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Wednesday, February 27, 2013

The ABC of Bourgeois Politics

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

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

ABC and Syriza

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

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

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

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

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

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

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

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

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

Tsipras assures Stephens that he advocates neither a default on Greek debt nor an exit from the euro zone.
Instead, Syriza is committed to a “conference” with the European Union to discuss negotiating a restructuring of Greece’s debt (Tsipras writes of the “public debt” though he also calls for the recapitalization of Greek banks, presumably mainly private banks). The model for this maneuver is the 1953 conference called to renegotiate the debt of the Federal Republic of Germany (Tsipras fails to acknowledge that there were two Germanys in 1953!) where 21 countries agreed to reduce the FRG debt and invoke less onerous terms. Unsaid in his proposal is the Cold War context of the 1953 conference. Conferees remembered well the consequences for the world of the heavy reparations and debt imposed on Germany after World War I. They were equally anxious to draw the FRG into the Cold War (the FRG joined NATO IN 1955) and in need of the FRG’s growing industrial might. Nothing remotely like these considerations weighs on the other EU members in deciding Greece’s fate today.

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

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

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

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

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

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

Zoltan Zigedy 

Thursday, February 14, 2013

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

Workers’ Woes

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

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

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

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

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

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

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

Currency Wars 

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

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

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

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

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

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

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

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

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

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

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

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

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

A Hushed Mea Culpa       

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

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

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

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

The Sky is Falling, but not on Everyone yet!  

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

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

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

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

Zoltan Zigedy