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
zoltanzigedy@gmail.com

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 jackrasmus.com).

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 (http://jackrasmus.com/2011/08/07/look-again-july-jobs-declined-by-198000/), 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
zoltanzigedy@gmail.com

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
zoltanzigedy@gmail.com

What It Takes to Make It Better

On July 2, as people in the US began their Independence Day festivities, Associated Press writer, Paul Wiseman, offered a remarkable article for our fellow citizens to ponder. In The Economic Recovery Turns 2: Feel Better Yet?, Wiseman gives a summary of the meaning of “recovery” for ordinary folks.

Wiseman observes: “[ In this recovery], …ordinary Americans are struggling with job insecurity, too much debt and pay raises that haven’t kept up with prices at the grocery store and gas station. The economy’s meager gains are going mostly to the wealthiest.”

True enough.

But Wiseman goes on to demonstrate his claim in a way never seen in the mainstream media. He points out that workers’ wages (with skyrocketing executive pay included!) account now for 57.5% of GDP, down from 64% before the first throes of the crisis. Moreover, profits are up by nearly 50% since the “recovery” began in June of 2009. Much of this, I might add, “achieved” during the tenure of a laughably pro-worker government led by the Democrats.

Wiseman notes that “Unemployment has never been so high – 9.1 percent [now 9.2%!] – this long after any recession since World War II… Average worker’s hourly wages, after accounting for inflation, were 1.6 percent lower in May than a year earlier…[And] Higher paying jobs in the private sector, the one’s that pay roughly $19 to $31 an hour, made up 40 percent of the jobs lost from January 2008 to February 2010, but only 27% of the jobs created since then.”

Wiseman’s bleak picture of US workers’ plight dispels any notion, constantly floated by politicos and their lap dog media, of shared sacrifice. Instead, the “recovery” has been decidedly one-sided: the wealthy and the corporations have enjoyed substantial gains, while working people have sunk further economically.

On the heels of the long July 4 weekend, pundits and forecasters sought to conjure better news by projecting a drop in the unemployment rate. Euphoria set in when the ADP data suggested strong job growth, sending the stock market soaring.

But as is often the case, the ADP report proved to be fool’s gold and the forecasts baseless, with the June unemployment rate notching up to 9.2%. A mere 18,000 jobs were added in June, the fewest since September of 2010. And May’s meager numbers were also revised dramatically downward. It has been over a year since fewer private sector jobs were added to the workforce. Temporary jobs – the new “growth” area – were down by 12,000.

In addition, wages were lower in June and workers worked fewer hours. If Wiseman had waited a week, he could have painted an even bleaker picture.

Amazingly, news of this import – news that directly and severely affects the lives of hundreds of thousands of people and indirectly millions more – gets little more than a shrug from a media obsessed with bizarre crimes and celebrity missteps.

At the same time, the politicians who owe their offices to these millions sidestep the question by expressing canned condolences prepared for random acts of nature, or – worst of all – linking the solution to unemployment to the need to rein in the debt, a cynical insult to the unemployed. The Commander-in-Chief offered an empty platitude – “The American people need us to do everything we can to strengthen the economy and make sure that we are producing more jobs.” – while working hand-in-glove with Republicans to cut government spending and guarantee the loss of more jobs.

This is surely a shameful performance all around.

To be sure, the continuing crisis of capitalism demonstrates the bankruptcy of the ideologies that supposedly triumphed over Marxism, over Communism. With those ideologies enjoying well over thirty years of ascendancy and domination over policy, the net result is an economic collapse of catastrophic proportions. If this putrid mix of corrupted bourgeois politics and economic alchemy were held to honest account, millions of our fellow citizens would be rushing to embrace an alternative, including socialism.

But those who rule and hoard the wealth have many mechanisms to restrain any such movement: fear, war-mongering, xenophobia, racism, anti-Communism, consumerism, and a host of other tools designed to derail any movement away from accepting the despair brought forth by capitalism.

Fending off these ugly, divisive influences has never been easy; perhaps it is even harder today, but it is essential for uniting and unleashing the popular forces that could challenge a world view that has been tried, but failed.

Yet, fighting consumerism, racism, anti-Communism and the other sordid road blocks to unity is not enough. We cannot unify without something to unify around. We cannot take an exit from this road designated by misleaders and well-paid flacks by simply removing blinders. We must also offer a new route, based on careful analysis and historical experience, that promises an escape from the carnage of global economic crisis.

A vague commitment to anti-capitalism is not enough, either. While it makes a nice slogan, a nice balm for the soul, it offers no solution, no road forward.
The road forward begins with a vision of a society shorn of all-powerful corporations, corrupted politicians, the pillaging of nature, exploitative social relations, and self-centeredness. For sure, it’s not a new idea. Elements of that society are found in all religions; they emerge more fully in utopians like Thomas More, Fourier, Saint-Simon and Robert Owen who painted a social landscape of fraternity and cooperation.

Industrial society coalesced this thinking into the idea of socialism and the recognition that the market economy and private ownership of productive assets stood in the way of the new vision. The clearest and most reasoned, though certainly not the final, expression of this vision was conveyed in the works of Karl Marx and Frederick Engels.

Since their time, no other alternative to capitalism, no rival vision, has emerged to effectively challenge capitalism, except socialism. No alternative has captured the allegiance of working people world-wide, across borders, in factories and villages, like socialism.

With the Bolshevik revolution in Czarist Russia, the vision became a reality. Like all visions that come to life, the Russian experience inspired and warranted study. And the touchstone of that inspiration and study was the work and thought of the Bolshevik leader, V. I. Lenin. Throughout the twentieth century, millions drew upon that experience to spark and shape their struggle for a better life. As Bertolt Brecht wrote:

Comrade Lenin has been honored
often and plentifully. There are busts and statues.
Cities and children have been named after him.
Speeches have been given in many languages,
meetings held, and demonstrations
from Shanghai to Chicago in honor of Lenin.

Again, Lenin was not the last word, but his program and its successes marked a step further from vision to reality. It was no accident that Leninism, as an anti-capitalist program inspired by Marxism, marked a point of departure for anyone serious about moving beyond the grip of capitalism. And to date, no alternative to Leninism has succeeded in fully breaking the shackles of exploitation and the dictatorship of profit.

Assuredly, political movements of a different cloth and their leaders have successfully championed anti-imperialism and national independence. Some have even raised the banner of “socialism” over profound changes in the balance of forces between the owners of capital and working people. They have even privileged working people, to some extent, over the bosses, using electoral leverage to achieve great gains. But they have yet to eliminate exploitation or erase private profit as the economic engine. Nor do they have a coherent idea of how to do it. I am thinking today, of course, of the revolutionary movements that inspire us in Latin America. While they inspire us, they inspire us as visionaries, remaining caught in the web of utopianism, as were Robert Owen and Pierre-Joseph Proudhon before them.

Of course much has changed since the time of Lenin. Still, Leninism remains the touchstone for crafting a revolutionary strategy. Advocating anti-capitalism, while dismissing Leninism, failing to heed its lessons, is like starting a journey without knowing where you are and where you are going. Marxism-Leninism boldly offers a full account of both where we are and where we should be going.

The failure to seriously engage Marxism-Leninism is a transparent failing of the left, especially in the US, but also in many other parts of the world. It is not a theological failure, a failure to memorize the classic texts or mechanically apply them, but a failure to grasp the powerful tools resting in the Marxist-Leninist tool chest – the analytical devices of class, profit and exploitation and the strategic notions of vanguard party and dictatorship of the proletariat. That is not to say that these tools must be accepted as they are or applied in the old ways, but they remain available, particularly at a time when so few viable alternatives to capitalism have emerged.

One sees the absence of class analysis and revolutionary tactics in the popular movements in the US, much of Europe, and the upheaval in many Arab countries. While the sentiment is there – anger, frustration, and despair – it fails to channel toward a program of fundamental change. While we must admire the determination and dedication of active masses, that action is too often dissipated or redirected by self-styled leaders or “democratic” illusions. Rather than shaking the foundations of capitalism, these movements demonstrate against the personalities and character of those in power. But these rulers are disposable, to be easily and quickly replaced by others of their ilk. A deeper understanding of the structures and institutions that reproduce the model bourgeois politician and minister is lacking. Marxism-Leninism offers that understanding.

The capitalist media showers us with pictures of thousands of “indignants” determined to give voice and physical commitment to their anger. Missing from these pictures are the slogans or banners that reflect an alternative program either challenging capitalism or wresting power from the capitalist rulers and their parliamentary lackeys. In short, they constitute no “specter” haunting those in power.

For Marxist-Leninists, spontaneity is seldom a reliable road to change.

In the US, the political arena is further complicated by leftist ideologues who have no mass base and mass leaders who have no ideology.

With no mass base, the best known ideologues command an audience, but their words are shorn of tactical constraints or organizational commitment. As such, they speak “freely” and “independently,” but with little concern for the political impact or the context of their statements. Noam Chomsky’s recent sharp, public criticism of a single alleged policy of the popular, progressive Hugo Chavez government in Venezuela is a case in point. As perhaps the leading light of the broad left, Chomsky, with his interview in the UK Guardian, provided raw meat to a pack of media carnivores ready to pounce upon the Bolivarian Revolution. This attack came at a time of great vulnerability brought on by malicious speculation about Chavez’s health. No doubt Chomsky acted from sincere individual conscience, but dissociated from any organization and without any responsibility to a movement –and no internationalist obligation to the interests of the majority of the Venezuelan people. As a result, he evades responsibility for the consequences of his words.

And our mass leaders, especially most labor leaders, often rail against the inequities and injustices wrought by capitalism, but without any over-riding, systematic understanding of how it produces and reproduces these results. Mired in the immediacy of policies dictated by others – corporate bosses, two-party politicians, and other hostile social forces – they only react with indignation and without a strategic plan to shift to the offensive. Without an ideology, without a class-based stance, they fulminate without inspiring, posture without leading. All of the mass anger and fighting spirit is funneled into the electoral arena and barely qualified support for the Democratic Party.

The Wisconsin uprising demonstrates well the ideological vacuum and strategic chains limiting the labor movement. Acclaimed by all as a major escalation of working class militancy, the mass actions threatened to grow in scope and fervor, but were soon sapped by “leaders” promising to convert the struggle into a grueling legalistic campaign for electoral recall. Instead of mobilizing tens of thousands of workers nationwide who are equally threatened by draconian cuts in wages and benefits, instead of calling for strikes and other expressions of solidarity, US labor leaders opted to divert the struggle to a mere political contest between Republicans and Democrats. Their fear of mass initiative and their ideological immaturity smothered a rare opportunity for US workers to achieve a level of effectiveness on a par with many struggles in Europe and the Arab world, a chance to stand up to ruling class power.

These weaknesses point again to the need for a Marxist-Leninist political organization, an organization committed to bringing a vital, energizing ideology to working people. Whether that organization comes in the US from a change in direction of the now nearly empty shell of the Communist Party USA, or one of the few, small organizations that have emerged to fill the ideological void abandoned by the CPUSA, or from some new formation is yet to be settled. The process is a difficult one requiring a clearing of all of the ideological underbrush accumulated since the fall of the Soviet Union and the shedding of all of the disillusionment generated by that fall. That process will only develop from offering Communist leadership to mass action and diligent and aggressive action in the war of ideas.

Such an organization will not arrive spontaneously, but we should be confident it can be delivered.

Zoltan Zigedy
zoltanzigedy@gmail.com

Capitalism Mugs Greece. Who Is Next?

To understand the fate facing the people of Greece, you have to imagine an intruder coming to your home, putting a gun to your head and demanding that you turn over your earnings, surrender your savings, and sell off your car, your television, and your refrigerator t. Greek citizens neither benefited from the profit frenzy of international bankers nor encouraged their irresponsible behavior, yet they are being asked – no, forced – to pay the price for the damage incurred in the collapse of the world capitalist system.

Greece – a small corner of the European Union – and its people know little of the exotic instruments concocted in the world’s financial centers to overproduce massive amounts of phantom capital fueling the growth of this rapacious system. They are only indirectly acquainted with the arrogant, irresponsible actions of giant investment banks like Bear Stearns, Lehmann Brothers or Goldman Sachs. Very few Greeks see their future tied to the success of the predatory financial behemoths that roam the global economy. And yet they are being forced, at gun point, to pay for their losses.

When the media fog lifts, this is clearly the plight of Greece’s eleven million citizens.

If home invasion, armed robbery, and extortion are crimes, then surely Greece is a crime victim. And the European Union, the European Central Bank and the International Monetary Fund are the criminals. They are aided and abetted by the bond bandits who prey on debt, pouncing on a country struggling to revive its sinking economy. And their puppets – pathetically willing accessories to the crime – are the PASOK leaders and parliamentarians who attempt to legitimize the crime.

With few exceptions, countries have been obliged to take on additional debt to stimulate economic growth in the face of a severe drop in global investment and broad demand. Capitalist economies have no option other than sinking further in decline. In earlier times, deficit, debt-producing spending produced improved growth and accompanying inflation. Growth and inflation, in turn, increased tax revenues and cheapened debt, allowing the public debt to shrink in proportion to the economic product. This has long been a feature of capitalist recoveries from mild to severe recessions. Conventional economists teach this as though it were a universal law.

But we live in exceptional times and conventional economists are seldom right about anything any more.

Today, two factors have changed this dynamic. First, the near-total domination of neo-liberal ideology has shaped opinion to fear public debt of any degree. What was once the dogma of the fringe right has, thanks to over forty years of focused, class-based intellectual encroachment, spawned a uniformity of thought among the media, politicians, and opinion makers bordering on faith and defying history and facts. What began as the so-called “Washington Consensus” in 1989 has become an international consensus, gaining near-theological obeisance. International capitalist institutions like the International Monetary Fund have eagerly embraced its tenets.

Debt hysteria, like patriotic fervor, induces baseless fears that perversely shape policy decisions. Like contrived patriotism, debt fright masks a hidden agenda – in this case, a hatred of all socially useful public spending.

Secondly, for decades, changes in the global economy ushered in a new dynamic that manipulates and exploits debt far beyond anything we have seen before. With many of the capital-rich countries surrendering their manufacturing to low-wage areas, financial activities – the management, manipulation and creative expansion of capital – took on a greater role in these economies. New techniques, instruments and institutions evolved to accumulate surplus value – profits – in the hands of the few engaged in the financial game.

As capital accumulated – US financial profits accounted for over two-fifths of all profits before the collapse – it became increasingly difficult to maintain the rate of return spurred by financial ascendancy. (In Marxist terms, the tendency for the rate of profit to decline reared its ugly head.) Riskier and riskier speculation sought to find a home for the overproduction of capital until the system collapsed, the scenario that we all know so well.

Fueled by an injection of public funds, the financial sector has returned to speculation with a vengeance. In addition, they are now finding new profits in attacking the debt of the most fiscally vulnerable countries and forcing the conversion of private debt into public debt. The financial sector was neither wounded nor chastened by its folly. Instead, it has roared back, attacking sovereign debt in vulnerable countries like Greece, Ireland, Portugal and Spain. Speculative capital has turned virulently predatory.

The combination of these two elements – one subjective, one objective – has placed Greece in a death spiral. With unemployment soaring over 16%, taxes on the poor enacted, homelessness on the rise, salaries and benefits sliced, and social services eviscerated, Greek workers face a future of decline.

II

If there is one insight central to the science of Marxism, it is that appearances seldom reveal the real social realities; indeed, they most often mask them. The interplay of personalities, the clash of proclaimed interests, or the statements of policy makers conveyed by the corporate media are seldom the actual forces at play in social developments. Instead, material forces evolving from the system’s dynamics are usually the decisive factors in driving change.

In the case of Greece and, soon, the other vulnerable European Union countries, finance capital -- particularly its most predatory elements (hedge funds and private equity firms) -- has exploited the crisis to generate profits by betting against Greece’s ability to manage its debt. These bets have predictably influenced the market, making it even more difficult for Greece to secure and pay off its debts. As selling and redeeming bonds became more costly, Greece lost the ability to generate a recovery from further deficit spending.

Without a boost from public sector spending to jump-start economic activity, tax revenues shrank further, crippling Greece’s ability to meet debt payments and again find favor with the bond profiteers. The painful, tortured route to economic destruction ensued.

The only sensible exit from the vise gripping Greece was to stand up to finance capital and extract a new deal or exercise its sovereignty by voiding its debt – defaulting. But Greece’s “socialist” party, PASOK, instead turned to the eager criminals of the IMF, the EU and the European Central Bank for “help”. Only the Greek Communist Party and the advanced sector of the working class, PAME, advocated swift exit from the financial vise.

III

Where the media presents Greece’s plight as simply one of irresponsible government bringing pain on itself and the attendant economic hardships as the market’s revenge, the truth is far different. The Greek crisis is what an unrestrained, dominant, and predatory financial sector produces. But we must also recognize that the financial monster devouring Greece is itself the product of a capitalist system dependent upon finance to sustain its continued accumulation of surplus value. Those who think that taming the financial behemoth will restore a kinder, gentler capitalism are ignorant of the system’s logic.

By turning to the triumvirate (the EU, IMF and the ECB), the PASOK government surrendered the country’s sovereignty and its economy to three enemies of the Greek people, three enemies with often contradictory agendas.

The European Central Bank is the strong-arm enforcer for European banks. Its goal is simply to ensure that Euro-banks are not damaged by any Greek events, that the banks’ investments and loans are protected. It adamantly opposes any policy that will ask euro-banks to sacrifice. The ECB opposes default at all costs, threatening to not buy Greek bonds if Greece defaults. It supports EU bailouts because they transfer Greek debt from the private sector to the public sector. J.P. Morgan estimates that public sector sovereign debt liabilities against Greece will surpass their private sector counterparts in 2013 as outstanding bonds are paid off. This trend is expected to continue, going forward. The ECB welcomes this exit by private banking since it will leave the banks immune from any negative consequences. They have no interest in the fate of Greece’s working people.

The International Monetary Fund, on the other hand, serves as an active agent for international capital. Through extortionate loans, it imposes the conditions for capitalist exploitation upon countries desperately in need of financial help. Privatization, diminished social securities, and dis-empowered workers constitute its agenda. Clearing a path for US imperialism drives the policies of the IMF, with the interests of the other imperialist powers playing a secondary role.

The details of the austerity package for Greece – privatization, unemployment (to discipline workers), destruction of social services, etc. – are the work of the IMF. It was with glee that international capital welcomed the demand for a $71 billion privatization of Greek public assets, including Athens Airport and Greek railways. The Wall Street Journal cynically dubbed it a “National Tag Sale.” The IMF, too, has no interest in the fate of Greece’s working people.

The European Union, a political body, reflects the political will of the dominant governments of the EU: Germany and France. Both countries’ governments subscribe wholeheartedly to the neo-liberal dogmas, prescribing austerity for growing public debt. In this respect, they endorse and lead the EU to support the IMF regimen. But they have political reservations about the terms of the extortionate deals crafted to impose austerity. They resist committing their own public funds to buy the Greek government's collaboration in selling out the Greek people. So-called “bailouts” come at the expense of public funds provided by the EU constituent governments. They prefer to find another weapon to hold to the head of the Greek people. But the EU, as well, has no interest in the fate of Greece’s working people.

Like all criminal syndicates, the unity of the triumvirate is threatened by selfish interests. The German government recently proposed a restructuring of privately held Greek debt (largely euro-banks), but the ECB slammed the door on this since it would call on European banks to sacrifice. France is now proposing similar actions with the ECB similarly in opposition. Neither government wants to commit its own public funds to the sustenance of Greek government debt. While they agree on the crime, they cannot agree on the weapon.

IV

It would be a profound mistake to see the mugging of Greece as an isolated, inconsequential event. Rather, it is a template for the way ahead for international capital.

In the days before the betrayal of the Greek people by the 155 PASOK representatives, stock markets world-wide were falling, in fear that the massive strike and demonstrations of the Greek people might frighten these spineless politicians into rejecting the extortionate deal demanded by the IMF, the ECB and the EU. The mere possibility that resistance would derail the program shook the foundations of capital. In the days following, the markets leaped forward more than they had in months.

Greece is neither isolated nor inconsequential.

The pattern established in Greece is being repeated in other countries, like Portugal, Ireland and Spain. Italy and the UK are next in line, with others to follow. The game plan will undoubtedly be tailored to different circumstances and different balances of forces, but capital will relentlessly strive to squeeze profit from the living standards of working people and expropriate the public wealth held socially. The weapon in this assault is debt manipulation.

Some on the left sounded the death knell of neo-liberal capitalism in the depths of the crisis. Clearly, that was a profound mistake. Neo-liberalism, financial predation and global capital have mounted a vigorous counter-attack, leaving those illusions dashed.

We can, however, draw important lessons from the Greek struggle. While the Greek people, led in this conflict by Communists and class-conscious workers, failed to stop the mugging, they are not defeated. They will have much to say about the next chapter in this unfolding story.

For us in the US, the assault on the Greek people should remind us of what we face. While we should be inspired by the resistance in Wisconsin, Ohio and other states, we must recognize what a daunting, difficult struggle lays ahead. And we should not be seduced by phony political allies like the Democratic Party, the US counterpart to PASOK, in this fight.

With all respect to our many causes, this is the central battle of our times.

Zoltan Zigedy
zoltanzigedy@gmail.com

Summing Up: Three Essays on Where We Are

Reliving 1937?

Though Ben Bernanke, the head of the Federal Reserve, prides himself on his extensive research and expertise on the Great Depression, he is strangely quiet on the glaring parallels between this moment and a similar moment four years into the New Deal “recovery” from that earlier economic catastrophe. I wrote in February, 2008:

The [Roosevelt] Administration lost further steam by aggressively attempting to balance the budget in 1937. With the economy sharply rebounding, administration officials began to sound the fear of inflation, urging budgetary restraint. Federal spending was cut drastically, with the WPA nearly shut down. Consequently, the economy quickly sank into decline. Industrial production fell drastically (35% in 9 months), prices fell and unemployment jumped dramatically.
 
Through the first months of 1938, Roosevelt stayed firmly with the policy of fiscal restraint urged by capital. This appeasement of business only deepened the crisis. In April, Roosevelt reversed his policies, reviving WPA with $1.25 billion for employment and further funding other programs to the tune of $3 billion. The Congress overwhelming approved these moves.
 
The turnabout of policy led to a turnabout in economic activity. Almost immediately, industrial production, employment, prices, and payrolls begin to climb. Nonetheless, the US economy never reached pre-Depression levels of employment and industrial production until 1939, seven years after their lows. By then, the mandate of 1936 was gone, eroded and crippled by the retreat of 1937 and the fresh economic slump of 1937-1938. The momentum of New Deal progressive legislation was lost without achieving the goals of full recovery or social justice.

Balancing the budget in 1937 is exactly the same thinking as the beliefs behind the debt hysteria rampant with the media and the legislators of both parties today. And in both cases, it is the interests of capital that stand to benefit from the policies. As recent economic reports prove, we are in danger of driving off the same cliff that the New Deal economy encountered in 1937. Radical budget constraints and the consequent austerity will, if history means anything, quickly find that cliff.

Oddly, few commentators reference this historical lesson – or few other historical lessons, for that matter – except notably Paul Krugman, columnist for The New York Times, who has warned of a repeat of 1937.

Another, far more curious, reference to the parallel comes from the extreme right, the pen of the best-selling author, Amity Shlaes. Shlaes is celebrated for the publication of a bizarre historical narrative of the Great Depression that crudely recasts the period as confirmation of the economic philosophy of Milton Friedman.

As an unvarnished apologist for unfettered capitalism, Shlaes recognizes the power of the historical precedent in potentially crafting a counter-argument to the shrill, ubiquitous argument for government austerity. Even though liberals are unwilling to challenge or even tepidly object to debt-fright, she hopes to head them off at the pass should they find some spine. In a Pittsburgh Tribune-Review commentary, Is ’11 the New ’37?, Shlaes argues that the wrong lessons are conventionally drawn from the 1937 economic relapse. The Yale University English major, elevated by the media into a serious economic historian, argues that rising taxes, Social Security payments, bank regulation, and, most importantly, the cost of labor, caused the relapse of 1937. Ominously, she contends, these same moves threaten the economy in 2011.

This is utterly ridiculous, yet Shlaes passes as a serious voice in public discussion of economic policy. More and more, that discussion is conducted in the realm of fantasy.

Consider the data: Federal tax receipts did grow between 1936 and 1937, but only by an absolute amount less than the growth of tax receipts between 1933 and 1934. Moreover, during the war years, a time of great expansion, tax revenues nearly doubled every year between 1941 and 1944. Clearly, there is no defensible simple relationship between rising taxes and economic decline – a fact that even a celebrity English major should acknowledge. High taxes or Social Security payments did not cause the 1937 collapse.

As for banks, credit grew between 1936 and 1937, as it did every year going forward from 1933. While its expansion slowed in 1937, it was not enough to account for the deep decline of 1937 that began in the summer. Indeed, the Board of Governors of the Federal Reserve tightened the reserve requirements for banks concurrent with this slackening, which only made matters worse. At the end of the summer, the economy collapsed.

To cite the rise in the cost of labor as a cause of the 1937 collapse purposely violates the truth. While the powerful unionization drive in manufacturing brought many into the protective umbrella of the CIO, earnings in manufacturing, mining, construction, transportation, communications, and public utilities grew at roughly the same pace as the prior two years going into 1937. The exception was a notable increase in earnings in the agriculture, forestry and fisheries sector, which was notoriously underpaid and of little impact upon the overall economy.

But what does stand out in the data is the pronounced decline in federal government expenditure which dropped in 1937 and even more rapidly in 1938.

By April of 1938, the Roosevelt Administration realized that its balanced budget “olive branch” to big business had failed and returned to New Deal pump priming:

Therefore, on April 14, the President sent a special message to Congress and addressed the nation in a fireside chat which announced the revival of the policies which had brought recovery in 1935, and had been reversed just prior to the recession [of 1937]. A new appropriation of $1,250,000,000 for the expansion of WPA employment was proposed… Additional appropriations for the PWA, PSA, CCC, NYA, USHA… brought the total recommendations… to slightly more than $3,000,000,000… (The History of the New Deal, Basil Rauch, p. 300).

With this return to stimulative programs, the economy began to recover again in 1939. A similar fireside chat from President Obama would be welcome now.

Shlaes blatantly distorts this history with a zeal driven only by ideological dogma and fealty to the celebrity easily won from our modern-day philistines.

But on one point, Shlaes approaches the truth. She correctly notes that military spending overwhelmed the tepid stimulus for popular programs offered by the Roosevelt Administration and invigorated the US economy going forward. After 1939, the major stimulus for growth came from rapidly expanding war-driven public expenditures. Only when the economy was established on a war-time footing -- in 1941 -- did GDP and per capita GDP surpass the level of 1929. For liberals like Paul Krugman, this glaring fact challenges the mythology of the New Deal. Can capitalism survive without massive military spending? With the US committed to a perpetual war economy since World War II, is it possible for capitalism to offer economic growth and peace with the rest of the world? History suggests that it cannot.

Today, we get war without economic growth or social justice.

*************

Disintegration of the Old Order

I wrote in November of 2008:

The economic crisis has reversed the post-Soviet process of international integration -- so-called "globalization." 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---for the simple reason that every nation has different interests and problems, a condition that will only become more acute as the crisis mounts. In the past, the most economically powerful country, the US, could impose a solution to regional problems as it had before in Asia and South America. With the US economy the most seriously wounded, this is now highly unlikely.

We see great stress on the European Union. Germany's export-driven economy is collapsing. France, on the other hand, has yet to feel the full force of the crisis. Italy maintains staggering debt and an already stagnant economy. Spain's real estate and building boom is rapidly contracting. In the face of these disparate, but debilitating expressions of the world economic crisis, it is highly unlikely that the Union will come up with common solutions. Indeed, the unraveling of the EU is a possibility.

I returned to this theme on several occasions in subsequent posts. Today, the European Union is indeed unraveling. While Germany’s export economy has recovered, the stark difference between Germany’s momentary prosperity and the fate of much of the rest of the EU has only exacerbated the tensions wracking Europe. Nor did I anticipate that Greece, Portugal, and Ireland would prove to be the focal point of EU dissolution. Nonetheless, the projection stands up. The EU faces numerous contradictory policy choices, all of which threaten to unwind the Union.

But the larger point should not be lost. Those who foolishly saw a new era of the decline of the nation-state, the global dominance of transnational corporations, and the emerging rule of international organizations in the wake of the collapse of the Soviet Union profoundly misread the logic of capitalism and the resiliency of nation-state imperialism. This view proved quite popular with neo-Marxists, especially in the nineties. In its essence, it was a rejection of Lenin’s theory of imperialism.

Today, events have demolished this view, with its adherents retreating into the academy or moving on to a new “re-thinking” of Marxism or Leninism, the game that sustains the intellectual left.

Instead, we are left with the crumbling of the institutions thought to be cornerstones of international integration and globalization.

Consider some of the elements that were thought to be the secure foundation and cement of a new transnational, global world order: the International Monetary Fund, free-trade agreements, NATO, the Organization of Petroleum Exporting Countries, bi- and multi-lateral coalitions, etc.

In the case of the IMF, contradictions abound between the advanced capitalist countries and the formerly compliant or subservient emerging economies. Intense frictions arose around IMF policy allowing unrestricted capital flows, with the entrenched representatives from developed economies reluctantly conceding some control to the emerging economies like Brazil. The recent jockeying over a new IMF Director only underscores these differences and tensions.

US free-trade agreements between Colombia, Panama and the Republic of Korea languish without ratification. Formerly, these agreements were rammed through in the face of any and all opposition. However, confidence in the virtues of free-market dogma is now lessened and ruling class unity is impaired over the “advantages” of these agreements.

NATO is experiencing deep divisions. In an unprecedented public admission, outgoing US Secretary of Defense, Robert Gates, expressed severe criticism of the US’s NATO allies, questioning their commitment to provide resources and manpower in support of NATO’s objectives. Most often, these objectives are dictated by the US and coincide with US interests. Members are less than happy with this arrangement, affording the US with less cover for its imperial designs.

The imperialist venture in Libya currently demonstrates the contradictions in NATO. Enthusiastic supporters of aggression have their eye on their own interests in and dependency on Libyan energy resources while other members have their eye on the impact of the aggression on the outcome of the so-called “Arab Spring.” The escalation of this naked aggression, with no success in sight, has only brought these contradictions to the fore.

Similarly, the uprisings in several North African and Middle Eastern states has shaken the alliances between conservative governments and their international sponsors, the US and Israel. Imperialists are scrambling to contain the damage through contradictory policies: propping up some conservative governments with aid and even military intervention, while reluctantly discarding others with the hope that money and covert operations will cobble together a friendly alternative. The recent decision by the G-8 pledging $40 billion towards the “Arab Spring” is the bank roll for both projects. In these impoverished countries, $40 billion will go a long way toward buying public opinion, feeding corruption, and directing policy, just as it did in Eastern Europe after the fall of the Soviet Union. Nonetheless, forces are unleashed that promise to disrupt the balance of power in the regions.

OPEC, long led by close US ally, Saudi Arabia, has recently concluded an acrimonious meeting with members agreeing not to agree on a policy going forward. Where OPEC formerly linked its policies to the needs and wishes of the most advanced capitalist countries, the relationship has soured with many member states.

Further east, the long-standing alliance between the US and Pakistan is under great stress, with hostility growing daily.

Relations between the US and China are similarly frayed.

Other examples of divisions and tensions wracking global cooperation and integration abound. The global economic crisis has exposed inter-imperialist rivalries and differing national interests long simmering during the decade of “globalization” and capitalist triumphalism. As these rivalries intensify, it will be increasingly difficult for policy makers to contain the damage inflicted by a sinking global economy.

The collapse of the old order offers left forces, progressives, and especially advocates of socialism, an opportunity to plant the seeds of a new order based on social justice and equality. While the road is difficult, the opportunity should not be lost.

************

The Joke’s on Us!

If nothing else sours the last remaining liberal, it should be President Obama’s Jobs Council. Faced with massive and sustained levels of unemployment (with signs that more is coming), the “hopey, changey” President created a council to address the most serious threat facing his country.

Presidents create councils when they have no policy ideas of their own and they hope that the public will be fooled into thinking that they intend to seriously address an issue.

In Obama’s case, he doomed the project to failure and contempt from the beginning by appointing Jeffrey Immelt as chairman of the Council. Immelt is CEO of GE, notorious for its anti-labor policies, off-shoring, and plant closing – actions that destroyed tens of thousands of jobs. Appointing Immelt to the key position is like asking a convicted rapist to lead the discussion on sexual harassment.

In addition, Obama loaded the Council with CEOs, none of whom has a distinguished record on hiring in the face of the crisis. Consider, for example, council member Jim McNerney of Boeing. His company is currently charged by the National Labor Relations Board with moving a plant to the non-union South to punish union workers who exercised their right to strike, a unique qualification for improving the lot of working people.

The biographies of this bizarre collection of tycoons on the President’s Job Council website tout their many awards and success in generating a return on investment. In other words, they are proven masters of lowering costs – including labor costs – for the sake of corporate profits.

To add credibility to this collection of wolves guarding the hen house, Obama appointed Richard Trumka, head of the AFL-CIO. With all his bluster about corporate greed and Democratic Party betrayal, he will have to live with his conscience over breaking bread with these corporate predators.

Last week, this august group offered the President and the public its initial proposals. Even the business community recoiled against its timid initiatives: The Wall Street Journal headlined: Surprise! Interim Jobs Advice From Panel Lands With Thud. They went on: “The yawn-o-meter spiked into the red zone in part because these ideas aren’t that new.”

They were not only old ideas, but ineffective and irrelevant to job creation; they were a joke.

Leading the way was the tired old bromide of job training, matching skills to available jobs. Apparently, no one bothered to notice that the private sector has not created sufficient jobs to offer to trained employees. Hopefully, the President knows better. Certainly Trumka does.

In addition, they implore the government to make it easier for firms to get construction permits, as though the permits – and not the availability of projects – stand in the way of job creation. Charged with finding jobs, the CEOs divert their attention to greasing the skids for contractors.

They see expediting foreign visas as a route to boosting travel and tourism. It’s hard to imagine anything further down a list of initiatives for effectively stimulating new jobs. Are there potential foreign visitors clamoring to have their visas approved to flood the US with euros or yen? If there were, would it put a dent in unemployment?

Extending credit to small businesses through the Small Business Administration is offered by the Council as a job-generator. Overlooked, of course, is the massive bail-out the public has made to banks so that they could continue to extend credit to worthy small businesses. Are they not fulfilling this function? Should they not bear this responsibility? And where are the businesses confident enough of the recovery that would use the loans to take on new employees?

Finally, the Council invokes the obvious by calling for an effort to employ construction workers, particularly in reconstructing public and private structures more energy efficiently. No doubt this is particularly appealing to the CEO of General Electric, whose firm, no doubt, has a hand in offering products and services in this sector. But invocation, like prayer, will not create jobs.

Like an obedient lap dog and vulgar careerist, the great labor traitor, Andy Stern, hailed the proposals, saying that the Administration has “the validation of the business community to get this done.”

When has there been as much insincerity and hypocrisy collected in one meeting place? When has a President offered a more absurd approach to the most pressing problem facing the economy and feared by the public?

Everything stinks about this sham “initiative.” There isn’t enough shame to lay before the initiators and participants in this tasteless joke on the US people. Obviously, no solution to unemployment is forthcoming from this Administration.

Zoltan Zigedy
zoltanzigedy@gmail.com

Captive Nations

Nearly thirty-five years ago, in a rare moment of truth-speak, President Gerald Ford, participating in a televised pre-election debate with future President Jimmy Carter, denied that the socialist countries of Eastern Europe were “captive nations” under Soviet domination. Ford, not known for his political acumen, violated one of the cardinal rules of national political campaigns: thou shall not deviate from “truths” held closely by the US ruling class. The media came down on Ford like a ton of bricks; some say his indelicate comment cost him the election.

It is likely that the bumbling Ford misread his cues or suffered a brain lock since he had earlier signed a proclamation designating the week beginning July 13, 1975 as “Captive Nations Week.” Breaking with the unity of thought that ruling elites fight so hard to establish is not easily forgiven, even if it is inadvertent.

Despite the end of the Cold War, sacred and unassailable truths still are a fixture of US political discourse: politicians are not allowed to mention that the Cuban people overwhelmingly support their government; the plight of the Palestinian people – their suffering and hardships – must remain unspoken at all costs; the charge of terrorism must include and be confined to acts against imperialism; and private ownership of assets is always to be preferred over public ownership. These are theological commandments in a country that trumpets its commitment to freedom of thought.

The Real Captive Nations

Though the notion of “captive nations” was one of those ridiculous ideas born from the malignant minds of Cold Warriors, there is no better time than today to find it a precise and appropriate application. Its aptness is one of those sublime ironies that would make the old master, Karl Marx, smile.

In the wake of the most destructive waves of the economic crisis, most nations were left with extraordinary public debt. Bailouts, stimulative spending, and substantially reduced revenues pushed public debt loads dramatically higher, excepting those few countries with sufficient reserves. In a real sense, the assumption of debt was the prescription – the only prescription – for surviving an accelerating mortal spiral of the capitalist system.

But in a capitalist country in the web of a global capitalist system, debt is shorthand for an intimate relationship between borrowers and lenders, a relationship that is easy prey for international banks, hedge funds, and the global enforcers of capitalism, the International Monetary Fund and the World Bank.

The group of weaker, less developed countries of the European Union was one of the most vulnerable targets of financial predation. When the Union was formed in 1993 from the European Economic Community, Ireland, Spain, Portugal, and Greece were late comers and poor sisters to the more highly developed countries of the EU like West Germany, France, Italy and the other northern neighbors that founded the EEC. There was enormous pressure for these countries to achieve a “European” level of development and living standards. By membership, they gained open markets and access to capital. Their relatively low wages gave them somewhat of a competitive advantage within the Union. Despite this “advantage,” they remained the underachievers of Europe – more the quaint vacation destinations for the rich than economic titans.

With the creation of a single currency, the euro, in 1999, and the establishment of the European Central Bank, economic relations between members were reordered. The common currency forced the surrender of individual sovereignty over monetary policy, eliminating an individual state’s ability to adjust exchange rates against other currencies. Further, euro-zone participation was predicated on a strict set of economic (neo-liberal) parameters established by the Treaty of Maastricht. Regulatory constraints were imposed as well. In effect, countries surrendered a great measure of their sovereignty to be a part of the super-state, the EU, the weaker economies surrendering their fate to the economic super-powers of Northern Europe.

For the less developed, membership in the euro-zone was an opportunity for conservative governments to impose neo-liberal changes, justified by the promised prosperity enjoyed by the wealthier member states.

Ireland granted subsidies, lowered corporate taxes and taxes on the wealthy to draw multi-nationals to exploit an educated, but low wage working class. Greece sold off public assets to the tune of 11.1% of GDP between 1998 and 2003. Both were hailed as exemplary team players.

Only Communists and the anti-capitalist left foresaw danger in surrendering sovereignty to the dominant powers in the EU.

With the full blast of economic crisis in 2008, all of the EU-based hopes were dashed. Catching up was off the table and survival was the business at hand. Ireland’s unregulated banks had piled up huge debts, necessitating massive government-funded bailing. The Iberian construction boom fizzled, leaving mountains of debt and massive unemployment.

But Greece was the special case. When the newly elected PASOK government revealed in 2009 that the budget deficit was twice what the previous government had claimed – no doubt for political reasons – the financial predators descended upon the country. Like a pack of wolves attacking the weakest, most vulnerable of the herd, international bankers, equity firms and hedge funds began to bet against Greek debt management, driving the cost of borrowing sky high. They speculated with credit default swaps and against credit default swaps, establishing an upward swing in the costs of financing and re-financing debt and a downward swing in credit ratings. These swings invited further speculation and a further worsening of Greece’s debt position.

Financial writers purposefully overlook these waves of aggression, lest they reveal the continued existence of rampant speculative capital, the very element that brought the global economy down. Instead, they write of Greek corruption, profligacy and financial irresponsibility.

In truth, Greece was the victim of international banks, equity firms and hedge funds - a financial mugging that brought the country to the brink of debt default in May of 2010. And under the guidance of a social democratic government, a government wedded to neo-liberal policies, Greece surrendered unconditionally to the rule of the EU, the ECB and the IMF, accepting a bailout of €110 billion. Greece became a captive nation.

As a condition of EU and IMF servitude, Greece was forced to accept an austerity program that, apart from incalculable human misery, brought the economy down, sinking into depression. Greece is, indeed, a captive nation.

The New York Times reported on May 16 that unemployment in Greece is approaching 15%, cement production is down 60% since 2006, steel production is down in the last two years, Athens has experienced a 25% increase in homelessness, and food kitchens are flourishing. Public sector jobs, wages and benefits have been slashed deeply. The human costs of this austerity program are only beginning to set in, while the cuts promise to retard Greece’s ability to raise tax revenue for both human services and debt repayment. The Greek government announced in April that it will seek an additional €3 billion in cuts. Currently, 6.7% of the declining Greek GDP goes to debt service, a figure inevitably growing as the economy shrinks and the cost of debt increases. These are the consequences facing a nation captured in the web of the EU, ECB and the IMF.

This is not merely extortion, but a wholesale commandeering of the Greek economy, and consequently, its political and social life. Recently, EU leaders demanded that the two predominant bourgeois parties of Greece meet and agree to continuing EU policy after the October, 2013 end of the PASOK government’s term. Dutifully, they met, though they could reach no agreement. Nonetheless, PASOK offered another €22 billion in cuts and tax increases to appease the EU lords of the manor.

But the EU game plan is not merely to bring Greece to its knees, but to steal its physical assets. The EU is demanding a fire sale of public assets, a massive privatization of the shared wealth of Greek society. So far, the appeasing PASOK government has entertained a €71 billion sell-off, with ports, airports, transport, power, water, motorways, gambling companies and telecommunications under consideration for heavily discounted sale to foreign investors. While this might momentarily appease the financial vultures, the massive loss of future revenue to the Greek government will only further cripple the Greek economy.

With glee, the IMF has noted that there is additionally a potential €200-300 billion of Greek property available for pillage, including the Olympic facilities and military properties. Will the Parthenon be next?

Greece has not known such domination by foreign powers since the Nazi occupation. As then, the only option is resistance.

Like a Nazi “Reichsbevollmächtigter,” the plenipotentiary of the EU is currently debating Greece’s fate. Understanding that Greece will be unable to pay or refinance the €66 billion in loans that will come due in 2012 (foreign bank lending to Greece declined 19% in 2010), the leaders are debating the best way to pick over the bones of the Greek economy. On one hand, the ECB threatens to cut off Greek banks (they borrowed €88 billion from the ECB in March) if the government attempts to modify its debt in any way. On the other hand, the euro-powerhouses, Germany and France, endorse loan restructuring in lieu of an additional bailout as requested by the Greek government. Neither option treats Greece as other than a satrapy.

The Other Captive Nations?

For the mainstream media, the enslavement of Greece is simply an aberration, a condition invited by Greek irresponsibility or a tragedy loosed by the gods of mythology. In reality, Greece’s plight is clearly the model for the other weak sisters in the EU. Ireland accepted a bailout that came with austerity provisos that mirrored Greece’s package and resulted in a dramatic decline in Irish living standards. With over a hundred billion euros in non-performing loans, a total that grew substantially from 2009, Irish banks continue to hang by a thread, inviting further extortionate intervention by the EU. They borrow even more than Greek banks from the ECB. And the yield on Irish bonds is 7.5% - a record level – above comparable German bonds. More austerity looms.

Portugal’s economy is reeling with at least a 2% annual decline in GDP projected for this and next year thanks to a severe austerity program. A €78 billion EU bailout is forthcoming, assuredly with further austerity and privatization demands from the EU lords. At the same time, Portugal is in the midst of a severe political crisis.

Spain, the next country in the sights of international financial predators, is also politically shaky with recent municipal elections rocking the ruling party. Spain’s 21% unemployment and stagnant economy thwart the country’s ability to contain and reduce its debt. While Spanish national debt trails the other three countries as a percentage of GDP, it is widely known that much Spanish regional and municipal debt has been hidden, unreported in official figures. The ruling “Socialist” Party has embarked on a severe preemptive program of budget cuts, layoffs, flexible work rules and other austerity measures that will only hasten the EU wolves to Spain’s door.

Even Italy, one of the old-guard members of the EU, may prove to be a candidate for captive-nation status. On May 20, Standard and Poor’s lowered the Italian public debt - $1.9 trillion – to negative status.

Resistance, not Collaboration

Facing captive nation or neo-colonial status imposed by their northern neighbors and the EU administration, the southern European countries have no option but to resist. Social democratic and conservative parties offer no road but collaboration. Like their Nazi-era predecessors, these Vichy-like leaders attempt to appease their masters while quelling the rising of the people. Trapped in the neo-liberal bubble and with no alternative vision, they enable the developed European powers to achieve the domination that the fascists of the last century sought through military means.

Resistance, however, means refusing the terms and conditions imposed by great powers. It means ignoring the debt – placing it aside, isolated from national accounts, as the “too big to fail” international banks did at the height of the crisis. It means threatening default if national sovereignty is not respected.

Resistance means rejecting the undemocratic nature of the EU and its institutions. If this means leaving the euro-zone and the imperious rule of the ECB, then captive nations should well entertain this option.

Resistance means formulating a new vision of a democratic, peoples’ Europe free from the domination of capital and elite rule. Of course this is a vision that projects socialism as the ultimate goal of rational, humane social relationships.

In Greece, this project is borne by the peoples’ movement of PAME and the militants of the Greek Communist Party. They, like their counterparts in the resistance to Nazi occupation, stand resolutely against the EU political and economic “occupiers,” rallying the masses to fight collaboration.

In Portugal and Spain, mass movements of workers and youth have taken to the streets in defiance of the bankruptcy of social democracy and the pain of EU-imposed austerity bringing joblessness and poverty. Hopefully, class-based organizations and Communists will continue to struggle to provide a visionary focus to their anger.

Those of us who stand in solidarity with the emerging European resistance should heed their experience. The wolves of financial predation are at our doors, too. The debt scam – the principal weapon of ruling class warfare today – threatens all of us.

Zoltan Zigedy
zoltanzigedy@gmail.com