a result and as an amplifier of economic decline.

Today, US consumption hangs precariously in the balance. While savings are declining, wages are in free fall. The year ending in September 2012 experienced a wage decline of 1.1%. First quarter estimates augur a shocking decline. The consumer is simply running out of money, savings, and available credit.

And the just announced June unemployment figures actually show an increase in the more telling U6 calculation to 14.3%. That rate includes those who have dropped out of the job market and those working part-time but desiring a full-time job.

Not a promising picture.

In most of the world's capitalist countries, the labor movements and left political parties have yet to decouple their fate from that of the monopoly capital, profit-driven, market-governed system. They are like ships on turbulent waters unwilling to bring their vessels and crew to port. They are simply counting on the storm to subside. They are neither prepared for nor expecting a hurricane or a shipwreck. After five disastrous years, one would hope that left and labor leaders would began to look for alternatives to capitalism, a safe haven for their fellow passengers.

Zoltan Zigedy

zoltanzigedy@gmail.com

Snooping and the Demise of "Hope and Change"

You've got to marvel at the industry of Cold Warriors and their offspring constantly reminding us of the state security measures-- real or imagined-- suffered by the inhabitants of the former Eastern European socialist countries. Books, movies, television and anecdotes have deeply embedded in the minds of people in the US the notion that life in Eastern Europe was under oppressive monitoring with spies lurking everywhere. Countless reports of visits to socialist countries told of the suspicions or hunches or impressions of being followed, watched, or overheard. I was always disappointed, in my admittedly infrequent visits to Eastern Europe or Cuba, that I never shared these experiences. I was either incredibly myopic or deemed not nearly as worthy of attention as were others.

Outside of the minority of US citizens who systematically question every “truth” endorsed and proclaimed by official circles, most people feel secure in believing that “we” don't do what “they” do or did. In fact, the certitude of our superiority in respecting privacy, speech, and beliefs serves as a pillar of the mythology of the land of the free.

Of course many of us on the left know better. We know first hand that the US security services operate without restraint or oversight. We know that every significant anti-war movement, every committee in solidarity with the victims of US imperialism, every party to the left of the Democrats, and even every renegade celebrity earns the attention of the US secret police agencies. We know that the tens of thousands of operatives employed and the huge budgets granted are not there for occasional or aberrant spying, but for systematic surveillance and monitoring of anyone perceived as challenging the ruling class consensus. We know that, whenever the need is felt, laws are passed that violate or stretch the intent of the Constitution. And extra-legal means-- easily concealed from the public-- are also common.

But you don't have to be among that select group to know what security services do. You don't have to be an anti-war activist to know that FBI files do not magically appear, but are created through surveillance and informants. The sordid history of the FBI, especially during the Hoover era, is available for all to see. Congressional committees have exposed enough of the chicanery, illegal activity, and violence of the security agencies to give everyone but the willfully blind an idea of just how fragile our privacy and personal integrity are under this self-styled democracy.

Yet liberals-- occupying a political category brazenly drawing its name from “liberty”-- have woefully fallen short in confronting the rise and expansion of the intrusive, Orwellian surveillance state, a process that only accelerated since the Second World War. The fears of the Cold War provided a handy excuse for government intrusion into the lives of hundreds of thousands of US citizens, driving such august institutions as the American Civil Liberties Union into backsliding and equivocation.

We saw it again in the uprisings of the 1960s, when even more presumably innocent citizens became the object of surveillance by a myriad of federal, state, and municipal spy agencies. Once again, the response was loud and clamorous on the part of the liberal establishment, but to little effect. Only Nixon's outrageous near-coup and the persistence of a few members of the normally somnolent media saved us from even further devolving toward a repressive, intrusive state in the early 1970s.

A further step towards a police state arrived with the so-called “War on Terror.” Few in the liberal establishment defied the hysterical surrender of the rights to privacy, speech, or association that ensued. In fact, most joined conservatives in a race to empower the security agencies with money, manpower, and legislation.

Oddly, those who find it so easy to identify snooping in foreign lands are conveniently blind to that malignancy in their own neighborhoods.

And now comes the Snowden affair.

The Nation magazine pens a headline, “A Modern Day Stasi State,” really a gratuitous slap at the former German Democratic Republic, to characterize the Snowden revelations of massive and comprehensive surveillance by the NSA. The truth is that nothing that the GDR security services could have possibly envisioned parallels the collection of every electronic communication by every US citizen. Perhaps the liberals at The Nation draw some perverse satisfaction from the false belief that other countries have gone to the same lengths to monitor their unsuspecting and innocent citizens.

And in an editorial commentary (“Snoop Scoops”) by Hendrik Hertzberg, The New Yorker magazine attempts to simultaneously maintain three pathetically weak excuses for the Administration's secretive spying programs: first, the Snowden revelations expose nothing new-- we already knew about the NSA programs; second, the NSA collects the content, but doesn't examine it; and third, there is nothing illegal about the NSA surveillance.

The best that can be said for the Hertzberg apology is that maybe his boss, the old Cold Warrior David Remnick, forced him to write this nonsense. The fact that one could follow threads and leaks to learn of NSA programs hardly excuses the absence of the topic in most mainstream media and popular discussion. Hertzberg glaringly fails to point to any effort on the part of his magazine to discuss the NSA surveillance. Moreover, if everyone knew about the programs, how do we account for the hysterical response of the Administration, its cronies (Senator Feinstein called Snowden a “traitor”), and apologists? How do we account for the criminal charges against Edward Snowden? For revealing something everybody knew?

Clearly this is a sleazy sidestepping of the profound dangers raised by the government's license to snoop.

Only the terminally gullible would believe that the content of collected data lies untouched in NSA electronic files. With nearly one and a half million government employees and contractors enjoying top secret clearance, surely a few would be tempted to check the e-mails or phone calls of their neighbors, ex-lovers, or rivals. Hertzberg takes literally the assurances of the same people who have been trying desperately to keep NSA activity from public scrutiny.

I suppose one could equally say that “nothing illegal” occurred in Nazi Germany, given that laws were passed enacting or enabling nearly all of the carnage inflicted by the fascist regime. In truth, the vast powers granted by the Patriot Act and the secret kangaroo courts legitimizing NSA acts guarantee that legality washes over anything and everything that government agencies do or could do, as they equally would sanction the SS or Gestapo in the Third Reich.

Indeed, our moment is not so remote from those moments preceding the consolidation of fascist rule in Italy or Germany. Like those times, liberals and social democrats are temporizing, excusing, and denying the assault on privacy, personal security, association, and dissent.

The true history of those times-- not the convenient history that blames the staunchest opponents of fascism, the Communists-- points to the treason and capitulation of bourgeois politicians who sought to compromise, outsmart, or neutralize the tide of fascism. Similarly, our liberal politicians populating the Democratic Party (with a few notable, courageous exceptions) rush to establish their security bona fides by endorsing the expansion of the police state. They show the same misplaced confidence in their ability to restrain or control the uncontrollable.

Amplifying the hesitation of liberals is the embarrassing role of the Obama Administration in the construction of the NSA police state. After giving their undivided, unqualified support to the candidacy of hope, change, and the restoration of liberal values, the liberal establishment finds itself in the uncomfortable position of defending the trappings of a police state or, conversely, righteously attacking their designated standard bearer. This dilemma has driven liberals to such outrageous statements as Hertzberg's: “The critics [of the NSA] have been hard put to point to any tangible harm that has been done to any particular citizen,” a statement worthy of a self-satisfied burgher in Munich in 1934.

Particularly bruised by the Snowden revelations are those pseudo-radicals who have unceasingly called for a love fest with the Democratic Party as a response to the “fascist danger.” How does one enlist those who we now know have crafted and implemented fascist-like policies as partners in stopping fascism? Surely embracing them as anti-fascist allies borders on insanity.

Perhaps it is only fitting that those seduced by the pied piper of hope and change have arrived at this juncture. However, we have lost far too much ground to this political silliness. There is too much at stake. We deserve better.

Zoltan Zigedy

zoltanzigedy@gmail.com

The Global Economy: A Midyear Snapshot

What happens to the US economy when the Federal Reserve stops printing money to buy mortgage based securities, treasury notes, and other bonds? What happens when that body stops injecting 85 billion dollars into the US economy every month?

These questions torture the economic pundits in the mainstream press.

Contrary to what most believe there has been no recovery. The reports from the other principal global economies have been dismal, recording stagnation or anemic growth. In the mean time, the US economy has been sustained by forced feeding. The Federal Reserve quietly prints notes and takes around 85 billion dollars worth of various securities off the market and parks them on the Fed's balance sheets. The announced reasons for this action are to keep interest rates low, attracting borrowers, and to thus stimulate business growth and job creation. An unannounced consequence of the 85 billion dollar injection has been a surge in equity markets and housing prices. Since both stock portfolios and home values are the principal components in the psychological “wealth effect” -- the subjective, personal sense of financial well-being -- they have spurred the impression of recovery and consumer confidence. Behind this conjured image of recovery, the US economy continues to stagnate and erode.

Whenever the Federal Reserve has suggested that it might slow or end this life-support, markets have dropped precipitously.

Obviously, the Federal Reserve program, dubbed “quantitative easing,” is a back-door stimulus program. Not a stimulus program of the New Deal type, not public works and public jobs, but more a reclamation of the garbage piled up after the massive, destructive party thrown by the financial sector and a rekindling of the pre-crisis euphoria. No one in the political establishment, neither Republican nor Democrat, had the stomach for a full-blown New Deal program, nor did they have any desire to pass even a little of the cost of a fix-up on to their corporate masters.

So the task of recovery fell in the lap of the Federal Reserve, an ostensibly independent non-political body. The Federal Reserve is not political, except when it is. While it can't be dictated to by the branches of government, its make-up of ivy league professors and financial industry veterans guarantees loyalty to corporate moguls. It also keeps an ear open to the powerful as well as the rich. On occasion the Fed even hears the voices from the barricades, but only when they are at the barricades!

It shares that “independence “ with the Supreme Court. Like the Supreme Court, the Fed gets occasionally chastised when it either missed or failed to get the message of a ruling class change in policy.

All central banks boast of their independence, but all listen closely for a shift in political favor. The Central Bank of Japan recently demonstrated its fealty to political change. With the election of Shinzo Abe as Prime Minister, the Bank relented to his pressure and began a policy of quantitative easing with the goal of doubling Japan's money supply in two years. Abe, a right-wing nationalist, advocates purchasing securities and bonds through a speed-up of the Bank's printing presses, but makes no effort to conceal his real goal: radically reducing the exchange rate of the national currency, the Yen.

Like his foreign policy initiatives, Abe's currency policy is a bold act of aggression, in this case, economic aggression. A weak yen makes Japanese manufacturing products cheaper in global markets, giving Japan a competitive edge against other global manufacturers. The rise of Japanese nationalism has not gone unnoticed by other Asian powers. Chinese demonstrators have trashed Japanese cars in a way reminiscent of similar spectacles in the US decades ago. Japanese automobile sales have dropped sharply in the PRC.

While retaliation may well be on the horizon, the Abe policies have brought a sharp drop in the Yen's value, but also great volatility in Asian equity markets.

Similarly, for all the US Federal Reserve's aggressiveness in printing money, the stock market's surge and the recovery of housing prices have masked serious issues plaguing the real US economy.

[June 2: “Investors have ignored poor economic news as stocks have risen... The Basil, Switzerland based Bank of International Settlements said... that central banks' policies of record low interest rates and monetary stimulus had helped investors “tune out” bad news-- every time an economic indicator disappointed, traders simply took that as confirmation that central banks would continue to provide stimulus.” as reported by Fox News.]

Disposable personal income growth is collapsing, for example. Excepting the 2008-2009 collapse, disposable personal income growth was lower in 2012 than any time since 1959 and is trending even lower in 2013. Not surprisingly, the personal savings rate-- a rate that grew dramatically after the frivolity leading to the 2008-2009 collapse-- has now dropped sharply. Clearly, workers are taking home less while reducing their savings to pay the bills. While unsustainable, this tact has buoyed consumer spending.

[May 31: The Commerce Department reported a .2% pull back in consumer spending for April, 2013.]

Manufacturing production in the US has declined for three of the last four months. Caterpillar Inc., a bell weather of the basic manufacturing sector, has witnessed factory orders of machines, calculated on a rolling three-month average, decline steadily throughout 2012, moving into negative territory at year's end.

Hyper-exploitation in 2009, in the form of unprecedented gains of productivity growth, pulled the US economy from its nadir. But since 2009, productivity gains have slackened with a substantial decline in the last quarter of 2012 and only a very modest recovery in the first quarter of 2013. Consequently, anemic corporate revenue growth is increasingly crimping earnings, once again threatening the rate of profit.

Pressures on profit are demonstrated by the falling yield on junk bonds. The demand for yield-- the never-ending search for a higher rate of profit-- has driven the yield on the riskiest investments lower than at any time in recent memory (a leading high-yield bond index records a return below 5%, the lowest since records began in 1983!). Conversely, treasury bonds, once popular as a safe haven, are now commanding greater and greater yield despite the fact that the Federal Reserve gobbles them up and removes them from bond markets. Obviously, investors do not want safe Treasuries; investors do want risky junk bonds! The gap between Treasury yields and junk bond yields are narrower than any time since 2007. Are we skating on the same thin ice, the same crisis of accumulation?

Accelerating private debt in Asia suggests that much of the capital seeking higher profit growth rates has landed there. But Asia is not the hot bed of growth that it was a few years ago. The mounting private debt in Asian economies supports risky, speculative projects and services like commercial and residential real estate. With international trade tepid, these once export-leading countries are attempting to sustain growth through speculation and the hope of global recovery. The new Chinese leadership seems determined to reduce the role of the state sector, market regulation, and public financing, the very factors that allowed the PRC to painlessly weather the global crisis. They are determined to entrust the fate of the economy to global markets. The simultaneous shrinking of government debt and the explosion of private debt underline this policy shift.

[May 31: The Reserve Bank of India reported the lowest annual GDP growth rate in a decade for the end of the fiscal year, March 31.]

The once robust South American economies are also slowing. Exports to the PRC are declining and exports to the EU are on the skids, retarding growth throughout the region. Stagnant growth presents new challenges to the conservative neo-liberal regimes on the continent as well as the more progressive social democratic governments. Nor do South American economies offer any relief, as they have until recently, to the global economy.

And, of course, Europe is in a depression-- a deep and profound depression. The EU as a unity faces both centrifugal and centripetal forces that challenge any policy resolution. Moreover, the major parties – conservative, liberal, and social democratic-- have exhausted their policy toolboxes. Until a new road is chosen, the European Union will only drag the world economy towards a similar fate.

[May 31: Eurostat reports the EU unemployment rate reached a new high-- 12.2% in April-- the highest level ever recorded since euro-wide tracking began in 1995.]

The global economy faces two stubborn challenges: first, a crisis of accumulation and second, an insufficiency of global demand. They are, of course, inter-related, continuation of the 2008-2009 collapse, and immune to conventional treatment. The vast inequalities of wealth and the resultant massive accumulation of capital hungering for investment opportunities (driven by Marx's tendency for the rate of profit to fall) stand at the center of the lingering crisis. Capital continues to seek increasingly risky and unproductive profit schemes, schemes that strangle productive, socially useful (but unprofitable!) activities. At the same time, the crisis has immiserated millions and idled a vast mass of human capital. Left with limited resources and limitless insecurities, these casualties of the crisis have necessarily reduced their patterns of consumption. A shrinkage in global demand followed.

Some still harbor illusions of taming capitalism and slaking its thirst for profit. As the years of crisis continue, it looks more and more like the beast must be slaughtered.

Zoltan Zigedy

zoltanzigedy@gmail.com

Anarchy in the USA-- Live at Zuccotti Park

In my last posting, I deplored the state of the US left, citing the rise of utopian and reformist alternatives to socialism. Deeply ingrained anti-Communism explains the ready acceptance of the shallow and muddy alternatives to capitalism served up by academic oracles like Professor Gar Alperovitz. These wishful options come at a time when more and more US citizens, especially young people, are showing a hunger to learn more about socialism. But the thin gruel of cooperatives and other small-scale and locally owned enterprises will not satisfy that hunger. Nor does monopoly capital seem too alarmed by the prescriptions of the good Professor. The threat of one, two, three... thousands of little “socialisms” has left big business singularly unmoved in spite of Alperovitz's reach well beyond the left establishment.

Among those fans of Alperovitz who wish to slink away from Marxism and revolutionary politics it has become customary to cite Lenin's essay “On Cooperation” from 1923. This shamefully dishonest tactic rips Lenin's praise of agricultural cooperatives from its context. Writing at the time of the New Economic Policy, Lenin emphasizes that cooperatives are only viable because of Soviet power, the monopoly of “political power is in the hands of the working-class.” He is crystal clear on the cooperative movement under the capitalist state:

There is a lot of fantasy in the dreams of the old cooperators. Often they are ridiculously fantastic. But why are they fantastic? Because people do not understand the fundamental, the rock-bottom significance of the working-class political struggle for the overthrow of the rule of the exploiters. We have overthrown the rule of the exploiters, and much that was fantastic, even romantic, even banal in the dreams of the old cooperators is now becoming unvarnished reality.

“Fantastic, even romantic, even banal...”

Seasoned veterans of the left know that any strategy that promises to be non-threatening and enters through the front door of the monopoly media should be received with suspicion.

Occupy Revisited

For the above reason, I read a recent The New Yorker article with a jaundiced eye. While nearly everyone acknowledges that the Occupy Movement is --if not dead --splintered and marginalized, a New Yorker “critic at large” Kelefa Sanneh, picked this moment to revisit it. Moreover, the usually attuned-to-the-cutting-edge editors indulged five full pages of copy to the movement's “godfather” and the allure of anarchism.

Just weeks ago, before the elections in Venezuela, the magazine published a long piece scathingly critical of the Bolivarian Revolution and its late leader, Hugo Chavez. No doubt with the approval of The New Yorker's dogmatic Cold War editor David Remnick, who still sees Stalin lurking under every bed, the author revived the tired canard of Chavez “preventing a coup like the one that put him in office.” [my italics] Of course Chavez didn't come to office through a coup, a fact that The New Yorker later acknowledged with a small correction. Certainly joining with the mainstream media to trash Chavez and his socialism doesn't dispose me to expect The New Yorker to experience a sudden change of heart and promote any genuine alternative to capitalism. And they don't disappoint.

Paint Bombs: David Graeber's 'The Democracy Project' and the Anarchist Revival (5-13, 2013) is a stealth exercise in distraction and diversion. Where many of us saw the Occupy movement as an incipient anti-capitalist movement degraded through its failure to generate organization and focus, Sanneh sees a noble struggle against “verticals” and in defense of the procedures of the “horizontals.” Sanneh crows: “Occupy resisted those who wanted to stop it and those who wanted to organize it”.

Imagine wanting to organize the Occupy movement! The shame!

The self-styled and New Yorker-anointed guru of the “horizontal” movement is David Graeber, an anthropologist and author of an interesting, eccentric book on debt. Sanneh acclaims Graeber as “the most influential radical political thinker of the moment” (Take that, Gar Alperovitz!). The arch enemies of the “horizontal” movement are “verticals” represented by Marx, the Soviet Union, and parties, leaders, and demands. Sannah claims to see this through the prism of Occupy:

...instead of arguing about economics and ideology, the Occupiers could affirm, instead, their unanimous commitment to freedom of assembly. Occupy may have begun with a grievance against Wall Street, but the process of occupation transformed the movement , peopled by activists demanding the right to demand their rights...

Perhaps no one could say exactly what the Zuccotti Park occupation wanted, but lots of people knew how it worked.

At a critical moment in an economic crisis adversely affecting millions, the “horizontals” were able to transform a movement against Wall Street into a statement “demanding the right to demand... rights.” Thankfully, this does not characterize all Occupy experiences outside of Zuccotti Park. In many cases, Occupiers joined activists in their cities and neighborhoods fighting for health care, jobs, economic justice, and against US aggression. They found righteous demands and learned valuable lessons in organized struggle.

Sanneh concedes that the “rehabilitation of the anarchist movement in America has a lot to do with the fall of the Soviet Union, which lives in popular memory as a quaint and brutal place-- an embarrassing precursor that modern, pro-democracy socialists must find ways to disavow.”

So it's embarrassment and not ideology, disavowal and not commitment that drives the popularity of anarchism. Does this not reek of opportunism? An opportunism that prefers to swiftly and resolutely condemn and separate from the Soviet experience in the face of a “popular” inquisition rather than candidly address both the Soviet strengths and weaknesses?

However, embarrassment should be felt for the anarchist blueprint for forging a new society. Rather than the vision offered by “grim joyless revolutionaries,” Graeber wants “a kind of de-centralized socialism, with decisions made by a patchwork of local assemblies and cooperatives...” – in his own words - “something vaguely like jury duty, except non-compulsory.” Thus, the road to an other-than-capitalist future is paved with “open mics,” assemblies, cooperatives, and a fuzzy analogy.

Adding more to the anarchist strategy are the views of a fellow anthropologist and ally, Yale professor James C. Scott. Scott salutes anarchism for “its tolerance for confusion and improvisation.” He finds anarchism's foot print in such acts of resistance as “foot-dragging, poaching, pilfering, dissimulation, sabotage, desertion, absenteeism, squatting, and flight.”

“Grim joyless revolutionaries” will be surprised to learn how easy is the road forward. Instead of tiresome organizing, demonstrations and marches, instead of demands and manifestos, instead of meetings and planning sessions, instead of party-building and coalition work, acts of individual and often covert defiance mark the way.

One suspects that despite the rhetoric of radical and participatory democracy advocated by Graeber, Scott, and other anarchist “influentials,” their ideas were not forged in the cauldron of struggle, their thinking was not the product of collective, “horizontal” decisions. The professors decry leadership, but contradictorily speak authoritatively for their movement with little hesitation. They are unsanctioned spokespersons for a leaderless movement. Strange.

To appropriate an old expression: Scratch an anarchist and find an angry, embittered liberal. Like all liberals, modern-day anarchists are obsessed with procedure. It's not a program that defines their agenda, but the ritual of decision making. It's no surprise that the liberals at The New Yorker are fascinated. And it's no surprise that they take us no further from a decadent, crisis-ridden capitalism.

Zoltan Zigedy

zoltanzigedy@gmail.com

Socialism or “Castles in the Air”?

It’s hardly a secret that the US left is barely alive. While left-wing movements in the US have hardly shaken the foundations of power in my life time, they have known moments of modest success, reshaping the political landscape in significant and irreversible ways. Since World War II, left activism has stirred and nourished important movements like the struggles for African American equality and against US aggression in Vietnam. The left has also played important roles in fueling struggles for women’s and gay rights and for strengthening environmental protection. While 1960s talk of revolution and radical alternatives were more hyperbole than real, the ferment of those days was real.

Unfortunately, little of the US left’s modest success penetrated the labor movement, a social force defanged and declawed by anti-Communism early in the Cold War. And little of the left’s wave of vitality challenged the two-party system in any serious way. As the risings of the sixties recede further and further in our collective memory, the quantity and quality of popular struggle diminishes as well.

It’s not just the number of actions or the size of the crowds that are shrinking, but also the ideological understanding that purports to animate our US left. That is, the ideas embraced by various elements of the left have grown more and more murky and superficial.

What Ails the Left?

There are many symptoms and causes of the relative decline of the US left.

But always looming in the shadows of struggles for social justice is the demon of anti-Communism. Other peoples have suffered periods of hysterical, paranoid anti-Communism, but few countries outside of the US have elevated it to a state religion. While fear of Islam may have currently replaced Cold War fears as the national obsession, anti-Communism remains deeply embedded in the national psyche. Recent movies featuring West Coast and East Coast invasions of the US by forces from the tiny Democratic People’s Republic of Korea only underscore the persistence of this demon.

Of course the US left is neither immune from nor unwelcoming to Red-baiting. From the fifties, “leftists” could earn respectability and credibility with the public ritual of denouncing Communism. It was from this period that critical financial umbilical chords from the most prominent, most influential left and liberal formations to wealthy donors, foundations, and, in some nefarious cases, the security services were established. Any independent organizations deriving grass roots funding from workers’ organizations or the nationally oppressed were routinely looked at suspiciously for Red ties.

By the early sixties, the purge of everything Red or even Pink was largely completed. Everything—words, ideas, associations—even vaguely linked to Communism had disappeared from the mainstream. And the rise of a “new” left reflected the weight of that legacy. Both opportunism and ignorance led most of the left’s new leadership to establish a political camp to the right or left of Communism, demonstrably distant from Communism: radical democracy and social democracy to the right; Maoism and anarchism to the left.

Arguably this failure to establish an honest, objective encounter with Communism, this Cold War attitude of framing all politics as a counterweight to Communism, contributed mightily to the decline of the left in the next decade. The student base and alienation from working people demonstrated the shallowness of New Left ideology. Most leaders and activists turned to careers, the Democratic Party, the social service bureaucracy, or retreated to the universities.

Anti-Communism continued and continues as a blind faith. The fall of Soviet and Eastern European socialism added a new dimension to the anti-Communist canon: Not only was Communism evil, but it didn’t work.

Without the foil of real existing socialism, the US left drifted aimlessly. Some found an ideological anchor in “market socialism,” especially with the rise of Market-Leninism in the Peoples’ Republic of China. Others found romantic answers in Comandante Zero, a pipe-smoking, inscrutable poet/revolutionary diminutive caricature of Che Guevera. Still others attempted to restore life to the New Left of the sixties. One cannot but be reminded of the situation of Russian revolutionaries after the suppressed 1905 uprising as described by Lenin:

The years of reaction (1907-10). Tsarism was victorious. All the revolutionary and opposition parties were smashed. Depression, demoralisation, splits, discord, defection, and pornography took the place of politics. There was an ever greater drift towards philosophical idealism; mysticism became the garb of counter-revolutionary sentiments. (Left Wing Communism: An Infantile Disorder)

Where most European Communists degenerated into social democrats in this period, US leftists, scarred by anti-Communism and with no similar tradition, found hope in narrow-issue activism, cult-like formations, or the unlikely revival of the New Deal Democratic Party.

Obama and the Left

The candidacy of Barack Obama proved to be a disaster for the US left. Anti-war and social justice activists put aside their signs and plans and flocked to the Obama campaign. Grandiose expectations were conjured out of thin air; a candidate associated in the past with conservative Democrats and a professed admirer of Ronald Reagan was imagined to be the second coming of Franklin Delano Roosevelt; and even cautious measures of critical support were overwhelmed by wild-eyed enthusiasm.

After the election, most of the US left kept faith with Obama, a faith that has produced very little of the anticipated change, but succeeded in disarming the left. The big loser was the historically most progressive element in US politics: the African American community. Understandably, African Americans rallied to support the first African American president, but his administration has neither represented African Americans nor lifted a finger to relieve the sinking material conditions of life for that community. In fact, often more has been done for African Americans under Republican presidents when the left is actively and vocally pressuring and Democrats are in opposition! As an example, no Republican president would get away with so few African American appointees or nominees in an administration as has the current President!

The US ruling class has successfully and opportunistically gauged the hard won level of racial tolerance of US voters. The new face of US policy and diplomacy presented by Obama was welcomed everywhere—at home and abroad—over the failed Bush regime. A byproduct of this tactic is the disarming of the left and the silencing of African American leaders. Tragically, the US left has accepted the shallow symbolism of an African American president at the expense of the African American masses.

The Crisis and the Left

For the left in the US and internationally, the profound economic crisis beginning in 2008 and continuing today offers a great opportunity to mount an anti-capitalist offensive and project a clear alternative. For over a century and a half that alternative was socialism. The vision articulated over that period differed from time to time, but shared some straightforward features: the theoretical primacy of class relations, public ownership of productive assets, an end to exploitation, a new democracy based upon the rule of the working majority, and social and economic planning. Each feature clearly addresses a glaring, unacceptable shortcoming of capitalism.

But in the US, our left will not address the devastation wrought by capitalism and embrace these features or even discuss them honestly. One of the most prominent and respected national leaders of the anti-war movement recently said: “I used to think I was a socialist… But I also think that people should have the right to be individually enterprising. I have yet to see the society that I would like to live in but I see pieces of it, bits and pieces of it here and there.” This is hardly encouragement for the 11.7 million US citizens looking for a job, the nearly 8 million who would prefer a full-time job over their part-time employment, or the tens of millions who still lack health insurance, all benefits once guaranteed and delivered by real, existing socialism.

Another prominent left pundit, in reviewing another left oracle’s “new economy” manifesto, remarks that the author’s assumptions are “…that socialism, as we have known it in the 20^th century did not work.” He blithely concedes that the book’s author “spends little time critiquing 20^th century socialism.” Not deterred by the lack of argument, the reviewer affirms that “I was persuaded… that a glimpse into the future is critical largely due to reality of the failure of 20^th century socialism, or more accurately, what is better described as the crisis of socialism.” “…did not work, “failure,” “crisis” are the unexamined, easy assumptions of our floundering left.

So what do they offer as an alternative?

Anything but the socialism associated with Communism. They take us back to the foolishness that Marx and Engels called “utopian socialism,” the schemes concocted by Fourier and Owen in the early 19^th century. In the Communist Manifesto they conclude that utopians “…therefore, endeavor, and that consistently, to deaden the class struggle and to reconcile the class antagonisms. They still dream of experimental realization of their social utopias, of founding isolated phalansteres, of establishing ‘Home Colonies,’ or setting up a ‘Little Icaria”—pocket editions of the New Jerusalem—and to realize all these castles in the air, and they are compelled to appeal to the feeling and purses of the bourgeois… They, therefore, violently oppose all political action on the part of the working class; such action, according to them, can only result from blind unbelief in the new gospel.”

We find a modern incarnation of utopianism in the “New Economy” movement, the US left’s current flavor of the day. Back in late 2011, Professor Gar Alperovitz reached for the golden ring of utopia with his America Beyond Capitalism: Reclaiming our Wealth, our Liberty, and our Democracy, a book that promised to take the disenfranchised in the US from peasants to lords. Alperovitz, like his utopian predecessors, believes that ideas generously given from a fount of wisdom will, if only embraced by those below, lead to “democratizing capital.” Alperovitz’s magical ideas are the spawning of “thousands of co-ops, worker-owned businesses, land trusts, and municipal enterprises” that will, with time, “democratize the deep structure of the American economic system.” A more romantic version of Marx and Engel’s derisive “new gospel” I cannot imagine.

The very notion of “democratizing” something, let us say “capital,” that doesn’t wish to be “democratized” is mind-boggling. Will capital be embarrassed into sharing the wealth? Will the success of co-ops demonstrate to Exxon that energy should be free to all and produced in an environmentally sound manner? Will the 17-trillion-dollar US-based multinational corporate behemoth shudder in the face of worker-owned enterprises and co-ops, surrendering control of the boards of directors to the people?

I don’t think so.

Alperovitz points to existing self-styled alternative ownership models like ESOPs (Employee Stock Ownership Programs), community development corporations, co-ops, etc. as the way forward (he concedes that ESOPs have a dubious record). As such, they would offer a relatively painless “evolutionary” road different “from traditional theories of ‘revolution’.” Many “businessmen, bankers, and others, in fact, commonly support the idea [of co-ops] on practical and moral grounds,” Alperovitz proclaims. Of course they do; they see no challenge to capitalism and a possible opportunity to cash in!

The fact that “castles in the air” ideas like Alperovitz’s actually gain traction demonstrates the sad state of the US left. The fact that opinion polls show a decided increase in interest in socialism is encouraging; however, the fact that those new to the idea must taste through the unappealing, non-nourishing gruel currently favored by so many on the left is disappointing. 

For more than a century and a half, socialism—the public and democratic ownership of the essential means of production under a majority peoples’ democracy—continues to be the only ultimate answer to a tenuous and destructive capitalist system.

Zoltan Zigedy

zoltanzigedy@gmail.com