Obama’s Economy: A New book by Jack Rasmus

Jack Rasmus’ new book, Obama’s Economy (PlutoPress, 2012), is a marked departure from his earlier volume, Epic Recession: Prelude to Global Recession (PlutoPress, 2010). Where the earlier effort sought to provide a theoretical framework to understand the worldwide economic crisis that began over four years ago, the new book offers a detailed, critical history of President Barack Obama’s policy responses to that crisis. In fact, much of Obama’s Economy reads like a vivid, insightful diary of economic life during that period. Rasmus links these events into a powerful narrative that was easy to miss as we lived it.

This blow-by-blow account of economic decline and feeble policy response is all cast in the shadow of Obama’s campaign promises, promises that were neither bold nor progressive. As Rasmus demonstrates, Obama -- the candidate – drew his financial support from Wall Street, surrounded himself with corporate-friendly, free-market-oriented advisers, and preferred caution and compromise to any bold, new vision:

Another clear conclusion from the campaign period is that once Obama had all but sewn up the nomination, he began a shift even further to the right. This was not unnoticed, even by the ultra-conservative editorials in the Wall Street Journal, not to mention columns by liberal economists like Krugman. To the extent that candidate Obama’s election-period programs were “populist” in any sense, they were positions largely borrowed from his Democratic opponents in the primaries. Most of these populist elements were de-emphasized in the fall election period, or soon after the election. Few would appear in his eventual 2009 first economic recovery program. (p. 33-34)

Beyond Rasmus’ account and well before the Presidential candidacy, Obama’s career was marked by sycophancy to power and wealth and by opportunism. What is truly pathetic is that so many who willfully overlooked the stark evidence and chose to embrace a Pollyanna picture of hope and change are now outraged at an imagined but non-existent “betrayal.” As Rasmus demonstrates, Obama’s economic course was largely predictable from his campaign promises. But then liberals and most progressives have been dining on the thin gruel of imagined Democratic Party “leftism” for decades. And they are at it again in this election cycle.

Rasmus sifts through the seeming chaos and improvisations of the last four years to find three distinct Obama recovery programs implemented in 2009, 2010, and 2011. In addition, Obama’s Economy identifies “two and a half” Federal Reserve actions (Quantitative Easings) meant to revive the slumping economy. It is Rasmus’s considered opinion that all these efforts failed to restore the US economy to anything like a sustainable vitality. The current abysmal state of the global economy and the sluggishness of the US economy would certainly suggest that Rasmus is right.

Further, he chronicles the bi-partisan, near-consensual debt-reduction mania that emerged in 2011, a development that found politicians competing with one another to suggest severe budget cutting and program elimination. Rasmus takes this anti-stimulative austerity to augur a “double dip” recession: a forthcoming decline in gross domestic product no later than 2013. In this, he is in agreement with the May 22, 2012 statement by the staid Congressional Budget Office which predicts a GDP contraction in the first two quarters of 2013 unless federally legislated measures are rescinded (the equally draconian state and municipal austerity programs are not a factor in the CBO calculations).

After reading Rasmus’ new book, one will find little to justify praise for the Obama administration. While the three trillion dollars of recovery programs (as tabulated by Rasmus) from March of 2008 until September of 2011 may have staved off an even deeper downturn, they have done little to revive the economy. And more than two thirds of these federal dollars were allocated on Obama’s watch.

Certainly from the perspective of capital and a wealthy and powerful tiny minority of our citizens, the recovery has been satisfactory, if not a rousing success: profits have been rapidly restored and, for those individuals, incomes and wealth are expanding. But for the vast majority in the US, wages are stagnant or dropping, benefits shaved or eliminated, living costs rising, home ownership in jeopardy, and employment tenuous; most of us are still looking for the recovery. And the economic data promise little improvement.

So if the Obama recovery program failed, why did it fail? And what might succeed? What should we advocate to save the majority from the devastation of this global economic catastrophe?

For the loyal opposition, most clearly represented by the high-profile, Nobel Prize awardee, Paul Krugman, the answer lies in the size of the stimulus programs. Obama and his administration failed to devote enough resources to bring the economy back. For these left liberals, size does matter. And the tragedy of Obama’s recovery program lies simply in pouring too little water on a raging fire, leaving hot embers that are about to re-ignite.

Of course this approach is merely a twenty-first-century revisiting of the ideas of John Maynard Keynes, ideas distilled from lessons he drew from the Great Depression of the 1930s. In its twenty-first- century incarnation, Keynesian solutions are advocated for their alleged ability to multiply or amplify economic growth as generated by government action. Neo-Keynesians, like Krugman, Stiglitz, Roubini, etc, see little difference in how or where governments act provided only that they generate more effective demand or investment push for economic activity. If recovery doesn’t come or if it stalls, more resources need to be committed.

Rasmus correctly challenges the simple, but flawed, remedy of the neo-Keynesians. Drawing on his understanding of the actual history of previous severe downturns—as described in greater detail in his earlier work—Rasmus stresses that the “where” and “how” of economic stimulus are of critical importance in generating recovery—it is not merely a matter of size, but also of composition, timing, and focus. Thus, tax cuts are proven ineffective stimuli, while jobs programs, infrastructure programs, government services, etc., often generate worthwhile outcomes. Likewise, the focus on restoring corporate health should not have overshadowed restoring home ownership, jobs, income and the stability of state and local government.

Unlike the formulaic neo-Keynesians, Rasmus respects the intent of the New Deal which was not conceived as a stimulus program, was not designed in its specifics as a recovery program, but, first and foremost, was implemented as measures to create jobs, provide humane living standards, and restore a popular sense of confidence. That is, the Roosevelt administration set out not to execute a general, comprehensive stimulus program for the flagging economy as did the technocrats in the Bush and Obama administrations, but to fix the many problems—unemployment, price deflation, impoverishment, financial distress, etc.—wrought by the Great Depression. All historians concede that the myriad New Deal programs—including the CCC and WPA jobs programs-- were largely improvisational and trial-and-error. There was no overarching stimulus goal binding the programs together. Recovery would come when the broken elements were all fixed.

The idea of a stimulus program grounded in fiscal and monetary action is really a product of neo-classical economics, a conventional mode of thinking that captivates both the Obama administration and its neo-Keynesian critics. It is a toolbox approach linked to a mechanical model of the capitalist economy, an approach that smugly presumes that recovery is simply a matter of troubleshooting and tinkering with a fundamentally sound economic engine.

There is, however, a larger question that neither the liberal neo-Keynesians nor Rasmus addresses credibly, though Paul Krugman readily concedes its significance. After over four years of agonizing, painful economic distress, the global economy is mired in a crisis that, like the Great Depression, appears intractable. Certainly the measures taken by the New Deal administrators went a long way toward  alleviating the harshest pains of the Great Depression; surely the many popular programs pressed by the Roosevelt team kept the economy from sinking even deeper; but on all historical accounts, these commendable efforts failed to generate the desired recovery. It was only the war build-up and subsequent world-wide conflagration costing tens of millions of lives, untold wounded and injured, and the production and unparalleled destruction of inestimable billions of dollars of wealth. Yes, World War II generated the recovery from the crisis of the '30s, but at a cost in lives and resources far beyond what anyone could find acceptable.

Is a similar orgy of destruction -- erasing debt, commanding production, and mobilizing the idle—necessary to escape the economic calamity of our time? Should we think that anything short of a planned, disciplined, state-directed war effort will rescue the US and world economy? Is war the only effective “stimulus” to a global economic catastrophe of this dimension?

Certainly, Rasmus is aware of this conundrum. In an aside in his earlier book, he states the following:

Wars have a double-edged impact on Epic Recessions and depressions… The financial panic of 1857 was cut short by the onset of the Civil War, which clearly dampened the potential impacts of the panic of 1857 on the real economy. The timing of the Mexican-American War in 1845 has yet to be analyzed as to its role in ensuring an end of the depression of 1837-43. Similarly, the Spanish-American War in 1898 perhaps not accidentally coincides with the ending of the depression of 1893-98… [T]he role of World War I in putting a definitive end to the Epic Recession of 1907-1914 is less debatable. The war put a definitive end to the extended stagnation period of 1908-14. (Epic Recession, p. 163)

Yet, if devastating wars are the only decisive solutions to the most severe crises of capitalism as history strongly suggests, then surely this raises the urgent question: Is capitalism worth saving? Is it time for a radical overhaul or replacement of the capitalist economic engine?

While I find much to admire in the writings of Krugman and other liberal public intellectuals, as much as I’ve learned from and appreciate the insights of Jack Rasmus, I am disappointed that they offer no answer to this, the most pressing question of our time. Indeed, they do not even acknowledge the question.

Since World War II, the US capitalist economy has become a perpetual war-time economy—first with the Cold War and now a contrived world-wide “war on terror.” When President Eisenhower warned of the “Military-Industrial Complex,” he was describing this new structural feature of capitalism in his own cautious words.

Nonetheless, even with the preferred “pump priming” of war and its associated economic “stimulus,” the global capitalist economy is now seriously broken. No way is it obvious or even likely that “repairs” are apt to be effective or that a recovery will ensue.

Thus a discussion -- at the very least, a discussion -- of socialism as an alternative economic system would seem to be in order. It is not surprising that a New York Times Nobel laureate would evade this question; otherwise, Krugman would be neither a Nobel laureate nor a New York Times columnist. It is disappointing that a writer of Rasmus’ integrity and acumen would not discuss its relevance.

The question of socialism is intimately linked with the politics of “recovery.” Rasmus, like the New Deal liberals (a brand of liberalism far to the left of what passes as “liberal” today), offers a people-oriented program that promises to restructure capitalism in a way that would dampen many of the inequalities and injustices generated by the capitalism of our time ( though I don’t share his confidence that it would revitalize the capitalist economy nor do I want to “save” capitalism). 

His program in Obama’s Economy is one that, popularized and adopted by a broad political movement, could serve us all well for the immediate future. It is bold and daring, engaging the government in employment in a way unseen since the New Deal. It reverses the housing crisis and protects and strengthens the social safety net (While it mirrors the programs advocated in Rasmus’ earlier book, Epic Recession, it curiously and unfortunately omits a single-payer healthcare solution in this version).

But in sharp contrast with the New Deal liberals, there is no political vehicle for this program. Certainly the Democratic Party has not and will not adopt it. The Democratic Party of the twenty-first century is Obama’s Party and not even a vague shadow of Roosevelt’s Democratic Party. And today’s weak labor movement has shown neither the desire nor gumption to re-shape or divorce the Democratic Party and opt for such a course. That leaves the fine Rasmus economic plan outside of US politics looking in.

Conversely, the socialist option will become increasingly attractive to millions of people as the global economy continues to sink and the wholly capitalist-owned political system continues to block any popular challenges to take-no-prisoners capitalism. Thus, the most urgent task is to ideologically and organizationally prepare a vehicle to advance that option.

Whether others agree with me, the wasteland of US mainstream politics leaves plenty of room to advocate independent, broad-based movements that will adopt a progressive program embracing the recommendations so persuasively argued by Rasmus. I regret that Rasmus does not engage in this advocacy in Obama’s Economy; perhaps he will in a later book. Nonetheless, I can wholeheartedly recommend the book for its unparalleled recounting of the economic failures of the Obama administration and its detailed, well-argued plan for the opening stages of the founding of a people’s economy.

Zoltan Zigedy

zoltanzigedy@gmail.com

 

“Human Rights” gone Wild

You have to marvel at the bizarre media circus triggered by the zany tale of “human rights activist” Chen Guangcheng. Chen’s saga began fantastically, evolved strangely, and continues as a hypocritical argument between Republicans and Democrats over who is the real friend of human rights.

Media accounts are vague on what earned Chen the mantle of “human rights advocate.” Some point to his opposition many years ago to the campaign in the Peoples’ Republic of China to limit population growth by urging families to birth only one child. There is also agreement that Chen was convicted and served four years in prison and was under home detention until the night of April 22.

On that night, according to Chen’s friends and repeated by the US officials, Chen escaped from his detention, scaled at least eight walls, and wandered around for 20 hours until he hooked up with a fellow dissident who drove him a considerable distance to an ultimate rendezvous with officials from the US embassy in Beijing. This feat is all the more remarkable because the media reports that Chen is blind. US news outlets hailed this accomplishment without any incredulity. Nor did they suggest that there was any connection between the “escape,” the resulting furor, and the beginning of high-level US-PRC talks scheduled to begin 10 days later. For the happily gullible US media these steps were mere happenstance.

After his arrival, confusion reigned. No one could quite figure out what Chen wanted, including US embassy officials. According to The Wall Street Journal, US officials found him “self absorbed.” They remarked how it “feels like the guy is unfairly attacking the US.” What began as another opportunity to show the PRC’s insensitivity to human rights was quickly dissolving into a fiasco.

At different times Chen insisted on talking by phone with PRC Premier Wen, Secretary of State Hilary Clinton, and Representatives Chris Smith and Nancy Pelosi in the US. For days, US embassy personnel chatted with Chen about his wishes. At the same time, he called friends in the PRC and the US to discuss his options. PRC officials calmly dialogued with the embassy—no doubt bemused by the increasing impatience of the US officials.

After six days, US officials believed they had determined Chen’s intention. He wanted to stay in the PRC, but with the caveat that he be admitted to law school in his native province. Despite his lack of a formal education, PRC officials quickly granted his wish. But wait: first, he wanted to be reunited with his family. Again, officials granted his wish, whisking his family to Beijing on a fast train.

Thinking the “incident” had been resolved, embassy officials drove Chen to a Beijing hospital to be treated for minor injuries. Overnight, he changed his mind again and demanded he be sent to the US to take advantage of a visiting scholar offer tendered by Jerome Cohen of NYU. He alluded to vague threats by PRC authorities that were denied by embassy officials. Finally, the Chen “human rights” struggle was capped off by a remote open mike dialogue with the US House of Representatives where he surprised House members with the revelation of his forthcoming journey to the US. By the way, Chen has since announced that he reserves the right to return to China when his US R&R is completed. Human rights indeed!

One obvious lesson of the Chen episode is that there is an avenue for convicted criminals to extort a law degree or a trip overseas if he or she plays the cards right, though I would not recommend that anyone try this in the US.

But the more serious lesson is for the myriad human rights groups in the US and Europe. Their ready acquiescence to “causes” that coincide with the interests of their respective ruling classes casts a shadow on their body of work. The critical observer cannot help but notice the coalescing of many human rights campaigns with the foreign policy objectives of the US and its NATO allies.

It’s an old story, beginning in the Cold War with a noticeable tendency for the most prominent rights groups to find human rights violations in the Soviet Union and Eastern Europe, but curiously overlooking the ravages of anti-Communism in the US. But after the Helsinki Accords of 1975, the human rights provision (though no other element) became an anchor for US and European foreign policy. Millions of dollars were directed towards Western human rights organizations and NGOs that compromised any objectivity for the routine payoff. Human rights pressure intensified on the Socialist countries while waning in the West. Of course some groups and activists were merely gullible; they inherited blindness to repression and oppression in their beloved backyard while bearing a nativist distrust of things foreign or different; cultural ignorance and disrespect of differences always exacerbated the blunders of human rights campaigners. And imperialists were quick to exploit these weaknesses.

In recent history, the irresponsibility of human rights activists has contributed to the dismemberment of Yugoslavia and the demonization of countries seeking an independent path from that chosen by the US and its allies, countries such as Cuba, the People’s Democratic Republic of Korea, the PRC, Venezuela, Iran, Libya, and Syria. Some groups seem to have forgotten the other nine points of the Helsinki Accord.

This institutionalization of human rights organizations, along with their penetration by governmental agencies, has challenged their credibility. The obscene campaign against Libya has resulted in civilian deaths and the brutal rule of bandits and racists. And the current campaign against the Syrian government brings frequent bombings by opponents and a great loss of civilian lives. Surely some human rights advocates owe us an accounting.

As The Colombia Journalism Review reports, the recent Mike Daisey account of workplace abuses in the PRC went viral after paradoxically appearing on This American Life (They show little interest in American workplace abuse). Eight hundred and eighty-eight thousand downloads followed. Consequently, Change.org, the ubiquitous on-line petition campaigner, solicited 256,425 signatures opposing this alleged abuse.

But Daisey’s account was a fraud, laden with inaccuracies and spurious charges. Consequently, This American Life retracted the Daisey episode. Yet only 486 people signed a petition urging the withdrawal of the Change.org petition. The damage was done. The stain remains.

We deserve better human rights advocates: less obsequiousness and gullibility, more responsibility and seriousness.

Zoltan Zigedy

zoltanzigedy@gmail.com

The Silly Season: A Caricature of Democracy

We are well into the silly season, the great US national election spectacle that will compete with the other inane entertainments offered by our mega-media; in a real sense, the 2012 Presidential and congressional campaigns are the ultimate reality shows. In fact, they are not far from mimicking the vulgar competitions of American Idol and Dancing with the Stars. Imagine a television show with participants chosen by how much money they can raise from mega-millionaires, shadow boxing over questions prepared by media multi-millionaires, and concluding with an extravagant climax in November, with US voters selecting the winners. And those winners then get to rule the US for the next two, four or six years. And that, without too much exaggeration, is our two-party electoral system. Of course ruling the US should be serious business. And the great tragedy is that this frivolous selection process is anything but serious.

This carnival has evolved. The role of television, for example, has transformed national elections into beauty pageants with $200 haircuts, attractive faces, winning smiles, and cute families superseding issues and programs. But before television, party bosses delivered the votes with patronage and Election Day “services.” The common denominator throughout the ages is money. Money, and the effort it buys, have been and continue to be decisive. Merely the ante has changed, growing astronomically until only the super-rich or their friends can vie for the highest offices. Inexorably, the staggering role of money exponentially multiplies the influence of a tiny cabal of the wealthiest in picking winners and shaping policy.

None of this is strikingly new or even seriously deniable. But what is striking and serious is the continued acceptance of this state of affairs by the millions of increasingly desperate citizens who cling to elections as an expression of their interests. Though elections are becoming more and more irrelevant to serving those interests, the cycle continues unabated.

For the “one percent,” the electoral circus is an undeserved gift that allows a refreshing of the ruling elites on a regular basis, with little chance of any renegades sneaking into the ruling clique. The pool of reliable candidates is determined well in advance based upon their service to capital and then the populace is allowed to pick from two duly anointed choices (certainly I recognize that in some “liberal” or minority districts better candidates vie, but this is consistently challenged with gerrymandering and hyper-spending geared towards embedding trustworthy and spineless social-liberals with no animus towards corporations).

For the ninety-nine percent, the elections are the meager meal that keeps the pitchforks in the barn and staunches the illusion that the US is a democracy.

While none of this is really disputable or even often challenged by the left, most of the left continues to dutifully climb on board the Democratic Party bus every election cycle. Sure, the thought of electing an ex-FBI snitch, clumsy B-film movie actor as President in 1980 drove most of us to vote for a mediocre Democratic incumbent who had already signed onto the neo-liberal agenda and betrayed his entire 1976 program (Ted Kennedy ran against him in the primary for exactly that reason). We should have known better—the Democrats had secured near-total dominance of the electoral arena after the Nixon fiasco and frittered it away, demonstrating no intention to further a progressive, popular agenda.

Election after election, the Democratic Party mobilizes its progressive base by stoking fears of the wacko-right. And like Pavlov’s dogs, the base pulls out all the stops to support well-groomed, corporate-friendly lawyer-candidates who promise, but never deliver. And now—over thirty years after Reagan—the incumbent Democratic Party President is on record as enthusiastically expressing his admiration for Ronald Reagan, the demon who stoked the great fear of the ultra-right. A bitter irony, but an irony lost on a new generation of leftists and progressives who hold their nose and work hard for a Democratic Party victory.

Why is this?

Arguments for repeating the same pattern abound: from future Supreme Justices to ending military occupations and containing economic predation. Yet the ideological disposition of the Supreme Court continually drifts rightward; the wars and occupations overlap from one regime to another; and inequality continues to grow unabated. Clearly, any merits of the “lesser-of-two-evil” tactic are not realized in practice.

What began as a credible tactic—put aside ideology, and deny the extreme right a shot at ruling—has since become an unthinking and unproductive habit, a habit that fails to stop or even slow the rightward drift in US politics. To break this habit, someone must pose, advocate, and work to popularize a new tactic that promises to turn back this vicious trend. To reverse this trend, a new approach is urgently needed.

But it would be naïve to believe that a new approach would emerge from within the Democratic Party. Party leaders have no interest in seeing such a movement arise and have been complicit for some time in smashing any internal insurgency by changing the rules against democracy, by siding with “winnable” moderates and rightists, and by undermining progressive candidacies; it’s their party and they’re keeping it. Yet many still tilt at these windmills.

Instead, devising a new approach falls upon the left, a left that seems determined to avoid this responsibility. The harsh reality is that the left in the US, even broadly defined, has little to no influence upon electoral outcomes and, therefore, has little to lose in exploring independent answers. That is not to deny that the labor movement in the US does seriously impact elections. But its long standing intimate relationship with the Democratic Party promises little change without a popular movement to show the way. Finding a new approach is one problem, but none will be found unless we begin to look for one.

Standing in the way are the naysayers, the perennial advocates for staying the course. Recently, I read an analysis by a “Communist” who castigated some on the left because they “disparage the electoral battle.” He pompously stated that the elections are the “main form of class struggle.” Such a view is sheer nonsense and an impediment to advancing both class struggle and class politics. Certainly, elections can be a form of class struggle, but never an effective form, except when influenced by powerful, independent and principled forces. We have known these moments both in the 1930s when the left mobilized millions in opposition to failed economic policies, and in the 1960s, when militant actions supported civil rights and challenged an imperialist war. If the results of the 2008 election (with a Democratic sweep) are a measure of the success of this form of "class struggle", then its success for those on the wrong side of the class divide. If we learn anything from the malignant Tea Party, we should understand the value of not tendering our support unless we get something for it. And if the Democrats don’t need our support, then we are foolish to offer it.

Still other pseudo-Marxists justify their electoral obsession and fealty to the Democratic Party by appealing to the writings of Georgi Dimitrov. Dimitrov introduced the notion of a united front against fascism in his 1935 report to the Communist International. On their reading, the left should make common cause with the Democrats to defeat the ultra-right, thought by them to be the contemporary embodiment of fascism. But this is a felony against history: we are not faced with the fascist threat of 1935. Nor do these Marxist poseurs represent Dimitrov’s views faithfully. He never advocated surrendering the left’s identity to rival political parties; he never advocated fighting the class enemy solely in the electoral arena; and he never endorsed making nice with the Parties of the big bourgeoisie. Certainly US Communists didn’t interpret Dimitrov in this fashion when they ran Earl Browder and James Ford in the 1936 election against Franklin Roosevelt.

Another variant on this opportunist “Marxist” theme postulates stages or levels of struggle by anointing collaboration with the Democrats in their electoral bids as an intermediate stage on the road to a distant socialism. With this view, any motion at all towards that distant goal must await the final conflict with the ultra right.

 Except this is not Marxism. Rather it is the pretentious appropriation of Marxist jargon to justify marriage to the Democratic Party. Marxists, first and foremost, recognize the direction of processes. And in the case of marching in lockstep with the Democratic Party, this policy has hardly been a productive process. In fact, it has led, over decades, to a continued rightward retreat under the banner of “the lesser of two evils,” a dubious launching pad for a higher stage.

From the perspective of an even lighter shade of red, Bill Fletcher has stirred a lively internet debate with his recent excoriation of those he sees as disdainful of electoral politics. In his “My Frustration with the Left when it comes to Electoral Politics”, Fletcher caricatures the debates on the left as between sensible, pragmatic leftists who bring their issues into the electoral arena and wild-eyed, cynical radicals who scorn elections. Like all caricatures, his simplifies and obscures differences and evades a real confrontation with the limitations of electoral politics in the here and now. Fletcher postures the electoral “arena” as a “field of struggle” for “popular power” and a place to “raise issues that have the possibility of gaining greater recognition.”

But is it? Certainly, it could be, under specific and ideal conditions—for example, the existence of a left bloc with the temerity and determination of our Tea Party foes on the right. But is the 2012 election such an arena for the left?

The answer is clearly “no.” A Democratic victory promises neither “popular power” nor the projection of any new, progressive issues. Surely, the betrayal of the meager program promised by the 2008 Obama victory underscores this point. Fletcher conflates what could be with what is. Elections could be meaningful if we had a class-based or anti-monopoly Party, but we don’t. Furthermore, Fletcher scoffs at the idea of building one. Instead, he projects one possibly arising “from an ‘insurrection’ within the Democratic Party and a major section of its base…” Waiting for this “insurrection” to spontaneously ignite has been a dream for generations, a dream of those blessed with patience, but short of vision and realism.

History teaches a different lesson: from the abolitionists through the anti-war movement of the sixties and today’s Occupy movement, change has come from organized forms resolved to press issues regardless of the electoral consequences and independent of electoral maneuvers. Were the abolitionists’ strategy to take the focus of struggle solely into the electoral arena, the cause would have languished for decades. Similarly, without labor’s independent militancy outside of the electoral arena in the early thirties, workers would have been saddled with the corporate-friendly NRA and the toothless section 7A.

Bringing struggles into the Democratic Party and entrusting it to advance these issues legislatively, as Fletcher suggests, inevitably dilutes, co-opts, and divides popular struggles. Certainly Democratic Party leaders opportunistically and parasitically adopt popular movements when they capture the attention of voters, but they do so to contain, compromise, and exploit those movements. That process was clearly demonstrated in the Obama era, with far-too-many leaders of the anti-war movement passing the cause on to the Administration. As a result, the wars continued to expand and the movement is virtually silent. Today, the Democrats are fervently trying to suck the energy of the Occupy movement into the electoral campaign. Should it succeed, it will eviscerate the movement.

Fletcher is correct to argue that we have yet to build a foundation for a left party in the US. However, we will never build one, if we do not fight to keep our struggles and movements independent of the Democratic Party and outside of a reliance on electoral politics. People should and will vote as they please. But energy spent on working for a Democratic victory in November is energy diverted from building our movements. Movements are the enforcers of ideas and policies. When the left builds its base, it will have something to advance or trade with bourgeois politicians and it will not surrender its support for nothing.

Zoltan Zigedy
zoltanzigedy@gmail.com

Is the French Communist Party Back?

After years of retreat and opportunism and consequent loss of support and influence, the French Communist Party (PCF) is showing signs of life. Aligned with smaller parties in the Left Front (Front de Gauche, FG), the PCF has rallied around the presidential candidacy of Jean Melenchon for the forthcoming first round of French elections. The latest polls show Melenchon with over 14% of the prospective voters, ahead of all other candidates excepting Hollande (PS) and Sarkozy (UMP).

This once dynamic party succumbed to the allure of reformism, anti-Sovietism, and compromise with its embrace of the so-called “Euro-Communist” stance in the seventies. With over half a million members immediately after World War II, and garnering more votes than any other party at that time, the PCF was poised to become the dominant force in French politics, if not the first CP to launch a Western European country onto the road to socialism.

In fairness, the US and its NATO allies did everything to see that this did not happen. The Marshall Plan, coupled with covert activities of the CIA, served to undermine the Party’s ascendancy. But as early as the 1960s, the PCF began a rightward tilt to curry electoral favor and seek a left coalition with the compromised Socialist Party of Francois Mitterand. This trend escalated under the leadership of Georges Marchais, who constantly repositioned the CP ideologically to earn “respectability” and middle-strata appeal. Locked in this concessionary cycle, the Party leadership distanced itself from the Soviet Union and its history while seeking an image of bourgeois civility and sobriety.

Thus began a long period of further compromise and decline.

After the fall of the Soviet Union, the leadership – first under Robert Hue and then Marie-George Buffet – the PCF embarked on a process of discarding Leninism entirely and refashioning the organization as a social-democratic formation—the so called “la mutation.” Believing that the departure of the Soviet Union reflected a failure and rejection of Leninism and revolutionary Marxism, Hue and Buffet sought to establish a moderate party of the left suitable to the new moment. Instead, the PCF membership and electoral strength sank dramatically, culminating in Buffet’s failure to attract even 2% of the votes in the 2007 Presidential first round election, a nadir unprecedented since the Second World War. The Party’s courtship with opportunism proved disastrous.

The creation of the Left Front and the ascendancy of Pierre Laurent to the position of National Secretary have seemingly brought a modest reversal to the Party’s long-term decline. Beginning with the municipal elections of 2008, the PCP has shown some electoral vigor.

But most significantly, the 2012 electoral campaign behind Jean Melenchon has brought new energy and organizational credibility to the Party. Opinion polling has shown a strong and unexpected support for the Melenchon candidacy. The campaign culminated in a mass rally of between 110,000 and 150,000 at the Place de la Bastille in Paris on March 18, the anniversary of the Paris Commune. Speeches demonstrated at least a new symbolic militancy, with references to the Revolution of 1789 and the Paris Commune.

Perhaps the surest mark of the new direction of the PCP is the endorsement of Francois Hollande, the Socialist candidate, by the PCF’s former leader, Robert Hue. Hue led the Party from 1994 until 2002, the period of its most dramatic ideological and popular slippage. Surely that unfriendly endorsement demonstrates that some things have changed for the better.

Melenchon has campaigned on re-nationalizing many of the leading corporations, strengthening the public sector, and criminalizing corruption and fraud in the private sector. He favors direct democracy—national referenda -- on all questions of French sovereignty, especially with regard to the EU. In addition, the Left Front supports higher taxes on the rich, a substantial increase in the minimum wage, and expanded rights of immigrants.

Pierre Laurent, National Secretary of the PCF, sees the campaign as more than another call for electoral support; rather, he views the movement as an invitation to “prenez le pouvoir”—to take the power.

Christian Piquet, spokesperson for the Gauche Unitaire, a component of the Left Front, reminds us that with the campaign "We are building a force indispensable for the defeat of the right, and also for the redistribution of the cards on the Left." This resolve to unite the objective of defeating the right with strengthening the left is a mission lost on much of the left in Europe and the US, and a welcome reminder of the dialectics of Marxist politics.

Hopefully, the Communist Party of France has taken a large step towards returning to the militancy and tradition of its past.

Zoltan Zigedy
zoltanzigedy@gmail.com

Review: Samir Amin’s The Law of Worldwide Value

Samir Amin has been an important participant in the conversation among Marxists for decades. His many books, his articles and his partisanship for the peoples of Asia, the Middle East, and Africa are acknowledged and respected by all those who strive for a world without capitalism. He has associated his views with Marxism and enthusiastically interprets those views through the prism of the Monthly Review theoretical triad of Paul Sweezy, Paul Baran, and Harry Magdoff. Perhaps he adheres even more faithfully to these views than the current editors of this influential journal. He shares with Immanuel Wallerstein the World Systems approach, with its emphasis on the “core” and “periphery” distinction in the global economy. Both views have, at different times, exerted great influence among Marxist thinkers and activists, especially in the West. These views have revealed important insights into the mechanism of global capitalism and imperialism. Yet these views are inadequate for a coherent understanding of our world today.

In his new book (The Law of Worldwide Value, Monthly Review Press, 2010), Amin offers a rich, thought-provoking update of his 1978 book The Law of Value and Historical Materialism (Monthly Review Press, 1978) designed to defend his views with respect to the developments leading us into deeper crisis in the twenty-first century.

Much has changed since 1978: the rise and total dominance of neo-liberal thinking and policy in the evolution of capitalism; the dramatic demise of the European socialist community; the rise of the Peoples’ Republic of China as a global economic power; the rise of powerful “emerging” economies in Brazil, India, Russia, and the Republic of Korea; the stagnation of the once-mighty Japanese economy; the rise and possible fall of the European Community; and most important, a profound crisis of capitalism generated by the ascendancy of finance capital in the US. In short, the world is vastly different than the world that Amin wrote of in 1978.

To his credit, Amin offers a vigorous defense of his earlier views in light of the dramatic changes experienced over the last three decades. Unfortunately, events have swept these once persuasive perspectives off the table; capitalism has moved on.

Fundamental to Amin’s perspective is a partisan defense of Marx’s law of value. The law of value for Marx engages a theoretical construct that demonstrates the fundamental relationships inherent in capitalist commodity production. Its import is to expose the components of productive activity and explain how they interact. With that understanding, the basis for commodity exchange is bared as an expression of uniform, embodied labor. As such, the law holds up well through the long evolution of capitalism from its competitive stages, through the emergence of monopoly capitalism, and its current expression as state-monopoly-capitalism.

Moreover, these revealed relationships give birth to useful technical ratios such as profit, exploitation, and capital composition that further reveal the deep structure of a system of commodity production based upon the selling and buying of labor power.

Marx goes to some lengths to show that the key components that he distills as constitutive of a commodity are fully measured by embodied abstract labor and combine to exhaust the content of a commodity’s value. His most impressive argument is to establish the necessity of such a value theory in establishing the proportionality of values between the various and sundry “products” of capitalist production. Put succinctly, the law of value explains how things bearing few or no obvious common features can nonetheless be exchanged in a non-random, regular, and rational fashion.

Armed with this theoretical framework, one can further understand the real-world relationships of prices and grasp how they tend to fluctuate around those proportionalities.

Many, following Marx’s refinement of the law of value in Volume III of Capital and Engels’ dogged pursuit of the matter, view the law of value as promising a derivation of real-world prices from Marx’s value theory. This issue consumes many Marxist economists, particularly those schooled in bourgeois economics, who have created a scholarly dust-up for over a century around the so-called “transformation problem.” Amin offers his own solution to this problem as well as to the challenge of value theory redundancy made by Piero Sraffa (for a relatively straightforward and clear exposition of the issues, the reader might want to read An Introduction to Marxist Economics, George Catephores, pp 87-106).

To my mind, Marx’s law of value is theoretically secure because it constitutes a necessary, though perhaps not sufficient determinant of real-world prices. By explaining the proportionality of prices of different commodities, it avoids the circularity of “cost” theories of price formation and the inadequacy of a supply-and-demand explanation. Bourgeois economics has no counterpart to fulfill this function.

Imperialist Rent

Of more interest is Amin’s innovative project, the expansion of the law of value into a law of global scope, the law of worldwide value. Central to this law is a distinction between those economies of the capitalist “core” – the advanced capitalist countries of Europe, North America and Japan—and the less developed economies of the South or “periphery.” From this once-widely-held thesis, Amin maintains that this distinction is generated and maintained by a structure of “imperialist rent”—a kind of imperial tax, systemic to the era of imperialism and imposed unerringly for the benefit of the core at the expense of the periphery.

There is much to recommend this view, especially as reflecting the world after World War II, with newly liberated, former colonial countries enduring the same kind of subordinate, super-exploitive economic relations as they did while under colonial subjugation. During the post-war era, the living standards on the periphery stagnated or declined, while working people in the core enjoyed some improvements and a relatively stable social life undoubtedly sustained in part by the super-exploitation of the periphery. In the same period, the periphery provided cheap raw materials to the core in exchange for expensive finished products, a clearly unequal exchange imposed by imperialism and inexplicable by mere market forces.

Certainly, these post-war developments provided facile experiential evidence for Amin’s and other theorists’ distinction. However, they were no more than that—they could not carry the weight of the claim that they evidenced a structural feature of global capitalism. They constituted no reflection of the deep logic of capitalism, no modification of Marxism’s fundamental law of value to fit the global economy.

Instead, they reflected historical contingencies in capitalism’s trajectory, contingencies that shifted again in the period to follow, with ever more varied and complex relationships between Amin’s core and periphery.

The bonds of colonialism were not severed easily. Political liberation was much easier to attain than socio-economic emancipation. Imperialism vigorously clung to and often enforced the former relationships. Further, most former colonies (most of the periphery) were deeply scarred by their histories of oppression and pillage. The former Spanish and Portuguese colonies of the New World demonstrate how severely these handicaps and imperial meddling can retard any real development for a very long time. And of course, the legacy of colonialism left few developed, unified peoples’ parties to effectuate a new path.

After the Second World War, the exigencies of the Cold War – the confrontation between the socialist bloc and the advanced capitalist countries—shaped relations between the core and periphery. The socialist community offered substantial material aid to many countries of the periphery (including some of the most active members of the non-aligned movement) in an effort to shore up their resistance to neo-colonial dominance. The advanced capitalist countries focused on undermining these efforts and maintaining the existing relationships under trusted, subservient regimes. They confronted these challenges covertly or through direct military intervention while establishing strategic outposts throughout the developing world, outposts like Israel, Iran, apartheid South Africa, Taiwan, etc.

Post-war monopoly capital focused on rebuilding a capitalist Europe and Japan because they offered a developed, though damaged, industrial infrastructure vitally in need of investment, and also provided cheap labor; and capital counted these countries as reliable allies in the Cold War. The Soviet effort to assist the periphery in escaping the clutches of neo-colonialism failed. Socialist material aid shifted necessarily to military aid and the countries of the periphery were denied the opportunity to peacefully develop a human and material infrastructure for advancement.

At this time, in the immediate decades after the war, conditions and production and distribution techniques were inadequately developed to fully exploit export-driven economies in the periphery. While cheap labor was available, industrial experience, urbanization, and infrastructure were lacking due to colonialism’s legacy. Similarly, the low levels of consumption from that legacy were unattractive to monopoly capital. The advanced capitalist countries neglected the periphery economically while attempting to dominate it politically.

The relationship between the core and periphery changed substantially over the next thirty years, changes brought on by transformation and advancement of production and distribution techniques, revolutionizing technologies, new divisions of labor, and the creation of an enormous labor market pool wrought by changes in the Chinese road to socialism and the demise of the European socialist states. The mobility of capital, the de-skilling of many manufacturing processes, new-found logistic efficiencies, cross-border assembly processes, de-regulation, free market ideology and, of course, cheap, flexible labor have created new conditions for exploitation in the periphery.

As a result, many, but certainly not all, of the peripheral nations have enjoyed growth rates far higher than the most advanced capitalist countries, as capital exploits low wage opportunities to shift production and services to its advantage. Where the doors are open, capital flows.

And the former privileged position of the core masses has eroded as productive activity has shifted South and East. Of course standards of living are still much higher in the core, but the trend is towards convergence as low- cost labor pressures those engaged in the diminishing industries of the US and UK core countries. Without a social net or their former public benefits, the once-socialist countries of Europe share an economic status akin to most peripheral countries. Their low wage levels have served as a magnet for capital and now pressure wage levels in Europe. Lower wage levels of some industrial workers in the US are now serving as leverage against their counterparts in Canada and other countries. In short, the development of the productive forces over past decades has vastly improved the hand of capital’s owners and managers to exploit global labor sources uninhibited by borders.

Thus, capitalism’s trajectory does not support a sharp economic divide between core and periphery. Nor does it support a theoretical addendum to the law of value expressed as “imperialist rent.”

I give core/periphery theorists this: the so-called peripheral countries are carrying the burden of anti-imperialist struggle far more than their brothers and sisters in the “core” who have failed to adequately find their place in this struggle. Remnants of their privileged position, chauvinism, and poisoned ideology keep them compliant as their privileges fade away. This is a matter of shame and embarrassment to those of us who live in the core countries.

Monopoly Capital: Sweezy and Baran

Amin generously acknowledges the intellectual heritage of the important, influential 1966 book, Monopoly Capital, by Paul Sweezy and Paul Baran, and he sees his book as part of the theoretical legacy of their work. Monopoly Capital is essential reading for many reasons, including its demonstration of the tendency of capital to concentration and centralization, a tendency that is well tracked and proven again and again in the pages of the late authors’ worthy journal, Monthly Review.

Sweezy and Baran dissected the sales effort and exposed the enormous material waste concomitant with monopoly capital, the ever-present role of militarism in maintaining the capitalist economic mechanism, and the hollow worth of life under monopoly capitalism. Their 1966 book contributed greatly to our understanding of these features of modern capitalism.

However, Monopoly Capital made a far more controversial claim: it argued that the concentration of capitalist enterprises diminished competition to the point that it changed the basic dynamics of capitalism, necessitating a modification of Marx’s analysis in Capital. Under monopoly (really, oligarchic) conditions, they see the laws of motion and basis for crises as different from what they were in Marx’s era of competitive capitalism.

Lacking competitive price pressure, giant corporations accumulate huge surpluses that cannot be adequately absorbed by reinvesting in capitalist growth when consumption is limited by a persistent rate of labor exploitation and the bounds of the gluttony of the rich. This over-accumulation results in investment in non-productive activities like the sales effort, product differentiation, false needs, military spending, government growth, etc. Eventually, these unproductive uses of the capitalist surplus lead to stagnation.

Amin attempts to demonstrate this theoretical turn by drawing on Marx’s two-sector expanded reproduction schema. He offers an algebraic argument with arithmetic examples to show that, at a given rate of exploitation and organic composition of capital, capital will eventually accumulate beyond the capacity of producer goods investment and investment in mass consumption to absorb it. Therefore, he argues, we must acknowledge a third sector— a “Department III” in Marx’s nomenclature—that absorbs the over-accumulation. And that third sector is co-extensive with the economic activities detailed in Monopoly Capital (John Bellamy Foster develops a similar three-sector analysis in “Marxian Economics and the State,” Science and Society, Fall, 1982).

It is significant and revealing that Amin’s argument is almost identical to the argument pressed by Henryk Grossmann’s 1929 book, The Law of Accumulation and Breakdown of the Capitalist System. Grossmann, too, uses Marx’s expanded reproduction schema to demonstrate an over-accumulation of capital after finite reproduction cycles. But it is telling that he draws a far different conclusion. Grossmann contends that over-accumulation generates a tendency for the rate of profit to fall (and lead to eventual crises) and not to unproductive or irrational “investment” and stagnation. Some might argue that, given the recent experience of sharp global economic decline following pressure on profitability, Grossmann’s views might offer a more satisfactory explanatory model.

We can credit Amin, Grossmann and Marx (in volume III, part III of Capital) for similar demonstrations of the tendency of capital to over-accumulate (with counter-tendencies discussed by all three), but they each draw different conclusions for the trajectory of capitalism.

In my view, over-accumulation is a persistent and pervasive tendency of capitalism in its competitive and monopoly phases. Indeed, it is, simply put, an inherent tendency in capitalist reproduction. Yet continuous concentration and centralization of capital are consistent with competition (Amin dismissively acknowledges it as “monopolistic competition”). Competition in the era of monopolies exists through changes in the regional and national balance of economic power, technological advantages, new product and industry introduction, rapid changes in manufacturing techniques, different management strategies, etc.—in short, a diverse set of factors beyond price competition. Robert Brenner traces this evolution of “monopolistic competition” convincingly in his account of “the long upturn” in The Economics of Global Turbulence (1998).

As for the absorption of the surplus generated by monopoly capitalism, the Monopoly Capital School underestimated the growth of consumption as a driving force of investment and productive activity. The relatively stagnant consumption base of the late sixties and seventies (in the US) expanded rapidly with women joining the workforce for both reasons of liberation and family survival. Equally, the authors failed to anticipate the explosion of consumer credit as a factor in consumption growth, a development fraught with problems, but powerfully boosting effective consumer demand.

From the eighties forward, the financial sector played a growing, even dominant role in absorbing the enormous monopoly surplus. In Monopoly Capital, Sweezy and Baran devoted a mere three pages to the financial, insurance, and real estate industries. Soon after the turn of this century, financial profits accounted for over 40% of the profits generated by the US economy, demonstrating its dominant role in surplus absorption. The authors vastly underestimated monopoly capitalism’s capacity to mortgage the future; they failed to anticipate how investments and bets on future gains could become the key factor (with disastrous results!) in exploiting the surplus. The relative decline in profitability of productive activity, poised against the growth of the surplus, led to “investment” in high-risk, future-directed speculation. The disaster ensued.

Amin, like his Monthly Review colleagues and many other Marxists, acknowledge this development with the unhelpful term: financialization---one of those trendy neologisms unrelated to any other aspect of Marxist theory. However, it is not enough to give a name to a profound shift in capitalism’s evolution without an equally deep Marxist analysis of debt and speculative capitalism. To my knowledge, that analysis is still forthcoming.

Old and New

The economic crises of the twenty-first century – the orgy of venture capital and technology speculation and the super-crisis of financial speculation-- afford Marxism a new opportunity to both energize a movement for socialism and revitalize the theoretical heritage of Marx, Engels, and Lenin. Both projects are behind schedule.

Crises expose the weaknesses of capitalism, but equally its inner logic. They display the mechanisms that propel growth and accumulation as well as those that produce failure.

Old views, like the ready, but theoretically weak under-consumptionist interpretation of crisis from a Marxist perspective, are swept away by the facts. Hyper-accumulation of capital in the hands of a few was the antecedent of these crises and not a drop in consumption. The economic data prior to the twenty-first-century crises demonstrate this clearly. The destruction of living standards and erosion of consumption were the effect and not the cause, an effect that indeed deepened the crises. Our understanding of capitalism’s dynamic begins with our understanding of the role of surplus and the capitalist’s unending drive to invest surplus profitably. I believe Samir Amin shares the recognition of the central role of accumulation in the system’s mechanism, but he is shackled by the Sweezy/Baran interpretation in applying it to today’s global economy. Sweezy and Baran (and Amin) drew their useful insights from a different era in capitalism’s evolution. Despite Amin’s intelligent efforts to apply those insights to today’s global economy, The Law of Worldwide Value falls short. That era was one of decadence and stagnation; this era is one of decline and multi-faceted crises. For Amin, the “new” is a characterization of our moment as “late capitalism of generalized, financialized, and globalized monopolies.” But this is merely an observation and not a theoretical analysis, an identification and not an explanation.

Different theoretical conclusions must be drawn; and a different politics is necessary.

Zoltan Zigedy
zoltanzigedy@gmail.com

The Battle for China’s Future

Suppose your favorite basketball team leads by twenty points at half-time, with more rebounds and steals and far fewer turnovers than its opponent. The athletic director rushes into the locker room and announces to the coach and players that unless they radically change the game plan, they will suffer a devastating defeat. Your first thought would likely be that the athletic director has taken leave of his senses. Or that he or she has been bought off by the rival.

Yet this is exactly like the advice that The World Bank and the Development Research Center urged upon The Peoples’ Republic of China on Monday, February 27. In a report entitled “China 2030,” the two entities—one a notorious cheerleader for free markets, privatization and meager social spending and the other an arm of the State Council of the People’s Republic of China—concede that the PRC has enjoyed 30 years of an average of nearly 10% annual growth. Besides this stunning achievement, the PRC negotiated the treacherous shoals of the world-wide economic crisis far better than any other large economy.

One would think that the study would probe the basis for this remarkable achievement and urge its continuance. Perhaps The World Bank would even suggest a similar approach for other countries. But instead, the authors of the report issue dire warnings of rough times ahead and prescribe urgent changes.

They warn that the average growth rate for the next 19 years will only be 6.6%. Assuming that the projection has some theoretical justification (World Bank predictions have fallen on hard times), the PRC economy would, at this rate, double in GDP every 11 years. Indeed, the report notes that it would become the world’s largest economy before 2030. Apparently, the authors of China 2030 are not impressed.

This warning is even more puzzling when we remember that most mainstream developmental economists project a declining growth rate as economies mature. Following W. W. Rostow’s heralded theory, high growth rates are only a feature of economies experiencing a “take-off.” Necessarily, growth slows, they agree, after the initial rapid expansion. Such a theory justifies the relatively low growth rates of the most advanced capitalist nations.

The PRC’s “friends” evade these questions by raising the dangers posed by the “middle-income trap,” a theoretical construct first suggested by economists in 2007. Noting the difficulties that many emerging market economies had in the 60’s and 70’s, they offer a muddled explanation of their failings, ignoring their political turmoil, dependencies, resource deficiencies, etc. Of the rare thirteen proclaimed “successes”—countries that elevated to the high-income category – four are now spiraling into the low-income ghetto. Greece, Portugal, Ireland, and Spain dutifully followed the prior prescriptions of The World Bank and The International Monetary Fund and are now choking on the Kool-Aid. The authors of China 2030 see no irony in this.

The report comes at a particularly opportune time, a week before the PRC’s annual meeting of the National People’s Congress. Media reports signal a heightening of tension between political leaders who wish to press forward with privatization and market de-regulation and those who want to preserve or even expand the socialist elements still extant in the economy and social life. A recent article in The Wall Street Journal (Fate of Two Chiefs Gives Clues on China, 3-3/4-12) embodies this struggle in the views of two rising leaders, Bo Xilai and Wang Yang. Clearly, China 2030 is ammunition for the rightists typified by Wang Yang.

While the Western media anticipated a lambasting of the state-owned sector, a boost for privatization, reduced government intervention and more doors open to Western corporations (see New Push for Reform in China, WSJ, 2-23-12 for a lengthy discussion), the report complied in somewhat veiled, measured econ-speak. Its primary recommendation was to implement structural reforms to:

…strengthen the foundations for a market based economy by redefining the role of government, reforming and restructuring state enterprises and banks, developing the private sector, promoting competition, and deepening reforms in the land, labor, and financial markets. As an economy approaches the technology frontier and exhausts the potential for acquiring and applying technology from abroad, the role of the government and its relationship to markets and the private sector need to change fundamentally. While providing relatively fewer “tangible” public goods and services directly, the government will need to provide more intangible public goods and services like systems, rules, and policies, which increase production efficiency, promote competition, facilitate specialization, enhance the efficiency of resource allocation…

In case the point was not made emphatically enough, the report goes on:

In the enterprise sector, the focus will need to be further reforms of state enterprises (including measures to recalibrate the role of public resources, introduce modern corporate governance practices including separating ownership from management, and implement gradual ownership diversification where necessary), private sector development and fewer barriers to entry and exit, and increased competition in all sectors, including in strategic and pillar industries. In the financial sector, it would require commercializing the banking system, gradually allowing interest rates to be set by market forces, deepening the capital market, and developing the legal and supervisory infrastructure to ensure financial stability and build the credible foundations for the internationalization of China’s financial sector.

Why these “reforms” are necessary and how they will improve prospects is never fully explained, except through blatant appeals to the neo-liberal manifesto. Since the state-owned industries represent 45% of non-agricultural GDP and they almost tripled their contribution to gross industrial output from 1998 to 2009, something beyond dogma is wanted.

The West and its accomplices in the PRC have their eyes on key state monopolies in petroleum, chemicals, electricity, and telecommunications as well as the state-dominated banking system. Under the guise of stimulating competition, the report argues for “breaking up state monopolies or oligarchies in key industries,” the first steps towards privatization. Undoubtedly, foreign capitalist monopoly corporations are lusting after these assets.

As I argued several months ago (The Chinese Puzzle, ZZ’s Blog, 12-14-11), the future of the PRC remains a mystery, with the leadership walking the thin, risky line between emerging capitalism and the remaining socialist institutions. But, clearly, The World Bank and its Chinese allies are determined to influence that direction. And there should be no doubt which direction China 2030 is intended to push those leaders.

Zoltan Zigedy
zoltanzigedy@gmail.com

Stern Advice to the Left from the House of Lords

A sense of humor is essential to balance the humbuggery of much of the political commentary that surfaces today. “Astonishment” is the best word for a recent “provocative discussion” (Say No to Protectionism) posted on the Political Affairs website and authored by Peter Mandelson--“Lord Mandelson” to his UK peers. In the past, Political Affairs was the source of timely, informative articles that expressed the views of advocates of the Marxist-Leninist perspective, authors like Jacques Duclos, Palmiro Togliatti, William Z. Foster, Henry Winston, Herbert Aptheker, Paul Robeson, and many other committed Communists.

But today Political Affairs embraces a far wider spectrum of opinion including now, for undoubtedly the first time, a “lord” from the prestigious UK House of Lords, Lord Peter Mandelson. Unlike Foster, Winston, and Robeson, Mandelson has established his credentials by championing the “third way”, a position to the right of traditional social democratic doctrine.

Mandelson, a pal of George Bush’s subservient buddy, Tony Blair, argued that the UK Labour Party should transform into a market-friendly, classless party located somewhere in the narrow political space occupied by the US two-party farce.

While advocating the vacuous, yet successful ideological fakery of Tony Blair,
he managed to cash in on the new opportunities afforded by the “third way”. Undeterred by the media scandals—the multiple resignations from government positions forced by shaky financial dealings—Mandelson persevered with his personal program. Like his US counterparts in governing, he managed to accumulate a fortune and achieve a tainted celebrity.

Mandelson’s subservience to capital has earned him—besides a “lordship”—a consultancy firm, an advisory position with the banking firm, Lazard Freres, and participation in the elite Bilderberg conference: all dubiously supportive of his leftist credentials.

Though Mandelson’s career has been tarnished by opportunistic changes of heart, charges of corruption, and political expediency, those facts do not necessarily diminish his argument. In other words, it doesn’t follow that Mandelson is wrong simply because he is a scoundrel.

So what does Mandelson have to say?

Put bluntly, Mandelson offers a simple, lordly scold to the Left: Say “no” to protectionism; say “yes” to globalization. In his words, “The most important focus for the left should be on equipping people to live in an uncertain economic world, not shutting that world out.”

But let us be clear: in the tortured language of modern day media punditry, Mandelson isn’t scolding the traditional Left of Marx, Lenin, or even the Left of Ralph Nader or Dennis Kucinich, as the editor of Political Affairs might want us believe. Instead, Mandelson means the tepid, slippery left of Barack Obama and Francois Hollande, the Left defined by its ever-so-slight distance from the Center and its merely rhetorical commitment to common folks. One might better call it the “corporate Left” for its refusal to decouple any popular reform from the promotion of corporate interests. That is, Obama and Hollande are really “third way” Left poseurs like Mandelson’s pal, Tony Blair. Hollande, the Presidential candidate of France’s misnamed Socialist Party, says as much in a recent interview in the UK Guardian (http://www.guardian.co.uk/world/2012/feb/17/francois-hollande-uk-city-london) where he heaps lavish praise upon Blair as well as associating himself with Obama’s policies.

While monopoly capital has little to fear from these third-wayers, Mandelson knows that in the heat of both Obama and Hollande’s electoral campaigns, they may well reach deep into their bags of campaign tricks and pull out a calculated populist promise to be tossed to the masses. His concern is that some may take them at their word and actually expect a mild rebuke to the corporate agenda.

For Mandelson, the great fear is that his ideological compatriots might back away from a fully enthusiastic commitment to “globalization”. Now “globalization” is one of those unfortunate and lazy terms that rise to the surface of popular discourse while masking more than it reveals. For decades, talk of free trade, the sins of protectionism, and the enhancement of international competitiveness have been a cover for the exploitation of labor markets. In the end, all the speeches, legislation, and agreements have been constructed to allow capital to flow freely and easily to centers of cheap labor—no more, no less.

It should be obvious that regions, countries, sections, and cities differ vastly in terms of resources, infrastructure, technologies, and capital. But the one element that they all share, the one element that can flexibly change to meet competition, is the cost of labor-power; workers can always be convinced or forced to work for less. A country or region cannot compete globally in the energy market if it has no energy resources, but any country can choose to compete by offering cheaper labor for production or services. Thus, behind all the promised benefits of globalization lies a profit-driven motive: cheap labor. Of course capitalists are not concerned that this process inevitably results in a wage-death spiral.

The big lie proffered by Mandelson and his ilk is that global, unfettered competition can produce a world of winners. Yes, even the most apathetic sports fan knows that competition is about winners and losers; someone loses when someone else wins. Perhaps when David Ricardo wrote nearly two centuries ago about countries enjoying relative advantages, the idea of winning some competitions and losing others made some sense. But in today’s world of huge trans-national monopoly enterprises rushing from one low wage area, then to another, the ancient argument dissolves. Only a fool does not see this. And Mandelson is no fool.

He writes that: “The banking crisis discredited certain kinds of financial capitalism and financial regulation and not capitalism in general…we still have to have faith in the basic model of an open and competitive economy.”

And faith is all that Mandelson offers. Only a “lord” in the church of market fundamentalism could disconnect the financially-triggered crisis from the trajectory of global capitalism. Vast wealth and income inequalities, spawned in large part by the “globalization” so dear to Mandelson’s heart, generated a vast ocean of capital seeking investment opportunities. Capitalists found a haven for this enormous glut of surplus value in the banks and other financial institutions, a haven promising strong returns through speculative ventures. Of course this was not a random series of events, but another logical step in the evolution of monopoly capitalism driven by the insatiable thirst for profit.

If over four years of global economic turmoil, four years of mass unemployment and declining living standards, does not “discredit… capitalism in general”, one wonders what would. With even conservative institutions like the IMF and the OECD projecting 5 to 10 more years of pain and suffering in Europe, one wonders what stands behind Mandelson’s vote of confidence.

Perhaps Lord Mandelson’s advice to the left will advance his career and earn him the prestigious knighthood. Certainly he has served the ruling class well.

Zoltan Zigedy
zoltanzigedy@gmail.com