Class against Class

Every commentator of every stripe concedes that US workers have been battered over the last five years since the onset of the global economic crisis. What most fail to concede is that the battering was the direct result of a one-sided class war.

From every perspective, measured by every economic indicator, all US workers-- those organized into trade unions and those not-- have been hammered relentlessly. Unemployment, measured by the government's least telling index, remains unconscionably high. Labor force participation, a better measure of the job picture, continues to decline. And the jobs that do become available are unprecedentedly part-time, low-paying, or temporary.

Wages are stagnant or declining in every sector and labor's share of national wealth continues to atrophy. Benefits are under attack with workers’ contributions to existing benefits growing and employers’ share shrinking.

The oft-cited road to success for working class youth-- a college education-- has proven fool's gold. The average student is saddled with $25,000 in student debt and a marginal job that retards getting out of debt and capturing meaningful savings.

At the same time, a “recovery” has occurred: production and national wealth have rebounded to and surpassed their pre-crisis levels. Profits and profit growth are well above historic levels and trends. And the stock market has revived energetically.

The widely heralded “recovery” has only been a recovery for the very wealthiest. A recent study by the formidable economic research team of Saez and Piketty shows that 95% of the income benefits of this one-sided recovery have accrued to the top 1% of income recipients. The other 99% must settle for a tiny share of the meager remaining 5% gain in income!

That US workers’ fate and the fate of their employers and their minions are on two separate, divergent tracks is undeniable. That these two tracks are sustainable is entirely a different matter, a matter to be settled when workers embrace a fight back in the struggle between classes.

While pundits from across the political spectrum acknowledge the huge and growing chasm between the rich and working people (see, for example, Paul Krugman's Rich Man's Recovery, The New York Times), they offer little by way of explanation and even less toward addressing and correcting the condition.

Instead, they deplore and regret, condemn and rue the sorry plight of working people in the face of burgeoning wealth channeled to the privileged. They trot out a host of tired, ineffective nostrums that consistently evade changing the dynamics that invariably generate growing inequality. Slogans like “tax the rich” warm the blood, but get no political traction. And on the rare occasion when tax increases and the like survive political mine fields, the rich find ways to evade them. Given the political power that inequality confers to the wealthy, it should be no wonder that even modest reformist proposals are decisively aborted by the best “public servants” that monopoly corporations and their wealthy owners can buy.

What, then, are the dynamics that generate inequality? What really accounts for the ever widening income and wealth game between a tiny minority and the vast majority of US citizens?

No understanding of economic inequality in a global capitalist economy can begin without an acknowledgment of class. The existence of social classes is the unwelcome analytic tool that capitalist apologists devote careers to denying. Media savants and academic authorities choke on the word “class.” To them, class division is a distant memory of hereditary aristocrats and down-trodden peasants. Surely, they affirm, the rise of representative government has eradicated class distinctions.

To avoid the obvious, liberals and so-called “progressives” have created a class that simply hangs in the air, absent any supporting structures: the middle class! A favored idea embraced by politicians, top labor leaders, and social workers, the middle class is said to shrink, decline, or disappear; yet no one tells us where the lost members go!

This slick trick hopes to mask the simple fact that the US is not a classless society.

Contrary to popular mythology, social life in the US is not all harmony and bliss. Instead, it is one of conflicting and incompatible interests. Moreover, the sharpest differences, the differences that determine material well-being, are differences of social class. The great contribution of Marxism is to reveal exactly how class is best understood-- not as social position, profession, or subjective perception, but as a material relation between employer and employee. That is, the most useful discrete divide is between those who engage the labor of others and those who provide that labor. The former constitutes a class of employers and their minions; the latter-- a much larger group-- constitutes the working class.

Even a casual reflection on the relation between the two classes in capitalist society exposes a sharp and irreconcilable difference of interest. Those who employ labor share no other goal than maximizing the profit of their enterprises. Put simply, from the Mom and Pop store to the largest monopoly corporation, owners are in business to make money. While small enterprises are limited in scope and intensity, larger enterprises, especially those with investors and shareholders, are driven relentlessly to achieve greater and greater rates of profit and sums of profit.

It is the logic of capitalism to reduce the costs of economic activity and command a greater share of that activity for the owners, investors, and shareholders. From the perspective of the worker, “reducing costs” translates into a relentless attack on the wages and benefits of the working class. The less that must be shared with the worker, the more that can go toward profit.

Since the dawn of capitalism, workers have recognized the divergence of interest between profit maximization and realizing their desire to improve their economic standing. They have understood the necessity of fighting to both maintain and expand their share of the fruits of economic activity. The history of labor is a history of the development of the instruments (unions, political parties), techniques (unity, strikes, demonstrations), and ideology (class, class consciousness, class struggle) necessary to secure a greater share of the surplus generated by the labor process. And among the most advanced, visionary workers, a world entirely free of the employer/employee relationship, a world without exploitation, a world of common, social ownership, is the goal.

Thus, we can and should measure the success or failure of the working class movement by how well it has fared in the battle with employers for a greater share of that surplus.

And by that measure, or any other, not only the last five years have been a disaster, but the previous three decades as well. Income and wealth distribution has shifted dramatically in favor of the employer class and its attendants. The rich are winning a class war for the lion's share of socially produced wealth. The working class is losing even the gains of the past.

How does this happen?

While the employers have mounted an aggressive assault on workers' wages and benefits, ostensible workers' organizations have failed workers.

The Democratic Party enjoyed the support of the working class thanks to both real and imagined gains won through the New Deal of the 1930s. In the ensuing years, that high point of labor-friendliness dissipated, with its last echoes embodied in the 1976 Democratic Party platform. Of course that platform was betrayed by the Democrat President-elect, James Carter. Never again did the Democratic Party embrace labor's cause, despite Don Quixote-like efforts by Jesse Jackson in subsequent years. While establishment Democrats mocked Reagan's lame “trickle down” economics, a decade later they celebrated the same idea with their absurd slogan that “a rising tide lifts all boats.”

Obama, the latest political “friend” of labor, has so far failed to deliver anything of significance to workers in the five years of his administration, nothing that might have reversed the grinding, painful decline of working class standards of living.

Certainly the top leaders of the trade union movement have served workers no better. Accordingly, they have been punished for their failure by a sharp decline in union membership, a decline that has lead them to panic before their own fate.

Of course their concerns, born of self-preservation, are nothing compared to the devastation of the working class inflicted over the last four decades. Their failure to use the available tools of class struggle, their reliance on cozy arrangements with bosses, and their identification with the health and flourishing of corporations are policies that have proven severely injurious to the working class.

Collaboration that links the fate of the working class to the fate of the corporations has paid off handsomely... for the corporations. A recent study summarized in The Wall Street Journal submits that by the end of this decade, “Adjusted for productivity, average labor costs will beat Japan by 18%, Germany 34%, and France 35%.” The study doesn't bother to mention what this will mean for US workers, of course. Their losses to the gods of competitiveness are capitalists' gains!

To take an example, US auto sales have soared to levels unseen since before the economic crisis first struck. Corporate profits are growing at a record pace.

How do they do it?

First, the US auto industry received massive tax-payer bailouts from the Obama administration, but only on the condition that they close plants and lay off workers! So much for the Democratic Party friends of labor.

Secondly, the industry produces the same amount of vehicles with less than 80% of the former workers, a forced-march increase in productivity.

And thirdly, at United Auto Worker unionized plants, the union submitted to deep concessions. Entry level UAW workers now make $15.78 an hour, a rate commensurate with an annual wage a mere 12% above the level defined by the Federal government as “living in or near poverty.” Once, the UAW wage and benefit package was the gold standard of industrial unionism!

Because of their total capitulation to the auto industry bosses, the leaders of the once proud UAW have resorted to pursuing the organization of the Chattanooga, Tennessee Volkswagen plant by sneaking through the back door. They hope to use a European Union regulation and their cozy relation with the company to secure recognition. How else to “win” a non-union shop when union and non-union wages are virtually equal? (Actually, when relative costs-of-living are factored, they are sometimes better in non-union plants).

Indeed, there is no class war when one side is always in retreat. The rout can only be reversed if workers shed their blind support for the Democratic Party and vigorously exercise their independence. The rout can only be reversed when workers transform their unions into class-struggle weapons and launch a counter-offensive.

The future doesn't have to continue with the past.

Zoltan Zigedy

zoltanzigedy@gmail.com

Spontaneous Combustion and a Knight in Shining Armor

“Give us an organization of revolutionaries, and we will overturn Russia!” V.I. Lenin

The US left suffers from two maladies that persistently thwart any effort to move beyond the malaise of internet negativity and the false activism of online petitions. Setting aside those still desperately clinging to the Democratic Party womb, well-intentioned and serious radicals, young and old, have yet to draw the lessons necessary to unify and focus the seemingly limitless committees, coalitions, and centers that constitute our dysfunctional left.

Most damaging is the mindless and groundless faith in spontaneity. Far too many of our brothers and sisters believe that political action, organization, and change will come the way it does in Hollywood horror movies. The people will emerge from their homes, recognize the danger, and rally to confront the alien threat. Danger combines with self-interest to generate a spontaneous common resistance and a common response. While it makes for entertaining fiction, it seldom if ever happens in real life.

The Occupy movement was the latest iteration of this faith. Life proved that the notion of spontaneous organization and governance would end, leaving barely a trace of its prior existence. Decades before Occupy, the so-called New Left cast its fate to spontaneity. Programs, parties, agendas, etc. were eschewed; the “Movement” would find its own way. Oracles of that flawed thinking have gone on to their life's work as professors, professionals, and Democratic Party operatives.

In the rear-view mirror of bourgeois historians, political movements are depicted as spontaneous risings-- a kind of spontaneous combustion sparked by a particularly hostile affront or violent act. The US colonial rebellion against the British was “sparked” by the Boston Tea Party or the confrontations at Lexington and Concord, never mind the years of debate, struggle, and planning by the Sons of Liberty and other evolving organizations of resistance. Similarly, popular history poses the Civil Rights Movement as a burst of activism ignited by Rosa Parks' courage and channeled by police dogs and fire hoses. The decades of organized and planned resistance that prepared for this moment are largely ignored.

Faith in spontaneous struggle, trust in an instinctive, automatic confrontation with power, spawns inaction. If the oppressed and exploited will unerringly marshal resistance, there is no need to organize and agitate among them; they will find their way without the uninvited help of organizers and agitators. Professional revolutionaries need not apply. They must simply add their bodies to the “movement” when the magic moment arises.

A logical conclusion of the faith in spontaneity is the dangerous and destructive notion that “the worse things get, the better.” When enough pain is felt, the masses will rise; until then we meet in our diverse and numerous causes, sending checks, signing petitions and reassuring each other that something big will undoubtedly erupt.

Among Marxists, the cult of spontaneity takes the form of what V. I. Lenin called “economism.” By acknowledging only the objective conditions, the unseen operations of the laws of capitalist development, the tendency for capitalism towards crisis and the “immiseration of the proletariat,” these “Marxists” see no role for agitation and organization; they see no need for a party of revolutionaries. Instead, they count on the grinding inevitability of crude determinism.

Marxists (and trade union leaders) who fall into the trap of “economism” invariably bury the Marxist principle of class struggle in the day-to-day administration of trade unionism. In writing about the Marxist “economists” of his time, Lenin charged that they “demoralized the socialist consciousness by vulgarizing Marxism, by advocating the theory of the blunting of social contradictions, by declaring the idea of the social revolution... to be absurd, by reducing the working class movement and the class struggle to narrow trade-unionism and to a 'realistic' struggle for petty, gradual reforms. This was synonymous with bourgeois democracy's denial of socialism's right to independence and, consequently, of its right to existence; in practice it meant a striving to convert the... working class movement into an appendage of the liberals.” (What Is To Be Done?)

Faith in spontaneity diminishes politics. Neither the vulgar belief that collective pain will birth action nor the “sophisticated” and distorted Marxist claim that objective laws will inexorably bring change stands the test of history. Agency-- the planned, concerted, and collective effort of organized groups-- make history.

“If only we had a Lenin, Martin Luther King, Ralph Nader, etc., etc....”

A different, but closely related malady retards political action on the US left: the Knight in Shining Armor syndrome. Like spontaneity, it postpones action until something unknown and unpredictable happens; it replaces planned, concerted action with faith.

Many on the left are frozen with inaction while waiting for the next great emancipator or political super-star. This variant of celebrity worship is nurtured by the all-too-common brief appearance of prominent figures on the political stage while leaving no lasting movement or organization in their wake.

The Jesse Jackson Democratic primary campaigns of 1984 and 1988 are cases in point. Jackson offered the most progressive Democratic Party platform since the New Deal. In the first primary battle, he captured nearly 20% of the popular vote. In 1988, he ran again, establishing himself as the front runner after handily winning the important Michigan primary and finished by more than doubling his previous vote total and securing 11 states.

And then he was gone, disappearing from Democratic Party politics, leaving neither a movement nor a political impact on the Party's destiny. By 1992, the Party had moved permanently rightward to embrace right-centrist, Bill Clinton. And twenty-five years later, the progressive wing of the Party waits hopefully and patiently for another celebrity arriving fully armored and on a powerful steed!

Similarly, the Nader Presidential campaigns brought great interest to the Green Party. But the ever-earnest Ralph Nader had little interest in party-building. Though serious, he walked away, leaving others to attempt to construct an on-going political party from the good will left from his runs. Fortunately, the Green Party's latest candidate, Jill Stein, has a more developed understanding of political theory. What she lacks in celebrity status, she more than makes up for with organizational savvy and historical perspective. Her innovative, clever development of the “shadow” cabinet concept is particularly impressive.

But it's not solely the fault of Jackson and Nader--two well-meaning candidates-- that these celebrity campaigns were comet-like. Rather, it is the naïveté of the left that failed to see beyond the immediacy of these political events, that felt no urgency to subordinate an unrealistic chance to actually win to the necessity of leaving something permanent upon which to build.

Behind the Knight in Shining Armor syndrome stands the Great Man (or Woman) theory of history: great events are the work of great personalities. For example, the Pharaohs built the Great Pyramids (All by themselves? to paraphrase Bertolt Brecht). The masses are merely the obliging instruments of superior minds and talented leaders. Lenin refers to this thinking as in the “Ilovaisky manner,” referring to the author of many Russian textbooks who saw Russian history solely as the work of czars and generals.

The political expression of this in Lenin's Russia came from the Norodniks who saw themselves as the saviors of the peasants. Middle class intellectuals impressed with their own superior abilities, the Norodniks “colonized” peasant society in order to surgically implant the great leaders they felt the peasantry lacked. In the words of Soviet writer V.P. Filatov, they believed “that only 'heroes' made history” and that they could turn “the mob into the people.”

Adding the 'Conscious Element'

Lenin's writings demonstrate that there is nothing new or unique in the false ideology of spontaneity. Further, we can learn from Lenin's conclusion: “[A]ll worship of the spontaneity of the working class movement, all belittling of the role of 'the conscious element',... means quite independently of whether he who belittles that role desires it or not, a strengthening of the influence of bourgeois ideology upon the workers...” (What is to be Done?) In other words, only attention to the “conscious element” can advance our cause beyond the false path of spontaneity.

But what does Lenin mean by the “conscious element”?

Going forward depends upon a correct assessment of what constrains our progress. It requires a consciousness of the ideas essential to successfully challenge power. It requires an ideology. Moreover, that ideology must be radically different from the ideology of the forces resisting change. Nor can it compromise with the enemy ideology. Thus, it is a revolutionary consciousness.

But revolutionary consciousness must be converted into mass revolutionary consciousness. For that we need an organization. Because its mission is to take the ideology of revolutionary change to those both most in need of it and most able to use it, that organization counts as a vanguard. It is the idea of a vanguard that allows us to advance beyond the illusion of spontaneity.

Opponents of Leninism charge the idea of a vanguard with elitism, the idea that a select group of revolutionaries knows better than the masses. It is nothing of the sort. Rather, a vanguard is the transmission belt for ideas that will not and cannot arise spontaneously within the working class or broader movement.

In our time, the ideology of resistance is decidedly and necessarily anti-capitalist. But that is not enough. A revolutionary ideology must offer an alternative to capitalism, an alternative that is neither cosmetic nor fanciful. That alternative is socialism.

Popular illusions abound: regulation can wean corporations from rapacious accumulation and dominance; small-scale “social” enterprises and cooperatives can erode the unprecedented political and economic power of monopoly enterprises. Such ideas fall far short of ideological credibility. Only socialism—the elimination of the process of private accumulation through labor exploitation-- reaches that credibility.

And who is to deliver the message of socialism; i.e., who is to serve as missionary for the revolutionary ideology?

The answer is as it was in Lenin's time: An organization dedicated to that task above all else; an organization not encumbered by the fetish of bourgeois elections; a party of revolutionaries; a Communist Party.

Zoltan Zigedy

zoltanzigedy@gmail.com

From Postmodernism to Postsecularism-- A Review

In January of 2012, I reviewed Eric Walberg's book, Post-Modern Imperialism (Clarity Press, 2011). I enthusiastically concluded that:

Walberg has offered a welcome taxonomy of imperialism from its nineteenth-century genesis until today; he has given a plausible explanation of imperialism’s contours since the exit of the Soviet Union and Eastern European socialism from the world stage; and he has convincingly described Israel’s unique role in the continuing reshaping of imperialism’s grasp for world domination.

Further, Walberg gave a needed response to misguided leftists who were quick to label Islamic resistance to US and Israeli predation as “Islamo-fascist.” Much of the US and European left took a smug, chauvinistic posture--a posture that coincided with the interests of imperialism-- toward fighters in the Muslim world daring to defy Western intervention and interference. They ignorantly announced that religious “fundamentalism” fatally tainted their resistance. Walberg struck a powerful blow against these immature conclusions.

Now Walberg has undertaken a more ambitious project in his new book, From Postmodernism to Postsecularism: Re-emerging Islamic Civilization (Clarity Press, 2013). His argument can be summarized-- without too much violence to its nuances-- as:

1. The last great secular social justice project-- socialism-- has failed with the demise of the Soviet Union.

2. Islam and its attendant political-social-economic doctrines are viable alternative routes to social justice.

3. Islam is the only alternative that can deliver social justice. Therefore, Islam is the universal way to social justice.

Of course Walberg goes to great lengths to shore this argument with a detailed, fascinating history of Islam and its currents that, alone, is worth the price of admission. He explores the relative shortcomings of other religions, a brief that is factually accurate, but, like the account of Islam, tellingly selective.

Hints of this thesis were embedded in the earlier book, Post-Modern Imperialism. I noted in my review: 

In the same vein, it is an exaggeration to portray Islam (or any other religion) as inherently anti-imperialist: in his words, “The unyielding anti-imperialist nature of Islam, its rejection of the fundamental principles of capitalism concerning money, its refusal to be sidelined from economic and hence political life…”

Unfortunately, Islam has the same tortured relationship with imperialism as have all the major religions. Precisely because they possess no robust doctrinal opposition to imperialism in general, all major religions have stood on both sides of the barricades.

The Islamist movement, Hamas, for example, stands as an important component of today's anti-imperialist front.

But it was not always this way. US ambassador to Israel, Daniel Kurtzer, speaking in Jerusalem on December 20, 2001, affirmed that the rise of Hamas coincided with “the promotion of the Islamic movement as a counter to the Palestinian nationalist movement... with the tacit support of Israel” as reported by Dean Andromidas in Global Outlook (Summer 2002). Andromidas quoted Kurtzer: “Israel perceived it as better to have people turn towards religion than toward a nationalistic cause [like the PLO].” PLO leader Yasser Arafat is quoted from the Italian press:

But Hamas is a creature of Israel which gave Hamas money, and more than 700 institutions, among them schools, universities and mosques. Even Rabin ended up admitting it, when I charged him with it, in the presence of Mubarek.

And

Hamas was constituted with the support of Israel. The aim was to create an organization antagonistic to the PLO. They received financing and training from Israel. They have continued to benefit from permits and authorizations.

In the same issue of Global Outlook, author Hassane Zerrouky (Hamas is a Creature of Mossad) outlines how “Hamas was allowed to reinforce its presence in the occupied territories. Meanwhile, Arafat's Fatah movement for National Liberation as well as the Palestinian Left were subjected to the most brutal repression and intimidation.” (reprinted in Global Outlook from L'Humanité).

Thus, while honest revolutionaries must recognize Hamas’s role in defending Palestinians from imperialism today, honesty equally demands acknowledgment of its sordid role in collaborating with Israel in the destruction of secular nationalism and the Palestinian left. It's difficult to find an “unyielding anti-imperialist nature” in this treachery.

Egyptian Communists acknowledge this vulnerability to imperialist manipulation in the August 3 statement of their Central Committee:

One of the objectives of the projects of imperialism in the Middle East is the establishment of states on religious grounds, which serves mainly Zionist plan to declare Israel a Jewish state for all Jews in the world, as well as the important results of  pushing these religious countries to inevitably get caught up in sectarian conflict. And it necessarily creates strategic divisions and fragmentations of the Arab countries and brings the conflict between Sunni - Shiite, Muslim - Christian, Muslim - Jewish to replace the Arab-Israeli national liberation conflict, to replace the social class struggle among the peoples of the Arab countries, and to replace the struggle against authoritarian regimes  allied with the imperialist global and international monopolies.

Most Arab socialists and Communists have sought unity with organized Islamic anti-imperialist organizations, sometimes successfully, as with Hizbullah and Lebanese Communists. But on other occasions that trust has been brutally betrayed, as with the slaughter of the Tudeh (Communists) in the Islamic Republic of Iran.

For Marxists, the major religions are a sometime ally in the struggle against imperialism.

Insofar as they welcome cooperation and reject collaboration with the class enemy, Islam and the other major religions will find consistent friends in Marxist-Leninists. Thus, we welcome and support the current shift in the leadership of the Catholic Church toward the cause of the poor and against the ravages of capitalism, just as we regretted the alienation of past Popes from the fate of the Catholic masses.

Contrary to Walberg's premise number two-- the centerpiece of the above argument-- Islam and the other major religions fall far short of offering an adequate ethics of social justice for today's world. The Quran, like the doctrines of the Catholic Church, forbids usury, the collecting of interest on debt. Absent usury, Walberg believes that a comprehensive practice of charity will provide Islam with a complete program of social justice for today and tomorrow.

Aside from the fact that religious practitioners and their leaders conveniently find ways to sidestep or obscure the prohibition of the collecting of interest, “usury” fails to even remotely capture the prevalence and depth of modern-day labor exploitation. The Catholic Church's condemnation of “excess” profits fails for the same reasons. To suggest that charity alone can solve the incredible poverty, unemployment, and economic inequality of, say, a country like Mali seems patently improbable. And the solution of charity seems dangerously close to the answer advocated by the apologists for unfettered capitalism.

Likewise, the Hebrew concept of “Jubilee,” as an admirable moral prescription of debt removal and property restoration and an answer to the inequities of antiquity, will not put a moral dent in contemporary capitalism. That said, the vital principles of economic justice found in the Torah, the Gospels, and the Quran suggest a posture toward the ravages of capitalism. A casual reader of the texts held sacred by the respective religions will find much encouragement for a condemnation of the process of capitalist accumulation. Should believers read those texts with earnestness, they would undoubtedly become Communists as well as believers!

My own-- perhaps eccentric-- view is that the major religions cannot escape the charge of hypocrisy unless they embrace socialism, the contemporary embodiment of the moral codes of their founders. Unfortunately, most religious leaders in our time choose to accommodate capitalism.

Walberg is not insensitive to the alternative vision of Marx and Communism. He devotes a full chapter to “Postsecularism: Marx and Muhammad,” going to great lengths to show that Islam answers the questions posed by Marxism while avoiding its “shortcomings.” 

Destructive to his argument, he misunderstands the Marxist theory of value as follows:

Kapital's weakness-- the labor theory of value-- is a materialist reductio ad absurdum, denying the 'value' of 'unproductive' labor (the elements brought to bear by the capitalist related to securing markets, research, innovations, factor management)...

This is fatally confused. Marx recognizes a value contribution in ALL necessary labor culminating in the production of a commodity, including the research, innovation, essential organizational management, etc. Further, he sees a necessary value deduction in the labor essential for a commodity's circulation. What he does not recognize is any value created or socially necessary from the mere fact of ownership. And this contradiction between ownership and labor is precisely the element missing in all of the social doctrines of traditional religions including Islam.

Walberg's confusion about Marx's value theory leads him away from the resolution of the contradiction between value created by labor and the ownership of that value by the capitalist, a contradiction only resolved by class struggle.

This error dooms his well-meant, but naive  synthesis of Islam and Marxism:

The ijtihad-jihad process is in a sense just a more comprehensive version of Marxist praxis [by] emphasizing:

●social unity rather than class struggle

●the family and spiritual life rather than material production

●evolution rather than revolution

While the sentiment is noble, it is irreconcilable with Marxism. Capitalism's rapaciousness-- acknowledged by Walberg-- cannot be eliminated by a retreat to mere spirituality, an unconditional appeal to unity or a common destiny, or the virtue of patience. These are simple facts that religions cannot escape.

I would propose a counter synthesis:

●class struggle as the path to social unity

●the family and spiritual life AND material production

●revolution leading to the realization of these values

which could readily open the road to a Marxist-Islamic understanding and cooperation.

Walberg's book is timely, coming in the wake of the so-called “Arab Spring.” One feels a veritable joy in his writings bursting from the optimism generated by the risings in Northern Africa and the Middle East. Unfortunately, that optimism proved short-lived. 

The Islamic governments established in Tunisia and Egypt generated great social rifts culminating in overthrow in one and growing tensions in the other. Open opposition in Libya and Syria drew the intervention of outside forces that swiftly transformed the struggle into imperialist regime change, destabilization of the regions, and enormous human and infrastructure destruction. Grievances were quickly appropriated by US and NATO meddlers who seized an opportunity to shape the outcomes.

In a little over a year, the rise of Islamic civilization that Walberg foresaw was dashed on the rocks of divisiveness and foreign intervention, just as it has in other times and places.

For the Marxist left, the Arab Spring provoked reservations and guarded sympathy, even apart from nefarious outside interference. On one hand, the rising against entrenched, reactionary authority was a welcome expression of popular will. On the other hand, the risings appeared to be more rebellions than revolutions. That is, the goals of the insurgents were neither united nor well-formed.

As events unfolded, these fears were borne out. Rather than challenge the structures of privilege and exploitation, sides were drawn around different attitudes toward tradition and “modernity,” secularism and spiritualism. While real and not fanciful, these differences do not touch the deeper relations of oppression. As with modern-day Western liberals who are occupied with lifestyle decisions and personal choices, the battles contested in the Arab Spring guaranteed that the poverty and exploitation of the masses would remain untouched.

One hopes are for the revival of a vibrant Marxist-Leninist movement in these countries to nurture these developments from rebellion to revolution.

Zoltan Zigedy

zoltanzigedy@gmail.com

Some Marxist Ideas Made Easy

The Ruling Class

The words “ruling class” conjure a group of older, rich, typically white, men sitting in overstuffed chairs in their private club discussing and deciding the future of US domestic and foreign policies. Better yet, images of an annual gathering in a private wooded area spring to mind, with the same wealthy codgers prancing around bonfires and indulging their fantasies before retiring to cigars and cognac and deliberation. To augment these representations, film directors like Jean Renoir (The Rules of the Game), Luis Bunuel (The Discreet Charm of the Bourgeoisie), and Peter Medak (The Ruling Class) have sought to provide vivid, often comical narrative flesh to the manners and fashions of those who are said to decide our fate---the ruling class.

But this is not what Marxists mean by “ruling class.” They do not deny that wealth and power come together from time to time, both socially and to do business, but Marxists would be hard pressed to name all the names and locate the seats of power.

For Marxists, the idea of the ruling class is the answer to an enigma: How does a relatively small segment of the population impose its will over everyone else? How could a tiny minority advance its interests ahead of the interests of the majority? And how could that minority do it not once, not occasionally, but systematically?

By asking these questions, we open the door to envisioning an alternative arrangement, an arrangement that would place the will and interests of the majority first. But first we must provide an answer.

Behind the words “ruling class,” Marxists find the secret of elite rule in a complex system of social relations and processes that compel, control, confuse, or secure consent, while frustrating any attempt to rebel. Ingenious mechanisms-- electoral pageantry, entertainments, competitions, contrived identities, insatiable consumption, and a host of other distractions-- deflect the majority from the question of who should rule. And should some get the bold idea of rejecting this machinery of consent, there are instruments of repression: the police and the judiciary.

These systems of contrived consent and coercion are posed as elements and guardians of “civil society,” when, in fact, they protect the interests of a minority of the super rich and protect them, their minions, and servants from any challenges from the many. Money and its influence fuel these mechanisms; from elections to movies, from lifestyles to consumption, the hand of an unseen class shapes the direction.

Like an electron, the ruling class is studied from its traces. While we cannot see or touch electrons, we know they exist from their relationship and influence upon other particles and processes. That is, their footprint is evidence for their existence. Similarly, the ruling class footprint is all over the social, political, and economic world.

History teaches that nothing beneficial to the great majority comes without a struggle. Why would this be? Who stands in the way of the majority will?

The answer should be apparent: the class that rules by virtue of its accumulated wealth and the power that it buys.

Bourgeois Democracy

“Bourgeois democracy” and “capitalist democracy” are terms that pose the fundamental question of “democracy for whom?” The terms remind us that the belief that there is some kind of pure democracy, a democracy that affords everyone an equal voice in decisions is only attainable when all the advantages of wealth and power are removed from decision-making processes.

Thus, in capitalist society-- what Marx meant by “bourgeois society”-- the wealthy are able to multiply the influence of their sole votes in the democratic process by “buying” elections. They use their ownership of the media, their influence over legislation, their command over political parties, and their vetting of candidates to ensure democracy for the few. The mechanisms for capturing electoral power are, of course, money and ownership.

Despite boastful claims of delivering democracy, the electoral systems of Europe and the US present outcomes that consistently favor the wealthy and their wealth-producing corporations. And when something resembling the popular will arises, it is quickly smothered with an outpouring of media demagoguery and the enticement to compromise. The rare electoral ascent of popular rule invariably faces naked, unabashed repression by the wealthy through their organs of coercion. One only has to review the fascist takeovers and military coups of the twentieth century to understand the limits of bourgeois democracy.

The deception of bourgeois democracy is not that the rules are not fair; in principle, anyone could be elected to an office. Rather, the deception is that everyone has the same possibility of winning an election. Trusted candidates supported by great corporations have an infinitely greater chance of winning against a candidate armed only with integrity and a commitment to social justice. 

And throughout the capitalist world, corporations support only candidates who are loyal to the bourgeois system. Today, the labor movement alone could marshal resources that even remotely challenge a corporate-sponsored campaign; sadly, most of the labor leadership is content to cast those resources before the corporate candidate who is less offensive to working people. And corporate candidates have the incentive to only marginally appear closer to representing the working class.

It is irresponsibly cynical to believe that nothing good can be accomplished within a regime of bourgeois democracy; and it is delusional to believe that fundamental change can be accomplished with bourgeois democracy intact. Reforms-- important reforms-- are possible with a bourgeois democratic government. But fundamental change in the balance of forces between the rich and the rest of us is impossible without fighting to replace it with working class democracy. 

Moreover, the transitional period between bourgeois democracy and proletarian or working class democracy is inherently unstable. Only one class can rule until classes are finally abolished.

Idealists and utopians constantly imagine a smooth exchange of the reins of rule through the bourgeois democratic electoral process. They see the wealthy and powerful recognize defeat and pass the keys of governance on to the representatives of working people. History knows of no such event.

That doesn't mean that working class democracy can't be approached through the bourgeois democratic process. It only means that working people must be prepared to meet every challenge, every reaction mounted to workers' power. Invariably the foes of change will react-- that's why they're called “reactionaries.”

Games of chance, like the institutions of bourgeois democracy-- representative elections, formal legal systems, decentralization of power, etc-- are not inherently unfair. In theory, they give everyone a reasonable opportunity for success. That is their appeal. But in practice, the poker player with far greater stakes will inevitably win. Similarly, bourgeois democracy guarantees that those with the great bankrolls will dominate the game of politics unless they are forced to play a different game.

State-Monopoly Capitalism

“State-monopoly capitalism” is one of the least-well understood ideas of Marxism; yet it is one of the most important.

Marxists understand that for most of the last century capitalism has become more and more monopolized with a shrinking number of enterprises in all of the key industries. This process has resulted in fewer and fewer giant enterprises absorbing or dissolving smaller, less competitive rivals-- the process of merger and acquisition. Old industries like mining, steel, auto, and other manufacturing have grown more concentrated, as have newer technology-based industries like telecommunications and computers.

Some have mistakenly asserted that the Marxist theory of monopoly capital implies that only one or a few enterprises will dominate every industry in time. It does not.

It does predict that the process of greater and greater concentration of capital in the leading enterprises located within an industry will continually be a feature of capitalism. It also implies that the cost of entry-- the amount of capital needed to start up an enterprise-- will grow greater and more prohibitive over time in those industries that have achieved maturity. Thus, it is the process of concentration that is revealed by the theory and not the status of individual enterprises in the capitalist hierarchy. Marx's colleague Frederick Engels put this point well when he exposed the logic behind this process: “Competition is based on self-interest, and self-interest in turn breeds monopoly. In short, competition passes over into monopoly.” Engels affirms that competition will continue, further leading to even greater concentration.

But along with the concentration of capital, another process is at work: the continual merging of monopoly capital with the bourgeois state. The state will play a larger and larger role in the destiny of monopoly capital and, conversely, monopoly capital will obtain a greater and greater role in the operation and direction of the state.

This process-- the underlying expression of state-monopoly capitalism-- is exemplified every day and in every way. The bail-out of financial institutions while mortgagees are thrown under the bus illustrates well the “ownership” of the state by big capital and the disdain of the state for the people. The regulatory agencies of the state grease the operations of monopoly capital while paying little head to the people's interest. The coercive arms of the state function to protect and expand the corporate horizon abroad and protect property and bourgeois values at home. The state establishes secretive and undemocratic trade agreements and global institutions that protect and promote monopoly corporations from the restraints of regional and national interests. The doors of big capital and government swing both ways as their respective leaders change places.

The political Right rails against big government, laying every social and economic ill at government's doorstep. This is, of course, absurd, but not because government is a benign or neutral arbiter of the people’s interests, as liberals want to suggest. The idea that government “bureaucrats” possess some deep-seated evil intent to cause mischief on individuals, businesses, and the economy strains the last thread of credibility. They have no common interest to buttress such a conspiratorial view. The rightist anti-government position is simply the disguise for shilling for monopoly capital.

On the other hand, the liberal position that government stands as a neutral arbiter and guardian of the rights of man is an equal absurdity. Moreover, opinion polls of confidence in government institutions-- notably Congress-- show that the US population knows that it is absurd. The responses of “a great deal” and “quite a lot” of confidence in Congress together barely reach double digits in recent Gallup polls, a showing even below that of the banks.

Election reform, term limits, and the other panaceas will fail to break the solid weld of monopoly capital to the state; only the evisceration of monopoly capital will break that connection.

The Interplay of the Three Ideas

The three Marxist ideas discussed above share many features and interact profoundly with one another. Bourgeois democracy is an instrument of class rule in the era of capitalism, an instrument of the capitalist ruling class. In other eras, ruling classes sustained their rule with other mechanisms.

State-monopoly capitalism is the expression of the most recent, mature stage of capitalist development, a stage that brings with it the most corrupted, crisis-ridden expression of bourgeois democracy.

While the ruling class maintains a stranglehold on governance in this era, its democratic veneer is constantly eroded; more and more of the governed recognize bourgeois democracy as thinly disguised, but naked rule by the wealthy and powerful. At the same time, state-monopoly capitalism exhausts its means to avoid or moderate economic decline or stagnation.

The maturation of these political and economic contradictions generates a revolutionary crossroads, a moment when working people must choose between veritable slavery or taking the reins of power.

Zoltan Zigedy

zoltanzigedy@gmail.com

“Middle Class Revolution”: A New End of History?

The US is notoriously unkind to “intellectuals.” Popular culture portrays intellectuals as absent-minded, divorced from the everyday world, and obsessed with spinning useless, but harmless abstractions. They are good to keep contained in universities where they can give future cogs in the capitalist machine a taste, but not a passion for, impractical thought. Regrettably, those posing as intellectuals have gone far to earn contempt, favoring arcane, specialized languages and scholastic debates.

That's not to say that there is no room for thinkers in the US, but they are dubbed “pundits,” “experts,” “researchers” or “consultants,” words that ring with practicality and single-mindedness; they are purveyors of small, easily digested ideas and not the “big” ideas associated with intellectuals.

In the US, we are taught to distrust big ideas unless they are linked to religions. But then religion has been compartmentalized, shunted off to Sunday mornings or weddings and funerals. All the big ideas we need were decided with the ratification of the US Constitution.

We can thank corporate marketers and their masters for our continuing alienation from big ideas and taste for small ones. They prefer ideas that are easily and flashily packaged, readily digested, and quickly obsolesced. They select for us ideas that can go “viral,” grabbing the attention of not thousands, but millions. They select ideas that easily fit in a two-minute TV commentary or on 6 or 8 column inches of news print. Intellectuals didn't invent the term “sound bite.” Nor did they invent “twitter.” Corporate taste makers did. So what we get in the market place of ideas are small ideas, commodified ideas with shiny packages.

Thus, it may be hard to understand how Francis Fukuyama fits into the world of ideas. We know him for his celebrated 1992 book, The End of History and the Last Man, an ambitious intellectual tome designed to place triumphant capitalism and its attendant bourgeois democracy at the pinnacle of a long historical, dialectical process. A big idea indeed!

Of course it wasn't that difficult to conjure a motive for this rising star of the Right. On the heels of the fall of the Soviet Union and the European socialist countries, Fukuyama saw the opportunity to mark "paid” to the theoretical foundations of Marxism by co-opting the Hegelian “dialectics” that Marx was schooled in and replacing the socialist ideal with something that looked remarkably like the socio-economic system of late twentieth-century US capitalism. Moreover, since Fukuyama had discovered the “end of history,” we needn't worry about any serious future military conflagrations or rebellions because we were entering the blissful era of market justice, parliamentary democracy, and human rights.

Fukuyama's big ideas can take small credit for the pious military crusades led by the US ruling class in the Balkans, Iraq, Afghanistan, and recently in Libya and Syria, as well as the meddling in Eastern Europe, the Middle East, Latin America and Africa. Those who failed to accept the end of history soon felt the wrath of history's enforcer. At the same time, the resistance to Fukuyama's vision of history's end challenged his big idea. The intense confrontation between the US and peoples in the Middle East and Latin America shattered the idea that with the demise of the Soviet Union the world would rush to embrace the values of the US and Europe.

With the “end of history” forestalled by unforeseen events, Fukuyama knocked around the research institute/think tank/academic circuit, writing books and resisting the temptation to join the courtiers of the mass media trading in small, nasty ideas. He passed on the enormous earnings available to the likes of the O'Reilly's, Limbaugh's, or the other aristocrats of wind-baggery. Instead, he scoured the landscape to find new opportunities to float big ideas.

And now he's back with a new big idea.

Fukuyama won a think-piece in the June 28/29 weekend Wall Street Journal entitled “The Middle Class Revolution.” He argues that “All over the world, today's political turmoil has a common theme: the failure of governments to meet the rising expectations of the newly prosperous and educated.” Cognizant of the worldwide mass risings of recent years, Fukuyama chooses this moment to offer an explanation, a theoretical explanation for those risings, an explanation palatable and comforting to US elites.

He rightly understands that linking the most recent mass upsurges requires sizable ideas. While there are many similarities, there are many differences as well. Successful exposition of their common features would tell us much about the underlying processes and likely offer a glimpse into the future. In short, it would give us a theory of contemporary social change, a decidedly big idea.

Unfortunately, he gets it all wrong.

He builds his case around reflections on events in the streets of Tunisia, Egypt, Brazil, and Turkey, a mixed collection neither reflective of all of the mass activity of our time nor sharing many common features. Seduced by recent headlines and sensationalist accounts, Fukuyama finds the “middle class” as the revolutionary agent in all cases. Besides the elusiveness of the term, he offers no evidence beyond youth, cell phones, and the presence of a vaguely sensed entrepreneurial spirit to justify the assignment of this role. And he is equally slippery in explaining what constitutes a “middle class.” Instead, he considers a series of candidates: income ($6,000-30,000 year), relative income (the middle of a country’s income distribution), and relative level of consumption (greater than the subsistence level of the poor). Rejecting these, he settles on “education, occupation, and the ownership of assets,” none of which is produced as evidence regarding any of the particular countries under review. In fact, the demographics of the four “revolutions” fail to show common attributes; nor do they demonstrate a rising of the “middle class.”

When Mohamed Bouazizi, a fruit vender in Tunisia, set himself afire in December of 2010, he became the symbol for the uprisings that pundits have dubbed “the Arab Spring.” Tunisia, under Ben Ali, was one of the success stories of neo-liberalism, a poster child for corporate-friendly “competitiveness” and foreign investment. Its industrial and service economies were relatively well developed. 

While the neo-liberal regimen delivered growth, modest GDP/capita, some social benefits (education and welfare), it was rocked by the economic crisis and the scourge of high unemployment. The youth (constituting nearly half of the population) endured one of the world's highest unemployment rates: 30.7%. As in the US, Tunisian youth are relatively well educated, but denied access to meaningful employment. The relative affluence of Tunisian elites enjoying the fruits of a growing economy and the lack of opportunity for a youthful population spurred the overthrow of Ben Ali.

Egypt presents a different picture. While Sadat and Mubarak also embraced the tenets of neo-liberalism, they did so in the shadow of Nasser's legacy of anti-imperialism, public ownership and social welfare. Moreover, free market capitalism fared far worse in this country. Despite a large industrial base and due, in part, to a relatively large agricultural sector (56.5% of Egyptians live outside of urban areas), Egypt achieved a GDP/capita roughly only 2/3 of that of Tunisia. 

But Egypt shares with Tunisia an extremely youthful population with massive un- and underemployment. With little government educational expenditure, it is no surprise that Egyptians have a relatively low participation in higher education.

Egyptian professionals-- the social base for the Muslim Brotherhood-- could count as a “middle strata,” though they are a small part of the population. Most Egyptians, however, enjoy an income only marginally above poverty, marking membership in what would properly be considered the working class.

The global economic downturn only brought the plight of young Egyptians to the fore and prompted mass action and the deposing of Mubarak. The subsequent Morsi presidency brought a further disintegration of the economy and a spike in unemployment and poverty. The Muslim Brotherhood failed to attempt an exit from neo-liberalism and restored the foreign policy of Mubarak, even betraying the Syrian government to imperialism.

The people have again taken to the streets. In the words of Salah Adly, General Secretary of the Egyptian Communist Party, Egyptian Communists believe “that what happened on 30^th June is a second wave of the Egyptian revolution that is stronger and deeper than the first wave in 2011. It has taken place to correct the path of the revolution and seize it back from the forces of the extreme religious right...”

The street demonstrations in Turkey, a country that has one historic foot in the Arab world and a tentative one in Europe, is more a political struggle than an explosion of economic discontent. Turkey's demographics are similar to a European country, a poorer European country like Portugal or Poland, but with a much higher percentage of youth in the population. The Islamist president Erdogan represents cultural traditions that conflict with that of more secular youth. Of course others, including workers, who have economic demands, support the demonstrations, as do unemployed youth. But they do not challenge the structures of bourgeois democracy or monopoly capitalism. Turkish Communists recognize this fact. As Kemal Okuyan, a member of the Central Committee of the Communist Party of Turkey, states “... this is an outburst of a huge social energy. It is powerful in extent and effect. But there are some Marxist criteria for defining a situation as a revolutionary crisis. We are far from that. At least for now...”

Brazil, Fukuyama's final example of a “middle class” revolution, demonstrates its own unique demographics and weaknesses. Despite showing exceptional economic growth, Brazil counts as one of the most economically unequal countries in the world. Highly urbanized, Brazil's poverty is concentrated in city neighborhoods, with all of the attendant social problems of poverty intensified. The large and growing service sector affords enough jobs to contain unemployment below crisis levels. But grinding poverty and the contrasting extreme concentration of wealth produce a persisting tinderbox.

Brazil's social democratic government has shown occasional anti-imperialist spunk, standing up to US arrogance at different times. This, along with the government's competent management of the capitalist economy, and some social welfare initiatives, has spawned national pride. At the same time, support for the government is fragile because of its inability to dent the massive economic and social inequalities suffered by working people. This contradiction between national sentiment and contempt toward the working class was brought home by the mass objection to new soccer stadia, in a soccer-crazed country, expressed by the mass demonstrations.

Clearly what all of these countries do share is a popular response to the failure of leaders, institutions, and political parties to overcome the legacy and reality of colonialism, imperialism, and global capitalism. Fukuyama hides this failing behind the mythology of middle class dissatisfaction with the level of consumerism and cultural expression: they rebel because they want to be like us in Europe and the US. One would never guess that an almost unprecedented and persistent economic calumny has shaken the social and political foundations of nearly every country over the last five years. One would never guess that all four of the countries under discussion suffer from severe economic and political problems unsolved by their past and current leaders.

In Tunisia, Ben Ali's embrace of neo-liberal fundamentalism was a bankrupt answer to youth unemployment. In Egypt, corrupted leaders brazenly counted on the accommodation with imperialism to prop up their aloof rule over an abused people. Turkey's leader, like politico-theological leaders of other persuasions, overstepped the limits of governance and opened the door to airing the many grievances of the opposition, formerly trumped by religious commitment. And Brazil's social-democratic government learned the folly of attempting to manage capitalism while promising to rectify its inequities.

From the Indignados to the Occupy movement, from the revival of the Latin American left to the Arab Spring, authentic popular up-risings have emerged from the failure of capitalism to deliver the future and security so seemingly assured before the great crisis of 2008. Millions have been failed by the institutions, parties, and leaders that they formerly trusted. It's not as though they have been dealt a bad hand, but it is as though there is no good hand to be found in the deck.

Spinning theories based on such a corrupted sociological idea as the “middle class” guarantees failure. Of course one can't blame Fukuyama entirely for buying in on one of the great intellectual frauds of our time. Everyone, from the Chamber of Commerce to the misleaders of labor, likes to remind us that we are all members of a vast collection of people located economically between the rich and the poor. Within this distorted picture there is something for everyone. We all share home ownership, a good job, vacations, family, and comforting values, so the fantasy goes. The unfortunate poor are with us because they have failed, though they deserve our compassion and, perhaps, our charity. The rich are with us because they are successful and merit our respect. This harmonious picture is only disrupted when the rich get too greedy or the poor get rebellious.

This myth serves the ruling class, their political flunkies, and labor's class collaborationists in maintaining class peace and stability. But most importantly, it obscures the real class divide between employers and employees.

The divisions that spark genuine revolution are not between some muddy notion of a middle class at odds with an equally obscure specter of government, but between the power and dominance of capitalist corporations and the diverse and largely unrepresented workers who enrich them. This sharply drawn class division accounts for the fundamentally economic, but also cultural and spiritual alienation of youth. Whether conscious or not, this division generates discontent and outrage. Expressed in many ways, the conflict between the employers and their employees stands behind the conflicts of the twenty-first century. And only its resolution in favor of the employee class – the working class-- will bring these conflicts to a close.

It's not a new idea; it's a big, but not too big of an idea; and it’s an idea that promises an escape from the failure of capitalism: Socialism.

Zoltan Zigedy

zoltanzigedy@gmail.com

Storm Clouds?

As the panic over the destiny of the Federal Reserve's “quantitative easing” program reaches hysterical proportions, uncommonly bizarre economic anomalies are surfacing. In the last week of June, the news that first quarter US Gross Domestic Product growth report was reduced dramatically from 2.4% to 1.8% was met by an equally dramatic, but paradoxical positive jump in equity markets. Normally, a rather staggering drop in GDP estimates would trigger stock market losses-- investor confidence would be battered. But the opposite occurred. 

What's going on?

Pundits and investors hailed the bad news because they hope that it will keep the Federal Reserve committed to the $85 billion per month bond purchasing project dubbed “quantitative easing.” They believe that the Fed would not dare to relax the program in the face of poor economic performance. And they recognize that without the Fed’s foot firmly pressing the accelerator, the capitalist economy will stagnate or slow. The Federal Reserve program is truly a life-support system for our economy, and capitalism's apologists recognize that they are in deep trouble without it. Therefore, investors welcomed the fall in GDP growth!

Even Paul Krugman, the popular voice of social democratic theory in the US, has caught the contagion of fear. In a late-June appeal in The New York Times (Et tu, Ben?) to Federal Reserve head, Ben Bernanke, Krugman calls for the Fed to keep its foot aggressively on the gas pedal. A firm advocate of an alternative policy option, fiscal stimulus (spending on infrastructure, public works, etc), Krugman holds his nose and urges the continuation of the Fed's monetary stimulus program of printing money for bond purchases.

So why can't we just all agree to get along and urge the Federal Reserve to keep printing dollars?

In the first place, the Fed's policy of dollar-printing promiscuity is losing its healing powers. The effect of the purchase of government debt-- Treasury notes-- in order to restrain bond yields and interest rates has diminished since mid-2012. Moreover, the Fed remedy has lost its magic entirely in May and June of this year, with the yield on the 10-year Treasury note rising by two-thirds, mortgage rates jumping about 27% from March to the end of June, and the US and European (except Germany) bond market experiencing a sell-off. All of these indicators demonstrate that quantitative easing, as a stimulus policy, is simply losing its punch.

The Federal Reserve sees its injection of $85 billion into the economy every month as a hedge against the dreaded deflation, a sure companion to stagnation or negative growth. They watch to see when inflation crosses their target of 2% in order to slap on the brakes to avoid an overheated economy. But there is no reason for the Fed to fret: inflation is well below their target, a clear sign that without monetary stimulus we would be in a deflationary period. Corporations are hoarding cash rather than investing: they are holding 5.6% of their total assets in cash, against a forty year average of 4.4%. It was weak business investment, in part, that caused the first quarter GDP growth revision downward by 25%.

The Chicago Federal Reserve's three-month moving average National Activity index remained in negative territory, underlining the diminishing effects of quantitative easing.

Aside from its ineffectiveness, quantitative easing poses more serious, more fundamental problems: Fed monetary promiscuity distorts markets and masks underlying economic processes. Given that a capitalist economy is an enormously complex organism made up of mutually interactive actors, commodities and processes, manipulating some of the central elements such as interest rates, the money supply, debt growth, etc. can have unforeseen and damaging repercussions in other sectors of the economy. Mechanisms fail and balances are disrupted. A therapy becomes an injury. This is a lesson that the leadership of the Peoples' Republic of China is learning from the volatility created by its shadow banking sector. Even with majority public ownership of the biggest banks, the informal private sector distorts the impact of policy decisions.

In Marxist terms, the massive Federal Reserve intervention in financial markets violates the law of value. That is, it replaces the exchange of equivalent-for-equivalent in financial markets, with exchanges determined independently of market forces by the officers of the Fed. Those exchanges must, at some point, be reconciled; but in the meantime, they distort exchange relationships in other sectors of the economy. They create a disconnect between the financial sector and the signals sent to the productive economy. They distort the rate of profit in the financial sector, channeling capital into speculation and over-reliance on cheap credit. It’s no wonder that corporations hoard cash and seek higher returns on retained capital and easily available capital.

In reality, quantitative easing invites the very conditions that led to the 2007-8 collapse.

And we are now seeing omens in the economic data.

The exuberant 2013 stock market is suffering a retreat, but even more ominously, demonstrating growing volatility. Last year, the small investor jumped back in the market, a sure sign that a bear market was in sight. Much of the volatility comes from market manipulators exploiting the amateur day-traders. Like the swaggering Vegas weekend gambler, they are ripe for the picking. One can watch the picking by following the end-of-day trading; they don't know when to get in or when to get out.

US exports are pulling back.

The post-World War II record profits reported in 2012 are threatened. Of 108 companies scheduled to report profits in the second quarter of 2013, 87 offered negative guidance to their shareholders. Falling profits, contrary to underconsumption theorists, are a better predictor of a downturn than falling consumption. Consumption generally falls as a result and as an amplifier of economic decline.

Today, US consumption hangs precariously in the balance. While savings are declining, wages are in free fall. The year ending in September 2012 experienced a wage decline of 1.1%. First quarter estimates augur a shocking decline. The consumer is simply running out of money, savings, and available credit.

And the just announced June unemployment figures actually show an increase in the more telling U6 calculation to 14.3%. That rate includes those who have dropped out of the job market and those working part-time but desiring a full-time job.

Not a promising picture.

In most of the world's capitalist countries, the labor movements and left political parties have yet to decouple their fate from that of the monopoly capital, profit-driven, market-governed system. They are like ships on turbulent waters unwilling to bring their vessels and crew to port. They are simply counting on the storm to subside. They are neither prepared for nor expecting a hurricane or a shipwreck. After five disastrous years, one would hope that left and labor leaders would began to look for alternatives to capitalism, a safe haven for their fellow passengers.

Zoltan Zigedy

zoltanzigedy@gmail.com