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Wednesday, December 14, 2011

The Chinese Puzzle

Whither China?
was the name of a widely circulated pamphlet authored by the respected Anglo-Indian Marxist author, R. Palme Dutt. Writing in 1966, with The People’s Republic of China (PRC) in the throes of the “Cultural Revolution”, the pamphlet sought to shed light on the PRC’s tortured road from liberation in 1949 to a vast upheaval disrupting all aspects of Chinese society as well as foreign relations. To most people – across the entire political spectrum—developments within this Asian giant were a challenge to understand. To be sure, there were zealots outside of the PRC who hung on every word uttered by The Great Helmsman, Chairman Mao, and stood by every release explaining Chinese events in the People’s Daily, Red Flag and Peking Review. A few Communist Parties and many middle-class intellectuals embraced the Cultural Revolution as a rite of purification. Yet for most, as with Palme Dutt, the paramount question remained: Where is the PRC going?

Today, forty-five years later, the question remains open.

The cultish followers of Mao have mostly gone on to their life’s work, though some still uncritically defend every aspect of Chinese Communist Party policies during Mao’s chairmanship.

But the PRC that we know today is a vastly different country from the country worrying R. Palme Dutt in 1966; yet it is one that is just as difficult to comprehend. In place of the economic stagnation of the Cultural Revolution period, the contemporary Chinese economy enjoys one of the highest consistent growth rates in the world and counts as an industrial giant well on its way to challenging the USA in annual national product. The economic autarky of the Mao period has been replaced with a massive effort to trade globally. And state enterprises and common land ownership are now eroded by private investment and private ownership. The PRC today has an abundance of millionaires and not too few billionaires, a fact that would violently offend the militants of the Cultural Revolution.

At the same time, the ruling party in the PRC is the Communist Party. Its theorists and ideologues insist that they are proceeding down a distinctive, deliberate road to socialism. Ironically the PRC is now the darling of many in the right wing of the anti-capitalist movement, embraced by those who defend the market mechanism and a gradualist, evolutionary approach to socialism.

Among those advocating socialism, the PRC constitutes a kind of laboratory for socialist policy, much the way the Soviet Union was regarded after 1917. Partisans of socialism sift through the massive literature, reports, and commentaries on the PRC to find evidence to support ideological positions. For the most part, conclusions are, at best, tentative and speculative. Comprehensive conclusions remain illusive to even the most elevated intellectual egos.

Yet the PRC is entirely too formidable of a factor in global political and economic affairs to ignore. Therefore, I offer some modest observations.


Wherever the PRC road leads, it remains a lightening rod to bourgeois politicians and, unfortunately, most labor leaders. To hide their own failings, they easily and often point to some Chinese policy that stands in the way of satisfying the interests of working people. In its crudest form and in its essence, it is vulgar anti-Communism. Exploiting the deeply ingrained collective hysteria of the Cold-War, crass leaders and class-compromised union bureaucrats invoke the words “Chinese Communists” and mass distraction ensues. China-bashing has replaced Soviet-bashing (and the once popular Japan-bashing when Japanese corporate power was on the upswing) as an easy and frequent diversion from the rapacious behavior of multi-national corporations.

Rather than blame US multi-nationals for the destruction of decent paying jobs in the US, leaders scapegoat the PRC. From 1999 until 2009, US multinationals added 2.9 million workers abroad while cutting 864,400 in the US, according to the Commerce Department. In 2009, these monopoly capitalist enterprises employed 23.1 million workers in the US against 10.8 million in other countries. Most overseas employees are in Europe with the Chinese holding only 943,900 jobs from US multi-nationals. Canada, Mexico, and the UK, on the other hand, account for over 3 million of multinational overseas employment.

These same multinational corporations have reduced capital investment spending in the US at a decade long annual rate of .2% while boosting capital investment overseas by an annual average of 4%.

These job shifts are corporate decisions based upon profit expectations and, according to the Commerce Department, “primarily to sell to local customers… rather to sell in the US market.” Thus, politicians and union leaders are hiding behind simplistic and self-serving demagogy in blaming China for the demise of US jobs. And their aversion to class struggle against US corporate giants masks the role of those corporations in taking jobs to where they can recover profits most easily; bogus patriotism obscures corporate fealty to the bottom line.

When pressed to put some meat on the bare bones of China-bashing, bourgeois economists cite the currency policies of the PRC. They argue that the relationship between the yuan and other currencies is consciously maintained at a lower-than-market level to increase the competitiveness of the Chinese export industries. But that argument has evaporated over the last year. Third quarter reports of PRC current-account surplus – a widely acknowledged measure of trade imbalance – show a dramatic decline from a year earlier; against the third quarter of 2010, the PRC current-account balance fell by 43.5%. Through the first three quarters of this year, PRC current-accounts surplus as a percentage of GDP fell from 5.1% last year to 3% currently. Ironically, at the November, 2010 G20 meeting, the US pressed hard to establish 4% or less current-accounts surplus/GDP as the benchmark for determining whether currencies were reasonably valued. With the PRC easily passing this test, the US has no argument. Nonetheless, US policy makers and pundits, including liberals, like Roubini and Krugman, continue to pound away at PRC currency policies.

When these current-account numbers are coupled with the continued high growth of the PRC (9.1% in the third quarter), they suggest that the PRC has made a significant shift from export growth to investment and consumption growth.

For the US left, the myths supporting China-bashing should be emphatically rebuffed. While the PRC policies internationally are generally self-interested – the PRC has seldom demonstrated the kind of international solidarity associated with twentieth century socialism—they are nonetheless independent of US imperialism. That is, the PRC operates to promote its own security and economic health. Where it clashes with US imperialism, for example, in UN votes against NATO aggression, progressives should applaud its role. At the same time, it shares many features with imperialism in its competition for markets, resources, and economic advantage in the global economy. These features often place it on the wrong side in its relations with other countries.

White Cat, Black stripes; Black Cat, White Stripes?

Much heat has been generated over the question of whether the PRC is socialist or capitalist. But from a Marxist perspective – like that of Palme Dutt – the telling question is not where it is, but where it’s going: Is the PRC on a path towards socialism or capitalism? Where is the process leading?

No one can deny that for decades, the PRC has allowed -- indeed welcomed -- capitalism in the front door. Foreign direct investment, joint-stock and private-stock enterprises, privatization, securitization, and acceptance of the market mechanism have all transformed the PRC economy into a prominent player in the global economy. This change has brought forth stunning growth for the country and a general rise in the Chinese standard of living, certainly from the stagnation of the period of the Cultural Revolution. In only a few decades, the PRC leadership has mounted a veritable revolution as profound as the sharp turns organized in Mao’s era.

At the same time, capitalism has brought with it nearly all of its ills: inequalities that rival history’s worse, a shattered health care system, working conditions that too often approach that of Dickens’ England, corruption, cronyism, unemployment, and a broken sense of collective fate or communal solidarity.

The entry of capitalist features into the PRC economy has plagued it with the maladies that arise from the anarchy of markets: imbalances, speculative fervor and bubbles, inflation, labor unrest, grey and black markets, and labor market chaos. In the spring and summer of 2010, workers rose against low wages and working conditions in many areas. Again, this year, there were significant actions for better pay, working conditions and against layoffs. In the fall, the PRC’s sovereign wealth fund was forced to buy shares in major Chinese banks. Despite the fact that private investors own a quarter or less of the country’s biggest banks, a sell-off by foreign investors caused a near panic met by the sovereign wealth funds’ intervention. Today, inflation, a construction bubble, and over reliance on exports weigh on the economy.

Despite these ugly aspects of the PRC’s flirtation with capitalism, the PRC negotiated the most tempestuous waves of the global economic crisis without the catastrophic damage incurred by the other economic powerhouses. In addition, most honest analysts, including even The Wall Street Journal, credit the PRC with a large role in thwarting world economies from being swept over the brink in 2008-2009.

How was this done?

In my view, those structures intact from the PRC’s early commitment to socialist economics proved to be a bulwark against global economic turmoil, especially from the financial sector. Regardless of the future course of the Chinese economy, many elements of socialist economic structures remain and they and they alone, permitted the PRC to evade the harshest consequences of the 2008-2009 collapse and blunt the forces of the market.

1. Banks and finance: The PRC’s four largest banks dominate the financial system along with the Central Bank. Despite recent public offerings, the big four banks remain 75% or more under public ownership. The experiment in raising private funds through stock offerings has proven to be more damaging (a recent sell-off briefly rocked the stability of these public institutions) than advantageous, but, nevertheless, the banks remain steadfast under government management. And the Central Bank, unlike our corporate dominated Federal Reserve, functions as a publicly run and owned institution tuned in closely to government economic goals. The “shadow banking” that rocked Western private banks was virtually unknown in the PRC: no securitized US mortgages, no complex derivatives, opaque bank-to-bank deals, etc. The pillars of the financial system, because they were publicly owned and relatively transparent, stood solid against the crisis; they retained the central functions of a financial system without the corruption of private profiteering.

For sure, private banking in the PRC exists and jolts the smooth functioning and stability of the financial system, but to date the government has been able to adjust financial flows swiftly and efficiently.

2. Economic Policy: The PRC retains indicative planning, though flexible and partial. With the onset of the global crisis, the PRC embarked on a sharp turn towards domestic consumption and investment and away from a deteriorating international market. Quickly adopting a massive $622 billion stimulus program and loosening the valves on lending from the publicly owned banks, the PRC minimized the damage from a collapsing global capitalist economy. While the West, stumbled and delayed, politicizing and horse-trading intervention in the economy, the PRC acted promptly and decisively. As a result, the PRC maintained a growth rate well above Western norms through 2008-2009, while nearly all other countries endured negative growth.

Even with the corrosive and corruptive influences of capitalist social relations, the Communist Party of China remains a leading institution linked to advancing the general welfare of the people. That is, it continues to respect and seek the promotion of national interests. Compare its performance in the face of severe crisis to the appalling submission of bourgeois democratic institutions in the West to the welfare and interests of capitalist institutions; banks and corporations were rescued while living standards were decimated. In terms of serving the interests of the vast majority of the people, the PRC institutions proved far more democratic in content than the formal Western “democracies”.

3. Planned development: The PRC adopted the “National Medium- and
Long-Term Plan for the Development of Science and Technology” in 2006, a plan that proposed doubling the percentage of GDP devoted to research and development through 2020. At the end of this November, the PRC confirmed a plan to spend $1.7 trillion over the next 5 years on sectors including alternative energy, biotechnology, and advanced equipment manufacturing (Reuters, 11-21-11). Such national planning is virtually unheard of in the West since the massive investments in infrastructure, education, and research and development brought forth by the panic over the Soviet launch of Sputnik.

Chinese planning shows much more responsiveness and flexibility than policy initiatives in the West. With global demand shrinking from 2008 through 2009, the PRC shifted swiftly with internal investment and expanded consumption while Western powers debated and hesitated.

4. Public ownership: With state banks opening the floodgates, and a
Communist Party leadership quickly implementing a stimulus program, publicly-owned enterprises reacted immediately and decisively to the call to expand economic activity. While the public sector was curtailed in the early years of the shift to market relations, it remains dramatically larger than in Western countries or most Asian neighbors. In a generally hostile article in The Wall Street Journal (China’s ‘State Capitalism’ Sparks a Global Backlash, 11-16-10), the authors make the point vividly: In 2008, the assets of the PRC’s publicly owned firms totaled 133% of economic output; in the same year, France’s state-owned firms’ assets amounted to only 28% of economic product. While much speculation revolves around the role of the public sector in the PRC, these numbers give a perspective on how important publicly-owned enterprises are in the PRC. Thus, when essential stimulus programs or planning initiatives are undertaken, they translate into rapid, measurable results, unlike in the US where policies are pushed through the sieve of private contractors with the consequent siphoning off of overhead and profits, few jobs created, and long delays.

While many in the West are skeptical of the PRC’s ability to move away from export-driven manufacturing to domestic consumption, the following figures are revealing: Exports as a percentage of GDP have fallen from 35% in 2007 to 27% in 2010; third quarter 2011 import growth exceeded export growth; and retail sales grew by 17% in August and 17.7% in September of this year against the prior year.

Of course the PRC’s success in weathering the economic crisis is no guarantee that it will do so going forward. Certainly the PRC leadership is aware of difficulties ahead. The PRC Vice Premier, Wang Qishan, was recently quoted by the Xinhua news agency: “The one thing that we can be certain of, among all the uncertainties, is that the global economic recession caused by the international financial crisis will be chronic.”

The country’s participation in global markets could present problems that even its remaining socialist tools cannot overcome. Moreover, it is not clear if the PRC will strengthen these safeguards or jettison them, as its leading Communist Party shapes this awkward mix of socialism and capitalism.

Thus, forty-five years after Dutt’s pamphlet, we are still left with the burning question: Whither China?

Zoltan Zigedy

Tuesday, November 22, 2011

Is There a Future for the European Union?

When the so-called “dismal science” – economics -- resorts to hollow metaphors like “contagion,” “belt-tightening,” “toxic,” or “tsunami” to describe economic facts and events, one might reasonably wonder if it represents dismay more than science. For sure, practitioners in this field eschew metaphors for technical jargon in their narrow academic studies that have earned many prizes and peer acclaim. But these studies have proven singularly unhelpful in explaining or resolving the four years of chaos that has befallen the global economy.

Thus, it comes as a surprise that those who are paid handsomely to think for us are hailing the appointment of two professional economists to run Greece and Italy. Reflecting these changes, stock markets and other market indicators also reacted happily. Aside from the fact that -- over the course of a weekend -- the democratic content of two bourgeois democracies were exposed as shams, aside from the fact that the appointments were largely dictated by forces outside of the two countries, it is incomprehensible that two economists—one a former vice-president of the European Central Bank and the other a former European Union Commissioner – will do anything other than continue subservience to the neo-liberal agenda. In effect, Greece and Italy have been put into receivership by the European Union.

That receivership promises no new approach, no retreat from austerity for the masses, no lessening of the slavish commitment to capital, and no defiance of financial markets.

“Centrifugal Forces”

There are properties of economic actors that exert pressure, propelling them away from each other, confounding collaboration and sowing antagonism. Marx identified these properties as intrinsic to capitalism. The properties of individual self-interest, competition and exploitation are inseparable from the social relations that define capitalism in all of its forms. From the small business owner to the CEO of a mega-corporation, from the Chamber of Commerce to the union of nation-states, the opportunity for gaining an advantage always stands in the way of any real, lasting unity between agents big and small. Within the confines of the capitalist mode of production, pressures are always latent to fracture or dissolve combinations or collectives.

Yet economic actors are wise enough to recognize the advantages that may arise from combination and cooperation; a larger capitalist enterprise enjoys an advantage over a smaller one: a big fish eats the little one. On the level of nation-states, a larger nation, or a federation of states, better competes against its rivals. Thus, they strive to advance their interests by striking some measure of unity with some against still other competitors.

Frederick Engels, in the seminal work of Marxist political economy, explained this dialectic well:
Each smaller group of competitors cannot but desire the monopoly for itself against all others. Competition is based on self-interest, and self-interest in turn breeds monopoly. In short, competition passes over into monopoly. On the other hand, monopoly cannot stem the tide of competition—indeed, it itself breeds competition… F. Engels, A Critique of Political Economy

It is this dialectical dance between immediate individual self-interest and self-interest promoted through opportune unity that explains the unstable existence of the European Union. Established as a bloc to compete more favorably against the economic might of the US and Japan, a senior partner in the Cold War rather than a compliant underling, the European community was a last-ditch effort to restore prestige and power to the old, formerly dominating European empires. Devastated by war and in the shadow of the new, post-war great powers, Euro-leaders hoped to forge a unity that would create a formidable entity capable of holding its own, or even overwhelm in the competition between imperialist blocs. Later, the bloc was the European answer to the post-Soviet international landscape that saw other economic powers like Brazil, Russia, India and China join the global competition for markets, resources, and ultimately profits.

In the better part of the twentieth century, imperialist competition led invariably to war; new economic, geographic and political arrangements were settled militarily. By contrast, the European Union was perhaps the most ambitious attempt at a voluntary and peaceful unification of capitalist states to secure economic advantage in global markets. But because each of its constituent states was in widely different circumstances and at uneven levels of development when accepting membership, they had widely divergent goals. The more economically successful states saw preferred markets for their products and downward pressure on their labor force from low-wage members. The poorer countries foresaw better financial terms, investments, and consumer spending from the newly adopted, successful Euro-siblings. In short, all the members – rich and poor – acquiesced to the Union for their own self-interest.

Today, these divergent interests are in immediate danger of destroying the EU. The only solution possible is outside of the logic of self-interest and individual advantage, that is, outside of the logic of capitalism. As Ian Bremmer and Nouriel Roubini put it, in an otherwise confused, cynical op-ed piece in The Wall Street Journal (Whose Economy Has It Worst? 11-12/13-11), “[the solution] implies a gradual transfer of wealth from the core economies to the periphery, a ‘transfer union’ from rich to poorer states.” Put plainly, the future of the EU rests on a program of affirmative action that will equalize the disparity in wealth and economic development between the European haves and the have-nots.

Instead, policy makers have resolved to punish the poorer states for being poor. The devastating austerity programs imposed by the EU, The European Central Bank and the IMF drive Greece, Ireland, Portugal, Spain, and soon Italy, into even greater depths of poverty. The inequalities in the EU generated greater inequalities and now the richer states propose to solve the financial crisis of the Union by proposing even greater inequalities. There is no affirmative action in this scheme.

Contrast this with the other twentieth-century experiments in unification: the union of republics constituting the USSR and the post-war CMEA project uniting Eastern European countries (and later, Cuba). For most of the twentieth century the USSR followed a Leninist policy of affirmative action regarding the poorer constituent republics of the USSR and likewise for post-war reconstruction of Eastern Europe (excepting the GDR which paid a heavy price in war reparations). Growth rates in the poorer republics and Eastern Europe’s former backwaters usually exceeded the rates of the Russian Republic. Most of these countries achieved levels of development on a par with or exceeding that of top European powers, measured by telling socioeconomic indicators: education, life expectancy, access to health care, culture, social securities, leisure, etc. And these achievements arrived in a short time.

Tellingly, the breakdown of Leninist policies during the Gorbachev era, the move to basing trade and aid policies on international market forces led to disintegration and the dissolving of this hard-won unity, another example of the centrifugal forces spawned by markets and the emergence of unequal, individualistic policies. Few will recall the disastrous effects of this policy shift, especially upon Cuba, and well before the demise of the Soviet Union. Indeed, these changes contributed powerfully to that demise.

With justification, one might conclude that unification – mutually beneficial combinations of national entities—is extremely unlikely to be successful with capitalist social and economic relations intact. Conversely, socialist social and economic relations, linked with an internationalist perspective hold the only real, lasting opportunity for unity among diverse states.

These same centrifugal forces gnaw at the twenty-first century effort to achieve economic integration among several progressive, anti-imperialist countries in Latin America. Clearly the European Union model cannot guide this effort. Its success can only come with a concerted effort to overcome the stubborn stance of self-interest and exploitative competitiveness of capitalist social relations.

From this perspective, I wrote in November of 2008:
As with the Great Depression, the economic crisis strikes different economies in different ways. Despite efforts to integrate the world economies, the international division of labor and the differing levels of development foreclose a unified solution to economic distress. The weak efforts at joint action, the conferences, the summits, etc. cannot succeed simply because every nation has different interests and problems, a condition that will become more acute as the crisis mounts… It is highly unlikely that the [European] Union will come up with common solutions. Indeed, the unraveling of the EU is a possibility.

Five months later, and well before Greece became the focus of EU crisis, I wrote:
The EU old guard, led by France and Germany, has adamantly refused to expand financial support for the Eastern European members. The limited aid to the newer members has been mainly exhausted by assistance to Latvia and Hungary. Germany, along with France, the dominant members of the EU, oppose additional EU-wide stimulus. It's not only Eastern Europe, newly capitalist states that thrived on international loans, but many of the original EU states that are left to their own devices. Spain suffers from the implosion of the construction industry, with delinquent loans and unemployment provoking a banking crisis. A 19% unemployment rate is projected for next year, the highest in the EU. Italy suffers continued stagnation, huge debt, and a broken, corrupted political system – a system that seems incapable of even generating a modest response to the crisis,

Germany has been only too anxious to accept the role as the "big dog" in the EU, dictating most of the terms of Union-wide economic policy. Much as the US assumes that role in the global economy, Germany uses its economic might and relative health to impose its will upon the EU.

Three years later, these assessments and projections have been borne out.

Zoltan Zigedy

Thursday, November 3, 2011

Where Does “Occupy Wall Street” Go From Here?

One of the most striking aspects of the Occupy Wall Street phenomenon is its failure to get any traction among the elite political strata, especially among elected officials with an eye on the upcoming elections. Sure, there have been numerous Democrats and even some Republicans who have, with an earnest, but patronizing tone, suggested that OWS is an understandable response to the pain inflicted by a sinking economy. But there has been no real attempt to harness the visible anger and outrage to the forthcoming political campaigns of 2012.

This is especially noteworthy in light of the Republican stance regarding the so-called Tea Party movement. They, unlike the Democrats and the OWS movement, early and often endorsed, embraced, and amplified the views of the nascent Tea Party formation. They funded it and encouraged the already friendly media to exaggerate its size and importance. They rode the movement’s anger into the 2010 elections and welcomed its “heroes” into the Republican fold. No such embrace of OWS seems imminent on the part of the Democratic Party.

Recent poll results add to this observation: an AP/GfK poll conducted between October 13 and 17 shows that 37% of the public supports the OWS protests.

Compare this to the overblown Tea Partiers. At its peak at the time of the 2010 interim elections, the Tea Party drew 31% of the public’s support, according to a CBS/New York Times poll. That same polling source places Tea Party support at only 18% in August of this year. As I have argued and continue to argue, the Tea Party movement represents nothing more than the same 15-25% of the population that have always plagued US politics: the “Know Nothings,” the Klan, the Liberty Leaguers, the Black Legions, the Coughlinites, the Segregationists, the McCarthyites, the Goldwaterites, and now the Tea Partiers. They crawl out from under the rocks in times of crisis and, thanks to powerful funding and media hype, they enjoy undue prominence.

So with substantial and hopefully growing public support, why hasn’t the Democratic Party hitched its wagon to this popular movement? With the President’s popularity sinking, would not this be an unexpected boost to Democratic Party fortunes?

It’s not happening and it won’t happen because the Democratic Party is a corrupted and bankrupt organization owned by the very targets of the OWS movement. Of course I don’t discount the Democrats' enormous resources that are at play to co-opt, distort, and re-shape this movement; they have a sterling record of doing so with past potentially radical movements.

But the current message of OWS is substantially at odds with the values and material interests of all but a few fringe Democratic Party elected officials. The slogan touted by OWS supporters that “We are the 99 percenters” conveys a sense of class division and emerging class unity that sends shivers down the spines of the operatives from both political parties. Nothing violates the quaint rules of political engagement in our two-party contests like the recognition that the US is a class-divided society.

Similarly, the movement has focused on banks, investment houses, and Wall Street as symbols of the inequities and injustices of US society. Given the enormous material support for the Democratic Party proffered by these OWS targets, Democratic officials are more than a little uncomfortable acquiring a taint from this movement.

They don’t want it, and OWS shouldn’t want them.

While commentators ranging from old lefties to media nabobs have scored OWS for having neither a single issue nor a common program, the truth is that their central and primary slogans do capture the mood and anger of many if not most US citizens. In fact, given the shallow ideological depth of the US public conversation, stunted by swift suppression of diverse ideas, and a media that crowds out all but the most superficial thinking, the slogans, placards, and banners are well suited to the moment. With the left demoralized and ineffectual from the long bout with Obama flu and splintered by multiple, parochial issues, the OWS movement has marshaled a timely focus on economic issues to afford the left yet another opportunity to grow and participate in a real oppositional formation. The fact that a substantial body of the labor movement has spoken and acted in support of OWS shows the potential of this movement.

It goes without saying that OWS is as yet only a spontaneous and loosely organized beginning. Where it goes from here is decisive. Already the security services have begun harassment and repressive actions in Chicago, Oakland, and many other cities. Mindful of how the arrests and violent actions on the part of the police helped to energize the OWS in New York City, they have yet to bring the full weight of the state security forces into play. They are, however, challenging the depth of public support for the OWS movement by testing the public’s tolerance of police intervention. Consequently, public demonstrations of solidarity are essential at this time.

Today, OWS is largely only an emotional reaction to social inequality and the rapidly deteriorating standards of living in the US. Emotional responses, through acts of civil disobedience, acts of “witnessing,” and other attention-getting activities, may well be necessary for building effective movements for change, but hardly sufficient. Needed are organizational forms that can sustain and grow the movement. These forms can formulate and correct tactical and strategic action and organically develop goals and demands. These demands can be further pressed into advanced forms of struggle, achievable as reforms in the electoral arena or through revolutionary direct action. Each step is a challenge requiring organizing skills, a deepening understanding and the deft touch of capable leadership. In any case, spontaneity must evolve into concerted, focused collective action.

While many are hailing the “spontaneity” of this movement, they confuse a spark with a bonfire. Bonfires are carefully prepared, fed, and maintained. They require attention and effort or they will die or burn, to no good purpose.

The flip side of the spontaneity coin is the OWS obsession with “horizontal” structure and allergy to any kind of hierarchical organization. To many of us, this is strongly reminiscent of the 1960’s new left’s fixation on “participatory democracy.” Coming after the Cold War demonizing and destruction of labor militancy and Communist influence, many young leftists in the US saw the failure of radical ideas as a failure to incorporate democratic values. The then ubiquitous and popular anti-Communist and anti-labor stereotypes of Communist “dupes,” labor bureaucrats, and robotic thugs reinforced this view. Moreover, the fetish of bourgeois democracy, the notion that process trumps all other values, that how things are decided is more important than what is decided, has profoundly deep roots in US history. Coupled with the cult of the individual associated with US social development, this tendency fosters contempt for organization and structure. It also accounts for the popularity of anarchism on the left and libertarianism on the right: two radical expressions of a near-paranoid distrust of organized and structured collective action.

The pressing question for OWS is not simply a matter of a platform or set of demands – as many critics put it – but of a commitment to develop the struggle to reach broad masses and deepen popular understanding.

We do not know where this will go. It is too early to either dismiss the movement or herald it as the beginning of something that will leave a lasting imprint on our politics. US history is filled with movements which
started by capturing broad support but collapsed when faced with the resources, organization, and subversion of our ruling class. The few, but significant, victories were won by developing solid, unshakable leadership with organizational skills and with a clear, firm vision of a better way.

We can all play a role in propelling this movement forward by engaging those activists militantly confronting the heart of the beast: capitalism. And it wouldn’t hurt to bring along a copy of V. I. Lenin’s What is to be Done.

Zoltan Zigedy

Tuesday, October 18, 2011

Solyndra: Scandal or a Noble Effort that Failed?

The internet and the other media are abuzz over the collapse of a private corporation, Solyandra LLC, singled out by the Obama administration for a $535 million government loan in early September of 2009. Solyndra, a company boasting of its mission to create a new, innovative type of solar panel was hailed by the President as the future of clean energy, a center piece of his stimulus program. As recently as May of last year, Obama pronounced Solyandra a “testament to American ingenuity and dynamism,” a claim that might well be proven sadly prophetic. After burning off well over half a billion dollars in less than two years, Solyandra filed for bankruptcy in September.

The dust-up generated by the Solyandra bankruptcy has pitted hypocritical conservatives on one side against cynical Obama apologists on the other. Neither side offers anything of value; both obscure the real lessons of Solyandra.

The charges and counters of insider favors and noble job-creating effort obscure the common practices of funding private enterprises with public funds. It is a rare, unusual occasion for the typical entrepreneur to tackle a new project without first seeking public, taxpayer funding. Though unspoken, this is the modus vivendi of twenty-first century capitalism. From the federal level of Solyndra to the local level of new restaurants, shopping malls or stadiums, thousands of contractors, developers, and business start-ups approach the government with hat in hand. From tax forgiveness to out-and-out grants, from publicly funded infrastructure improvements to interest-free loans, business in the US begins with the politics of securing taxpayer-provided welfare or cost-free public services.

Disguising these practices as job creating or growth enhancing, the Democratic and Republican Parties, liberals and conservatives, national politicians and local officials energetically endorse what has euphemistically been dubbed “Public-Private Partnerships.” Typically, the projects are profit-producing endeavors with any profits going to the capitalist partner and the costs and risks absorbed by the public partner. Generally the political operatives who arrange these deals are well rewarded for their effort with generous campaign contributions or out-and-out kickbacks. In the case of investment bankers who structure bond deals to finance such projects, there are fat commissions. And for the public – which seldom has a voice in these deals—there may be carrots: vague promises of jobs or increased economic activity. Or there are sometimes sticks: threats of relocation or closure of existing businesses. In any case, Public-Private Partnerships are never democratically decided, but imposed by the elites who stand to benefit.

The supreme irony of the emergence and dominance of Public-Private Partnerships lies in their blatant violation of the axioms of free market economic theory. The very proponents of these partnerships uniformly voice the values of entrepreneurship, market rationality, and market non-intervention. By the dogmas that dominate economic thinking in the US, a new business or the expansion of an existing business should be left to the tender mercies of the free market. If private capital is not made available, then the market, in its purported rationality, shows little confidence in the proposal; it is too risky. If, on the other hand, the market allocates private capital for a new project, there is no need for public subsidies. Obviously, hypocrisy is never an obstacle to profit seeking through pillaging public resources.

In the case of Solyndra, the Administration gambled public funds and lost on a project laden with political opportunities. If Solyandra had succeeded, Obama would have touted this as an example of job creation and environmental progressivism, a feather in his cap with important elements of his electoral base. His Republican opponents, on the other hand, cheerfully endorse private sector welfare, but seized an opportunity afforded by the bankruptcy to charge Obama with political favoritism in the Solyandra affair.

But missing here is advocacy for the people. Solyandra was a decidedly bad deal.

It was a bad deal because investing public money in private enterprises is generally a bad idea. There was a time when the ferocious war between corporate monopolies and small businesses might have been influenced by government intervention. There was a time when tax breaks, favorable loans to small businesses and other modest measures of support would have given small businesses a lifeline against McDonalds and Wal-Mart. But that moment has long passed. Instead, governments and public officials chose to side with monopoly capital, seduced by the corruption, influence, and power of giant national and international corporations. Those who need help the least, get it the most.

Of course the corrosive influence of profit on government funding is not new. In the interesting 1947 movie, Boomerang, an innocent man is railroaded on murder charges. Directed by Elia Kazan, in his “red” period before he ratted out his colleagues and comrades for mainstream respectability, the movie connects the fate of the accused to the conflict between the old-guard political party and its “reform” opponents. But the movie shows that there is more at stake than one man’s life. While the “reformers” are willing to broker a man’s life to remain in power, the movie reveals that there are even more sinister motives behind their complicity: the top “reform” leaders are involved in a shady deal to sell their real estate holdings to the city for a seemingly worthy public facility. If the Boomerang story resonates today, it is because these kinds of petty corruptions have since expanded and evolved enormously into common and prevalent practice.

The perpetual military economy propelled private appropriation of public funds and resources to an entirely new, qualitatively higher level after World War II and the onset of the Cold War. The so-called military-industrial complex – a kind of socialized mechanism of anti-social economic activity for private profit – intimately linked procurement, research and development, war planning, intelligence, etc. to the private sector. Thanks to the hysteria of the Red Scare, a massive amount of public funds was uncritically and wastefully funneled into profits for corporations parasitic upon both war fears and tax-payer resources. Even without the threat of world war, the military economy expanded and evolved to include private sector mercenaries, client armies, and a giant complex of private contractors and consultants. Standing as a symbol for this evolution is that private behemoth, Halliburton, which offers the military every service from showers to food service.

Two other distinct, but related, developments – the privatization of public enterprises and services and the explosive expansion of tax-evading “non-profit” services – added to the pillage of the public coffers and the taxpayers' paychecks. Despite its free-market advocates in both major parties, privatization has produced higher costs and diminished services, while the growth of “non-profits” has stripped tax collections and government revenues. In some cities over 40% of property goes untaxed because of the granting of transparently ridiculous “non-profit” status.

Solyandra is merely one more instance of the decay and systemic crisis of the capitalism system. Solyandra exposes not an aberration, but a politically charged example of the fusion of the private capitalist economy with the functioning of the state. While some rail against corporate welfare, few today understand its deep roots in the logic of capitalism. V. I. Lenin foresaw this development over a hundred years ago and later Marxist political economists developed his insights into the theory of state-monopoly capitalism. We can trace the twentieth century evolution of the unification of the state and monopoly capitalism from the capitalist response to the Great Depression through the lessons learned from the state’s role in creating political consensus, employment and profitability in World War II. We can see its further expansion in the permanent war economy, the wholesale purchase of the two-party system by private wealth, and the guarantee of private sector profitability in all state policy. We are now experiencing its highest form in the outrageous publicly funded rescue of the most irresponsible and socially aloof corporations.

Without this understanding, we only change the flavor of the drug we are offered.

Zoltan Zigedy

Sunday, October 9, 2011

Greece, A Victim of Capitalism

Thanks to Walter Lippmann of CubaNews for the English translation of the Granma article which appears below in Spanish as well. Lippmann hosts the CubaNews list serve recommended on my blog-- the best English language source for real and honest information about the beacon of socialism in the New World. And thanks to Manuel E. Yepe who consistently and fervently advocates the Marxist-Leninist perspective in the pages of the esteemed organ of the Cuban Communist Party. Granma, as well, is a recommended link on my blog.

The Greek people continue to suffer from and struggle against the demands of finance capital. While the world economy hangs in the balance, the narrow interests and petty maneuvers of the capitalist actors continue.


Havana, Monday, July 18, 2011. Year 15 / Number 199

A CubaNews translation. Edited by Walter Lippmann.

Greece, cradle of slavery democracy, seems fated to be among the countries digging the upcoming grave of capitalist democracy.

“To understand what the future has in store for the people of Greece, you need to imagine an intruder breaking into your home, pointing a gun at your head and demanding you give him your salary, your savings, your car, your TV set and your refrigerator.”

That’s how US writer and journalist Zoltan Zigedy sees the situation in his web site ZZ’s Blog where, under the title Capitalism Mugs Greece. Who is Next?, he explains that the Greek people did not benefit at all from the orgiastic profits of international banking nor did it promote its irresponsible behavior, but now it is forced to pay the price for the damage which caused the collapse of the global capitalist system.

“And if invasion, armed robbery and extortion are crimes, Greece is undoubtedly a crime victim. And the European Union, the European Central Bank and the International Monetary Fund are the criminals with the PASOK leaders and parliamentarians who attempt to legitimize the crime".

The recovery-from-recession prescription -- presented by capitalist economists as a universal law – stemmed from the concept that deficit and debt-promoting expenses stimulated growth and inflation which, in turn, increased tax incomes and made the debt cheaper allowing the reduction of public debt vis-a-vis the economic product.

Today, according to Zigedy, two factors have changed this dynamic. Firstly, the almost total domination of the neoliberal ideology which has generated in public opinion a great fear of any degree of public debt.

Secondly, for decades, changes in the global economy led to a new dynamic that manipulates and exploits the debt to limits never seen before. With many of the rich capitalist countries moving their manufacturing industries to low-salary areas, the financial activities – administration, manipulation and expansion of capital – took on a main role in these economies.

New techniques, instruments and institutions evolved toward the accumulation of surplus value – profits – in the hands of only a few engaged in the financial game.

The combination of these two elements –one subjective and the other objective – has placed Greece in a spiral of death. With a swiftly rising unemployment rate already over 16%, with taxes that cannot be collected, reduced salaries and benefits, with a growing number of homeless families and their social services slashed, Greek workers face a future of serious decadence.

The Greek people know little of the exotic instruments created in the international financial centers to generate the massive amounts of ghost capital that stimulates the growth of the predator system; they are only indirectly familiar with the arrogant and irresponsible actions of gargantuan international banks such as Bear Stearns, Lehmann Brothers and Goldman Sachs.

Zoltan Zigedy recommends that his fellow countrymen notice the similarities between this assault on the Greek people and the situation facing the US citizenry. “We should be inspired by the popular resistance in Wisconsin, Ohio and other states, and understand that we have a very difficult struggle ahead, without being seduced in this struggle by such false political allies as the Democratic Party, the US homologue of the Greek PASOK.”

Certainly for humankind the collapse of the global capitalist system will not be an easy matter, because there is no doubt it will do everything possible to delay its own debacle and will lay upon the rest of the world, including its allies, the associated damages.

La Habana, lunes 18 de julio de 2011. Año 15 / Número 199

Grecia víctima del capitalismo


Grecia, cuna de la democracia esclavista, parece encaminada a estar entre los países llamados a excavar la ya próxima sepultura de la democracia capitalista.

La plaza Syntagma, de Atenas, fue escenario de las protestas del pueblo contra las medidas estrangulatorias impuestas por la Unión Europea y el FMI.

"Para comprender lo que el futuro depara al pueblo de Grecia, usted debe imaginar que un intruso llega a su casa, le apunta a la cabeza con un arma y le exige que le entregue su salario, sus ahorros, su auto, su televisor y su refrigerador".

Así ve la situación el escritor y periodista estadounidense Zoltan Zigedy en su sitio web ZZ¢ s Blog donde, bajo el título Capitalism Mugs Greece. Who is Next?, explica que el pueblo griego no se benefició para nada con las orgíacas ganancias de la banca internacional, ni estimuló su irresponsable conducta y, sin embargo, ahora se le fuerza a pagar el precio de los daños causantes del colapso del sistema capitalista mundial.

"Y si la invasión, el robo armado y la extorsión son crímenes, Grecia es sin dudas la víctima de un crimen. Y la Unión Europea, el Banco Central Europeo y el Fondo Monetario Internacional son los criminales¼ con los líderes y parlamentarios del PASOK tratando legitimar el crimen".

Alimentado por una fuerte inyección de fondos públicos, el sector financiero del mundo capitalista desarrollado, que no fue condenado ni castigado por sus acciones conducentes al desastre que se pretendía reparar, retornó con fuerza a la especulación y, ahora, ataca las deudas soberanas de países como Grecia, Irlanda, Portugal y España, los más vulnerables en Europa, forzándoles a la conversión de la deuda privada en deuda pública.

Con pocas excepciones, estos países se vieron obligados a contraer mayores deudas para estimular el crecimiento económico ante la severa caída de la inversión y la demanda general, a nivel global. Las economías capitalistas quedaron sin otra opción que no sea la de seguir hundiéndose.

La fórmula para la recuperación en casos de recesión —que los economistas capitalistas presentaban como ley universal— partía de que el déficit y los gastos generadores de deudas promovían el crecimiento y la inflación que, a su vez, incrementaban los ingresos impositivos y abarataban la deuda permitiendo que la deuda pública se redujera con respecto al producto económico.

Hoy, según Zigedy, dos factores han cambiado esta dinámica. Primero, la dominación casi total de la ideología neoliberal ha ido conformando en la opinión un gran temor a cualquier grado de deuda pública.

En segundo lugar, por décadas, los cambios en la economía global llevaron a una nueva dinámica que manipula y explota la deuda hasta límites nunca antes vistos. Con muchos de los países capitalistas ricos trasladando sus industrias manufactureras a áreas de bajos salarios, las actividades financieras —administración, manipulación y expansión del capital— asumieron un mayor papel en estas economías.

Nuevas técnicas, instrumentos e instituciones evolucionaron hacia la acumulación de valor excedente —ganancias— en manos de unos pocos comprometidos con el juego financiero.

La combinación de estos dos elementos —uno subjetivo y otro objetivo— ha situado a Grecia en una espiral de la muerte. Con un desempleo en acelerado incremento que ya sobrepasa el 16 %, los impuestos que no se cobran, salarios y beneficios recortados, un número creciente de familias sin vivienda y con sus servicios sociales cercenados, los trabajadores griegos encaran un futuro de grave decadencia.

El pueblo griego conoce poco de los exóticos instrumentos urdidos en los centros financieros internacionales para generar las masivas cantidades de capital fantasma que avivan el crecimiento del rapaz sistema y solo indirectamente están familiarizados con las arrogantes e irresponsables acciones de gigantescos bancos internacionales como Bear Stearns, Lehmann Brothers y Goldman Sachs.

Zoltan Zigedy recomienda a sus compatriotas que vean la similitud que tiene el asalto al pueblo griego con la situación que enfrenta la ciudadanía en Estados Unidos. "Debía inspirarnos la resistencia popular en Wisconsin, Ohio y otros estados y reconocer que lo que tenemos por delante es una lucha difícil, muy difícil, sin dejarnos seducir en esta lucha por falsos aliados políticos como el partido demócrata, homólogo en Estados Unidos del PASOK griego".

Es indudable que para la humanidad toda el colapso del sistema capitalista mundial no será nada fácil, porque nadie duda que hará todo lo posible por retardar la debacle propia descargando sobre el resto del mundo, sus aliados inclusive, los perjuicios coyunturales.

Saturday, October 1, 2011

There is a Better Way

What can we learn from Karl Marx regarding the swelling second wave of the global economic crisis with its epicenter in Europe?

Writing in the first volume of Capital nearly 150 years ago, Marx added to the end of the first chapter a curious essay entitled “The Fetishism of Commodities and the Secret Thereof.” Coming after a rigorous argument that places the commodity at the center of his analysis of capitalism, section 4 reads like a disclaimer of all that precedes it:

Man’s reflections on the forms of social life, and consequently, also, his scientific analysis of those forms, take a course directly opposite to that of their actual historical development. He begins, post festum, with the results of the process of development ready to hand before him. The characters that stamp products as commodities, and whose establishment is a necessary preliminary to the circulation of commodities, have already acquired the stability of natural, self-understood forms of social life, before man seeks to decipher, not their historical character, for in his eyes they are immutable, but their meaning. Consequently it was the analysis of the prices of commodities that alone led to the determination of the magnitude of value, and it was the common expression of all commodities in money that alone led to the establishment of their characters as values. It is, however, just this ultimate money form of the world of commodities that actually conceals, instead of disclosing, the social character of private labour, and the social relations between the individual producers. When I state that coats or boots stand in a relation to linen, because it is the universal incarnation of abstract human labour, the absurdity of the statement is self-evident.

Nevertheless, when the producers of coats and boots compare those articles with linen, or, what is the same thing, with gold or silver, as the universal equivalent, they express the relation between their own private labour and the collective labour of society in the same absurd form.

The categories of bourgeois economy consist of such like forms. They are forms of thought expressing with social validity the conditions and relations of a definite, historically determined mode of production, viz., the production of commodities. The whole mystery of commodities, all the magic and necromancy that surrounds the products of labour as long as they take the form of commodities, vanishes therefore, so soon as we come to other forms of production.

The “secret” in this section is not only the secret to understanding commodities, even capitalism, but indeed the key to appreciating the Marxian method.

Marxism stands apart from “bourgeois economy” precisely because, through a dedicated study of history and revealed historical patterns, the Marxian method grasps that commodities, like markets, banks, and even today’s credit default swaps, are evolved and evolving human artifacts best understood through the constitutive relations between human actors who consciously construct and employ these instruments. That is to say, these elements, like the social relations that stand behind them, are neither fixed nor eternal, but changing and changeable.

Contrary to the pretentious, puffed up Hegelianism of celebrated pundit Francis Fukiyama, capitalism as we know it is not the “end of history.” And contrary to the triumphalism of iconic political figures like Margaret Thatcher, “There is No Alternative” is a foolish, bombastic slogan.

Yet today’s political leaders and economic thinkers are captured by the “magic and necromancy” of markets, as Marx might put it. They firmly believe that the profound economic crisis currently destroying thousands of lives and chewing up the standards of life of millions more can only be resolved in the narrow straight jacket of bourgeois economics and its eternal theological “laws.” But unlike the laws of nature, bourgeois economic laws reflect social relations, relations of social classes established by power, dominance, and privilege that might well be overturned or modified by human agency. We cannot replace the second law of thermodynamics for a “better” law of physics, but we can replace the current “laws” exhibited by the financial market place with new social relations and, consequently, a new financial order.

As Marx notes, this point is obscured for those unable to envision “other forms of production,” for those dogmatically wedded to the “immutable” laws of bourgeois economics.

With the exception of those fighting austerity and the tyranny of the popes of economic dogma such as the Greek Communist Party and others not constrained by any irrational fetish, the global economy remains strangled by the fetishism of markets and the financial predators exploiting that fetishism.

What is needed urgently is a break with stagnant, self-defeating thinking that elevates the cancerous financial sector and its privileged status among our institutions.

Witness the tragic pandering of progressive, social democratic, and other left political parties to the fetishism of financial markets throughout the world. The never ending demands of the agents of finance – the International Monetary Fund, the European Central Bank, and the European Union functionaries, in the case of Europe – bleed working people of the little they have retained in the face of the economic hurricane unleashed in 2008. Relentlessly, a tiny elite of financial manipulators and their hedge funds, private equity firms and investment banks have extorted concessions in the form of vicious austerity programs imposed on the masses.

The more governments concede in jobs, spending, and public welfare, the worse their economies perform. The worse their economies perform, the greater their debt in relation to economic product. The greater the share of sovereign debt against national product, the greater the concessionary demands of the vultures of finance. And the cycle repeats endlessly. This is the kind of reductio ad absurdum that only a madman could embrace.

The laboratory for this insanity is Greece. For two years financial predators have swarmed the relatively small chunk of international debt held by the Greek government while demanding the surrender of Greek assets and social spending to cover or guarantee those debt claims. The EU leadership could have easily placed this debt in a secure strong box as they did for banks in 2008 and 2009, protecting Greece from the vultures. Instead, they did nothing but collaborate with the assault of the financial sector. That collaboration, along with the compliance of the politically bankrupt PASOK government, brought catastrophe to the Greek people.

Recent exposés of misery in The New York Times and The Wall Street Journal have only scratched the surface of the pain now being endured daily by the workers in Greece.

And the misery will continue with the passage of the latest package of property taxes, salary reductions and layoffs. As these draconian measures, extorted by the titans of finance, further slow the Greek economy, officials will shrilly note that the Greeks are now even further from reducing their national debt and even more crippled by debt service. There will surely be further demands of privatization and austerity.

Unmoved by the fetishism of markets and the iron discipline imposed by its doctrinaire disciples, a growing segment of the Greek population has joined with Greek Communists and militant trade union leaders to simply say “No!” to this voluntary enslavement. For them, there is no fear of crumbling capitalist institutions. There is no civil debate over the fate of extortionate European banks. There is no awe of a future without the imposing structures constructed by European elites to shape Europe to benefit the privileged.

Rather, they face the future with optimism. Instead of “There is No Alternative,” they offer “There must be a Better Way.” The rest of the world would wisely heed this message and take a hard look at the socialist option.

The old Moor, as his friends fondly called Karl Marx, would smile at the slogan: “We will not pay for your crisis!”

Zoltan Zigedy

Wednesday, September 7, 2011

Imperialism Unmasked

If international solidarity is to be a cornerstone of building a militant and oppositional left in the US and other developed countries, then we have much work to do. Tragically, much of the left continues to tacitly or enthusiastically view NATO and US intervention in the affairs of far-off, small countries as support for just causes – noble military offensives for democratic change or the promotion of human rights.

Since the demise of the last great counterforce – the Soviet Union – the US and its allies have used their domination of all major sources of information to posture their many aggressions as altruistic efforts to secure stability, peace, democratic change and support for human rights.

Of course there is nothing new in this posture. Since the birth of imperialism, powerful developed countries have striven to shape the world in such a way that it benefits their economic and geo-political interests. They have sought to explain these interventions by offering transparent, but morally seductive, accounts of their motives. From the “civilizing” mission of British imperialism through the rabidly anti-Communist demonology of US administrations, imperialists have sought to mold the world in a way that best advances the narrow interests of their national bourgeoisie, especially its supra-national interests.

What is new is the incredible gullibility of so many to swallow the lame justifications for aggression against weaker, more vulnerable countries. When you slather great power intervention with noble-sounding homage to democracy and human rights, it remains imperialism. When powerful countries use their resources to fashion the world – regardless of their pretended motives – the result never serves either democracy or the interests of the subjected peoples.

I have in mind, of course, Libya.

While the media assiduously portrays the Libyan civil war as a popular rising and part of the so-called “Arab Spring,” they calculatedly avoid the obvious differences. Unlike the mass risings in Tunisia, Egypt, Bahrain, Yemen and some other Middle Eastern countries, the opposition to the Gaddafi government quickly took the form of an armed uprising. Within a month, a shadowy alternative government and armed resistance was established. In less than another month, US and NATO intervention occurred, sanctioned by a hasty UN resolution ostensibly passed to “protect innocent civilians” with a vigilant umbrella of air power, a “no-fly zone.”

Despite the pretext of the resolution, NATO intervention has been decisive in determining the outcome of the civil war. Air Power, arms, advisers and covert operations have wholly shaped every engagement, as well as terrorizing the Gaddafi loyalists. In addition, Qatar, Jordan, and the Emirates have supplied resources to the anti-Gaddafi cause, which certainly include advisors and might well involve combatants. What may have begun as an expression of political opposition was quickly transformed into a military action fronted by a surrogate regime and its rag-tag military, all serving the interests of the leading NATO countries.

The media portrays the Gaddafi government as Satin incarnate. This characterization is most agreeable to those in the West who trust no one but white guys in business suits. But even many of the left and most liberals fall prey to their own cultural biases by seeing Colonel Gaddafi as alien and unpredictable, without any reference point to the culture or social context from which he sprang. They are much more comfortable with “rebels” in Nike shoes and Western T-shirts.

But the issue is not whether Gaddafi is a good guy or bad guy, as simple minds in the West so often characterize conflicts. I confess that I know far too little about conditions in Libya, its history and its political life. I’m confident that pundits like Juan Cole or Stephen Zunes who have jumped out emphatically in support of NATO’s “humanitarian mission” know little more beyond uncritical internet research, anecdotes and hunches. The real issue is whether or not non-Libyans should have a say or, more urgently, a hand, in determining the fate of this North African country. Surely, those with the most at stake, those living in Tripoli, Benghazi and other cities or villages in Libya are both best equipped and most deserving to decide these matters without the eager “helping hand” of NATO.

This, of course, is the principle of self-determination enshrined in the United Nations charter and declarations of rights, a principle that has been shamefully abused since the post-Soviet domination of the UN by the US and its allies.

Self-determination is also a guiding principle, a core element, in the anti-imperialist posture. Anti-imperialists reject any actions or policies that restrain a people from determining their own course of action. But anti-imperialism is much more. It is also to confront and resist those great powers that overtly or covertly shape the fate of weaker nations for their own economic and political interests. For those living in those great powers – in this case, the US and other NATO countries – it is a special duty to vigorously and militantly support and advocate for the victims. The ideological softness fostered since the disappearance of a principled socialist bloc has sown confusion, luring many to side with imperialism in the several great-power encroachments and wars contrived since that time. The Balkans, Eastern Europe, the Middle East, Latin America and many other areas have experienced imperialist meddling, even military actions, all under the banner of human rights and democracy.

Blindness to imperial maneuvers produced little outcry when the G-8 countries – the primary imperialist countries – pledged $40 billion in “aid” for the “Arab Spring” countries in late May of this year. While few details were offered, the G-8 leaders stressed economic and social “reforms,” “transparency” and private sector development, all code words for fostering regimes amicable to imperialist penetration.

To Egypt’s credit, it emphatically turned down a US offer to supply the newly liberated people with $165 million to support “democratic and economic development” through the stealth imperialist agency, USAID. Egyptian officials were stunned when Hilary Clinton announced that these funds would come from existing aid programs and were to be administered directly by USAID and without the consent or involvement of Egyptian representatives. Egyptians wisely saw this as US interference in their internal affairs in order to influence the course of its ongoing revolutionary process.

On the Libyan question, skeptics point to the cozy relations Gaddafi has enjoyed with the West since 2003 as counter to the claim that the US and NATO are operating out of imperial hostility. Further, they cite economic ties as erasing any possible self-interestedness – energy resources, for example – that would motivate imperialist aggression.

For sure, recent releases from Wikileaks and other sources demonstrate warm, bilateral relations between US officials and Gaddafi right up to the January events. Even closer ties are now known between Libyan officials and the CIA. But this only demonstrates incredible hypocrisy on the part of the aggressors.

Even more revealing of imperial cynicism is the strange story of the rebels’ military commander, Abdel-Hakim Belhaj. In a recent AP story, Belhaj is identified as a CIA target swept off the streets of Bangkok in 2004 by the CIA, tortured, and rendered to Libya where he was imprisoned by pre-arrangement with Libyan authorities. The fact that Belhaj -- labeled a “terrorist” only a few years ago -- is now acceptable to the West as the principal military leader of the anti-Gaddafi forces seems to cause no discomfort.

But do the US and its NATO powers have an economic interest in seeing Gaddafi removed from power in Libya?

Contrary to the skeptics, the NATO aggressors have a major and telling interest in seeing Gaddafi removed. In a little noticed article in the back pages of the April 15, 2011 Wall Street Journal, author Guy Chazan lays out the case for the major oil companies in seeking Gaddafi’s departure (For West’s Oil Firms, No Love Lost in Libya). Chazan notes that foreign companies enthusiastically “poured in” to Libya after 2003; he cites a major player: “Libya was very fashionable… [e]veryone saw it as a great opportunity.”

But despite some major early deals, things turned sour. “Under a stringent new system known as EPSA-4, the regime judged companies’ bids on how large a share of future production they would let Libya have. Winners routinely promised more than 90% of their oil output to Libya’s state-owned National Oil Corp., or NOC.”

In addition, Libya kept its “crown jewels”—the onshore oil fields producing most of its oil – in the hands of state-owned companies. In 2007, even long engaged “friendly” companies were made to renegotiate their contracts to conform to EPSA-4. Foreign companies were forced to hire Libyans for jobs, including top managers.

One big loser was Italian oil firm, Eni SpA, which had to pay $1 billion to extend its contract with the Libyan government. Even more painfully, the Libyans reduced Eni’s share of production from 35-50% to a mere 12%. It’s no wonder that the Italian government was the most enthusiastic supporter of the NATO aggression. Nor is it anything more than a bitter irony that Eni CEO Paulo Scaroni pronounced the NATO assault on Gaddafi’s government “a lucky outcome.”

Chazan reports that “A clutch of companies left Libya as their five-year contracts began to expire, among them Chevron Corporation, BG Group PLC, and Australia’s Woodside Petroleum LTD.”

No doubt they are now eager to return with a more favorable regime on the verge of taking power under NATO’s protective arm.

In the last week of August, Eni SpA signed a contract with the “interim” government of Libya to fulfill all of the natural gas and petroleum needs of the Libyan people, a suitable reward for the fulsome efforts of Italian imperialism. No one in the capitalist media saw this naked payoff as shameless.

When the “friends of Libya” conference convened in Paris on September 1, 2011, the 63 countries representing themselves as “friends” spoiled their celebration by feuding over the disposition of the Libyan oil resources. “French Foreign Minister Alain Juppe said he thought it would only be reasonable if French companies benefited from preferential access to Libyan contracts, given that Paris, together with the UK, led the foreign military offensive in Libya”, as reported in The Wall Street Journal (Amid Harmony on Libya, a Spat Over Its Oil, 9-2-2011). So now the scramble for Libyan oil begins.

Convincing some that NATO intervention in Libya was an act of imperialist aggression may well be a hopeless task. Many are blind to capitalist motives, just as they are ignorant of historical patterns. Yet, imperialist aggression continues as blatantly and arrogantly as it has for well over a hundred years.

V.I. Lenin, writing in 1900 of the naked aggression against China by the “Great Powers,” presages the imperialism of 2011:

And now the European capitalists have placed their rapacious paws upon China, and almost the first to do so was the Russian Government, which now so loudly proclaims its “disinterestedness.” It “disinterestedly” took Port Arthur away from China and began to build a railway to Manchuria under the protection of Russian troops. One after another, the European governments began feverishly to loot, or, as they put it, to “rent,” Chinese territory, giving good grounds for the talk of the partition of China. If we are to call things by their right names, we must say that the European governments (the Russian Government among the very first) have already started to partition China. However, they have not begun this partitioning openly, but stealthily, like thieves. They began to rob China as ghouls rob corpses, and when the seeming corpse attempted to resist, they flung themselves upon it like savage beasts, burning down whole villages, shooting, bayonetting, and drowning in the Amur River unarmed inhabitants, their wives, and their children. And all these Christian exploits are accompanied by howls against the Chinese barbarians who dared to raise their hands against the civilised Europeans…

How is our government’s senseless policy in China to be explained? Who benefits by it? The benefit goes to a handful of capitalist magnates who carry on trade with China, to a handful of factory owners who manufacture goods for the Asian market, to a handful of contractors who are now piling up huge profits on urgent war orders (factories producing war equipment, supplies for the troops, etc., are now operating at full capacity and are engaging hundreds of new workers). In the interests of this handful of capitalists and bureaucratic scoundrels, our government unhesitatingly sacrifices the interests of the entire people. And in this case, as always, the autocratic tsarist government has proved itself to be a government of irresponsible bureaucrats servilely cringing before the capitalist magnates and nobles. (The Chinese War)

That was the ugly face of imperialism in China, this is the ugly face of imperialism in Libya today.

Zoltan Zigedy

Saturday, August 13, 2011

Sinking Fast

Regrettably, there is much to write about that must take a backseat to the economy and the current panic in equity markets. For the moment, the political fiascos, imperialist misadventures and cultural crudities that cry out for commentary are driven into the background by the fears generated by the latest economic news.

The loss of over 10% of equity value in one week terrorized business and economic pundits while driving investors to the exits. Making matters worse, there is an overriding, profound sense that no one in the seats of power knows what is wrong or how to fix it.

Of course some of us foresaw another round of decline coming, what the media has misleadingly dubbed the “double-dip”.

I posted on May 4, three months ago: “Rather than a recovery, we are in Act II of a severe crisis of capitalism. It is not merely a financial crisis, a severe business cycle trough or a radical imbalance, but a profound crisis of the capitalist system.” (The Crisis of Capitalism: Act II). Citing trends in GDP, labor productivity, unemployment, consumer spending, trade and even profits, I drew the conclusion that the road ahead was not only bumpy, but deeply rutted and perhaps impassable.

In another post in late June (Reliving 1937?), I emphasized the folly of debt hysteria and wholesale government budget slicing as a prescription for a seriously ill economy. A near consensus of economists and policy makers were blithely urging the same policies that nearly wrecked the vulnerable New Deal recovery in 1937. History was indeed repeating itself, first as a misstep in 1937, now as dogma-driven insanity.

Among liberal economists, Paul Krugman has commendably repeated warnings of this disaster in the pages of The New York Times.

And on the left, political economist Jack Rasmus has, for many months, boldly projected an impending relapse of 2008, citing a raft of economic data supportive of this conclusion (see

But most economists and mass media commentators were swept up in the debt fraud and the high drama leading to the last minute capitulation to debt extortion.

After the curtain fell, ridiculousness reached new heights as Standard and Poor’s – one of the feared financial rating agencies (the same cabal that assigned the highest ratings to toxic, Rube Goldberg financial junk)—lowered the US credit rating by one notch. To underline the irrelevancy of this rating, the yield of US Treasury notes immediately dropped. Instead of fleeing US debt, investors stepped up to pay more and buy more. In fact, since late July, as the phony debt standoff grew in intensity, the yield on two and ten year Treasury bonds fell at an unprecedented rate, indicating not only willingness, but eagerness on the part of investors to secure US debt. In addition, the stern warnings about the consequences of debt on interest rates were proven unwarranted, with mortgage rates at an historic low. Still the humbuggery reigned.

This is a strange debt “crisis” indeed that attracts investors to secure more US debt. The same pundits who cite rising interest rates on EU member state bonds as evidence of a debt crisis conveniently overlook the reverse behavior of US bonds. The blatantly contradictory claims of economists and public commentators demonstrate that the “crisis” is really a contrived political maneuver.

No one notes that the credit rating of the Peoples’ Republic of China is two notches below the lowered rating of the US. It is no wonder that PRC officials howled at the US debt drama after they were able to weather the 2008 financial crisis despite a credit rating of only AA-. Standard and Poor’s ratings mean little to a country unchained from the tyranny of bond markets. Thanks to the PRC’s publicly owned banks and its large measure of economic planning, PRC leaders are able to withstand capitalist irrationality better than their Western counterparts.

Capping the confusion and deception of the first week of August was President Obama’s emergency statement during the stock market collapse on August 8. Adding to the madness, he spoke of “a renewed sense of urgency” in drastically reducing US debt, as though throwing gasoline on a fire would somehow extinguish it. I’ll leave it to psychotherapists to determine if the President really believes this nonsense.

Some not-so-random thoughts:

1. We are indeed falling off the economic precipice. While stock market performance is only a secondary indicator of economic health, it does signal the sentiment in ruling circles and among the wealthy. That sentiment is decidedly confused and fearful. Volatility, as in 2007-2008, signals an imminent retreat from investing. The players who remain active are hedge funds and private equity firms who gain even when the rest of us are drowning economically. We lost the chance to tame these renegades in 2009 and 2010 with financial reform, but left them free to prey on our economy. And they are.

2. Profit and its tendency to decline are still at the center of the global economic crisis. While profits have grown enormously over the last two years, they have shown slowing growth for some time. Moreover, the widely noted $2 trillion in cash reserves held by US corporations represent the same glut of liquidity, or vast pool of capital seeking a return, that led to the last crisis of financial speculation. In a Marxist technical sense, these reserves count as potential constant capital and weigh against the profit rate of capitalist enterprises. The lack of investment opportunity for accumulated capital explains why the stock market and economic growth are in such dire straits despite officially high profits. Capitalism only thrives when every possible cent of accumulated surplus is placed back into the profit-generating caldron.

3. Increased labor exploitation – the principle force propelling the proclaimed recovery – has petered out. Labor productivity, won by employing fewer workers to do more work, dropped .6% in the first quarter and another .3% in the second quarter of 2011, calculated on an annual basis. I noted the decline in productivity growth in my May 4 article, but new BLS figures actually show an absolute decline. While capitalists will continue to try to squeeze workers, BLS data prove that hyper-exploitation is showing diminishing returns.

4. Act II of the capitalist crisis is still centered on the financial sector. Despite the absorption of weaker financial institutions by those left standing after the 2008 crisis, despite the concentration of finance capital, banks are in a precarious position, holding shaky loans and dubious assets. Again, the opportunity was lost in 2009-2010 to secure a rational, economically useful role for banks. Instead, they were allowed to resume their rogue, speculative ways, further exacerbating the crisis.

5. Unemployment – the idling of workers seeking to keep their families from despair – continues to loom over the economy. As I urged in my May 4 posting, the “official” rate, as bad as it is, is a false, misleading indicator of the plight of the workforce. Instead, we must measure the pain of job loss and employment frustration by the employment-to-population ratios and the labor participation rates which better show the tragic fate of the US workforce. Jack Rasmus, in a recent post, has given an even more forceful, complete explanation of the true dimensions of unemployment (, an explanation that erases the false hopes encouraged by the media.

6. The trade balance widened in June to the detriment of US exports, a trend that further dilutes GDP growth potential.

All signs point to a perfect conjunction of stubbornly irrational policy decisions and lost economic momentum leading to the second, more intractable act of this twenty-first century economic crisis.

Zoltan Zigedy

Tuesday, August 2, 2011

A Crisis of Liberalism?

“Obama’s offer… falls to the right of the average voter’s preference; in fact, it may outflank the views of the average Republican.” George Packer (The New Yorker) citing The New York Times writer, Nate Silver

“Put it this way: If a Republican president had managed to extract the kind of concessions on Medicare and Social Security that Mr. Obama is offering, it would have been considered a conservative triumph” Paul Krugman, The New York Times

“President Obama presented Republicans with what, at almost any other time in recent history, would be seen as a conservative dream…”
The Nation editorial

“It was shocking when he betrayed core principles of the Democratic Party, portraying himself as high-minded and brave because he defied his loyal constituents.” William Greider, The Nation

The quotes above and many other similar statements point to a crucial, disturbing moment in the evolution of US politics. Self-styled liberals or, as they now prefer to be called, “progressives,” are recognizing the loss of their influence in the dynamics of the US political process. They are feeling the pain of marginalization.

For liberals, the election of Barack Obama signaled a return to an imagined earlier politics that would establish a coalition of the have-not and have-less elements of US society and would counter the unrestrained pillage of the very rich and powerful. This idealized vision never promised to settle accounts with powerful interests, but only to buffer the pain of the less advantaged with a robust, but patronizing “safety-net.” In foreign policy, liberalism never abandoned imperial goals masked as advocacy of transcendent values, but sought a softer, less belligerent imposition of these goals on client states and potential opposition. In the 2008 election campaign, Barack Obama and other Democratic Party candidates did much to encourage the view that new politics were on the horizon.

Nearly three years after the election, the promise of Obama and the hope of liberals are gone, replaced by shock and disappointment.

Liberals-in-denial blame the Obama debacle on the ultra-right: the determined, uncompromising right flank of ruling class politics that unabashedly promote the interests of the wealthy and powerful while advocating unrestrained US global dominance. Standing by 19th-century economics, libertarian social and political policies, and hyper-patriotism, the ultra-right enjoys a base seduced by an ideology in a world awash in compromise, opportunism and hypocrisy. Against their shrill, ideological fervor, Obama, the prince of civility and concession, stands no chance. For the liberals, the ultra-right violates the rules of fair play, a charge of little sting at a time of profound economic and political crisis.

Still other liberals lash out at Obama as a traitor to the cause, a candidate who side-stepped the promised changes and violated the values enunciated in the 2008 campaign. For the most part, they need to revisit the campaign promises and sweep away the naiveté that blinded them to the massive corporate and elite support that put Obama on the main stage. They need to investigate the available, though widely ignored, accounts of Obama’s political career that cast great doubts on his liberal credentials and show his progressivism to rest on the thin ice of opportunism. Those who bought the puffery of vanity political accounts have no one to blame but themselves. More importantly, liberals fail to acknowledge the many decades of Democratic Party embodiment and facilitation of shifting liberal values; they fail to see the continuing escape from and re-shaping of those values as demonstrated transparently by the previous policies of the Carter and Clinton administrations.

US Liberalism

US liberalism is an elusive ideology, if it is an ideology at all. It shares with classical liberalism a reverence for vague and fuzzy notions of freedom and liberty that deny any class relativity to these concepts. For the most part, US liberalism in the era of monopoly capitalism differs from US conservatism by exhibiting more social tolerance, allowing more free space for life-styles, religious attitudes, ethnic differences, and expression. Notably, the limits of liberal tolerance often stop at radical political expression and activity. Liberals are seldom friendlier to socialist, anarchist or Communist movements than their conservative counterparts.

Some locate the roots of modern US liberalism in the Progressive Era. Others see stirrings of the modern variant in the doctrines of Woodrow Wilson. But liberalism, as we came to know it, surely owes its fundamental principles to the Franklin Roosevelt era and New Deal policies. Shaped by a profound capitalist economic crisis, an influential and growing independent left, and emerging ultra-right, fascist threats, Roosevelt and his allies crafted an ideology that re-structured capitalism and its institutions to meet these challenges. Not without many reservations, the Democratic Party became the flag-holder for this new ideology.

Apart from the bloated mythology surrounding the New Deal, the liberal initiatives of the 1930’s ameliorated the hard edge of suffering falling upon most working people, deepened democracy and proved to be immensely popular with a majority of US citizens.

Key elements of New Deal liberalism include the following:
1. Government has a duty to establish a baseline of living standards guaranteed to all.
2. Government has a similar duty to regulate and manage the capitalist economy to ensure its viability and success.
3. Foreign policy should avoid intervention (except in the Americas) and rely on negotiation and international institutions.

To a great extent, these elements served as a cornerstone of liberalism, broadened its appeal and established a loyal base for the Democratic Party. Coupled with the threat of fascism, this produced an uneasy, but stable unity with the socialist and Communist left.

New Deal liberalism reached its zenith during World War II with its Grand Alliance of those fighting fascism, an alliance that included the Soviet Union. The post-war world envisioned by liberals as well as Communists promised an end to war, peaceful democratic governments and a decided social and economic tilt towards the masses. The Potsdam, Tehran and Yalta conferences sketched the outlines of this post-war world.

But it was not to be.

New Deal liberals and Communists alike underestimated the strength of reaction and failed to stem the counterattack by corporate interests and their political allies.

Within three years of the end of the war, liberals melted before an onslaught of hyper-patriotism and anti-Communist zealotry. In a preview of our current moment, liberalism sought to compromise with the most rabid, anti-democratic forces, conceding civil liberties, foreign policy sanity and the militarization of the US to protect remnants of the New Deal agenda. With the left nearly destroyed or in retreat, liberals lost the spurs that prodded the most radical, progressive policies in the New Deal’s response to the Great Depression. With that loss went the spine of liberalism. The Cold War ushered in the retreat of liberalism and the infidelity of its Democratic Party electoral partner.

With the mass upsurge of the 1960s driving the initiative, liberalism and its Democratic Party vehicle made one last, futile attempt to breathe life into the New Deal agenda. Lyndon Johnson’s Great Society returned to the spirit of the New Deal, but made the fatal mistake of embarking on domestic reform while appeasing conservatives with an aggressive, imperialist war. The New Deal and the Cold War were simply incompatible.

Since that time, with liberalism and the Democratic Party joined at the hip, the trajectory of US liberalism and the Democrats has moved further and further away from New Deal ideology. The Democratic Party platform of 1976 was the last gasp of New Deal consensus, only to be neglected and subverted by the Carter administration.

The electoral victory of Ronald Reagan pushed liberals and the Democrats even further from New Deal thinking, with both soon accepting the primacy of free markets, de-regulation, a minimal public sector, balanced budgets, and government non-intervention in the affairs of corporations.

If liberalism had an ideology, it was embodied in the New Deal. With most of the New Deal gone and liberals tepidly defending its remnants – Social Security, Medicare and Medicaid – it’s hard to find the soul of this once vital political force.

Liberals and Democrats

US liberalism, since the time of the New Deal, placed its fate in the hands of the Democratic Party. Indeed, most identify modern liberalism with the Democratic Party. It is easy to understand why. During the New Deal era, the Democratic Party was the vessel for New Deal policies and the legislative executor of those policies. But it is also necessary to understand that it was not an easy fit. Roosevelt battled internally with many factions within the Party, as did his closest liberal allies.

From the onset of his term, Roosevelt felt compelled to appoint conservative Party figures to key positions and appease the pro-business orientation of the Party’s old guard. As a self-proclaimed experimenter, he shifted personnel to find answers to the Great Depression: progressives brought him success, conservatives didn’t. In addition, he was always looking over his left shoulder at a Communist and labor movement that was pressing hard at his heels.

His successes won a huge victory for the Democrats in the 1936 election. While many newly elected Democrats were progressive, many were not. And his program after 1936 was often stalled and even reversed by conservative elements in the Party. In short, the Democratic Party was still a bourgeois party. It did not make Roosevelt and his New Dealers progressive; they made the Democratic Party progressive.

In 1948, New Deal liberals, led by ex-Vice President Henry Wallace, understood this well. In the face of a Democratic Party retreat from the New Deal ideology, they formed a third party, the Progressive Party. While many see this as ill-advised and ill-fated, others of us view this move as a premature recognition of the forthcoming decline and dissolution of New Deal liberalism. While the Progressive Party fell victim to Cold War hysteria and liberal divisiveness, it attempted to keep alive the soul of the New Deal.

Over the next many decades, with the rise of television and other new media, the decisive role of polling, and the accompanying critical necessity of fund raising, the Democratic Party became less of a willing partner for New Deal ideas and more of a brand to be manipulated by consultants and other shapers of public opinion. The draw of ideas and issues was replaced with the politics of personality and vapid sloganeering.

Having made its bed with the Democratic Party, US liberalism valiantly stood by as the Democratic Party was polluted and corrupted with corporate money. A Party allied with the bourgeoisie became a Party owned by the bourgeoisie. Instead of a Party seeking the enlightened interests of US capitalism to be found in a measure of social justice, the Democratic Party became a vulgar tool of US capitalism, paying lip service to its core support in the labor movement and among African Americans and other minorities.

Today, liberalism has paid a heavy price for its marriage with the Democratic Party. By slavishly correcting its vision to comply with an increasingly ideologically bankrupt and crassly opportunistic political machine, liberalism has acceded to the sapping of its once politically relevant principles.

It is not for those of us of the anti-capitalist left to find redemption for liberalism. We have our own work to do. But its collapse has left the door open to the continuing advancement of the most extreme, the most rabid supporters of corporate brigandage and political reaction.

Zoltan Zigedy