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Print Demand, Don't Succumb
Mar 26, 2009 By Michael Albert
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The current economic crisis disrupts an already monumentally despicable system. The crisis makes what is horrible, horrific. But what can one do?
Is it useful to propose paths forward that lead back to the past? Should we celebrate attitudes that have no hope for anything more than recycling attenuated hardship? Should we proceed as if we have not even an inkling of an inclination to seriously change basic economic relations? Or should we get radical?
When elites look at a crisis that threatens the whole system, they too want to get out of it. But they want to minimize their own losses and ensure that the path out of temporary crisis doesn't reduce their advantages for the long haul. They want to escape current disaster, yes, but they also want to avoid what they consider permanent disaster - a system that works, but not solely, or even mostly, for them.
In other words, for those pulling the policy levers, the highest priority is not fixing things but avoiding long-term losses for owners and to a lesser degree for managers and other rich folk. True, the government's concern is not for each and every rich person. Some of the most transparently egregious money hoarders will be tossed under the proverbial bus, so to speak. The government's concern is for the money hoarders as a whole. The government's intent is to maintain the relative position of the owning class.
Thus, government proposals to escape the current debilitating disruptions and ward off impending disasters are constrained by what policy makers consider allowable. By dictate, corrective policies are not allowed to substantially raise the relative power of working people. That is the bottom line constraint that leads our government to enact half assed programs that pour social assets into rich people's institutions while not even considering for a second the possibility of stimulating the economy via charging the rich and benefitting the rest.
It is as if someone's heart stops and the defibrillator is parked right near the patient's bed. However, there is also a silent order from the Hospital's administration - a kind of unspoken bylaw of medical policy - doctors cannot use the defibrillator. Doctors, and in our case it is doctors for the economy, have to resurrect the dying patient, but they can't do it with the defibrillator. What is the "defibrillator" the economic doctors have to avoid? Redistribution of wealth and power.
The two most obvious elements of the economic mess the economy is currently spiraling ever deeper into are housing and jobs. This is not the whole of it, by any means, but let's focus on these two aspects, here.
Houses were overvalued - the famed housing bubble. As housing valuations came back to earth, foreclosures ensued and banks lost assets. The banks' financial problems are hard to track due to incredibly convoluted trading of mortgages wrapped up in "leveraged" securities that are sold again and again among the rich. But the basic situation - the collapsing investment values of the banks, and the declining house values and increasing mortgage payments of homeowners, together percolate into massive foreclosures, reduced bank loans, and reduced consumer spending. Declining revenues from the resulting curtailed sales then produce more cuts in lending and still less spending. It all reduces demand for final products which in turn causes cutbacks in their production. The production cuts lead to pink slips.
Next, those who lose their jobs, or who start to fear losing their jobs, defensively cut back their consumption, whether they have housing problems or not. Now we are in a real mess because this in turn leads to more firms reducing output, which means they fire more workers and have no jobs available for those who have been fired elsewhere. Housing begets slowdown begets firings begets more slowdown begets more firing.
Other dynamics contribute, and radical and even a few mainstream economists have been offering plenty of good analysis of the very detailed proximate causes that have been at work. What has been largely missing, however, is commentary that clarifies that it isn't greedy individuals but an institutional framework called capitalism that brings the disruption and that compels escalating exploitation of the poor. But the issue that is getting even shorter shrift is formulating plausible, desirable proposals for going forward.
Now I don't mean to say that finding such proposals is easy. I don't begin to understand macro economics - and I studied it in school, oh so long ago - though sometimes I wonder if the professional economists have all that much better understanding than me, or than the average person getting evicted or being handed a pink slip. Maybe the proposals I offer below would do the trick - or perhaps they would have effects I haven't foreseen that would need to be addressed by refinements. Maybe they would even have problems that would make them unwise or counter productive. That all has to be assessed. What I am sure about, however, is that the attitude behind the proposals offered below is very different than the most prevalent attitudes all around us. And we need new attitude.
Regarding housing, to start, how about we simply pass a law, no more foreclosures. Period. It is not allowed. No one should be denied their home because of a crisis which has enriched the rich at the expense of the poor. Oh wait, we need a caveat. If mansions are foreclosed, so be it. No house valued less than, say, $1 million can be foreclosed. More than that, no problem. So we start with the end of non rich people losing their homes due to the crisis. Up until when we win the no foreclosure act of 2009, of course, we should continue to organize to prevent foreclosures case by case and to forcibly forbid evictions, as part of making the more comprehensive demand.
But if the banks et al. can't foreclose, because we block their doing so, or we win a new law, what is to prevent people from simply ceasing to pay their mortgages? Answer: that's not allowed either, unless, that is, one can make a case that paying is beyond one's means due to the crisis affecting the value of one's home, the mortgage interest rate, or one's income. If any of that pertains, the mortgage is refinanced so it matches available means.
How do we determine people's available means? Life is messy, and no procedure will be perfect, but how about all those who say they must refinance due to crisis conditions, and who live together in a legislative district, must gather together, present their cases openly, and then collectively settle the rates for their rewrites. The district's legislators help and mediate. So do local high school civics teachers. They all facilitate.
Legislative districts are by the new law entitled to some total write down percentage on the sum of all their homes. The lower the average income if residents, the more overall write down is allowed. Yes, this means we are redistributing. Indeed, it is best to do that at every opportunity. Within a neighborhood, in light of its total write down options, and helped by legislators and high school teachers, neighbors who are seeking to reset their mortgages must cooperatively negotiate with one another the percentage of that total write down that each petitioner should have, given each person's plight as compared to the plight of others.
In other words, people in the legislative district have to act together in light of their relative real needs, taking account of one another, in order to move the process forward. It is all done in public, in participatory, assembly style meetings. Full cases are offered. Maybe local journalists can investigate the veracity of suspect claims.
Will some folks offer deceptive stories and get away with some lies and thereby gain when they shouldn't? Yes, it could happen in some cases. But so what? They have been ripped off of their dignity and material well being for ages. Anything that exceeds propriety after such public negotiations wouldn't begin to approach in scale or in impact the venality of what the rich do daily, much less what they do with taxpayer-financed bonuses.
This housing approach would, of course, cut into the profits of many institutions. But that is not a problem, it is another virtue. Can we get that straight? We leftists who are concerned with justice do not genuflect to profit. So why do even leftists often act as though profits declining is a bad thing? Oh, yes, I know, it's because if profits drop, owners want to stop operating their workplaces. It turns out, therefore, that we need to impose another law.
Any business with more than 20 employees or more than $5 million in assets cannot stop operations due to feeling that profits are going to be too low to warrant continuing. To retain their legal claim to own a profit making firm, owners must do their best to operate it to meet social needs. We are enduring a crisis. Owners should bear the brunt of the cost. Do owners want a supplement for lost income? No problem. They should try working.
What would give this law teeth? Any owner of any firm that wants to forego serving the public interest by ceasing to produce and distribute to meet needs is free to personally stop. That's their choice. However, having chosen to stop, the owners' firm is immediately turned over to the workforce and the surrounding community to keep it operating. The owners' deed to the firm is abrogated. And there is no selling to overseas buyers, either, or moving the firm's residence. Try any of that that, and the firm is turned over to the employees. That's society's choice.
What about employment? Demand has already dropped and is dropping further. To deal with needing to produce less output due to facing reduced demand, firms fire workers. We don't want that, so we need another law. There will be no firing until the crisis is passed. None. We don't want firing, so we outlaw firing. The owners won't like that. Tough. They are the masters of the old universe, not of the one we want to live in.
But how can owners keep just as many workers, yet produce less output? They can cut back hours for each worker. That way they keep all their workers employed but they can also have a total output at whatever level is needed. But wait - unless we make another rule, cutting back work hours would reduce overall incomes the same as just some people getting pink slips would. It would reduce overall demand and continue the spiraling problem of less demand inducing less production causing less demand, further reducing production, etc. Well, we can just adapt our new law.
Firms can and should cut hours in order to not overproduce when output must be reduced to avoid waste. That's fair enough. However firms cannot cut their total wage bill. Worker income cannot suffer due to the shortening of work time. If a workers' hours drop from 40 to 30, say, or more likely from 60 or 50 to 40, he or she still gets paid the total that he or she was earning at the greater number of hours. This means we are raising hourly wages. If you get the same income for 30 hours as you got for 40 hours and you were earning $10 an hour before, now you must be earning $13.33. With this approach, the total wage bill does not drop. Demand does not drop. Workers are working fewer hours, but with no cut in their total incomes. Additionally, we can impose that hourly wages cannot be cut during the crisis - at all. So be careful owners. If you unwisely cut back production, you will have to raise hourly wages. If you later increase production back up, increasing hours for everyone, you will have to maintain wages at their elevated level! It is probably better to drop your prices a bit and sell more, than to cut production when purchasing power declines.
Let's suppose those hearing this program are really relentless about pursuing justice. They say, hold on, what about the millions of currently unemployed? Why should they continue to suffer? So let's deal with that too. How about, right off, all firms must reduce the work week of all staff by 10%. Then, to keep producing at current levels, they must immediately hire new employees to make up the ensuing loss in output. At that point, if the firm wants/needs to reduce hours further for everyone, so be it - wages stay up - as described above. But then someone points out that all this extra wage burden will decimate profits. But our reply is: so what? You bet it will. That's the point. For at least the duration of the crisis - and we can hope this kind of thinking will catch on and persist forever - owners will have to operate pretty much without profits, and even taking losses, which means we are finally redistributing in the ethically and economically right direction.
So what have we got?
We have no more people losing their homes. We have no more exploitative mortgages ruining lives. We have no more pink slips being handed out. We have new jobs for the currently unemployed, and yes, enlarging green jobs and expanding education and other infrastructure are totally compatible with and would be enhanced by all this. The above would fit with, and advance, additional programs to have local banks under community control finance socially valuable projects, provide loans to firms in trouble with conditions requiring enlarged worker participation in decisions and reduced wages for executives or profit sharing with all workers and perhaps even the surrounding communities, raised emission standards, etc.
But even just addressing the two aspects highlighted in this essay, we also have increased wages per hour for everyone (or better, for everyone below some high target wage level) - and we have lots of new taxes on all that income for additional socially worthy programs. We also have workers enjoying leisure. And we have that the only people hurt by it all are the rich, and quite properly so. It is not, however, a punishment for bringing on the crisis. They didn't bring it on, capitalism did. They are losing wealth because they have too much, and need to be pulled back into this universe.
Okay, is there some technical problem in all this? Probably there is. After all, the system is so ingrained to go berserk about even the most minuscule deprivation for the rich that there are bound to be many additional regulatory features needed to avoid a berserk system. Or maybe the whole proposal needs an overhaul. The point is, we need to conceive seriously radical options that can actually lead where we ought to be going. And then we need to fight for them.
In other words, leftists should have demands that represent our desires, rather than having demands that assume that our desires shouldn't be uttered in polite company.
If we aren't strong enough to win all the above, we work toward getting that strong. More, having demanded all the above, we will have so scared the rich and powerful about what kind of activism may be just over the horizon that they will agree to more than they would otherwise. We will have also opened the debate, begun the thinking that can lead forward, not back.
More, just because we have a comprehensive program giving a coherent logic to our desires doesn't mean we seek nothing less, but on the way to that program. In workplaces and neighborhoods workers and residents pursue tactics, strategies, and local demands that make sense where they are. The overarching program discussed here means to provide a context in which local activity can better take place. It means to indicate where local activity should aims and threaten to go.
You know the old joke about the economist who is trying to get a can of soup open on an island. Everyone else is trying to figure out how to get the top off the can by cleverly banging the can with sticks, or by carefully utilizing rocks to squeeze it, or maybe using a fire to make it explode. The economist, delusional and devoid of concern about being delusional, simply says, assume a can opener. Well the real version of this is that for any problem economists always tell us - implicitly - to assume the system must always aggressively benefit the rich and powerful, and then work within that constraint. I am sick of working within that constraint. We should all be sick of working within that constraint.
By the way, the idea of reducing work hours and retaining total wages paid - say, paying 30 hours work 40 hours pay for those below $100,000 salary per year, and perhaps 30 hours work 35 hours pay for those between $100,000 and $200,000 a year, say, and 30 hours pay for 30 hours work for those between $200,000 and $300,000 per year, and significant hourly and thus total pay cuts for everyone making more than that - would be a wonderful demand any time at all. In fact, it would be fine by me if it was way more stringent. Let the people decide! Not only would such a campaign, in a crisis or not, be dramatically redistributive, it would also give people time to lead lives, and, dare I say it, to pursue the monumentally important work of further redesigning society.
From: Z Net - The Spirit Of Resistance Lives
URL: http://www.zmag.org/znet/viewArticle/20982
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Print Keynes, Capitalism, and the Crisis
Mar 21, 2009 By John Bellamy Foster
John Bellamy Foster's ZSpace Page
Amandla: As governments across the world spend trillions to help private capital survive the global financial crisis, is it not misleading to talk of a shift to Keynesian policies?
JBF: I think there has been, as Paul Krugman says, a "return of depression economics," and in that sense we can talk about a revival of broadly "Keynesian" policies. Keynes advocated expansive fiscal policy and deficit financing in a depression, and all governments are now seeking to put such expansive policies in place to some degree -- although generally not on a big enough scale. Also Keynes clearly advocated government attempts to reflate the economy in the face of deflationary pressures, in the context of the banking crisis of the early 1930s. So in this sense too we can talk about a return to Keynesian economics.
But the real action right now is elsewhere, in the direct government salvaging of financial capital. This has little to do directly with Keynesianism and in fact reflects the continued dominance of financial capital in the crisis. Keynes was far from being a big supporter of speculative finance and argued for the "euthanasia of the rentier." In the course of this downturn the
Those who might reasonably be called "Keynesians" of a sort today (though not nearly as critical of the system as Keynes himself), such as Paul Krugman and Joseph Stiglitz, represent a different policy mix. They would argue for a bigger fiscal stimulus and would probably be less immediately responsive to financial capital. (Another Keynesian or post-Keynesian figure of a more radical sort is James K. Galbraith.) But such individuals are not in charge today in Washington, while more decidedly conservative economists who represent the interests of Wall Street, such as Bernanke, Geithner, and Summers, are ensconced in the Federal Reserve, the Treasury, and the White House.
The fact that Keynesianism, even of the mild sort represented by Krugman and Stiglitz, is still on the outside in all of this has to do, in my view, with the shift in the nature of capitalism from monopoly capital to monopoly-finance capital beginning in the 1980s. This meant that financialization was increasingly the focal point of the economy. I wrote at length on this together with Fred Magdoff in our recently published book, The Great Financial Crisis: Causes and Consequences. The present economic catastrophe is in many ways a crisis of financialization (i.e., the shift in the center of gravity of the economy in the last three decades or so from production to finance) overlaid on deeper problems of stagnation. Hence, financial capital is still the focus during the downturn.
Keynesianism, classically, was concerned much more with what economists call the "real economy" related to production of goods and services (as measured by GDP), than with the financial economy, geared to speculation in asset prices. So in that sense Keynesianism, though given some impetus by the crisis, is still secondary to what is going on immediately, since the center of attention is still on the financial implosion.
One reason that Keynes's theory is considered so relevant today of course has to do with what he called the "liquidity trap": the interest rate falls to a near-zero level and hence monetary policy is no longer able to stimulate the economy through reductions in the interest rate. This was a description of what happened in the Great Depression and it was repeated in
Amandla: In a recent interview you spoke of the bastardization of Keynes' ideas. What did you mean and who was the real Keynes?
JBF: Keynes even before The General Theory was recognized as an outstanding, perhaps the most illustrious figure, in orthodox economics of his day, the heir to Alfred Marshall at
Keynes, as he himself emphasized in the preface to The General Theory, fought hard in response to the Great Depression to free himself from the orthodox neoclassical economics of his earlier years. This required something of a revolutionary break, which he never followed out to completion, leading to various interpretations of his theory. Monetarists, like Milton Friedman, preferred the A Treatise on Money Keynes (what we would call the pre-Keynesian Keynes) and mostly rejected The General Theory. The main group of so-called "Keynesians," like Paul Samuelson, tried to repair the damage resulting from Keynes's break with economic orthodoxy, so as to create the neoclassical-Keynesian synthesis or what is more commonly called the "neoclassical synthesis." Joan Robinson famously called this in 1962 "bastard Keynesianism," since it jettisoned all of Keynes's major criticisms of the system.
One way to understand the evolution of bastard Keynesianism (as I explained in the March 2008 issue of Monthly Review in an article entitled "A Failed System") is in terms of the way that Keynes employed the concept of "the general theory" and how that later came to be subverted. Keynes explained in the beginning of his magnum opus that orthodox economics (what we now call "neoclassical economics") was a "special theory" pertaining to a full employment economy, which in reality hardly ever existed under capitalism. In that sense his "general theory" was meant to address the usual case of an economy of unemployed resources. However, neoclassical economists after the Second World War argued that partly due to Keynes's own influence, which had led to fiscal and monetary fine-tuning, the main dilemmas that Keynes had raised hardly ever applied. As a result Keynes's own economics was reclassified as a "special theory" while the orthodox neoclassical economics, which saw the economy as naturally tending to full employment, was pronounced the true "general theory."
Under Friedman's inspiration, full employment was redefined to be compatible with actually existing unemployment through the introduction of the notion of the "natural rate of unemployment." Keynes was pronounced dead, since a depression/deflation, in which his ideas would be operative, could never occur again. Ben Bernanke, chairman of the Federal Reserve Board and an academic scholar of the Great Depression, said a few years ago that we had entered the Great Moderation, in which the business cycle had essentially smoothed out. In fact these views played a role in getting him appointed as Fed chairman. I have discussed this (together with Fred Magdoff) in The Great Financial Crisis.
Of course the truth was that Keynes's critique of capitalism never ceased to be relevant, as is now readily apparent. But economic orthodoxy was unable to move beyond Keynes to address the larger issues he raised (nor did Keynes himself in the end do so). Paul Sweezy was thus right in saying somewhere that Keynes represented the last major scientific representative of bourgeois economics. From Keynes on there was nowhere to go but the rejection of capitalism itself. Far from an apologist for the system, Keynes had written in the Yale Review in summer 1933: "The decadent international but individualistic capitalism, in the hands of which we found ourselves after the [first world] war, is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous -- and it doesn't deliver the goods. In short, we dislike it, and we are beginning to despise it." But he did not follow his views to their logical conclusion in the rejection of the system, while mainstream, bastard Keynesianism retreated from his view.
Amandla: What was the essence of Keynes's ideas and why are his ideas suddenly seen as relevant again?
The essence of Keynes's contribution was the demolition of Say's law of markets. (A secondary element was Keynes's rejection of the then orthodox theory of interest, and its replacement by one based on liquidity preference.) Say's Law argued that supply created its own demand, so that there could never be an actual glut of production. Hence, full employment was regarded as the natural tendency of the system. If there were limits to economic expansion they were on the supply (cost) rather than the demand (sales) side.
Marx had rejected Say's Law from the beginning, calling it "the childish babbling of a Say, but unworthy of Ricardo." But neoclassical economics was built on it. Keynes had to undergo a great struggle to overcome this. Part of the problem was that neoclassical economics was erected on the notion of a kind of barter economy model with money laid over the top like a veneer. Once monetary exchange was viewed as central to the inner workings of the capitalist economy it became apparent that it was possible for overproduction or insufficient effective demand to emerge. In working this out, Keynes, in his early notes to The General Theory, actually used Marx's shorthand of M-C-M¢ (Money-Commodity-Money¢ [the last equal to M + ∆m or surplus value]) as a way of figuring out the contradiction in Say's Law. (Keynes got this from a secondary source rather than from Marx himself.) Meanwhile Richard Kahn, a close associate of Keynes and the originator of the Keynesian multiplier, came up with a way of conceiving the savings and investment relation that replicated (unbeknownst to him) Marx's reproductive schema. As a result of this critique, Keynes was able to separate out more clearly the two sides of accumulation (savings and investment) and to argue that it was investment that determined savings and not the other way around as previously thought. The famous "paradox of thrift" could be explained then as excess savings (ex ante) that could not find investment outlets. In terms of effective demand as a whole, the problem was a lack of consumer demand due to income inequality, and then leading fairly naturally, but not inherently, to weaknesses in investment demand, as a normal shortcoming of the system. For Keynes the proper policy response was to increase government spending to compensate for a lack of consumption and investment demand -- to the point that full employment was reached. But this of course ran normally straight into the class barriers of the system.
Amandla: What was the substance of Keynes' critique of capitalism and how does it differ from the other great critic of capitalism Karl Marx? What are the short-comings of Keynes critique of capitalism?
JBF: Keynes, as I explained in "A Failed System," pinpointed what he called two "outstanding faults" of capitalism: an enormously unequal division of income and persistent, built-in unemployment, tending toward what was to be called an "unemployment equilibrium." Orthodox economics was by nature blind to both of these flaws, and thus was, in his view, "incompetent to tackle the problems of unemployment and of the trade cycle." Keynes made it clear that he believed that the investment or accumulation function of the mature capitalist economy was systematically depressed over the long run. As Joan Robinson wrote in 1955 in a piece on "Marx, Marshall, and Keynes," Keynes showed "that there is a natural tendency for an advanced capitalist economy to run into chronic stagnation, with permanent unemployment, and that it is by its very nature highly unstable." Yet, Keynes never provided an actual theory of stagnation, and those early Keynesians who did so based on his suggestions, such as Alvin Hansen, also fell short of what could be seen as a complete theory of the stagnation tendency of advanced capitalism. It was thus left to Marxist theorists, such as Michal Kalecki, Josef Steindl, Paul Baran and Paul Sweezy, to develop this further.
Keynes by the time he wrote The General Theory no longer believed in the harmonious self-regulation of capitalism, along orthodox lines, as represented by Hayek and neoliberalism. As Robinson said, Keynes represented "the disillusioned defence of capitalism." He tried to deal with what he saw as the system's major flaws through various technical fixes, probably knowing that this would never be sufficient. He could never get himself to wage a full-fledged critique. Keynes still hoped for a kind of rational capitalism, as I explained in my article "The End of Rational Capitalism" (Monthly Review, March 2005). Still, his critique was so radical in its implications that his analysis was not acceptable to the system except at those moments when its back was against the wall. Keynes went so far as to point to the need of a "somewhat comprehensive socialization of investment," the "euthanasia of the rentier," lessening of income inequality, and limited controls on international capital flows. All of this meant that he remained a "dangerous" figure from the standpoint of the system.
To get an idea of Keynes's limitations from a Marxist perspective it is useful to compare him to the Polish economist Michal Kalecki, who developed most of the essentials of the "Keynesian revolution" before Keynes himself. Kalecki was a Marxist economist, whose work also became crucial in defining Keynesianism. In Kalecki one finds the legacy of Marx and Luxemburg. His work contains not only a powerful critique of class-based accumulation and imperialism, but also a developed theory of monopoly capitalism. Keynes lacked all of these elements. A particular deficiency was Keynes's continued adherence to notions of pure and perfect competition, even though his younger colleague Joan Robinson, part of the Cambridge "circus" that helped generate The General Theory, was one of the foremost developers of the theory of imperfect competition. (Paradoxically, Robinson herself did not integrate this into most of her later work.) Kalecki's concept of the "degree of monopoly" (focusing on the price markup on labor and raw material costs) became a way of integrating class income distribution under capitalism (governed in Marx by the rate of exploitation), with concentration and centralization, and economic stagnation. All of this was essentially derived from Marx and placed in a contemporary context. Kalecki's work led to the development of Josef Steindl's Maturity and Stagnation in American Capitalism and Paul Baran and Paul Sweezy's Monopoly Capital.
The most important concept in Marx's economics is the rate of exploitation. For Keynes this is entirely missing. Kalecki, however, provided a link between Marx and Keynes (from the Marxist side) with his theory of long-run income distribution: workers spend what they earn, and capitalists earn what they spend. The trouble is that capitalist spending on accumulation is affected by expected profits on new investment, which become depressed if (among other factors) consumption is weak due to growing inequality and unemployment. "The tragedy of investment," as Kalecki said, "is that it is useful." Capital will not invest if it has a large idle capacity of plant and equipment and expects this excess capacity to grow as a result of the building of new factories and the anticipated weakness of final markets. This contradiction of accumulation, ultimately related to income distribution, explains why the
Recently, it has been more and more recognized that Keynes also pinpointed a third outstanding flaw of capitalism, and that this was crucial to his overall theory. Thus he stressed that, with the rise of the market for industrial securities and the developed financial system, there were two price structures under capitalism, one related to GDP and the other speculation in asset prices. And the correlation between the two price structures was unstable, and dependent upon unpredictable social-psychological pressures. This created enormous speculative binges, which strongly impressed themselves on Keynes, particularly following the 1929 Stock Market Crash. The socialist economist Hyman Minsky drew out the importance of Keynes's critique in this respect in John Maynard Keynes and subsequent works. From this Minsky developed his famous theory of financial instability.
Minsky's analysis, though, was still oriented towards explaining periodic financial bubbles/crises and not so much the secular process of financialization building up over decades. The analysis of financialization as a response to stagnation was dealt with systematically by Marxist economists Harry Magdoff and Paul Sweezy, in a series of works -- The Dynamics of U.S. Capitalism, The End of Prosperity, The Deepening Crisis of U.S. Capitalism, Stagnation and the Financial Explosion, and The Irreversible Crisis, written between the early 1970s and the late 1980s (with subsequent essays in the 1990s). These works were rooted in Marx-Kalecki, but also drew on Keynes, and particularly in the later years, on his critique of speculation. Magdoff and Sweezy understood that the financial explosion was not merely a phase immediately prior to the peak of the business cycle -- ultimately Minsky's view -- but a process causally interconnected with stagnation extending over multiple business cycles.
Amandla: Is it likely that as the crisis deepens there could be a shift to Keynesian policies especially if there is a new wave of struggle and resistance in the face of the bailouts.
JBF: There has already been something of a switch toward Keynesian-style policies, out of sheer necessity. But Keynesianism is inadequate to deal with the overall crisis of capitalism. Further, there is a great deal of resistance to Keynesian measures structurally from the capitalist class, as well as resistance to Keynes's ideas at the level of economic theory and policy. One has to remember that Keynes helped account for the Great Depression, but Keynesianism and civilian government spending did not lift the economy out of the depression. Rather the Great Depression ended when it merged into the Second World War. So there is no historical case of an effective Keynesian response to conditions of depression (unless you count so-called "military Keynesianism" of the kind that began in
We talk in the
In the
If you look at those economists who are taking a kind of Keynesian stance -- figures such as Krugman or Stiglitz, both of whom received the Bank of Sweden's Memorial Prize in Economic Sciences for their services to the economics mainstream -- the level of criticism of the system is very muted compared to Keynes himself. There is here no mention of the "outstanding faults" of the capitalist system or the "somewhat comprehensive socialization of investment." Until fairly recently, Krugman was a strong critic of what he called, in the title of a 1997 article (originally published in Slate), "Vulgar Keynesians." In that piece he wrote:
You might think that raising wages would reduce the demand for labor; but some early Keynesians argued that redistributing income from profits to wages would raise consumption demand, because workers save less than capitalists . . . and therefore increase output and employment [through their spending]. Such paradoxes are still fun to contemplate; they still appear in some freshman economics textbooks. Nonetheless, few economists take them seriously these days. There are a number of reasons, but the most important can be stated in two words: Alan Greenspan. . . . Indeed, if you want a simple model for predicting the unemployment rate in the
In his introduction to the 2007 edition of Keynes's General Theory issued by the Royal Economic Society, Krugman observed that Keynes was "wrong" in thinking that the economic contradictions of the 1930s would persist and that problems of stagnation would continue. I mention Krugman only because he is one of the very best liberal economists, and frequently identified with Keynesianism. He and Stiglitz and some others are certainly "disillusioned defenders of the system." But they are a far cry from Keynes himself in this respect. To be sure, Keynes, as I have noted, offered no real solution to the problems of deep stagnation, financialization, and widening inequality that currently beset the capitalist economy. Nor were his criticisms of the system ever acceptable to the vested interests.
What this means is that real solutions to the contradictions of capitalism lie not in Keynesian economics but in a revolt from below of the population, which holds out the potential for a change in the rules of the game. Joan Robinson said somewhere that a political movement strong enough to reform capitalism would also be strong enough to introduce socialism. Therein lies our hope and their fear.
Amandla: Can there be an exit from this crisis through a shift to green capitalism, i.e. massive investment in renewable energy, green technologies -- a kind of "green Keynesianism" as proposed by the folk of New Economics Foundation.
JBF: There is a lot of talk recently about "green Keynesianism." Robert Pollin and others at the Political Economy Research Institute at the
What kind of spending one does of course matters economically in the degree to which it immediately provides jobs and socially in its usefulness. Dollars spent on investments in future technology are certainly less efficient in putting people to work immediately than work relief programs. Environmental spending can of course be of either kind, but the bulk of green spending in the Obama plan is, I gather, directed at research and long-run technology and investment projects. This will not give as much bang for the buck in terms of current job promotion and in fact is heavily geared to subsidies to industry. We might even say that what is being advanced is not so much green Keynesianism as "green Schumpeterianism," since it is primarily aimed at stimulating investment with new technology.
In spending on the environment in a capitalist economy one runs up, like everywhere else, on deeply entrenched class forces of resistance. Those things that could be done to address the ecological crisis, such as the closing of coal plants and their massive replacement by other forms of energy, or the establishment of a national carbon tax with 100% dividends to the public, as proposed by NASA's James Hansen, are not done, because the vested interests won't allow it. Either it interferes with economic growth or with profits or both. Obama heavily committed himself during the presidential campaign to the continued support of big coal.
Indeed, there are really two questions here. Can a green Keynesianism lead to economic recovery? And can we save the environment this way? My take on green Keynesianism is that it is much too limited in nature, and too technologically driven, to constitute the nucleus of a full economic recovery. In fact, we are faced with a deep, long-lasting problem of economic stagnation and the crisis of financialization, as discussed in The Great Financial Crisis, which Keynesianism by its nature can do little to address. With regard to the environment -- to be understood as by far the most serious challenge of our time since the climate, the earth's species, and human civilization are all threatened -- what is currently needed is not an economic recovery plan or faster economic growth, but an ecological revolution. This would necessarily be a social revolution, on a far more massive scale than anything yet imagined. This is an issue that I have addressed in my forthcoming book (to be published in April) The Ecological Revolution.
Keynes can help us understand the flaws of capitalism but he cannot take us very far down the road to meeting the challenges of the twenty-first century. His practical suggestions were in the end simply limited to trying to fix what he called "magneto" (or alternator) problems. He avoided directly addressing the larger contradictions or "outstanding faults" of capitalism that he saw. He never got beyond advocating more in capitalist terms, while we live in a world where we need to focus on enough. For this we need not Keynes (or Schumpeter), but the much more revolutionary -- economically, socially, and ecologically -- figure of Marx. (See my Marx's Ecology.) Keynes represented the last great scientific defender of a "rational capitalism" that has now proven to be impossible.
This interview also appears in Amandla.
From: Z Net - The Spirit Of Resistance Lives
URL: http://www.zcommunications.org/znet/viewArticle/20930
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Mar 09, 2009 By Michael Albert
Michael Albert's ZSpace Page
In the March 21st Nation and the Nation online on March 4, there is a welcome foray into addressing vision and strategy, a symposium built around Barbara Ehrenreich and Bill Fletcher's provocative essay, "Reimagining Socialism."
Ehrenreich and Fletcher report that capitalism, always despicable, is now in a "death spiral," wisely adding that today's horrible dislocations warrant seeking a better system, not voyeuristic celebration.
They also claim with some exaggeration, I think, that there is not much U.S. economy left to redefine, merely paper thin banking, insurance, and the like, but then accurately add we would need much new Green, humane, creation to meet needs and develop potentials.
But the main contribution is that they then ask: "do we have a [shared] plan?" and they forthrightly and accurately answer that we don't, and that we need a "deliberative process for figuring out what to do."
Immanual Wallerstein replied in the Symposium that indeed there is a "death spiral" of capitalism and what will follow will be worse unless we have a "clear and coherent" shared vision and related strategy. Wallerstein argued compellingly that we must create militant opposition now, to push Obama and other elites in desirable directions, but also "organize at a thousand levels and in a thousand ways to push things in the right direction." But what is the right direction?
Tariq Ali questioned, in the Symposium, the "death spiral" expectation, but mainly added that "until the emergence of a viable sociopolitical and economic alternative, perceived by a majority as such, there will be no final crisis of capitalism." I agree, but then mustn't we prioritize developing and advocating such an alternative? Ali also concisely argued, "Without action from below, there will be no change from above." But then don't we need to soon create organization that has program and structure sensitive to future vision? In my own view, all this has been the priority case for a long time, so of course we should re-offer or newly offer ideas about vision and strategy. Here are ten related claims (actually first offered at a Z sponsored Symposium in 2006), that may help get the ball moving a bit faster and further than otherwise.
Claim 1: Need Vision
First, as Ehrenreich and Fletcher highlight, we need shared institutional vision to inspire hope, incorporate the seeds of the future in the present, and guide gains that will take us where we desire.
Opponents of the importance of vision emphasize that a proposed vision can congeal inflexibly to exclude new insights, can fuel sectarianism, can overextend into details that aren't knowable, consequential, or a matter for prior determination, and can become frivolous and divert attention from more important concerns. Worst, a proposed vision can be monopolized as a bludgeon to aggrandize power.
These worries are warranted, however the answer is not to reject having vision, but to collectively deliberate on and arrive at vision flexibly. We should focus on essentials and not overextend. We should share and continually refine results widely, openly, without elite jargon or posturing.
Claim 2: Classlessness
Classlessness ought to be part of our economic goal. We know we must end the rule of the capitalist class over labor. But for classlessness, we must also end the rule of the coordinator class over labor.
To have classes means to have groups that by their economic position have different access to income and influence, including benefiting at one another's expense. Attaining classlessness, in contrast, means establishing an economy in which everyone is equally able to participate, utilize capacities, and earn income.
We cannot eliminate the distinction between those who own means of production and those who do not own means of production, unless no one owns means of production, or, conversely, and what amounts to the same thing, unless everyone owns means of production equally. That much is an obvious tenet of advocating a new classless economy beyond capitalism. All socialists, past and present, accept this view.
But class division can also arise due to a division of labor that affords some producers, who I call the coordinator class, far greater influence and income than other producers, who I call the working class.
A modern capitalist economy has owners or capitalists. It also has people who have no economically structurally built-in power other than owning their own ability to work, or workers.
An additional insight we need to share is that capitalism also has a third coordinator class, who, though they sell their ability to work like workers, unlike workers have great power and standing built into their position in the economic division of labor.
These coordinator class lawyers, doctors, engineers, managers, accountants, elite professors, and so on, by their position in the economy accrue information, skills, confidence, energy, and decision making access. They largely control their own tasks. They largely define, design, determine, and even control the tasks of workers below. They utilize their empowering conditions to enhance their position both at the expense of workers below and capitalists above. Yes, they are subordinate to capital and can be pushed down from above. But they are also above workers, and push them down still lower.
Capitalism is by this account mainly a three class system. Seeking classlessness therefore means not just eliminating capitalist rule, but also not constructing coordinator class rule in its place. "Out with the old boss in with the new boss" does not end having bosses. To eliminate private ownership but retain the distinction between the coordinator class and the working class would ensure that the coordinator class rules the working class. This type change can end capitalism, but it will not attain classlessness.
In other words, our desire for classlessness must take us beyond what have been called market socialism and centrally planned socialism - which systems have in fact been market coordinatorism and centrally planned coordinatorism due to the fact that they elevate the coordinator class to ruling status above workers.
Our movements and projects must not only be anti-capitalist, that is, they must be pro-classlessness. They must prioritize both eliminating the monopoly of capitalists on productive property and also the monopoly of coordinators on empowering work.
Claim 3: Our Values Forefront
Beyond classlessness, we also ought to seek positive economic values including equity, solidarity, diversity, self-management, ecological balance, and economic efficiency.
To be against something bad - such as class division and class rule - is very desirable, of course. But rejecting bad features does not easily generate clear standards for positive goals and claim 3 is about positive values.
Economics affects how much we each get from what we all produce. We want equitable outcomes and what's equitable is that each person who is able to work receives back from society in proportion to what they expend at a cost to themselves in production. We should be remunerated, that is, for the duration, intensity, and, when it varies from person to person, the onerousness of our socially valued work.
This is a matter of preference, of course, not proof. It is a value, an aim, a norm, not some kind of natural law, but it is certainly consistent with history's most morally enlightened thought. Moreover, remunerating effort and sacrifice also provides appropriate incentives to elicit what each individual has the ability to in fact withhold or provide, which is his or her socially valuable time, intensity, and willingness to endure hardship.
Economics also affects relations among people. Anyone who isn't pathological would presumably prefer to have people concerned with and caring about one another in a cooperative social partnership - rather than seeking to fleece one another in an anti social competitive shoot out. Thus, a second value we can seek to implement is solidarity.
Economics affects our range of available options. We are limited beings who have neither time nor means to each do everything. We are also social beings who can enjoy vicariously what others do that we cannot. And finally we are thinking and pragmatic beings who can benefit from avoiding over dependence on narrow options that leave us stranded if some of those limited options are flawed. Diversity of options, our third value, enriches possibilities and protects against errors.
Economics affects how much say we each have over what is produced, in what quantities, by what methods, with what apportionment of people to tasks, and with what product allotted to people. Economic decisions determine outcomes that in turn affect us and even the act of decision making itself also affects our mood, our sense of involvement and efficacy, and our sense of personal worth.
There is no moral or operational reason any one able person should have excessive say compared to how much they are affected, nor insufficient say compared to how much they are affected. One decision-making norm can apply to all socially involved people, yet also respect the variation of conditions from case to case.
That is, we should each have a say in decisions in proportion as those decisions affect us. No single methodology such as majority vote, two thirds vote, consensus, or single method of information dissemination and deliberation will optimally fit all cases. What will suit all cases, however, is the overarching self management norm by which we choose among possible means of decision making in each instance.
Economics also affects relations to our natural surroundings. An economy should not compel us to destroy our natural habitat nor should an economy compel us to so protect the natural habitat that we are left no means with which to fulfill ourselves. An economy should reveal the full and true social and ecological costs and benefits of contending choices, and convey to workers and consumers control over what choices to finally implement. In that way we can cooperatively care for both our environment and ourselves, in proportions that we freely choose.
Economics finally of course also affects the social output we have available for people to enjoy. If an economy abides the above values but wastes our energy and resources by failing to meet needs and develop potentials, by producing harmful byproducts that offset the benefits of intended products, or by splurging what is valuable in inefficient actions that waste assets needlessly, it will diminish our prospects. Even as an economy operates in accord with equity, solidarity, diversity, self management, and ecological balance, it should also efficiently utilize available natural, social, and personal assets without undo waste or misdirection of purpose.
Claim 3 is that economic institutions should by their operations and outcomes advance equity, solidarity, diversity, self-management, ecological balance, and productive efficiency, not violate much less obliterate them.
Claim 4: Economy is only part of Society
A new and better world will include new and better economics, yes, but also new and better relations of kin and family, religion, race, and culture, law, adjudication, and collective action, ecological arrangement, and international organization, as well as more specific parts of life in these and other dimensions as well, such as science, art, education, health, and so on.
We therefore need vision to learn, inspire, rebut cynicism, and guide practice not only for economics, but for kin relations and socializing, cultural and community relations, legislative and juridical relations, ecology, and international relations.
More, just as our economic vision and strategies provide a context that feminist vision and strategy, cultural vision and strategy, political vision and strategy, ecological vision and strategy, and global relations vision and strategy must abide and augment, so too, in reverse, feminist, cultural, political, ecological, and global relations vision and strategy provide a context that pareconish economic vision and strategy must abide and augment.
In every case, new arrangements in one realm if life will have to fit compatibly with new arrangements in other realms of life. Movements for a new world will have to combine vision and strategy across entwined centrally important aspects of social life and should not prioritize one key area above others as that would be morally bankrupt and strategically suicidal.
Claim 5: Rejecting Dead Options
Seeking classlessness, positive values, and accommodating economy to gains in other spheres of social life and vice versa, compels us to reject private ownership of productive property, corporate divisions of labor, top down decision-making, markets, and central planning.
Without belaboring the obvious, each of these institutional possibilities intrinsically violates one or more (and usually all) of the norms set forth above.
For example, private ownership produces capitalist class rule over coordinators and workers. It obliterates equity by remunerating property and power. It obliterates self management by vesting primary power in the hands of owners.
Corporate divisions of labor produce coordinator class rule over workers. They negate self-management by disempowering some and aggrandizing power to others, as does top-down decision making.
Markets obscure true social costs and benefits of all items that involve positive or negative effects that extend beyond immediate buyers and sellers. They lead to incredible misallocation of assets, particularly ecological, not to mention orienting output to maximizing surpluses rather than human well being. Markets also impose anti-social behavior, nice guys finish last, and produce class division between coordinators and workers because firms must compete by cutting costs and because to cut costs firms will create and employ an elite that is freed from the implications of their cost cutting choices and callous to the immediate human implications of their choices, and this is precisely the coordinator class.
Central planning intrinsically violates self-management and imposes coordinator class rule to ensure obedience. Central planning typically also aggrandizes the ruling coordinator class at the expense of workers below, including centralizing control in ways that yield ecological imbalance.
Beyond economics, capitalist relations also aggravate hierarchies of power, status, and wealth generated by other spheres of social life, for example aggravating and exploiting sexual, gender, racial, and political hierarchies born of extra-economic relations. Capitalism likewise produces ecological imbalance and even violates ecological sustainability. It produces as well a competitive rat race that, writ large, internationally unleashes colonialism, imperialism, neo colonialism, empire, unimaginably extreme destitution, and war.
It follows that if we are serious about classlessness, economic equity, solidarity, diversity, self-management, ecological balance, and socially oriented efficiency, as well as about broader aspirations for race, gender, political power, ecology, and peace, we must reject typically available economic institutions and must seek alternatives.
Claim 6: New Economic Institutions
Seeking classlessness, the proposed positive economic values, and the broader social aims, and rejecting capitalist and coordinator institutions, leaves us needing to advocate new economic institutions, which for me leads to advocating the defining structures of participatory economics, or parecon. These are: self-managing workers' and consumers' councils, remuneration for duration, intensity, and onerousness of socially valued work, balanced job complexes, and participatory planning.
For workers and consumers to influence decisions in proportion as they are affected by them requires self-managing councils where they can express and tally their preferences.
Equity requires that ethically workers are remunerated for the personal cost to them of their participation in time, intensity of effort, and harshness of conditions, and that economically they are remunerated only for socially useful work to ensure incentives consistent with eliciting fulfilling output.
Self-managed decisions require confident preparation, relevant capacity, and appropriate participation and therefore lead to advocating apportioning to every worker a balanced mix of empowering and disempowering tasks so that no sector of actors monopolizes empowering work while others are left disempowered and unable to even arrive at much less manifest a will of their own. Balanced job complexes eliminate the monopoly on empowering labor that differentiates coordinators from workers by giving each worker a job of average empowerment implications so that all workers are enabled by their work related conditions to participate comparably in self-management.
Finally, to make all the above viable, allocation should be accomplished in accord with the freely expressed will of self-managing workers and consumers and should be undertaken via cooperative and informed negotiation in which all people's wills are proportionately actualized and in which operations, mindsets, and structures further the logic of self-managing councils, balanced job complexes, and equitable remuneration rather than violating each. All this implies, I believe, what advocates of parecon call participatory planning.
Insofar as worker and consumer self-managing councils, equitable remuneration for duration, intensity, and onerousness of socially valued work, balanced job complexes, and participatory planning treat all actors economically identically, they also counter any possible social hierarchies among actors generated outside the economy. Insofar as these institutions properly value ecological effects and convey decision making power to those affected, and insofar as writ large, internationally, they progressively eliminate inequality of wealth and power between nations, they also accommodate and even augment aims for natural and international arenas of social life.
Claim 7: Program Must Reflect Aims
Requirements for our own projects, organizations, and movements ought to include patiently incorporating the seeds of the future in the present, including self-managed decision-making, balanced job complexes, equitable remuneration, and cooperative negotiated planning, as well as central features of other dimensions of the new world we seek.
Creating institutions in the present that incorporate seeds of the future makes sense as an experiment to learn, as a model to inspire, as a way to do the best possible job now for current fulfillment, and to begin developing tomorrow's infrastructure today.
Of course, we need to keep in mind that even in our own operations we cannot have perfect future structures immediately, both because of surrounding pressures and because of our own emotional and behavioral baggage. But the fact that we need a sense of proportion about what future seeds we can experimentally harvest now is not the same as calling for entirely rejecting contemporary harvesting.
Just as movements should foreshadow a future that is feminist, poly-cultural, and also politically free and just, to avoid being internally compromised in their values, incapable of inspiring diverse constituencies or even prone to alienate them, incapable of overcoming cynicism, and weak in their comprehension even of current flaws and potentials, so should movements for the same reasons foreshadow a future that is classless, including incorporating self-managing council organization, balanced job complexes, equitable remuneration, and self-management.
Put strategically, constructing movements that embody coordinator class assumptions, mannerisms, and aspirations would violate our aims and cripple our prospects just as horrifically as constructing movements that embody sexist, racist, or authoritarian assumptions, mannerisms, and aspirations would cripple our prospects.
Claim 8: Seeking Reforms Without Succumbing to Reformism
Seeking participatory economic institutions requires that we not only create in the present new institutions, but that we also fight for changes in existing capitalist institutions. Demands made against existing institutions ought to enhance people's lives, advance the likelihood of further successful struggle, and advance the consciousness and organizational capacity to pursue those further aims.
As valuable as experiments in creating visionary economic (or gender, race, or politically inspired) organization in the present are, to only prioritize creating forward oriented experiments would consign those who work in existing institutions to observer status as well as callously ignoring pressing needs of the moment. The path to a better future includes creating experiments in its image in the present, but it also includes a long march through existing institutions, battling for changes that improve people's lives today even as they auger and prepare for more changes tomorrow.
Changes in existing institutions which do not replace those institutions down to their defining core, are undeniably reforms, but the effort to win such reforms need not accept that only reform is possible. On the contrary, efforts to win reforms can enable a process to win a whole new economy.
We can utilize demands, language, organization, and methods, all in accord not only with winning sought short term gains but also with increasing the inclination and capacity of people to seek still more victories in the future. Rather than presuming system maintenance, battles around income, workplace conditions, decision-making, allocation, jobs, work day length, and other facets of economic life should enlarge and empower future-oriented desires. We should win reforms now not only to enjoy the benefits, but also to pave the path to win more gains later. This is a non-reformist approach to winning reforms.
Claim 9: Change Is Not Automatic
At some point in the future vast movements will have features such as those noted above, and will become vehicles toward winning new societies. This will not happen, however, automatically.
Change will not arise from an unfolding inevitable tendency that sweeps us, uncomprehending, into a better future. Change will come, instead, via self-conscious actions by huge numbers of people bringing to bear their creativity and energy in a largely unified and coherent manner that will have internal debate but that will also overarching shared aims and steadfast purpose.
It we travel into the future in our minds, and we imagine looking into the past, we will see a historically relatively brief period, at some point, during which people in one nation or another, or in many at once, form projects, organizations, and movements that thereafter persist to become centrally important vehicles for fighting for, constructing, and even finally merging into a new world.
We can reasonably ask what attributes such a lasting project, organization, or movement would incorporate. We can also reasonably act on our shared answers, once we feel we have them more or less in hand, to try to create such vehicles of change. Might we get our efforts wrong? Yes, we might. But if we don't try, then we have no chance of succeeding. And if we do fail, we can take lessons from our mistakes, and try again.
It follows that at some point building vehicles not just of opposition but for self-conscious creation of a new world must become our agenda. We should undertake this with exaggerated images of instant success, or with inflated ideas of ease, or utilizing impatient approaches that limit participation or bias outcomes, but we should also refuse to succumb to cynical delay.
Claim 10: What's Next?
When a capable and caring group agrees on claims like those offered above, however refined and adapted by their deliberations, it will become incumbent on them to collectively seek wider agreement from a still larger group and to solidify their inspiring intellectual unity into a more practical organizational and programmatic unity. That is the injunction of justice and revolution. And if not now, when?
From: Z Net - The Spirit Of Resistance Lives
URL: http://www.zcommunications.org/znet/viewArticle/20826
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Mar 08, 2009 By Barbara Ehrenreich
Source: The Nation.
If you haven't heard socialists doing much crowing over the fall of capitalism, it isn't just because there aren't enough of us to make an audible crowing sound. We, as much as anyone on Wall Street in, say, 2006, appreciate the resilience of American capitalism--its ability to regroup and find fresh avenues for growth, as it did after the depressions of 1877, 1893 and the 1930s. In fact, The Communist Manifesto can be read not only as an indictment of capitalism but as a breathless paean to its dynamism. And we all know the joke about the Marxist economist who successfully predicted eleven out of the last three recessions.
But this time the patient may not get up from the table, no matter how many times the electroshock paddles of "stimulus" are applied. We seem to have entered the death spiral where rising unemployment leads to reduced consumption and hence to greater unemployment. Any schadenfreude we might be tempted to feel as executives lose their corporate jets and the erstwhile Masters of the Universe wipe egg from their faces is quickly dashed by the ever more vivid suffering around us. Food pantries and shelters can no longer keep up with the demand; millions face old age without pensions and with their savings gutted; we personally are consumed with anxiety about the future that awaits our children and grandchildren.
Besides, it wasn't supposed to happen this way. There was supposed to be a revolution, remember? The socialist idea, prediction, faith or whatever was that capitalism would fall when people got tired of trying to live on the crumbs that fall from the chins of the rich and rose up in some fashion--preferably inclusively, democratically and nonviolently--and seized the wealth for themselves. Such a seizure would have looked nothing like "nationalization" as currently discussed, in which public wealth flows into the private sector with little or no change in the elites that control it or in the way the control is exercised. Our expectation as socialists was that the huge amount of organizing required for revolutionary change would create an infrastructure for governance, built out of--among other puzzle pieces--unions, community organizations, advocacy groups and new organizations of the unemployed and nouveau poor.
It was also supposed to be a simple matter for the masses to take over or "seize" the physical infrastructure of industrial capitalism--the "means of production"--and start putting it to work for the common good. But much of the means of production has fled overseas--to China, for example, that bastion of authoritarian capitalism. When we look around our increasingly shuttered landscape and survey the ruins of finance capitalism, we see bank upon bank, realty and mortgage companies, title companies, insurance companies, credit-rating agencies and call centers, but not enough enterprises making anything we could actually use, like food or pharmaceuticals. In recent years, capitalism has become increasingly and almost mystically abstract. Outside manufacturing and the service sector, fewer and fewer people could explain to their children what they did for a living. The brightest students went into finance, not physics. The biggest urban buildings housed cubicles and computer screens, not assembly lines, laboratories, studios or classrooms. Even our flagship industry, manufacturing autos, would require major retooling to make something we could use--not more cars, let alone more SUVs, but more windmills, buses and trains.
What is most galling, from a socialist perspective, is the dawning notion that capitalism may be leaving us with less than it found on this planet, about 400 years ago, when the capitalist mode of production began to take off. Marx imagined that industrial capitalism had potentially solved the age-old problem of scarcity and that there was plenty to go around if only it was equitably distributed. But industrial capitalism--with some help from industrial communism--has brought about a level of environmental destruction that threatens our species along with countless others. The climate is warming, the oil supply is peaking, the deserts are advancing and the seas are rising and contain fewer and fewer fish for us to eat. You don't have to be a freaky doomster to see that extinction may be what's next on the agenda.
In this situation, with both long-term biological and day-to-day economic survival in doubt, the only relevant question is: do we have a plan, people? Can we see our way out of this and into a just, democratic, sustainable (add your own favorite adjectives) future?
Let's just put it right out on the table: we don't. At least we don't have some blueprint on how to organize society ready to whip out of our pockets. Lest this sound negligent on our part, we should explain that socialism was an idea about how to rearrange ownership and distribution and, to an extent, governance. It assumed that there was a lot worth owning and distributing; it did not imagine having to come up with an entirely new and environmentally sustainable way of life. Furthermore, the history of socialism has been disfigured by too many cadres who had a perfect plan, if only they could win the next debate, carry out a coup or get enough people to fall into line behind them.
But we do understand--and this is one of the things that make us "socialists"--that the absence of a plan, or at least some sort of deliberative process for figuring out what to do, is no longer an option. The great promise of capitalism, as first suggested by Adam Smith and recently enshrined in "market fundamentalism," was that we didn't have to figure anything out, because the market would take care of everything for us. Instead of promoting self-reliance, this version of free enterprise fostered passivity in the face of that inscrutable deity, the Market. Deregulate, let wages fall to their "natural" level, turn what remains of government into an endless source of bounty for contractors--whee! Well, that hasn't worked, and the core idea of socialism still stands: that people can get together and figure out how to solve their problems, or at least a lot of their problems, collectively. That we--not the market or the capitalists or some elite group of über-planners--have to control our own destiny.
We admit: we don't even have a plan for the deliberative process that we know has to replace the anarchic madness of capitalism. Yes, we have some notion of how it should work, based on our experiences with the civil rights movement, the women's movement and the labor movement, as well as with countless cooperative enterprises. This notion centers on what we still call "participatory democracy," in which all voices are heard and all people equally respected. But we have no precise models of participatory democracy on the scale that is currently called for, involving hundreds of millions, and potentially billions, of participants at a time.
What might this look like? There are some intriguing models to study, like the Brazilian Workers Party's famous experiments in developing a participatory budget in Porto Alegre. Z Magazine founder Michael Albert developed a detailed approach to mass-based planning that he calls participatory economics, or "parecon," and one of us (Fletcher, in his book Solidarity Divided, written with Fernando Gapasin) has proposed a locally based network of people's assemblies. But all this is experimental, and we realize that any system for mass democratic planning will be messy. It will stumble; it will be wrong sometimes; and there will be a lot of running back to the drawing board.
But as socialists we know the spirit in which this great project of collective salvation must be undertaken, and that spirit is solidarity. An antique notion until very recently, it flickered into life again in the symbolism and energy of the Obama campaign. The Yes We Can! chant was the slogan of the United Farm Workers movement and went on to be adopted by various unions and community-based organizations to emphasize what large numbers of people can accomplish through collective action. Even Obama's relatively anodyne calls for a new commitment to volunteerism and community service seem to have inspired a spirit of "giving back." If the idea of democratic planning, of controlling our destiny, is the intellectual content of socialism, then solidarity is its emotional energy source--the moral understanding and the searing conviction that, however overwhelming the challenges, we are in this together.
Solidarity, though, is an empty sentiment without organization--ways of thinking and working together, and of connecting the social movements that are battling injustice every day. We see a tremendous opportunity in the bleak fact that millions of Americans have been rendered redundant by the capitalist economy and are free to dedicate their considerable talents to creating a more just and sustainable alternative. But if we are serious about collective survival in the face of our multiple crises, we have to build organizations, including explicitly socialist ones, that can mobilize this talent, develop leadership and advance local struggles. And we have to be serious, because the capitalist elites who have run things so far have forfeited all trust or even respect, and we--progressives of all stripes--are now the only grown-ups around.
From: Z Net - The Spirit Of Resistance Lives
URL: http://www.zcommunications.org/znet/viewArticle/20816
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Mar 15, 2009 By David Harvey
Source: CounterPunch.
Does this crisis signal the end of neo-liberalism? My answer is that it depends what you mean by neo-liberalism. My interpretation is that it's a class project, masked by a lot of neo-liberal rhetoric about individual freedom, liberty, personal responsibility, privatization and the free market. These were means, however, towards the restoration and consolidation of class power, and that neo-liberal project has been fairly successful.
One of the basic principles that was set up in the 1970s was that state power should protect financial institutions at all costs. This is the principle that was worked out in
What happened in the
But this can lead to a deeper political struggle: there is a strong sense of questioning why are we empowering all the people who got us into this mess. Questions are being asked about Obama's choice of economic advisers - for example Larry Summers who was Secretary of the Treasury at the key moment when a lot of things started to go really wrong, at the end of the
A new state financial architecture is required. I don't think that all existing institutions like the Bank of International Settlements and even the IMF should be abolished; I think we will need them but they have to be revolutionarily transformed. The big question is who will control them and what their architecture will be. We will need people, experts with some sort of understanding of how those institutions do work and can work. And this is very dangerous because, as we can see right now, when the state looks to see who can understand what is going on in Wall Street, they think only insiders can.
Disempowerment of labor: enough is enough
Whether we can get out of this crisis in a different way depends very much upon the balance of class forces. It depends upon the degree to which the entire population says ‘enough is enough, let's change this system'. Right now, when you look at what's been happening to workers over the last 50 years, they have got almost nothing out of this system. But they haven't risen up in revolt. In the
One of the major barriers to continuous capital accumulation back in the 1960s and early 70s was the labor question. There were scarcities of labor both in Europe and the
The second thing you go for is rapid technological change which throws people out of work and if that failed then there were people like Reagan, Thatcher and Pinochet to crush organized labor. And finally capital goes to where the surplus labor is by off-shoring, and this was facilitated by two things. Firstly technical reorganization of the transport systems: one of the biggest revolutions that happened during this period is containerization which allowed you to make auto parts in
All of these solved the labor problem for capital, so by 1985 capital has no labor problem any more. It may have specific problems in particular areas but globally it has plenty of labor available to it; the sudden collapse of the Soviet Union and the transformation of much of
The first was the gap between what labor was earning and what it was spending was covered by the rise of the credit card industry and increasing indebtedness of households. So in the
Crises of asset values
The second thing which happened was that from the 1980s onwards the rich are getting far richer because of that wage repression. The story we are told is that they will invest in new activity but they don't; most of them start to invest in assets, i.e. they put money in the stock market, the stock market goes up so they think it is a good investment so they put more money in the stock market, so you get these stock market bubbles. It is a ponzi-like system without the Madoff's organizing it. The rich bid up asset values, including stocks, property, and leisure property as well as the art market. These investments involve financialization. But as you bid up asset values this carries over to the whole economy, so to live in Manhattan became all but impossible unless you went incredibly into debt, and everyone is caught in this inflation of asset values, including the working classes whose incomes are not rising. And now we've got a collapse of asset values; the housing market is down, the stock market is down.
There has always been the problem of the relationship between representation and reality. Debt is about the assumed future value of goods and services, so it assumes the economy is going to continue to grow over the next 20 or 30 years. It always involves a guess, which is then set by the interest rate, discounting into the future. This growth of the financial area after the 1970s has a lot to do with what I think is another key problem: what I would call the capitalist surplus absorption problem. As surplus theory tells us, capitalists produce a surplus, which they then have to take a part of, recapitalize it, and reinvest it in expansion. Which means they always have to find somewhere else to expand into. In an article I wrote for the New Left Review called ‘Right to the City' I pointed out that in the last 30 years an immense amount of the capital surplus has been absorbed into urbanization: urban restructuring, expansion and speculation. Every city I go to is a huge building site for capitalist surplus absorption. Now, of course, many of these projects stand unfinished.
This way of absorbing capital surpluses has got more and more problematic over time. In 1750 the value of the total output of goods and services was around $135 billion, in constant values. By 1950, it's $4 trillion. By 2000, it's $40 trillion. It's now around $50 trillion. And if Gordon Brown is right it's going to double over the next 20 years, to $100 trillion by 2030.
Throughout the history of capitalism, the general rate of growth has been close to 2.5% per annum, compound basis. That would mean that in 2030 you'd need to find profitable outlets for $2.5 trillion dollars. That's a very tall order. I think there has been a serious problem, particularly since 1970, about how to absorb greater and greater amounts of surplus in real production. Less and less of it is going into real production, and more and more into speculation on asset values, which accounts for the increasing frequency and depth of the financial crises we've been having since 1975 or so; they are all crises of asset value.
My argument would be that if we come out of this crisis right now, and there's going to be capital accumulation at 3% rate of growth, we've got a hell of a lot of problems on our hands. Capitalism is running into serious environmental constraints, as well as market constraints, profitability constraints. The recent turn to financialization is a turn of necessity, as a way of dealing with the surplus absorption problem; but one that cannot possibly work without periodic devaluations. That's what's happening now, with the losses of several trillion dollars of asset value.
The term ‘national bailout' is therefore inaccurate, because they're not bailing out the whole of the existing financial system - they're bailing out the banks, the capitalist class, forgiving them their debts, their transgressions, and only theirs. The money goes to the banks but not to the homeowners who've been foreclosed on, which is beginning to create anger. And the banks are using the money not to lend to anybody but to buy other banks. They are consolidating their class power.
The collapse of credit
The collapse of credit for the working class spells the end of financialization as the solution for the crisis of the market. As a consequence of this we will see a major crisis of unemployment and the collapse of many industries unless there is effective action to change that. Now this is where you get the current discussion about returning to a Keynesian economic model, and Obama's plan is to invest in a vast public works and investment in green technologies, in a sense going back to a New Deal type of solution. I am skeptical of his ability to do this.
To understand the current situation we need to go beyond what goes on in the labor process and production to the complex of relationships around the state and finance. We need to understand how the national debt and credit system have from the beginning been major vehicles for primitive accumulation, or what I now call accumulation by dispossession - as you can see from the building industry. In my ‘Right to the City' article I looked at how capitalism was revived in second empire
What I think is happening at the moment is that they are now looking for a new financial set-up which can solve the problem not for working people but for the capitalist class. I think they are going to find a solution for the capitalist class and if the rest of us get screwed, too bad. The only thing they would care about is if we rose up in revolt. And until we rise up in revolt they are going to redesign the system according to their own class interests. I don't know what this new financial architecture will look like. If we look closely at what happened during the
Alternatives
We need in fact to begin to exercise our right to the city. We have to ask the question which is more important, the value of the banks or the value of humanity. The banking system should serve the people, not live off the people. And the only way in which we are really going to be able to exert the right to the city is to take command of the capitalist surplus absorption problem. We have to socialize the capital surplus, and to get out of the problem of 3% accumulation forever. We are now at a point where 3% growth rate forever is going to exert such tremendous environmental costs, and such tremendous pressure on social situations that we are going to go from one financial crisis to another.
The core problem is how you are going to absorb capitalist surpluses in a productive and profitable way. My view is that social movement must coalesce around the idea that they want more control over the surplus product. And while I don't support a return to the Keynesian model of the sort we had in the 1960s, I do think there was much greater social and political control over the production, utilization and distribution of the surplus then. The circulating surplus was put into building schools, hospitals and infrastructure. This was what upset the capitalist class and caused a counter movement toward the end of the 1960s - that they were not getting enough control over the surplus. However, if you look at the data the proportion of the surplus which is being absorbed by the state has not shifted very much since 1970, so what the capitalist class did was to stop the further socialization of the surplus. They also managed to transform the word government into the word ‘governance', making governmental and corporate activities porous, which enables the situation we have in Iraq where private contractors milked the possibilities ruthlessly for easy profit.
I think we are headed into a legitimating crisis. Over the past thirty years we have been told, to quote Margaret Thatcher, "there is no alternative" to a neo-liberal free market, privatised world, and that if we didn't succeed in that world it's our own fault. I think it's very difficult to say that when faced with a foreclosure crisis you support the banks but not the people who are being foreclosed upon. You can accuse the people being foreclosed upon of irresponsibility, and in the
One of the big ideological configurations we are going to have is what is going to be the role of home ownership in the future once we start saying things like you've got to socialize much more of the housing stock, as since the 1930s we have had huge pressures towards individualized home ownership as in a way of securing people's rights and position.. We've got to socialize and recapitalize public education and health care long with housing provision. These sectors of the economy have to be socialized along with the banks.
Radical politics beyond class divides
There is another point we have to consider, which is that labor, and particularly organized labor, is only one small piece of this whole problem, and it's only going to have a partial role in what is going on. And this is for a very simple reason, which goes back to Marx's shortcomings in how he set up the problem. If you say to that the formation of the state-finance complex is absolutely crucial to the dynamics of capitalism (which it obviously is), and you ask yourself what social forces are at work in contesting or setting it up these institutional arrangements, labor has never been at the forefront of that struggle. Labor has been at the forefront in the labor market and over the labor process and these are vital moments in the circulation process, but most of the struggles which have gone on over the state-finance nexus are populist struggles in which labor has only been partially present.
For example in the
There is also a big problem on the left that many think the capturing of state power has no role to play in political transformations and I think they're crazy. Incredible power is located there and you can't walk away from it as though it doesn't matter. I am profoundly skeptical of the belief that NGOs and civil society organizations are going to change the world, not because NGOs can't do anything at all, but it takes a different kind of political movement and conception if we are going to do anything about the main crisis which is going on. In the
I don't think we are in a position to define who the agents of change will be in the present conjuncture and it plainly will vary from one part of the world to another. In the
Social movements have to define what strategies and policies they want to adopt. We academics should never view ourselves as having some missionary role in relation to social movements; what we should do is get into conversation and talk about how we see the nature of the problem.
Having said that I would want us to propose ideas. An interesting idea in the
Another key question is that of citizenship and rights. I think that rights to the city should be guaranteed by residency no matter what your citizenship is. Currently people are denied any political rights to the city unless they happen to be citizens. So if you're an immigrant you don't have any rights. I think there are struggles to be launched around the rights to the city. In the Brazilian constitution they have a ‘rights to the city' clause which is about the right to consultation, participation and budgetary procedures. Again I think there is a politics which can come out of that.
A reconfiguration of urbanization
In the
Another important question is to think strategically about how the social economy in some alliance with labor and the municipal-based movements such as Right to the City could also be a component in a strategy. This relates to the question of technological development - for example I see no reason why you couldn't have a municipal-based support system for the development of productive systems such as solar power, to create more decentralized employment apparatuses and possibilities.
If I could develop an idealized system now I would say in the US we should create a national redevelopment bank and take $500 billion out of that $700 billion they voted and the bank should work with municipalities to deal with neighborhoods which have been hit by the foreclosure wave, because the foreclosure wave has been like a financial Katrina in many ways; it has wiped out whole communities, usually poor black or Hispanic communities. You go into those neighborhoods and bring back the people who used to live in those communities and re-house them on a different basis of tenure, residency rights, and with a different kind of financing. And green those neighborhoods, creating local employment opportunities in those fields.
So I could imagine a reconfiguration of urbanization. To do anything on global warming we need to totally reconfigure how American cities work; to think about a completely new pattern of urbanization, with new patterns of living and working. There are a lot of possibilities the left should be paying attention to - this is a real opportunity. But it is where I have a problem with some Marxists who seem to think, ‘yes! It's a crisis; the contradictions of capitalism will now be solved somehow!' This is not a moment for triumphalism, this is a moment for problematizing. First of all I think there are problems with the way Marx set up those problems. Marxists are not very good at understanding the state financial complex or urbanization - they are terrific at understanding some other things. But now we have to rethink our theoretical posture and political possibilities.
So there is a lot of theoretical re-thinking that is needed as well as practical action.
Transcribed by Kate Ferguson. Edited by Mary Livingstone.
David Harvey is a Distinguished Professor at the City University of New York (CUNY) and author of various books, articles, and lectures. He has been teaching Karl Marx's Capital for nearly 40 years. He can be reached through his website, http://davidharvey.org
From: Z Net - The Spirit Of Resistance Lives
URL: http://www.zcommunications.org/znet/viewArticle/20876
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Wednesday, March 18, 2009
Building a Better Bible « United Methodeviations
Building a Better Bible « United Methodeviations
Using the Wesley Study Bible for a yearly reading of the bible in conjunction with a weekly discipling group is a great idea!!
Using the Wesley Study Bible for a yearly reading of the bible in conjunction with a weekly discipling group is a great idea!!
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