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Monday, December 29, 2008

Let Obama be Obama?

Disenchantment is setting in... Among those who describe themselves as "progressives" (an umbrella-term re-invented to avoid the pejoration of "liberal" and to encompass liberals and the non-Marxist left), the infatuation with President-elect Obama has began to sour. As thousands prepared to join the inaugural celebrations in DC, the announcement that Reverend Rick Warren would invoke the ceremonies sparked a decided outcry from progressive Obama supporters. The right-centrist Cabinet appointments - earlier indications of Obama's governing posture - were largely sloughed off by left supporters as Lincoln-esque maneuvers or practical accommodations. But honoring Warren stretched the credulity of even the most smitten. While Warren has shown a tad more tolerance and compassion than the worst of the evangelical right, he is still a member-in-good-standing of the cabal of fire and brimstone reactionaries.

Who is Obama?
Has Obama betrayed his progressive promise? Obama never made a progressive promise. The idea of Obama as a water-bearer for liberal or progressive reform came not from Obama's mouth, but from the sheer wishes and dreams of the left. They took the vacuity of the "change" slogan as something more than the usual hyperbole of two-party politics despite the fact that it is hurled at every lame duck or incumbent. They saw rhetorical, fuzzy commitments to constituents of the Democratic Party base as more than they have been in every previous Democratic campaign. They took youth, energy, and elequence as a mark of liberalism in a way not seen since the JFK campaign. In short, Obama ran a predictable, well executed Democratic Party Presidential campaign and the left took it to be a people's crusade.

The "democratic" component of the campaign - the internet engagement - was seen as a departure from business-as-usual even though it was used effectively by Howard Dean four years earlier and spawned no new, progressive movement. It is not yet clear how the post-election internet pollings will differ from the numerous Democratic Party postal fund-raising appeals that I receive, masquerading as polls. Republican strategists are now planning a similar "grass roots" strategy for coming elections. The mass mobilizations may well have surpassed previous ones, though, as in past campaigns, the organizers asked for no programmatic commitments or concessions. The efforts were gratefully received as "gifts" and not leverage.

Obama has effectively postured as his political career demanded. His social agency beginnings in Chicago coincided with the mayoral incumbency of an authentic progressive and reformer, Harold Washington. Yet there were no strong ties to either Washington's program nor his legacy.

Obama took liberal positions while dependent in his political advancement upon the liberal Hyde Park constituency and, at the same time, courted moneyed interests in Chicago - interests that would boost his advancement even more. His subsequent career generally followed these lines, balancing policy positions with constituency and fund-sourcing. In this regard, Obama's career parallels that of other centrist Democrats, no better or worse. But certainly nothing in Obama's career would warrant counting him among the Democratic Party's more progressive leaders, for example, Dennis Kucinich or John Conyers.

In fairness, Obama has betrayed no one. His vast centrist following and the Democratic Party old-guard have shown no fear of Obama's perceived "progressive" agenda, an agenda that appears to be more and more in the minds of a self-deluding left. Obama's appointments and positions have produced no panic among big capital which showered an unprecedented amount of financial support onto his campaign.

Fifty-six years ago, Walter Lippmann, an astute political observer, made similar observations about a Democratic Party nominee named "Franklin Roosevelt". As cited in Frederick Lewis Allen's Since Yesterday:

Walter Lippmann warned those Western Democrats who regarded Roosevelt as a courageous progressive and an "enemy of evil influences" that they did not know their man.

"Franklin D. Roosevelt" wrote Lippmann, "is an amiable man with many philanthropic impulses, but he is not the dangerous enemy of anything. He is too eager to please.... Franklin D. Roosevelt is no crusader. He is no tribune of the people. He is no enemy of entrenched privilege. He is a pleasant man who, without any important qualifications for the office, would very much like to be President".

Lippmann's assessment of Roosevelt before his election loosely fits our President-elect. Of course Roosevelt went on to be celebrated as the father of the New Deal and the symbol of the US welfare-state, such as it was. But as every careful read of the Great Depression history shows, the New Deal reforms were the result of independent mass pressure enabling and forcing these changes (see my The Real Lesson of the New Deal for the US Left,

The Left: Immature or Irrelevant?

By fitting Obama with the mantle of progressive change, the leadership of the broad left - much of the peace movement, liberals, environmental social justice activists, etc. - surrendered their critical judgment, independence, and influence to a blind trust in a fictitious movement for change. In the history of social change in the US, every real advance was spurred by independent organization and struggle unhampered by the niceties of bourgeois politics. From the Abolutionist movement to the Civil Rights movement, from the Populist movement to the Great Society, from the Anti-imperialist League to the Anti-Vietnam War movement, the initiative for change sprung from committed, independent activists who defied the caution and inertia of elected officials. Why have these lessons been ignored?

The many open letters to Obama circulating on the left, the often cogent economic game plans, and the internet support groups are no substitute for organized action. Sadly, the left - for I suppose tactical reasons - never rallied behind Obama's progressive pastor, Reverend Wright, when he was dumped and denounced, though many now feel an outrage for his choice of Reverend Warren. Both actions were dictated by opportunity and not principle.

Again, President-elect Obama has betrayed no one. He is who he says he is, in spite of any illusion conjured by left wing forces that chose to forgo the hard work of organizing independent action for fawning after bourgeois politicians. Some wise voices on the left remind us that we must now pressure Obama in order to move him forward towards progressive goals. Indeed, that is so. But that would be true regardless of who won the election.

Even more than the scolding of left wing critics, even more than the corporate connections and lame cabinet appointees, and even more than his offensive inaugural choice, Obama's silence and deferral to the Bush administration in the face of the outrageous massacre of Palestinians demonstrates where he stands. In turning his back on this slaughter of civilians, he is no better nor worse than the vast majority of two-party politicians that encourage Israeli aggression and disdain for Arab lives. There should be no doubt that Israel launched this atrocity, at least in part, to test the compliance of the President-elect. He has passed with flying colors.

Zoltan Zigedy

Friday, December 19, 2008

Brasscheck Exposes the Feds

On December 16, Brasscheck, the daily video release addressing generally progressive issues, joined the chorus heaping condemnation upon Illinois' Governor Blagojevich. Like most casual observers, Brasscheck followed the herd by referring to the non-existent "indictment" assumed after the Governor's dramatic early morning arrest and media-titillating perp walk.

To Brasscheck's credit, it had second thoughts on December 17, noting the not-to-subtle coincidence of Governor B's arrest and his support for Illinois workers - a point made on this blog on December 10. Brasscheck said:

Yesterday, we had some fun at the
Governor of Illinois' expense.

Maybe he deserves it.

On the other hand, there is something
very odd about the timing of his arrest.

The FBI, those paragons of law enforcement
virtue, seem to be operating more as
political enforcers than anything else.

See what the Governor was doing the
day before he was arrested...


- Brasscheck
And on December 18, Brasscheck came back with another video on the Republic victory noting how quickly l'affaire Blagojevich pushed the labor action off the front pages:

When was the last time you heard good news
about a labor action in the United States?

Have you *ever* heard good news about a
labor action in the US?

There may be a reason for that.


- Brasscheck

Kudos to Brasscheck for throwing more fuel on the fire of suspicion around the political motives of Fitzgerald's hasty arrest of the Illinois Governor.

Of course the issue is not Governor B's innocence; it would be shocking if he didn't participate in the pervasive process of "pay for play". As a noted defense attorney commented, it is customary for ambassadorships, UN appointments, and other government appointments to flow from campaign contributions and other financial commitments; influence-peddling is the lifeblood of bourgeois politics. Call it cynical, but it is surely naive to feign shock at the horse-trading that characterizes the crassness produced by two-party domination.

At issue here, though, is the blatant, high level abuse of judicial action to influence public sentiment and shape public policy. With Brasscheck, I question the timing of the dramatic arrest that tarnished Governor B's prior defense of Illinois workers and drove the story of militant action to the back pages, diminishing the chances of any "copycat" actions.

Later revelations show that Fitzgerald had even bigger fish to fry. Obama's associates, SEIU, and the labor movement in general are now all drawing scrutiny based upon implied association. The weekend Wall Street Journal reveals that an anti-union group, Center for Union Facts, plans to mount a media campaign against the Employee Free Choice Act based upon drawing links between SEIU and Blagojevich.

Those who fail to oppose this judicial thuggery should be reminded of the Federal campaign against Teamster President Ron Carey who died last week. On the heels of his victory against corruption and his leadership of an historic UPS strike, Carey was driven from the union leadership by a long, tedious judicial mugging that forced him from the union leadership and set back the cause of class struggle unionism. Then, like now, few had the stomach for a principled fight for judicial fairness in the face of public humiliation.

Sunday, December 14, 2008

Even More on Governor B and the Feds

While the media has pounced on Governor B's alleged sins and Democrats are scrambling in every direction to dissociate and condemn the Governor, a few judicial experts, with no horses in this race, have spoken out on improprieties in the actions of the Feds.

Writing in The New York Times, Barry Coburn, a former Federal prosecutor, opines:
Against this backdrop, it is hard to feel comfortable with Mr. Fitzgerald's [the Federal prosecutor's] remarks in announcing the charges that Mr Blagojevich's conduct amounted to a "political corruption crime spree" and "would make Lincoln roll over in his grave," that "the breadth of corruption laid out in these charges is staggering." that Mr. Blagojevich "put a "for sale" sign on the naming of a United States Senator" and that his conduct was "cynical" and "appalling" and has "taken us to a truly new low."

Any prosecutor at the center of a firestorm of publicity may find the temptation to grandstand hard to resist, but these comments are, to put it mildly, remarkably inflammatory. Mr. Fitzgerald's expression of revulsion, use of hyperbolic rhetoric and implicit assertion of his personal belief that the charges have merit clearly run a foul of the rules. It is one thing for a prosecutor to publicly condemn a defendant's actions and assert a belief that he did what he is charged with doing after a trial and conviction, but another to do so before he is indicted by a grand jury.

In "The Prosecution Should Give It a Rest" (12-13-08), Coburn cites the relevant rules of both the US District Court for Northern Illinois and the American Bar Association pertaining to Fitzgerald's actions. Though stated in cautious legalese, it is clear that the prosecutor is in flagrant violation of these rules.

On the same day, Victoria Toensing, a former Justice Department official - and a self-described Republican - wrote of Fitzgerald in The Wall Street Journal ("Fitzgerald Should Keep His Opinions to Himself" 12-13-08). Repeating much of the Coburn charges against Fitzgerald, Toensing adds "And although I am a Republican, I am first an officer of the court. Thus, I take no joy in a prosecutor pursuing a Democratic politician by violating his ethical responsibility. I fear for the integrity of the criminal justice system when a prosecutor breaks the rules."

She goes further by making a connection to Fitzgerald's prior behavior in the Plame case:

In his news conference in October 2005 announcing the indictment of Scooter Libby for obstruction of justice, he compared himself to an umpire who "gets sand thrown in his eyes." The umpire is trying to figure what happened and somebody blocked" his view. With this statement, Mr. Fitzgerald made us all believe he could not find the person who leaked Valerie Plame's name as a CIA operative because of Mr. Libby. What we now know is that Mr. Fitzgerald knew well before he ever started the investigation in January 2004 that Richard Armitage was the leaker and nothing Mr. Libby did or did not do threw sand in his eyes. In fact - since there was no crime - there was not even a game for the umpire to call.

Clearly, Toensing is suggesting that Libby was unjustly convicted in the Plame case and Fitzgerald knew that the conviction was not appropriate to the charge. But what she doesn't say is that Libby was the designated fall guy in the case in the time-honored tradition of two-party politics. Libby fell on his sword - without a great deal of pain as things turned out - in order to protect others. The long, costly investigation diverted attention from the real connections that would have linked Cheney, Rove, and, probably, Bush to the illegal outing of Plame. This could not have been done without the collusion of Fitzgerald and a lapdog media. We know from the Nixon Watergate scandal, where layer after layer of fall guys were peeled away before Nixon's role was revealed, that this is a common practice with bourgeois politics. But the media "watchdogs" have short memories.

It should be abundantly clear that Fitzgerald is a political operative, willing to serve his political allies even at the expense of the appearance of judicial propriety. His career since his appointment to the Northern Illinois position has been one of immediate and persistent legal investigations of Democratic elected officials in line with the directives of the Bush Justice Department that are now well documented. Nonetheless, he has been emboldened by the lack of resistance from either a vigilant media or a combative Democratic Party.

There should be no doubt that this is more than a move against Governor B. In reality, its a shot across the bow of President-elect Obama and his administration, signaling a willingness on the part of the rabid-Right to insure that Obama's heralded bi-partisanship will be decidedly one-sided. Because of Democratic Party spinelessness in this affair, they have likely already conceded the vacant Illinois Senate seat to the Republicans. It seems unfathomable that Governor B has been pilloried by his Party and the media before a hysterical prosecutor has called a Grand Jury or achieved an indictment.


Thursday, December 11, 2008

More on Governor B and the Feds

Folks love a good scandal. Politicians caught with their hands in the cookie jar or with their flies open satisfies a deep and too rarely fulfilled need to prick the huge balloon of bourgeois hypocrisy.

But behind every public exposure is a political back story of intrigue, connivance and opportunism. Only a freshman journalism student still believes that good stories are simply mined from the everyday labors of hard working reporters or picked like ripe plums from the myriad events of the day. Stories are leaked, provoked, manipulated, and choreographed. In an age where the line between news and entertainment is blurred, at a time when careerism, self-interest, and political advantage motivates, this is especially true. If you're a Marxist, this calls for the M-L scalpel to cut away appearances and expose the underlying forces at play. And if you're a movie buff, you may prefer the imagery of a gullible Kansas girl pulling back the curtain to reveal the manipulative Wizard of Oz (with lyrics by the blacklisted Red, Yip Harburg). However you take your dose of political skepticism, there's always more to the story than meets the eye.

The saga of Governor B continues to unfold with more and more interesting wrinkles. Wednesday's Wall Street Journal screams in headlines of a possible link between Governor B and Jesse Jackson, Jr. In lower case type, the Journal alleges a tie to The Service Employees (SEIU). The glee in which these claims are stated is barely contained. Innuendo about a connection with President elect Obama drips from the columns. Clearly, a political campaign is emerging, directed by the Bush appointed US attorney general, Patrick Fitzgerald. Fitzgerald was, of course, the special prosecutor charged to investigate and prosecute in the infamous "Plame" affair involving the outing of a CIA agent deemed hostile to the Bush administration. After five years of slow-moving, cautious, and enormously costly investigation, Fitzgerald convicted a Cheney aide, "Scooter" Libby and closed the case despite strong public evidence of Rove and Cheney involvement. No journalistic hatchet men were charged and Libby walked after a Bush pardon with a laughable fine and probation.

Compare this with the early morning raid and Governor's B's perp walk in handcuffs: No grand jury, no judicial process, no caution, just a dramatic arrest guaranteed to draw media fervor (and take attention away from the Governor's prior act of solidarity with Republic workers). Clearly, Fitzgerald has more enthusiasm for this case than he showed in the Plame matter.

Buried in the Wednesday Journal article is the revelation that many defense attorneys who read the 76 page FBI document "noted many of Gov. Blagojevich's headline-grabbing conversations weren't necessarily crimes". Prominent attorney Gerald Lefcourt affirmed this, adding "Every politician keeps accounts - what is horse trading, and what is hyperbole?"

The Thursday Journal adds even more detail to what is shaping up to be even more clearly a case of politically motivated judicial head-hunting. In an article about convicted Chicago developer and fundraiser Antoin Rezko, the authors point out that Rezko had written to the judge in his case complaining that Fitzgerald was pressuring "him to tell them the 'wrong' things I supposedly know about Governor Blagojevich and Senator Obama". After more arm-twisting and a possible plea bargain, Rezko has now agreed to cooperate with Fitzgerald's office, serving as one of the principal sources supporting the charges against Governor B. Politically motivated? For sure.

Is there any doubt that "facts" will appear that will send the talk radio and cable snakes into a frenzied attack upon Obama?

The broken two-party system, where public office is essentially bought and sold, creates this cesspool of corruption, judicial manipulation, and political opportunism. To run for any office beyond dog catcher, sums of money are necessary - well beyond the resources of any but the very rich. It becomes virtually impossible to raise such sums without establishing relationships with contributors, relationships based upon favors - what has come to be called "pay for play". It is naive to think that this behavior is an aberration. At best, politicians are either shrewd, by distancing themselves from any incriminating transactions, or less reckless than others.

In this context, nearly all financial exposure is foolhardy or politically motivated. And in the case of Governor B, likely both are true. The financial difficulties of fighting the Feds through nearly all of his tenure as well as Fitzgerald's hit-man mission left him vulnerable to the charges that are emerging. The timing of the arrest may well have been made to overshadow the Republic factory occupation, but the ultimate goal is to embarrass and tarnish the Obama administration. But, then, that's bourgeois politics.

Wednesday, December 10, 2008


A friend made an interesting observation this morning. He mused that he had never heard of the Governor of Illinois until he publicly attacked Bank of America for denying any credit relief to Republic Window and Doors in Chicago, the company that closed last week only to be met with a militant sit-in by two hundred of its workers. Governor Blagojevich, like the members of the United Electrical Workers local, took a stand. He stated unequivocally that that state of Illinois would no longer do business with Bank of America, a company that eagerly took billions of dollars of bailout money meant to loosen credit, while steadfastly refusing to pass it on to a struggling company employing workers in Chicago. After the sit-in began at week's end, Governor B, on Monday, was the first prominent person to visit the workers and take a tough public stance for the workers' cause.

As my friend noted, the otherwise obscure Governor made national headlines on Tuesday, not for his act of solidarity, but for his Federal indictment on corruption charges. Before the word could spread about his support for desperate workers, the national headlines were scandalizing his name, erasing even a hint of integrity in his bold Monday declarations.


Frankly, you have to suffer from nursery school naivete to buy this explanation. Does that mean that Governor B is pure as the driven snow? Of course not. He's a crook. Friends and relatives in Illinois have recounted his many shady deals for some time. Governor B was a willing participant in the national political sport of "pay for play", the active solicitation of personal or campaign funds in return for no-bid contracts, legal and bond work, and other public benefits. It would be far easier for an investigative reporter - if there are any left - to find "public servants" who are not players than to identify the few that pass on the tantalizing attraction of graft. The long and lucrative career of Vincent Fumo, a Philadelphia-based Pennsylvania State Senator, is only the most recent and outrageous publicly revealed example of the mind-boggling greed of public officials.

But think about this indictment. Put the justifiable indignation over the revelations about another corrupted, cynical politician aside for the moment and consider the timing. The Feds have been wiretapping Governor B for five years! They have a veritable treasure trove of self-implicating, vulgar graft-mongering. Like the infamous FBI under J. Edgar Hoover which wiretapped the mafia for two decades, they seemed more interested in eavesdropping than pursuing justice. But - aha! - a moment arrived when they could stick it to the old Governor. He dared to side with the workers!

Now I have no more insight into Governor B's mind than I do the true motives of other politicians who have signed onto progressive legislation or taken commendable public stands, but I do know this: no other Governor has stepped up to defend and support the laid-off workers of Republic except for him. And few will fail to see the possible consequences of doing so, given that the Feds may have been monitoring their deals as well. Nothing puts a damper on political boldness like an assassination - remember the sixties? - or Federal indictments.

Whatever his reasons, Governor B stepped up with real support before anyone else. It took John Sweeney, President of the AFL-CIO, a full five days to issue a statement in solidarity with the workers in Chicago. The machinery of class solidarity seem to be a bit rusty in Washington DC. Maybe the labor movement should consider the UE organizer who dared to take on Republic and Bank of America, Leah Fried, as the next President of the AFL-CIO. She and the workers she so ably represent seem to show a lot more fight than the UAW's groveling President who proudly stands shoulder to shoulder with the discredited auto moguls.

I salute the workers at Republic. Let this be a beginning!

Thursday, December 4, 2008

The First Challenge

With over a month to go before the Presidential inauguration, a measure of the new administration's direction is emerging. While skepticism about Cabinet appointments has been brushed aside as negativism, policy positions are not so easily dismissed. This past week, Obama has shared specifics on his Iraq policy. In a New York Times article entitled "Reality mutes campaign promises on Iraq"(12-04-08), author Thom Shanker gathers Obama's current statements on the occupation to piece together a picture of a position somewhat at odds with the position advertised in the primaries and the Presidential campaign.

The current position might be summarized as follows:

  • The promised troop withdrawal by May of 2010 only applies to combat troops. Obama iterated "I said that I would remove combat troops from Iraq in 16 months, with the understanding that it might be necessary - likely be necessary - to maintain a residual force..." An Obama security adviser ventured that there might be 30,000 to 55,000 remaining troops, down from a total of 146,000 today.

  • Obama emphasizes the necessity of basing withdrawals on the recommendation of national security advisers and field commanders: "I believe that 16 months is the right time frame, but, as I've said consistently, I will listen to the recommendations of my commanders". This position mirrors the consistent stance of Bush since the invasion of Iraq, scoffed at by his critics.

  • The Pentagon, as the next administration no doubt knows, can and would willingly "remission" troops now counted as combat troops. Currently only 15 out of 50 brigades serving in Iraq are labeled "combat troops". As Shanker comments, "At the Pentagon and the military headquarters in Iraq, response to the statements this week from Mr. Obama and his national security team has been akin to the senior officer corp' letting out its collective breath..." Planners see as many as 70,000 troops remaining in Iraq indefinitely.

Shanker observes that "To date there has been no significant criticism from the Democratic Party's anti-war left of the prospect that Mr. Obama will keep tens of thousands of troops in Iraq for at least several years to come".

For the anti-war movement this is a serious challenge. Clearly, the Obama position of the moment is at odds with a complete withdrawal from the imperial mission. There is nothing in this stance to indicate a break with US neo-colonial policies of establishing Iraq as a forward base for US interests in the Middle-East. As things stand, Iraq would remain a dominated country with a client government serving the US.

As Shanker notes, there has been little response from the left to these "clarifications" of President-elect Obama.

To a great extent, the leadership of the anti-war left has adopted three tactical positions:

  • A Presidential and legislative victory of the Democratic Party was essential to the conclusion of the war. Anti-war activity was largely replaced by an all out effort to secure a Democratic victory in the election cycle. Candidates were seldom pressed on their position and, as a result, the occupation was seldom mentioned in the campaign.
  • An anti-imperialist approach to organizing was too narrow to secure peace in the region. With the exception of the ANSWER coalition, every effort was made to exclude an anti-imperialist message. Connections were not sought nor made with US predations in Cuba, Venezuela, Eastern Europe or other targets of aggression. Nor were they welcoming to solidarity with Palestinians or other oppressed peoples.
  • The anti-war movement needed to make every effort to appear patriotic. The US occupiers were in all cases characterized as equally victimized by the Bush administration and the anti-war movement sought to cast the effort as one of supporting those troops.

There were, of course, some compelling reasons for embracing these tactics. The tide of xenophobia and hyper-patriotism after the September 11th attack were seen as requiring the broadest possible approach to ending the war. Nonetheless, events suggest that these tactics both underestimated the US people and the US ruling class. By uncritically aligning with the Democratic Party, the anti-war movement misjudged the commitment of the party to restore Iraq to the Iraqis. Like all of us, the Democratic leadership saw that the occupation was untenable with a public appalled at rising US casualties. On the other hand, the Democrats never renounced either the US occupation nor domination of Iraq. Thus a draw down of US combat troops is today perfectly consistent with the goals of US imperialism.

In addition, the anti-war leadership misread the Bush victory in 2004. Despite slippage in the popularity of the war, Bush's victory was taken as a public commitment to his occupation policies. No one saw the election as less a Bush victory than a Kerry defeat. The Obama win demonstrates, in retrospect, the many weaknesses of the Kerry campaign. Certainly Obama benefited from a collapsing economy, but he also proved much more resilient to the charges of "liberal" elitism while offering a clear, though unspecific, message of change. Memory will serve to remind us that the Howard Dean campaign, before it was subverted early in 2004, exhibited much of the youth, energy, and vigor that Obama captured in 2008. As Bush's second term progressed, we all saw clearly that the US populace was in no ways endorsing the Bush aggression with its votes.

As a new Iraq policy emerges, the anti-war movement faces the challenge of tackling an occupation looking less and less like a war. It would seem unavoidable today that the idea of imperialist domination should be brought into the movement. Resistance to continued US presence in Iraq, manipulation of the government, and exploitation of the country's resources cannot be couched in language that sidesteps the charge of imperialism. Moreover, that understanding can only be strengthened by stressing the involvement of the US ruling class in other imperialist adventures. In short, the anti-war movement must become more and more an anti-imperialist movement. As such, it will find a growing chasm between the movement and the foreign policy elites that now and in the future administration shape US foreign policy.

Thus, rekindling the fire of anti-war activism requires a re-examination of all three elements of previous tactics. The reality of a Democratic administration committed to a more benign occupation through "peace keepers" and mercenaries may mask the injustice and alter the appearances, but never erase the stain of imperialist domination.

Thursday, November 27, 2008

George Soros and Markets

There is now an entire cottage industry writing about the capitalist crisis. When I first projected something ominous, something far worse than an ordinary downturn on the MLToday website in April of 2007, I noted that many radical commentators had made a career of projecting capitalism's collapse. Like religious zealot's predicting the end of the world, some were bound to eventually get it right. But few did.

At that time, I used the headlines in the tabloid, The Weekly World News, a National Enquirer spin-off, as a rhetorical and facetious foil. The now defunct scandal sheet foretold a coming depression in the summer of 2007. It proposed all kinds of outlandish strategies to survive the catastrophe. I noted at the time that the writers seemed to have a deeper understanding of the world economy than the experts pandering their wares in the media. I'm happy to say that I stood shoulder to shoulder with the editors of this august publication, though I sought a Marxist explanation to support my position. On the other hand, I've seldom shared an opinion with the editors of the New York Times.

Reflecting on this article, I think its fair to say that few found my argument compelling, probably even the writers of The Weekly World News who made careers out of reporting unlikely events. Nonetheless, the fact that I playfully put my projection side-by-side with a super market tabloid shows how uncommon and unconventional such a view was in the Spring of 2007. While I'm not pretending that I was the first or only writer to predict the crash, most - including the doom-and-gloom forecasters of the left - did not foresee an economic event of such catastrophic impact. I would like to believe that this is a tribute to the power of Marxism.

One person who, while not predicting the collapse, has anticipated a profound disruption of the financial sector for over a decade is the billionaire investor, George Soros. Soros is a strange bird. He has been a willing and able accomplice to American imperialism, spending millions of his vast fortune in support of the many so-called "color" counterrevolutions in Eastern Europe. Through his Soros Foundation, he supports "democratic" change - change that curiously coincides with his own vision of free market capitalism and seeks to sway those who's idea of democracy deviates from his own. Nonetheless, when it comes to understanding capitalism, his success in mastering the vicissitudes of the global economy is unmatched. In other words, he knows how to make money.

Soros's unique skills separate him from the many academic economists who have much to say about modern capitalism, but have put nothing on the table. While celebrated and award winning economists like Stiglitz, Reich, and Krugman have argued forcefully for a capitalism with a human face, Soros has raised deeper questions about the way capitalism functions. Even the most liberal of trained economist, like Paul Krugman, are confined in their thinking by the dogmas of classical and neo-classical economics. Soros, concerned mainly with making money, knows no such restrictions. Moreover, he is willing to step beyond the bounds of conventional thinking. He is a maverick, but a maverick with wide experience in the inner workings of contemporary capitalism.

Soros develops his views in a recent book with the ponderous title of The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means and in a recent article in The New York Review of Books entitled The Crisis and What to Do About It (12-04-08). In the later essay, he makes several points that separate his views from the orthodoxy, even the newly awakened orthodoxy of neo-Keynesian regulation.

1. He writes: With the financial system in cardiac arrest, resuscitating it took precedence over considerations of moral hazard - i.e., the danger that coming to the rescue of of a financial institution in difficulties would reward and encourage reckless behavior in the future - and the authorities injected ever larger quantities of money... Unfortunately the authorities are always lagging behind events... Even if it is successful, consumers, investors, and businesses are undergoing a traumatic experience whose full impact on global economic activity is yet to be felt. A deep recession is now inevitable and the possibility of a depression cannot be ruled out. (NYRB, p. 63)

This is an unusually frank and accurate statement of what has been done to solve the crisis and where events stand. What is unsaid, but suggested, is that force feeding public funds into proven irresponsible financial institutions only encourages irresponsible behavior - outrageous executive bonuses, predatory mergers, and the pawning of toxicity onto the public. Soros recognizes that nothing done so far changes the behavior patterns of financial players, it only cleans the mess after they've made it. And he rightly sees more of a mess ahead.

2. Credit - whether extended to consumers or speculators or banks - has been growing at a much faster rate than GDP ever since the end of World War II. But the rate of growth accelerated and took on the characteristics of a bubble when it was reinforced by a misconception that became dominant in 1980 when Ronald Reagan became President and Margaret Thatcher was prime minister in the United Kingdom.

The misconception is derived from the prevailing theory of financial markets, which... holds that financial markets tend toward equilibrium and that deviations are random and can be attributed to external causes. This theory has been used to justify the belief that the pursuit of self-interest should be given free rein and markets should be deregulated. I call that belief market fundamentalism and claim that it employs false logic. (NYRB, p. 64)

Soros is correct to see that credit has grown as has the role of financials and the risk undertaken by them. He is correct to see that the ideological pillars of the accelerated growth were laid during the rise of ultra-right politics, though it is misleading to suggest that Reagan and Thatcher were the architects. But he fails to see that the material conditions for this leap in credit were created by the demise of the Soviet Union and the ensuing era of so-called"globalization".

To his credit, he is bold enough to challenge the myth of the market. While he supports limited market regulation, his rejection of market infallibility opens the door to a far reaching challenge to markets. Markets, like mathematics, cannot be usually, or more often than not, accurate. If they are not always optimizing, then they are always necessarily subject to human scrutiny, adjustment, or trumping. Let's call that Zoltan's law. The appeal of a market based economy - "free markets", as their high priests like to call them - is that they make optimal decisions in allocating resources, labor, and products. If they cannot optimize, as Soros concedes, then they must be corrected by human intervention. But if they can only achieve optimal results with the help of a higher power - human intellect - then they have lost their mythical power to determine economic life. Not only is economic planning possible, but necessary.

Even if markets could always optimize, they face the contradiction between optimizing profit and optimizing social well-being, a contradiction that would seem more and more apparent with every passing day. Zealots for markets have argued that one of the benefits of markets is that they optimize the common good by maximizing profits. With living standards and social mobility for most people frozen at or deteriorating to levels of nearly forty years ago, this seems hardly a compelling argument.

3. Soros offers an eccentric theory called "reflexivity" which he attempts to graft onto conventional market theory to explain market aberrations like the current financial debacle. He hopes to rescue markets as an otherwise optimizing mechanism by isolating and explaining deviant market behavior in terms of a certain psychologically grounded "self-reinforcement". In essence, he is simply saying that markets fail when market players deceive themselves. And self-deception encourages even greater self-deception - it reinforces itself. Bubbles result.

What he does not say is that the underlying motive for self-deception is the unfettered lust for profits - the sooner the better and regardless of other costs. Soros correctly notes that the financial sector grew to occupy 25% of market capitalization. What he fails again to note is that, at the same time, the financial "industry" accounted for nearly 40% of all profits! The easy profits, acquired through what he calls "financial engineering", sucked away resources from more productive, socially useful needs. It placed an enormous amount of wealth in fewer and fewer hands. And the pool of accumulated wealth cried out for even more arcane and risky methods to maintain and grow profit rates. This is the logic of markets and the logic of capitalism, only to be countered by a severe economic crash.

4. At the end of the day, Soros is in the same position as those who clung, at all intellectual costs, to the Newtonian world view when faced with the telling predictions of Einsteinian physics. He stretches for an ad hoc explanation to save the dogma of markets: human excesses distort markets and human correctives must be employed to fix those excesses. But this just exposes the deeper truth that "markets" are merely a short-hand term for economic exchange between people, a social relation. These exchanges are shaped and determined by a host of political, juridical, cultural and power relations. There is no magical "correctness" to the allocations determined by markets. As the sum total of a society's conventions, these "markets" - social relations - reflect the interests of the social forces that dominate that society; in our case, capitalism.

For the society of the future - socialism - economic exchange will be determined, not with the social conventions of capitalism, but by mechanisms that place the optimization of the common good first. They will not be determined by a rigid theology of markets, but by the best rational mechanisms for ensuring both societal goals and efficiency. Only a medieval scholastic (or a neo-classical economist!) would not see a greater role for democratic, scientific planning. Neither the rigid dogma of market-fetishism nor the anarchy of markets will have a place in this world.

Zoltan Zigedy

Tuesday, November 25, 2008

What Would Nationalization of the Financial Sector Look Like?

Now that disgust with the financial sector and the government bailout is reaching a fever pitch, it's a good time to look at how nationalization of this wounded shark might proceed. Discounting those who foolishly defend the looting of public funds as nationalization, there are more and more calling for public ownership of financial institutions. Unfortunately, most calls for nationalization are short on specifics and potentially more harmful than helpful.

Below are some notes - admittedly tentative and sketchy - that may stimulate the discussion further.

1. What do financials "produce"? Essentially banks, insurance companies, and other financial institutions produce paper and plastic. More specifically, they deal in debt and other future obligations; they serve as an intermediary between people or institutions and money tendered and money borrowed or awarded.They collect assets from depositors, the insured, and investors and loan money or award money to willing borrowers or those meeting certain contracted conditions. What separates them from publicly-owned or cooperative financial institutions is profit. What they have in common with other privately-owned enterprises is, again, profit. Their primary mission is to make money and not serve any greater or collective cause. Their radical self-interest precludes any collective solution to the current financial disaster through individual bailouts precisely because their individual behavior is driven only by profit maximization. They have no social consciousness. Bailouts, like the current mega-gift to CitiBank, cannot work unless the profit motive is contained or by sheer dumb luck. Giving public funds to them is like giving drugs to a junkie.

2. If bailouts cannot work, what will? There is an essential need for the financial functions that are currently served by private institutions; without these services, there would be no economic activity, no hope for a better future. But for the vast, vast majority of people, these needs are fairly simple and easily administered: the accounting and distribution of compensation; insurance against life's unforeseen eventualities; loans for home purchase, education, consumer goods; guarantees of health care and retirement benefits; etc. Private institutions perform these functions poorly and at a high cost, duplicating services, incurring unnecessary expenses for marketing and promotion, thwarting economies of scale and, of course, expanding profits.

In addition, private financials are genetically determined to go beyond the essential functions of banking and insurance into areas of speculation. The profit imperative encourages speculation. If they engaged in reckless behavior with their own money, no one would care. But they are in the unique position of gambling with other people's money: deposits, retirement funds, insurance funds, savings, etc. Moreover, they are driven to take more extreme and socially irresponsible choices in pursuit of profit: securitization, derivatives, CDO's, and a host of other instruments that are impossible to explain or understand. The results are what the pundits call "toxic assets". They are indeed toxic because they engage and affect the fate of millions of people, but they are hardly assets. The real, original value of these instruments has been squeezed out through fees and charges, leaving nothing else but nearly worthless paper.

3. So what should be done? Three options are available. Firstly, we could shore up, at public expense, the speculative functions of the financial industry. This is the policy of the Bush administration and most of the Democratic opposition. Obama has not rejected this approach. It cannot and will not work.

Secondly, we could broadly nationalize the financial sector, paying current market value for their assets and taking on the essential financial services as well as the "toxicity".

Or, thirdly, we could simply create the means - easily and quickly - to provide the essential financial serves required by most of us. In other words, we could devise the necessary "products" through government agencies to provide - without profit, marketing costs,high management salaries, etc. - housing, automobile, health, home owners insurance; student loans; mortgages; consumer loans; etc. This move would fulfill the unrealized promise of Fannie Mae, the Federal National Mortgage Association, established in 1938. While Fannie Mae only addressed one aspect of the financial crisis of the Great Depression, it pioneered the creation of government institutions that supplied essential financial services formerly provided by the private sector. Over time, virtually all the existing financial liabilities incurred in the private sector could be absorbed by refinancing into the public sector. Such a move would be both rational, efficient and cost saving. Imagine if the estimated $7.7 trillion (the total value of ALL mortgages in the US is estimated to be $10.6 trillion!) already gifted to the financials were put to this use, a figure that is both wasted assets and equally a liability on the citizens of the US who must pay for it.

4. What would happen to private financial services: banks, insurance companies, etc.? They would remain whole based upon fair market compensation for any of their assets surrendered to the public sector, but they would be left to their own devices to dispose of the "toxic" assets that they have created. This harsh measure would eliminate the moral hazard of unfettered financial speculation, discipline their practices, and lower their profit expectations to levels commensurate with their actual productive value. I predict that they would shrink to service financial niches much as private doctors do in some countries with national health care.

5. Would there be other advantages to this nationalization other than stepping over the toxicity of greed fostered by the private sector? Sure. The current banking system is antiquated, changing slowly to adjust to new technologies. To a great extent finance is moving quickly to electronic transactions, but less so below the level of high finance. On the consumer level, the industry is still dominated by a "brick and mortar" approach , but with declining service stretching customer tolerance. Automated telephone systems, hidden penalties, long service queues, massive paper work, deceptive contracts, etc. are common complaints about the financial system. In addition, the security concerns associated with financial transactions engage draconian tactics, zero tolerance and extreme penalties, all, in the final analysis, enforced by the government.

Furthermore, the era of printed money and coinage is coming to a close only hindered by the untold cash transactions that the banking industry conducts with criminals and tax-evaders. Super-profits give the private bankers no incentive to report or hinder these transactions in the illegal economy.

A publicly-owned and democratically run financial organization free of the profit motive would eliminate the wasteful duplication of brick and mortar facilities, moving most financial transactions to the internet or other electronic media. Where two or three drive-thru banks are in one city block or in one mall, facilities for those unable to access or use these technologies would be strategically placed for convenience rather than where the money flows most freely. Uniform credit and debit cards, procedures, terms, and universal acceptance would replace the chaos and uncertainty found today. Consumers would democratically determine service levels and service mechanisms, balancing cost-effectiveness with ease of usage. Enforcement of obligations would, as with a humane health-care system, stress prevention over punitive remedies. Moreover, enforcement of obligations would be elastic to adjust for circumstances and external conditions, unlike with the shameless foreclosures and repossessions exploding in the current crisis. Needless to say, government monitoring of criminal finances would be vastly improved: drug dealers don't use credit or debit cards.

6. But what about enterprise financing? Assuming - contrary to my vision - private enterprises still exist, they can be financed directly from the government. Quietly - a few months ago - the Federal Reserve opened loans directly to financial corporations without the intermediary of banks. There is nothing different - except for cost-savings and efficiencies - in making this a general practice of a publicly-owned, democratically run central bank. Loan decisions would include, contrary to today, matters other than profits: environmental impact, social consequences, long term effects, etc. Certainly if private investment banks can serve this function better and more efficiently, but under government scrutiny, they are welcome to try.

7. Does this nationalized financial sector include insurance? Nothing in the private financial sector is as utterly parasitic as the insurance industry. A monkey could take the government funded and researched demographic data and contrive actuarial tables to balance set-asides with projected expenses. The trick, for the private sector, is to shave enough away from realized expenses to accrue a profit from accumulated charges. They have been very successful at the expense of equitable and efficient use of the resources they accumulate. They do this in many ways, including "over-insuring", denying insurance to the unlucky, denying benefits, offering misleading terms and coverage, inflating liabilities, and buying out the regulators. And in recent years, they have taken their reserves - set aside to cover beneficiaries - and gambled them in the insane speculative carnival that is now bringing down the entire financial sector. The insurance industry is the ultimate huckster.

It would take less than a week to establish a government agency to perform the functions of the insurance industry, an agency that would be more efficient, responsive, humane, and cost-effective than what we have now. I might add that without private insurance, the single-payer health care solution would not only be more likely, but essential.

8. In its simplicity, cost-effectiveness, and social responsibility, this nationalization option would best serve the needs of 90% of the people in the US. Perhaps, the other 10% would be less pleased. They could explore other options. But the poison of unbridled speculation would be expunged from the productive economy.

I offer this sketch of financial nationalization, not as a blue print, but as viable and attractive alternative. Such an option would not come about from the will of a treasury secretary or "progressive" president, but from an intense, determined class struggle. The forces arrayed against such a plan are formidable, but there is no better time to press for it.

Saturday, November 22, 2008

Getting Beyond Euphoria

Of all the many post-election, euphoric self-congratulations over the Obama victory few can match in fulsomeness the long-winded, pompous posting of Carl Davidson on Portside. In "The Bumpy Road Ahead: New Tasks of the Left Following Obama's Victory (long)", Davidson indulges 19 Word-document pages of hyperbole and pontification to affirm much of the left's unqualified support for Obama and the elevated expectations from the electoral victory. In many ways this is a welcome document because it serves as an unabashed example of the strange, deluded route that so many chose to follow. A taste of Davidson's exaggeration should be quite enough to illustrate. Davidson writes:

"...hundreds of millions-Black, Latino, Asian, Native-American and white, men and women, young and old, literally danced in the streets and wept with joy,celebrating an achievement of a dramatic milestone in a 400-year struggle, and anticipating a new period of hope and possibility."

Hundreds of millions? Literally? A dramatic milestone? Of course there were not hundreds of millions even voting, nearly half of which voted against Obama! And "dramatic milestones" should be reserved for truly world shaking events like the Civil War, The Great Depression, and possibly the economic catastrophe now looming. This dramatic overstatement is precisely the kind of puffery that contributes to isolating the left from working people.

Davidson's foray into the politics of class alignment would be amusing if it weren't meant so seriously. Davidson lists the following as one Obama's strategic accomplishments :"...he realigned a powerful sector of the ruling class into an anti-NeoCon, anti -ultra right bloc.” This is sheer nonsense. The ruling class, with a few exceptions, turned against Bush before the 2006 elections, not out of hostility to the ultra-right ideology, but because his policies were failing and proved to be a hindrance to the advancement of capitalism. There is no fundamental change in ruling class thinking, only a shift to more reliable partners. To think otherwise is a flight of unfettered imagination.

He goes on:
"The Obama team at the top is comprised of global capital's representatives in the U.S. as well as U.S. multinational capitalists, and these two overlap but are not the same. It is a faction of imperialism, and there is no need for us to prettify it, deny it or cover it up in any way. The important thing to see is that it is neither neoliberalism nor the old corporate liberalism. Obama is carving out a new niche for himself, a work in progress still within the bounds of capitalism, but a 'high road' industrial policy capitalism that is less state-centric and more market- based in its approach, more Green, more high tech, more third wave and participatory, less politics-as- consumerism and more 'public citizen' and education focused. In short, it's capitalism for a multipolar world and the twenty-first century".

Davidson draws distinctions that don't exist and makes projections that are unfounded. The folks around Obama (the cabinet has yet to take shape) are Clinton retreads or worse. Vague notions like "'high road' industrial policy" and "third wave" are unhelpful in understanding a candidate like Obama who campaigned on broad, equally vague pronouncements and the virtues of bi-partisanship. Apparently, Davidson listened little to what Obama said.

The retail politics of the campaign are hard to reconcile with Davidson's claim that Obama has departed from "politics-as-consumerism". The clear fund-raising winner in the billion dollar presidential derby raised more money from most sectors of the ruling class than any candidate in the primaries or the general election. Through the ruse of so-called "joint fund-raising committees", Obama received contributions of over $25,000 from 2,205 individuals. Does Davidson really believe that they will have no more impact on the administration than an individual giving $200?

Perhaps Obama will carve a new niche, perhaps he won't. But history does show that bourgeois politicians never stray too far from the capitalist ranch unless there is intense popular pressure. There would be no revolutionary break with England without an uprising in the colonies; there would be no emancipation of slaves without an abolitionist movement; there would be no Social Security, unemployment insurance, or industrial unionism without mass action; there would not be integration without a civil rights movement; and so on. In no case was an electoral victory sufficient to guarantee these outcomes. And in no case were the movements that drove these victories dependent upon or limited by electoral outcomes.

So "...the important thing to see is that it [the Obama team's ideology] is neither neo-liberalism nor the old corporate liberalism." Given that the Obama's team is shaping up as old-guard Clintonites, this is a wildly misleading statement indeed. What are Obama's associates? Socialists? Closet New Dealers? Born-again progressives? One sees the transformation of hope into faith in such blatant, naive wishfulness.

To help us understand the new world opened with the Obama victory Davidson garnishes the victory with a flourish of pop-Gramsci:
"The Obama alliance is an emerging, historic counter-hegemonic bloc, still contending both with its pre-election adversaries and within itself. It has taken the White House and strengthened its majority in Congress, but the fight is not over. To define the victorious coalition simply by the class forces at the
at the top is the error of reductionism that fails to shine a light on the path ahead".

O ne is surely struck dumb by a bloc that contends with its former adversaries by putting Hilary Clinton in charge of foreign affairs - a most unusual way of "contending". But Davidson is right; the fight is not over; in fact, it hasn't really began. To evade the glaring affirmative action for the ruling class among Obama's close collaborators, Davidson evokes the tired, cheap, and, by now, vacuous charge of "reductionism". Like a cross waved before a follower of the devil, the mere appearance of the word is supposed to drive the Marxist left back into the shadows.

Davidson distinguishes the layers of the Obama victory: At the top - as he likes to say - is a superstructure of solidly established, old guard politico's who have yet to propose one idea that departs too far from the limited toolbox of neo-classical economics and imperial foreign policy. Yes, there is talk of green initiatives, a friendlier relationship with labor, support for social liberalism, and a vague, dangerously tame reform of health care. But this group has shown no new thinking on the catastrophic economic crisis. Moreover, their timidly progressive pronouncements differ little from the false hope promised by the Clinton and Carter Democratic administrations that precede this one. This is hardly the promise of a "historic milestone" as foreseen by Davidson.
Below this elite center of power is an electorate overcoming racism, demonstrating a decisive rejection of the Bush administration, and starved for real change. Yet Davidson never - even remotely - bridges the chasm between their aspirations and the actual promises of the new administration. Change will come from the efforts of those organized oppositionally to force new initiatives and not from those relying on the good will of ruling elites. To ignore this historical truth is to risk the disillusionment and alienation of all of those who have advocated change with their vote.

Davidson huffs and puffs in a scolding and self-congratulatory diatribe against those he characterizes as the "ultra-left" because they failed to share his total submission to the Obama road show. He singles out three organizations who "mostly got it", though he concedes that they are "rather small and not growing in any major way". Of course they're small and not growing! They have surrendered their independence and they have been completely absorbed by the Democratic Party campaign to take a turn at bourgeois democratic rule. The dogmatic proposition that the left cannot welcome the rejection of the Republican agenda without subjugating itself to the agenda of the Democratic Party is unacceptable to anyone committed to moving beyond the tyranny of the two-party system. It may come as a surprise to Davidson that many members of the three organizations mentioned were able to work for the Obama victory without vassalage to the Presidential candidate (full disclosure: I voted for Ralph Nader).

Now that the election is over there is no excuse for not working to build a socialist left - an oppositional force - that will go beyond a three decade long defensive struggle against a persistent and relentless rightward shift in bourgeois politics. Maybe the Obama victory signals a halt to that drift; maybe it doesn't. But the urgency of the moment - a profound economic crisis - affords a rare opportunity to advance an anti-monopoly agenda beyond anything that Democrats would or could support. For many of us this may well be the opportunity of a lifetime to make an anti-monopoly, if not a socialist, option a real factor in US politics. There is time to celebrate the repudiation of Bush and the setback to racism, but not too much time. We must not yield to those who urge the unearned confidence in a political party with a history of betraying that confidence.

Davidson's article is available at:

Thursday, November 6, 2008

The Presidential Election: A victory for the People?

The 2008 US Presidential election is behind us. A fair estimation of the results might be as follows: A clear, significant statement of the US electorate; a hollow, likely disappointing result for the people. After the euphoria of the Obama victory, it is vital that we separate these two assessments and avoid the cynicism of leftist isolationism and the self-deception of hopeful idealism. What the voters wanted was unquestionably significant change. What they were promised was change. Whether change will come from the Obama administration is - at best - questionable.

The Meaning of the Vote

The vote was most importantly a repudiation of racism and the Bush administration. White voters in working class areas cast aside crude racist appeals, put aside the three-headed Trojan horse of abortion, gays, and guns, and voted economic self-interest. They knew that McCain would do nothing for them and they wanted to believe that Obama would. A kind of reverse Bradley effect - unnoticed by the media - was operating. Many were afraid to openly support an African-American, but were comfortable doing so in the privacy of the voting booth, canceling out any lost votes from the opposite tendency. Thus, the polls proved to be an accurate, if not underestimated, gauge of the election results.

The significance of this cannot be overstated. The level of overt racism - the open, vulgar racism fostered by talk radio, shock jocks, internet slime - should diminish with the expression that most citizens are comfortable with an African-American President. Of course it won't disappear.

Also, the vote opens the door to a more unified working class. Make no mistake about it, union leaders who were lukewarm, often absent fighters for equality were forced by the circumstances of the campaign to take strong, out-front statements against racism. This is a good thing, and, though their efforts were sometimes clumsy, commendable.

Of course much work lies ahead in the struggle against racism; voting for Obama is not a free pass for racial insensitivity.

The three strongest constituencies for Obama (giving Obama the largest portion of their group vote) were African-Americans, Latinos, and union labor. African-Americans understandable took pride in the candidacy of Obama with predictable results. Latinos voters represented 8% of the total vote, siding decidedly for Obama. Both the growth of their total vote and their stronger support for this Democratic candidate mark a greater importance in electoral politics and a powerful progressive tendency. These results were duplicated in Florida, where the intimidating gusano influence continues to wane.

The election confirms the demographic expansion of the minority population and their increasing importance for anti-monopoly political organizing. The shift in the Latino vote makes the excuse for appeasing the anti-Communist Cubans in foreign policy even more lame.

The union labor vote - which overlaps substantially with the minority vote - was strong for Obama: 67% supported him, according to the AFL-CIO. Most importantly, the union electoral drive proved effective in blunting and overcoming racism and the always present distractions of abortion, gun control, and gay marriage. Like the Prohibition issue in the election leading to the New Deal victories, these issues are used to deflect attention from more fundamental issues. The union electoral effort shows the potential for influencing policy well beyond the electoral arena and much more frequently than the electoral cycles. Labor activism is an untapped source, lacking only ideological clarity and militant leadership - a task for the left in the coming period.

The Catholic vote went for Obama despite the efforts of many right-wing bishops to to swing the vote towards anti-abortion candidates. Protestant Obama fared better than Catholic Kerry in 2004 - another measure of self-interest trumping self-identity.

In general, the vote results show an electorate ripe for new policies, new answers and moving in a clear progressive direction. The trends exposed by the Pew Research Center's two decade long polling study ("Trends in Political Values and Core Attitudes") towards social democratic policies and away from insularity and obscurantism is born out by the 2008 election.

The Meaning of the Obama Victory

There is a glaring contradiction between the wants and needs of the people of the US and the issues debated and embraced by the Presidential candidates - it is as if they existed in two different worlds. The institutionalization of the two-party system both allows and insures this fact. It is no criticism of Obama or his hope-filled partisans of change who worked with such great enthusiasm to point this out. But, by the same token, it is delusional to forecast a progressive turn in the Obama administration from this great effort. If Nader, if Cynthia McKinney, if even Bob Barr were allowed to debate the candidates before a television audience, there might well have been progressive issues on the legislative table. If... if... if... But the institutionalized two-party system does not allow for such opportunities. And it will continue to block any move leftward without a dramatic mass movement forcing it.

The political influence of the right-wing Democratic Leadership Council surrounds Obama with the appointment of Rahm Emmanuel as chief-of-staff only underlining this reality. With Emmanuel as the gate keeper, the notion that progressives at least have access to the White House is even more remote. Despite the fact that the DLC is completely out of touch with the needs of the majority of the citizenry, they exercise inordinate influence within the Democratic Party. It must be remembered that they have a strong base in the South as well as the suburban bed-room communities in the North. These suburban communities proved to be the power base for sweeping away the progressive platform of the Democratic Party after the 1976 election victory.

Again, in 2008, suburban voters left the Republicans and sided with the Democrats. Despite their fickle loyalty to the Democratic Party (they respond mainly to the Party's social liberalism agenda of gun control, abortion rights, gay marriage, and other personal freedom-based issues), they are the main justification for the constant urging by the Party's pundits to tack towards the center and center-right). Their "activism" is what the Democratic Party best understands - money and power. And they stand as rivals for policy influence with African-Americans, Latinos, and labor.

On the economic front, Obama's advisors are hardly inspiring; indeed, they are a bit scary - Paul Volker, Lawrence Summers, Robert Rubin. Austin Goolsbee, Jason Furman, Timothy Geithner, and Warren Buffet have all the wrong corporate and academic credentials. None have stepped too far from the warm, comforting waters of neo-liberal orthodoxy. And in a world of real oppositional politics all would have been ferreted out for previous personal or policy sins. For the hope-crazed progressives, there should be some puzzlement at the absence of Krugmans, Stiglitzs, and Reichs from this group (actually Reich is part of the transition team - a rose among so many thorns).

At this early date, the names floated for key cabinet positions are largely political retreads of previous administrations and old legislative warhorses. Very few wear any progressive medals for deviation from the center, center-right agenda.

Regrettably, the electoral victory was no victory at all for the left. That is just to say that the Obama victory brought no assured policy reward for left support. At best, the Obama administration would be more accomodating to, less intransigent against any advances forced upon it by mass action. That is something, but hardly a justification for most of the left's unconditional support of the Obama campaign. The occupation in Iraq is no closer to conclusion; universal single-payer health care is no closer to being achieved; there is no plan to end the Afghan war; the Cuban embargo remains policy; Palestinians remain political untouchables; and so on and so on... And every indication is that the Obama administration will continue down the path of advancing imperial interests and privileging corporate America.

Looming over this election is the global economic catastrophe - a giant gorilla towering over all other issues. Many see a repeat of the Great Depression - a sense not completely farfetched. And many hopefully see Obama as the new Roosevelt launching a new New Deal - a sense built upon the sand of "Yes we can". In truth, Roosevelt was not the great savior of capitalism or the people, a myth that lingers in liberal theology. But the facts give no portent that Obama is Roosevelt, either. It's time for the left to put the aside comforting illusions and rebuild an independent, oppositional front that is not dependent upon the good will of the corrupted Democratic Party. We desperately need that left to forge a true people-saving agenda from the destructive gorilla.

Friday, October 31, 2008

Oh Glorious Day!!!

I woke up this morning with socialism in the air. Everywhere I turn someone is speaking or writing of socialism.

When I turn to the right, the wacko-right is speaking in a hysterical, ominous voice of Obama's socialism. "Spread the wealth", he says, and Fox news and the talk radio hosts hear "socialism".

Add it up: Obama actually had social intercourse with a self-avowed radical - one of those ultra-revolutionary rich kids who embraced armed struggle in the sixties, only to be re-admitted into polite circles with his redemption. Of course, political discourse with terrorists like Ollie North or the gusano Posada is never elevated to a serious media issue. Furthermore, Obama - in an off-the-cuff comment not vetted by his corporate consultants - actually spoke of spreading the wealth! He must be a socialist.

Actually, I welcome the right's new strategy of red-baiting (pink-baiting?). Common sense says that where there is no red-baiting, there is no fear of the left. Years ago, when a friend commented that since the demise of the Soviet Union red-baiting had subsided, I suggested that that only meant that there was no perception of a threat from the left. So maybe the new scare tactic signals a new born threat of the old specter - socialism. Maybe they're looking over their shoulder nervously!

And when I turn to the left, progressives and the soft left are finding socialism sprouting in every garden. David Sirota, who assures us that he would surely know socialism since he worked for Bernie Sanders, finds the germ of socialism in the aftermath of the elections ("The Potential Progressive Mandate"). Robert Borosage acclaims that "socialism is winning" ("A New Progressive Era"). And The Nation, in a euphoric editorial, finds the buds of socialism springing from the bailout program (see my "The Bailout Scam" below). Breathlessly, The Nation editorial declares: "And yet here we are in 2008, with the old Wall Street hand Hank Paulson, of all people, suddenly seeming to embrace the idea [of nationalization]".

Forgive me for being skeptical, but I don't think socialism will emerge from the efforts of Paul Volker, Robert Rubin, and Lawrence Summers (Obama's principal economic advisers) and surely not from the actions of Ben Bernanke and Henry Paulson.

Nonetheless, socialism should be in the air. Not the moralisms that the demented-right shrilly attacks, not the false alarms of the hope intoxicated Obama-maniacs, but real socialism.

How do we know real socialism?

First, it will not be delivered as a gift by the ruling class. Epic conversions should be left to religious zealots and not the real world of political change. History speaks to the determination of capitalists to cling to their system to the death of the last worker.

Second, socialism will not come without class struggle. While class consciousness is rapidly emerging with the deepening of the world economic crisis, capitalism will not simply surrender in the face of public outrage. The defiant behavior of the financial elites who have drawn deeply from the public trough as a result of the bailout program demonstrates this dramatically (again, see "The Bailout Scam" below). One need only look at the polls to see the contempt that the capitalist class and its minions have for the opinions of the majority.

Third, class struggle needs to be organized. Advanced workers must come forward to constitute a critical mass of dedicated advocates - what Lenin calls a "vanguard" - to spread the idea of socialism and organize for its attainment. Historically, this has been the role of a Communist or Workers Party, but sadly many of these organizations have succumbed to opportunistic parliamentarianism or embraced bourgeois parties as instruments of change. Thus, the job of revitalizing these parties becomes vital. Even the tireless Presidential candidate, Ralph Nader - no advocate of socialism, but one of the greatest living reformers - understands this point profoundly. William Greider, writing in The Nation quotes him: "I see a lot of anger around the country, but I don't see it organized...Anger that's unorganized has no power."

Many on the left reject the idea of a vanguard party, believing falsely that class struggle will somehow organize spontaneously and find a way to socialism. But history shows this to be morally commendable, but practically unfeasible. From the early Christian martyrs to the peasant revolts in Europe, from the the long history of anti-colonial resistance to the selfless, but futile sacrifices of anarchism, victory is only achieved through organization and leadership. There is simply no way for the vast majority of working people to successfully battle a resourceful and powerful capitalist class without an organization of revolutionary change.

Fourth, socialism must spring from an understanding and a vision of how the world would get on without capitalism. In short, working people must be presented with a new ideology - an ideology free of the corrosive elements of capitalism and promising a better life.

That ideology must reflect the conditions necessary for the realization of socialism. Again, history shows that socialism cannot be attained until the decisive organs of power are in the hands of working people. From the Paris Commune to the Salvador Allende government, from reconstruction in the defeated US South to the attempted coup in Venezuela, this lesson has been brutally demonstrated. Radical change requires a fundamental redistribution or neutralizing of the coercive forces operating in society. Though distasteful to many, this truth separates the arm-chair socialist from socialist militants.

Marx has been criticized for failing to offer a socialist blueprint. But surely expecting one is most unrealistic. Socialism is not declared by fiat, but created democratically from the experiences, needs, and resources of working people at a particular time and place. To construct a blueprint would depart from the Marxist method. Ideology, like all social processes, evolves with new experiences and deeper understanding. Similarly, the shape of a new society will evolve in the cauldron of struggle.

Yet socialism is not merely people's power, but people's power guiding a material life without exploitation and, necessarily, without the engine of private profit. For Marx and other students of history's trajectory, common ownership of the sources of material life was both the truest, and most effective route to eliminating exploitation and the other miseries of the capitalist regime. By common ownership, Marx, and those who followed him, understood that the resources and means of creating wealth would be shared by all, developed and administered by all, with all enjoying fairly the benefits of their shared efforts. Such a regime of social justice is clearly impossible with capitalism.

Vague notions of "shared wealth" are not compatible with this vision. Tax policies may "reform" capitalism, welfare programs may "humanize" capitalism, and charitable activities may take the sharp edge from capitalism's injustices, but they will not replace capitalism nor will they reverse the inequalities that capitalism invariably produces.

By the same token, government stock ownership schemes in private companies, public-private partnerships, "injections" of public wealth, and other forms of government interventions that are meant to revive an ailing capitalism are not socialism. And public assumption of the waste products of capitalist excess - whether its called "nationalization" - is far, far away from socialism.

In the end, there can be no socialism ushered in enthusiastically by the capitalist ruling class - only by the conscious, organized efforts of a determined working class..

But I may wake up some morning with socialism really in the air.

Tuesday, October 28, 2008

The Bailout Scam

I would be lying if I claimed to understand the full scope of the financial crisis afflicting world capitalism. Too much is deeply concealed by the exotic instruments, opaque hedge funds, private equity funds and other arcane aspects of the world of high finance. Rumors and speculation abound. Some say that $60-70 trillion dollars exist somewhere in the debt-credit universe with no solid mooring in the world of ordinary folks. What this sum means, how it was acquired, and what will become of it defies understanding by those of us who simply balance a checkbook.

My view for some time has been that the onset of crisis is a product of both a growing role for financial capital in the global economy and a speculative, parasitic direction pursued by this sector. Further, I see this direction as one encouraged by state-monopoly capitalism to bolster a sagging profit rate.

As the crisis intensified, policy makers in the US ruling class whistled in the dark, minimizing the depth of the crisis. First, they postured it as a crisis of sub-prime loans and declining housing values, then as a crisis of individual firms (Bear Sterns, Countrywide, etc.), later as a crisis of the financial sector, and finally as a full blown crisis of world capitalism.

With the recognition of its depth, these same policy makers used the panic in the stock market as a cover for a radical bailout of the monopoly financial firms. Fear, intimidation, and stealth defined an extraordinary week that led to a massive commitment of public funds to the privileged sector of the economy most responsible for the panic [].

Actually, "bailout" was the wrong word; while the financial corporations lost billions of dollars of paper assets, they were actively encouraged to access tens of billions of dollars in credit from the Federal Reserve. Nonetheless, the bailout was sold as an attempt to break a credit log jam. But the constipation of credit was not due to a lack of funds, but to an understandable reluctance to take risk given the unfolding collapse of the world economy. How extending relief to credit lenders could shake this fear is a question that no one dared ask and no policy maker faced.

I saluted the unprecedented mass rejection of the bailout plan and condemned the flagrant, undemocratic legislative coup to promise $700 billion to the rapacious financial sector[]. Yet many on the left embraced this audacious act of corporate welfare. I was surprised to hear a self-proclaimed "Marxist" professor on Michael Ratner's Law and Disorder radio show, when pressed, concede that the bailout was probably necessary. Even more surprising was the infamous "dose of socialism" article in the CPUSA People's Weekly World, actually celebrating the bailout as a kind of incipient socialism.

With the passage of only a few weeks, both the intent and practice of the bailout program - TARP - are being exposed for all to see. The veil has come off the official version - the restoration of the flow of credit - to reveal the shameful pillage of public funds for monopoly consolidation and corporate pillage.

Articles posted on make the connection between the first wave of public subsidies and the payment of the annual corporate bonuses of the big financial corporations. Commentator Jonathan Weil, in a fit of righteous indignation, explained on October 21 that very likely the Treasury subsidies for both Morgan Stanley and Goldman Sachs will find their way into the respective companies end-of-year bonus packages. Morgan Stanley, despite losing around a third of its stock value this year, has about $6.5 billion dollars in bonus commitments. The company's total employee compensation expenses this year amount to $10.7 billion which is nearly twice its pre-tax earnings. As Weil's title aptly reveals: "Morgan Stanley's Bonuses Get Saved By You and Me". Though Goldman Sachs is far healthier, they also got a $10 billion infusion from the US Treasury which will undoubtedly go a long way towards meeting its $11.4 billion compensation commitment. And surprise! That figure too is almost twice the company's pre-tax earnings.

In a follow-up article on dated October 27, Christine Harper and Serena Saitto developed the point further, exploring the similar gambit of Merrill Lynch. In the case of Merrill, the per employee compensation is actually higher than last year thanks to layoffs and in the face of five straight quarters of losses and a 70% slide in stock values.

The thrust of the game plan for corporate America was revealed in a New York Times article by Joe Nocera who spied on a conference call between JP Morgan Chase executives. The executives candidly asserted that the bailout monies are to be directed to M&A, the Wall Street acronym for "mergers and acquisitions". In other words, "freeing" credit for loans is neither perceived as a problem nor taken to be object of accepting bailout money. Instead, the public funds are meant for and to be used for consolidating the banking industry.

This candor only deepens our understanding of the government collaboration with PNC bank to both fund and secure the purchase of National City bank. While PNC was relatively healthy, National City was quite weak. Nevertheless, the Treasury agreed to a purchase of $7.7 billion of PNC preferred stock, a move unneeded by PNC except to make the acquisition. At the same time, the ailing National City was denied a similar deal which could have bought it a reprise from its difficulties. Clearly, the Treasury was complicit in the move. This did not go unnoticed by some Ohio legislatures, including Dennis Kuchinich, who cried foul, noting the government's "arbitrariness" in its efforts.

That there is nothing arbitrary in this move was confirmed in a Wall Street Journal article on October 28 entitled "Much Bank Aid May Not Go to Loans". The authors cite several bank executives in line to receive pieces of the first $125 billion tranche of bank welfare. All were coy about applying the monies to new loans. One executive frankly stated that "potential acquisition" was one option and another bluntly said "opportunities would certainly include M&A..."

These developments demonstrate that the TARP legislative act was really a trojan horse. The $700 billion bailout was not meant to break a credit log jam (in reality, a credit strike based upon risk aversion). If anything, giving the assets to gun-shy financials only served to encourage them to business-as-usual and renewed recklessness. Instead, the public funds were meant to encourage and execute a consolidation and restructuring of the industry. For capitalism, restructuring translates into more profits. Job cuts, reduced benefits, and inhanced productivity (speed-up) are all part of the rationale for consolidation. Capitalists plan to restore profits the old-fashion way: by increasing the rate of exploitation.

But it is not just the financial corporations that are looking for government subsidized restructuring. The long rumored GM-Chrysler merger is projected to turn on $10 billion of federal TARP funds which would allow the merged company to "layoff workers, close plants, integrate the two companies, and provide liquidity...", according to the October 27 Wall Street Journal. Internal estimates anticipate a loss of 40,000 jobs from a current work force of 166,000! In other words, public funds are being solicited to destroy 40,000 jobs and squeeze production dramatically from the remaining work force. Could there be a more audacious demonstration of the reality of the fusion of the state and monopoly capitalism?

Of course this is just the beginning of state-monopoly capitalism's offensive to restore capitalist profitability.

Shame on those liberals and Marxist poseurs who tried to sell the bailout as some kind of back door socialism! Now is the time to leave this sordid chapter and begin the fight for real relief for working people. Society's resources should be dedicated to society's needs and not the machinations of our false " representatives" and their corporate masters.