Search This Blog

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