The crisis of bourgeois economics

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Re: The crisis of bourgeois economics

Post by blindpig » Sat Jun 05, 2021 2:22 pm


Americans must recognize economic classes

Posted Jun 04, 2021 by Bruce T. Boccardy

You see, if you shoot pool with some employee here, you can come and borrow money. What does that get us? A discontented, lazy rabble instead of a thrifty working class.

—Henry Potter, banker commenting on the people who reside in Bedford Falls and were helped by the Building & Loan company instead of crawling to Potter and his predatory bank lending policies.

This was excerpted from the holiday classic film “It’s a Wonderful Life.” It is one of the few times when the term “working class” was used in a widely seen cultural medium.

There appears to be a reluctance in the United States to wear the mantle of “working class.” Its connotation appears to be a relic from the economic revolutions of Europe in the late nineteenth century.

In the United States, the denotation is not worn proudly, but rather as having a slight tinge of being beneath the other more affluent and educated classes above it.

President Biden asserted in his speech to Congress on April 28:

And it recognizes something that I’ve always said: Wall Street didn’t build this country. The middle class built this country. And unions built the middle class.

The president misrepresented the demographic “middle class” as building this country. Sorry, Mr. President, but the working class of all races built this country. Also, his assertion that the “unions built the middle class” is only accurate if income and wealth is how “middle class” is defined.

Moreover, it was only attained after unions were established by working-class people in epic conflicts with the United States’ dominant class.

Regardless, it shows how reluctant politicians are to identify the vast majority of employees in the United States as “working class.”

However, they remain the economic class that built the nation’s now failing economy.

Conventional Views
Scholars and academics analyze, define, and redefine social classes. There are truckloads of literature that identify the historical development of social, political, and economic groups by income and wealth.

Mainstream sociologists tend to parse and expand social classes from a distinct, controlling economic class.

C. Wright. Mills was an acclaimed social conflict theorist. Mills argued in his classic 1956 book, “The Power Elite” that a small group of individuals within the political, military, and corporate realms actually held the majority of power within the United States.

Mills asserted that a small group of largely males dominated the social, political and economic structure of America. However, he rejected the identifier “ruling class.” His description of the demographic that dominated American life was the “power elite.

G. William Domhoff, prominent sociologist presented the case that there was a “power elite” in his 1967 book “Who Rules America.”

Oliver C. Cox, esteemed black sociologist, however, did not avoid the distinct economic class dominance in American society in his exhaustive study in 1948, “Caste, Class and Race.” Professor Cox emphasized that “economic class” was the basis in determining social classes.

Unquestionably, there exists a comparatively small economic class in the United States that controls the political, social, environmental, and foreign policies of the country.

Their policy views often do not comport with the views of working people on issues that affect the vast majority of Americans and why would they?

Maintaining their economic status drives every important policy issue in the country.

Actual Economic Classes
Dominant Class—aka the “One Percent, the “Ruling Class,” the “Power Elite,” the “Ruling Elite” and the “Upper Class.” They own most of the income and wealth in our economic model, but that’s the cursory view.

What matters is their power.

This class is comprised of owners and boards of directors. They exist at the municipal, state, federal and international levels.

They own or control the primary methods of producing goods and services in the country; they decide the organization and distribution of those goods and services. They control the workplace of those in the working class and “middle class.” They are the bulwark against a democratic economic model.

Working Middle Class
The “working middle class” is below the dominant class. In the media and literature this demographic is identified as the “middle class.”

This class identification resonates with most Americans.

“Middle class” is often used to promote the existing economic model in the United States implying that everyone existing in the expansive “middle class” is economically comfortable or should be. I’m happy for

However, it is clearly an artificial metric that merely serves to give a measure of false security to working people against the perceived judgements of others. It is promoted by the dominant class to keep working people divided.

The polls also reflect Americans’ preoccupation with it.

For example, in a 2015 poll by the Pew Research Center, people were asked to self-identify their economic class.

The poll noted that there were at least 12 different definitions of “middle class.” When all 12 definitions were considered, over 90 percent of the U.S. population would qualify as “middle class.”

T.G. Bottomore, a leading authority on classes wrote about the “middle class” in his 1966 work “Classes in Modern Society.” He asserted that the prevailing economic model served to create the “middle class.” Bottomore saw it as a social construct that emphasized status rather than economic position.

However, noted economist Michael Zweig, articulated the similarities between the “middle class” and the working class in his 2006 book “America’s Working Class Majority: America’s Best Kept Secret.”

He identified the “middle class” as professionals, small business owners and managers, and supervisors. They share many of the same conditions as working-class people do such as the instability of the market, government overreach, comprehensive healthcare and retirement security.

Also housing purchases, non-healthcare insurance, exorbitant education costs and prescription drug prices are similar conditions for both classes.

He also included college teachers, public defender lawyers, medical professionals, and public school teachers in the demographic.

Indeed, the working middle class shares many of the same associations with the dominant class as working-class people do. They may be compensated better, but the power to control their economic reality is similar to the working class. Their positions depend entirely on the decisions and caprices of the dominant class.

The tiny number of celebrities in entertainment and sports industries must be mentioned. They are often compensated with lucrative contracts. They can live lifestyles that most people only dream about if that’s a dream in the first place.

However, they are still employees, no matter how bloated their bank accounts or portfolios. Unless they become owners of entities that employ others, they are merely high paid workers dependent on the dominant class of billionaire owners and boards of directors.

To be sure, some of these individuals must be complimented for using their celebrity platforms to advocate for issues affecting working people. However, their numbers are insignificant to the demographic and they remain as outliers to the rest of the working middle class.

Working Class
Economists can also muddy up basic, clear definitions of class.

Guy Standing, prominent British economist came up with a novelty in his 2011 book The Precariat: The New Dangerous Class. Standing asserted that we now have an international social class of people who are in a constant state of precarity without predictability or stability in the workforce. He combined the words “proletariat” and “precarious” to arrive with the identifier “precariot.”

With considerable respect to Professor Standing’s impressive work, this identifier is gratuitous. The working people described here are still a demographic in the working class. There is no reason to single out these people with a fanciful portmanteau that brings little insight on the composition of the working class. This applies to the “gig” economy as well.

It is consistent with America’s narrative that about 62 percent of employees in the workforce are working class.

Zwieg identified the working class as white-collar bank tellers, call-center employees, cashiers, blue-collar machinists, construction workers, assemble line employees, secretaries, nurses, and home healthcare employees.

Also included are the significant numbers of service industry and healthcare employees.

These employees have little control over the content or conditions of their workplace unless they are fortunate enough to be unionized. However, without a robust resurgence of the labor movement, the number of union members today will remain pitifully small.

Power, Not Income or Wealth
The ultimate definition of economic class rests with the identification of power in the economy.

We must identify who has it, who doesn’t and how our society strives for democratic ideals if that is what we seek.

Political democracy is impossible without economic democracy.

Martin Gilens and Benjamin I. Page, respected economists, wrote a paper in April 2014. They reported that policymaking in the United States is dominated by powerful business organizations.

They concluded that “America’s claim to a democratic society is seriously threatened.”

This was not a cataclysmic revelation to those who track corporate “crime, fraud and abuse” as Ralph Nader aptly described it.

However, their conclusion was disturbing and prescient in light of recent events as elements of the country veer toward fascism manipulated by oligarchs of the dominant class.

No political movement, however motivated by righteously moral intentions can advance without a blueprint that accurately identifies the demographics involved.

From spiritual progressives relying on faith-based initiatives to secular progressive organizations the participants must be identified accurately by their economic power or lack of it.

We must present a simplified definition of economic classes; it will allow us to convey a better understanding of political machinations to ourselves and the American public.

It will also facilitate a plan to address the continuing issues of racism and sexism in our society.

Economic class is the basis of both.

Although the mainstream media painstakingly avoids that view, the F.D.M. crowd (Facts Don’t Matter) will eventually figure it out at some level.

Consider that the frustration and venom of Mr. Trump’s base would evaporate if they had opportunities for decent, sustainable jobs with healthcare, education, housing, nutrition and a clean environment.

Instead of the relentless and witless indoctrination from the dominant class through its coopted and corporate supported media they might redirect that discontent to the source.

The working middle class and working class are natural allies.

They exist largely in the same power associations controlled by the dominant class. Their numbers approximate 99 percent of working people if defined by economic power.

If we subscribe to the concept of democracy, it must be acknowledged that the continuing economic plague visited on a vast majority of the American people must change. They deserve better from an economic model.

George Bailey, said it best, again in “It’s a Wonderful Life” when addressing Henry Potter’s attempt to take over the Building and Loan company.

Do you know how long it takes for a working man to save five thousand dollars? Just remember Mr. Potter, that this rabble you’re talking about… They do most of the working and paying and living and dying in this community.

They still do. ... c-classes/

Having grown up in blue-collar Baltimore row houses I was much confused being identified as 'middle class', given that Ward Cleaver and his ilk went to work in suit and tie, lived in big houses in leafy neighborhoods, etc. 'Working class' was purposefully eliminated from the common American lexicon as communist/socialist, the mere utterance of which was suspect.

The pandemic has handed us the 'essential worker' about whom so much ink and concern have been expended until very recently. In truth that appellation applies to all the productive workers of our society and we should shove it down the throats of the bosses and their flappers, make them choke on it.
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Re: The crisis of bourgeois economics

Post by blindpig » Sat Jun 12, 2021 11:42 am

The Political Economy of Public Debt: a Marxist Critique of Modern Monetary Theory
June 10, 2021
By Yanis Iqbal – Jun 7, 2021

As governments attempt to spend their way out of the crisis, ideas like Modern Monetary Theory have gained traction; Yanis Iqbal explains why it’s no solution for the left to champion

During a crisis, ideas developing in the background seem to foreground themselves. In the pandemic catastrophe we are experiencing today, new economic theories purporting to present alternatives to the existing neoliberal regime have gained traction. Keynesianism or its updated variant named “Modern Monetary Theory (MMT)” is a paradigmatic example of this.

One of the central tenets of this theory is that state spending, a public debt, can be used to combat recession. Raising overall demand in a given country will facilitate a recovery insofar as there is disposable productive capacity (unemployed workers, stocks of raw materials, machines working below capacity). These unused resources are mobilized by the additional purchasing power created by the budget deficit. Only when these reserves are exhausted do you get the onset of inflation.

To recognise the structural unsustainability of Keynesianism-MMT, we need to look at Karl Marx’s views regarding public debt, which are rooted in relations of class exploitation. When one adopts this analytical lens, it becomes immediately clear that public debt is associated with myriad problems and contradictions.

Financial aristocracy
First, public debt aids the expansion of the stock market and encourages speculation on the part of capitalists and banks, thus creating an “aristocracy of finance”, a group Marx described as a “brood of bankocrats, financiers, rentiers, brokers, stockjobbers, etc.” that amassed fortunes from trading and also owning government securities. Speculation tends to reduce capitalists’ investments and banks’ credit to production.

This is because public debt allows corporations to gain from speculation, in a process where capitalists tend to become rentiers. The reduction of investment and production credit implies a reduction of productive employment, which, in turn, due to the enlargement of the “reserve army of labour”, means a reduction of wages.

This clearly reduces the demand-expanding impact of state debt. In sum, the debt-financed expansion of public expenditure paradoxically causes a redistribution of available labour from productive to unproductive sectors, reducing workers’ wages.

It is important to note that excessive public debt ultimately becomes a burden on capitalism. This is because public debt, in the final analysis, is a drain on surplus value. Without a productive economy, it is meaningless. Capital won’t yield interest if the capitalist economy does not perform any productive function i.e. if it does not create surplus-value, of which interest is just a part.

For much of the post-WWII boom, although the public debt of the major capitalist countries was increasing, it was growing at a rate less than the accumulation of capital; the situation was containable. It was only when the specific weight of such debt began to mount, when it threatened to consume a greater proportion of a slowly rising volume of surplus value, that the situation became intolerable for capitalism.

The needs of the individual capitalist with his share in the public debt and the need of the system as a whole to extract surplus value in the course of industrial production came into conflict. Inflation seeped into the economy as the claims of the different groups to the social product (surplus value) added up to more than the social product itself. This strongly contributed to the stagflation of the 1970s.

Fiscal conflict
Second, wages fall not only because of the aforementioned rise in the unemployment rate but also because the increase in public debt implies increases in taxes on wages—a case of fiscal conflict. For Marx, the tax revenues that are eventually needed to service the public debt are financed by overtaxation of “the most necessary means of subsistence.”

This overtaxation is not accidental: it is an entrenched principle of public indebtedness. Thus, public debt creates a clear-cut conflict, redistributing or expropriating income from the working masses of taxpayers to the rentier class of public creditors.

A highly concentrated public debt limits the efficacy of debt-financed government spending. The propensity to consume is much higher for those with lower incomes, and a pattern of distribution skewed toward top earners will inevitably undermine, rather than enhance, the efficacy of countercyclical deficit spending.

If the government taxes companies, capitalists will react to it either by postponing investment or refusing to buy state bonds. Furthermore, disposable wages can drop even if the government taxes firms, since firms can offload taxes onto prices, thus negatively affecting real wages. Hence, it is the state’s dependence on the private sector which erodes its economic power.

Monopoly capitalism
Third, the increase of the supply of state bonds generates an incentive to speculate only for firms that operate in the financial markets i.e. generally for big corporations which have higher accumulated internal funds. This by and large weakens the standing of small corporations.

Moreover, an increase of public debt in a situation of full employment is associated with a “crowding out” effect—a scenario where private players are unable to raise funds due to an increase in government borrowing from the financial markets. The government borrowing often raises the cost of borrowing, which has a prohibitive effect on these players.

In a demand-constrained economy, public debt does not cause crowding out due to simultaneous output and price adjustments. This is because the “fixed pool of savings” increases as output increases and there are no constraints on private sector borrowing.

However, in an economy where there is no disposable productive capacity, government expenditure, financed by borrowing, does not generate additional private savings, over and above the savings that were being generated before this expenditure was undertaken. Thus, crowding out occurs.

This happens at the expense of small capital, which becomes more vulnerable to processes of acquisition on the part of big corporations. As a result, increases in public debt steadily contribute to an increase in the industrial concentration ratio, thus amplifying the tendency towards monopoly capitalism.

Monopoly dampens the impetus to new innovations. The investment-seeking surplus generated by the enormous and growing productivity of the system is increasingly unable to find sufficient new profitable investment outlets. And so monopoly capitalism faces a tendency toward stagnation.

There is a continual need to find new ways to profitably invest its surplus and create new sources of demand. Today, this has led to the creation of a financial “casino” where finance plays a crucial role in propping up demand—fuelling speculative tendencies. The crisis appears with the collapse of the speculative bubble.

Instead of working toward the benefit of workers, Keynesianism-MMT—through the use of public debt—solidifies exploitative class relations by dividing society into taxpayers that finance interest payments on government bonds and bondholders that receive those tax-financed interest payments.

What we need is a socialist economic regime which eliminates the fundamental contradiction of the capitalist mode of production between exchange value and use-value, between the social relations and the forces of production. If this contradiction is not eliminated, profit-making for the rich will continue to destroy human creative power. ... ry-theory/
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Re: The crisis of bourgeois economics

Post by blindpig » Wed Aug 11, 2021 1:19 pm


Equality and scarcity
Posted Aug 11, 2021 by Prabhat Patnaik

Originally published: Peoples Democracy (August 8, 2021 ) |

MANY would remember that the Soviet Union and other Eastern European socialist countries used to be characterized by long queues of consumers for several commodities. This was a source of much derision in the West and was attributed to the inefficiency of the socialist system of production, compared to capitalism where one just had to walk into a supermarket and buy whatever one wanted to.

As a matter of fact, far from being a symptom of inefficiency, the long consumer queues were a reflection of the highly egalitarian nature of the socialist societies; likewise, the free access to goods under capitalism is founded upon the extreme income inequality that prevails under this system. This point can be illustrated by an example where we deliberately choose numbers that are identical in every other respect except income distribution.

Take two economies S (under socialism) and C (under capitalism). Each invests 20 units and can produce 100 units of output. The upper 20 percent in S (consisting of socialist officialdom) has 30 percent of output and the lower 80 percent (consisting of workers) has the remaining 70 percent; by contrast the upper 20 per cent in C (consisting of capitalists and officials) has 60 per cent of output and the remaining 80 percent (consisting of workers) has 40 percent. The top segment in each economy consumes half of its income and the workers in each economy consume their entire income.

Now if the full capacity output of 100 is produced in S, then the total consumption demand will be 85 (consisting of half of 30 plus 70), and the total aggregate demand (inclusive of investment of 20) will be 105. By contrast, the total consumption demand in C will be 70 (half of 60 plus 40), and the total aggregate demand (inclusive of investment of 20) will be 90. In other words, if the full capacity output of 100 is produced, then there will be an excess demand of 5 in S, and a deficient demand of 10 in C.

The capitalist economy therefore will not be producing full capacity output because of demand deficiency. Instead it will produce only 66 2/3, since with this output and the same distributive shares, the capitalists will get 40 and the workers will get 26 2/3, so that total consumption will be 46 2/3, which together with the investment of 20 will exactly equal the output produced, 66 2/3. The actual employment therefore will be only two-thirds of what it would have been if full capacity output was being produced; there would in short be massive unemployment. Since there is no question of any shortage or excess demand (indeed the contrary) in this economy, consumers can simply march into any supermarket and buy whatever they like; there is no question of any queues for goods.

By contrast in the socialist economy, where production of 100 causes excess demand of 5, the full capacity output of 100 will be produced; but the question is how will such an economy cope with the excess demand of 5? The easy way of doing so would be simply to let prices rise, until the real incomes of some consumers have been squeezed sufficiently to reduce their purchases by 5; but typically this would mean a disproportionately large squeeze on the workers who will have very little cash balances to run down, for maintaining consumption. The entire excess demand of 5 then will be reduced at the expense of the workers. But compared to this, a proportionate reduction in everyone’s consumption will be better; this is what the socialist economies did, by maintaining prices at the old level but instituting rationing, so that the reduction in demand by 5 could be more evenly shared out. It is this rationing which meant that people had to queue up for their purchases.

The fact that the socialist economies were characterized by queues was thus not caused by any inefficiencies of the system; on the contrary it was a reflection of the fact the system was concerned about keeping down the inequality in income distribution. It did so in two distinct ways: one, by keeping the base level of distribution relatively more equal; and two, by ensuring that if excess demand arose nonetheless, then its resolution took the form not of a price rise that would have been regressive, but of rationing at given prices. The queues were a result of this rationing.

No doubt there were many problems in the actual implementation of such a policy in the socialist economy, such as privileged access by some (State or Party functionaries) to the scarce goods, and the violation of the principle of equal rations for everybody by the institution of a “first-come-first-served” principle which had the effect of distributing the scarce good arbitrarily; but these do not negate the basic point that the observed scarcity of goods in a socialist economy was the result of a more egalitarian distribution of income. Likewise, the observed plenitude of goods under capitalism is the result of the fact that vast masses of the working people have too little purchasing power in their hands to buy these goods, which is both a cause and a consequence of the mass unemployment that invariably characterizes this system.

The well-known Hungarian economist Janos Kornai, a critic of the socialist system that existed in his country, had said: “classical capitalism is demand-constrained while classical socialism is resource-constrained”, meaning that the latter fully utilizes all its resources including available labour. The reason he gave for this phenomenon was that under socialism since firms are assured of government subsidies, they face a “soft-budget constraint” that makes them over-spend on investment projects, without being too calculating about the prospective rate of return; under capitalism by contrast firms face a “hard budget constraint” that makes them cautious in undertaking investment.

While this may be true, there is an additional powerful reason that we have emphasised, for capitalism being demand-constrained and socialism resource-constrained; and that is the greater equality in income distribution under socialism. Put differently, since the level of aggregate demand in any economy (ignoring foreign trade) consists of two elements, the level of investment and the level of consumption as determined by the average ratio of consumption to income (or economy’s propensity to consume as Keynes had put it), Kornai’s explanation for the difference between capitalism and socialism refers only to the first element, while there is also a very important difference with regard to the second. The greater equality in income distribution under socialism means on average a higher consumption-income ratio, and hence a higher level of aggregate demand for any given level of investment (what economists call a higher “multiplier” for investment). This key aspect of socialist economies was missed by Kornai.

What, it may be asked, is the point in saying all this now, when socialism in the Soviet Union and Eastern Europe has collapsed? Well, a part of the reason is to remind ourselves that, notwithstanding all their limitations, the socialist economies constituted a group which achieved full employment, in contrast to what every other economy over the last two hundred years has done. This is because capitalism cannot, by its nature, achieve full employment, while socialist economies had a very different dynamics which allowed them to do so. That such economies existed should always be remembered.

The other part of the answer lies in the fact that the sharp contrast between capitalism and socialism also holds to a lesser extent between the dirigiste and neo-liberal regimes in third world countries like India; not that these countries achieved anything like full employment, but the dirigiste regimes had greater equality in income distribution because of which they faced problems of excess aggregate demand and had to resort to rationing of various goods. This was in contrast to the neo-liberal phase in these same economies that has seen a huge increase in income inequality and therefore a squeeze in the purchasing power in the hands of the working masses, which gives an entirely misleading impression of plenitude in supermarkets.

In India for instance, according to Chancel and Piketty, the share in national income of the top one per cent of population was as low as six percent in 1982, prior to the introduction of “liberalisation” that has been dated by many to 1985, but increased to 22 per cent in 2013, the highest in almost a century. Inflation under the neo-liberal regime therefore is not generally caused by excess demand; it is typically administered by the government through raising taxes on goods of common use rather than on capitalists’ wealth or profits.

But even this inflation is then sought to be controlled by imposing fiscal austerity (as if its cause was excess demand), which further worsens the unemployment situation without lowering inflation. The government of India is now in the process of pursuing such a mindless exercise.

Bolding added.
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Re: The crisis of bourgeois economics

Post by blindpig » Wed Oct 13, 2021 11:48 am

Build Back Better Legislation: New Keynesianism or Neoliberal Public Relations Stunt?
​​​​​​​ Ajamu Baraka, BAR editor and columnist 06 Oct 2021

Build Back Better Legislation: New Keynesianism or Neoliberal Public Relations Stunt?

Some provisions of Biden’s “Build Back Better” legislation benefit the masses of Black people, but this legislation is a bare minimum effort to blunt some of the sharpest contradictions of the system while attempting to maintain the neoliberal order.

For more than a week the country has been caught up in the ongoing melodrama of the “Build Back Better” (BBB) legislation, the Democrat Party’s “social investment” bill now languishing in the House because of the inability of the Democrats to come to an agreement. The fight is characterized by the corporate media as an intra-party struggle between the emerging “progressive/left” pole of the Party and the “center,” represented by the recalcitrant neoliberal corporate Democrats in the persons of Senators Joe Manchin from West Virginia and Kyrsten Sinema from Arizona.

But the media’s tendency to reduce this struggle to a battle of personalities distorts, in a fundamental way, the real interests at play in this fight. The intra-party struggle of Democrats is a crystallization of the complex and contradictory reality of the intra-class struggle within the dominant wing of the capitalist class on the correct strategies for dealing with the ongoing and deepening capitalist crisis.

The real terms of the struggle are between the class faction that sees the need to preempt potential radical working-class rebellion by making non-threatening reforms meant to bring some psychological relief and minor material benefits to the laboring classes as some of the provisions in the BBB legislation would bring.

Another faction of the ruling class, however, is concerned with the legislation’s cost, the threat it poses to their economic interests, and a potentially dangerous shift of influence, if not power, to the laboring classes. They see expanded social-welfare spending as inflationary and providing leverage to the working class. Being militantly committed to the logic of the neoliberal project, this faction wants to hold the line on government spending, impose austerity at every level of government and is opposed to state interventions into the economy that would reduce the precarity of workers by undermining the carefully constructed labor management policy goals that have been faithfully carried over the last forty years of discipling U.S. labor and driving down its costs in the U.S.

It is imperative that the left, particularly left forces representing Black and nationally oppressed peoples, employ a materialist, class analysis as the lens and framework to inform their critique of the BBB legislation. If we fail to engage this legislation in this way, we run the risk of inadvertently helping to obfuscate the political and ideological agenda of capital, whose objective is to dissipate and manage the class struggle.

Was Build Back Better Really Intended to Be Passed in Its Entirety?

It is clear that the main focus of Joe Biden’s legislative priority was getting the infrastructure bill passed. It received bipartisan support and was able to pass in the Senate, and is being supported by a majority in the House because it represents the consensus across all elements of the capitalist class.

That consensus, however, does not exist for the BBB. Yet, there is a reason that Joe Biden, the consensus choice of the neoliberal ruling class, embraced a number of reforms during his campaign and after assuming office that cannot be understood as just the result of “pressure” from the left-pole of his party.

The fact that Biden was comfortable enough to at least pretend to be committed to a number of “liberal” policies like expanding Medicaid and investing in pre-K and child-care was precisely because an important faction of the capitalist class has arrived at the position that, if not correctly managed, the more blunt-edge elements of domestic neoliberalism were posing dangerous and potentially irreversible legitimation challenges to the entire system.

From advocating for a 70% marginal tax rate and 3% tax on every dollar over one billion in wealth to support a basic income for every “American,” and redefining the role of corporations to entities committed to serving “all of the people ,” the Business Roundtable, U.S. Chamber of Commerce, and capitalists like Warren Buffet and the CEO of BlackRock represent the tendency among the U.S.-based but transnationally-oriented capitalist class that sees redistributionist state policies and some kind of brake on the obscene economic inequality as vital to preempt serious social upheavals from workers and members of a shrinking middle-class.

The editors at the Wall Street Journal , the flagship paper of the U.S. ruling class, also argued that adjustments to what has been called neoliberalism had to be made.

But the editors of the Financial Times, the paper of choice for the international bourgeoisie, made what was a startling claim on April 4, 2020 that the era of neoliberalism was basically over :

“Radical reforms – reversing the prevailing policy direction of the last four decades – will need to be put on the table. Governments will have to accept a more active role in the economy. They must see public services as investments rather than liabilities and look for ways to make labor markets less insecure. Redistribution will again be on the agenda; the privileges of the elderly and wealthy in question. Policies until recently considered eccentric, such as basic income and wealth taxes, will have to be in the mix.”

Biden got the message and shared his thinking on how to advance a public relations approach that would offer some marginal and temporary relief without changing anything when he told his Wall Street funders :

“When you have income inequality as large as we have in the United States today, it brews and ferments political discord and basic revolution. It allows demagogues to step in and blame ‘the other’ . . . You all know in your gut what has to be done. We can disagree in the margins. But the truth of the matter is, it is all within our wheelhouse and nobody has to be punished. No one’s standard of living would change. Nothing would fundamentally change.”

Just a few months ago, what was once unthinkable, ideas that were rejected as extreme and a threat, are now subject of serious discussion, not because capitalists have suddenly experienced a Scrooge-like transformation but because they are recognizing that even the absence of a militant movement putting pressure on them, they have to have stop-gap measures to address the now glaring contradiction of neoliberal capitalism that the economic crisis in 2008 and the 2020 pandemic exposed. Therefore, there is no “radical” departure here. The consummate servant of capital, Biden, is simply carrying out the new program.

However, what is also becoming clear is that the BBB was not meant to be passed in whole. It was pure political theater meant to placate the Party’s “left-pole.” The real target is/was the infrastructure bill. The Party bosses’ plan was to draw the progressives into a deal in which they would support the infrastructure bill, accept a “framework” for the BBB that would then get whittled down and backlogged with delayed spending that would then get reduced even more when the Republicans came back into office.

The clashing of interests within the ruling class, even among some of those same elements who supported some minor ameliorative reforms and the delay in passing the BBB as a result of the progressives holding firm, suggest that the above scenario is not that far fetched.

Welcome the Change, But Recognize the Ruling Class’s Fears and Build for More Independent Power

The New York Times is correct: “The Build Back Better Act is centrism taken seriously ; ” it is “an effort to fix American democracy through economic support rather than structural political change.”

So, while the left could welcome this so-called stimulus bill if it is passed in whole, we must not have any illusions. The capitalist class is clear. They are supportive of this partial Keynesianism as long as the policies do not threaten their fundamental interests or require real sacrifices for their class.

For workers, and especially Black and other colonized workers and the poor, the provision for universal pre-K and support for child-care, paid parental leave, expanded Medicaid and Medicare, free community college, new funding for public housing support, elder-care, and possibilities of new job creation as a result of public investments in green-oriented industries, are important.

However, it is equally important that we do not become cheerleaders for what the rulers understand, perhaps better than some of us, that these social reforms are meant to address some of the more glaring social contradictions produced by four decades of neoliberal policies, but with the objective to strengthen capitalism and preempt radicalism.

Biden’s mission is to restore U.S. capitalism’s profitability, ability to compete with China and to preempt domestic radicalization. By advancing reforms that blunt some of the sharpest contradictions of the system, it is believed that it will stabilize the neoliberal order while not substantially reversing the logic of labor discipline that four decades of neoliberal policies have created.

Yet, it is truly an “impossible mission.” The competing and conflicting interests among capitalist factions will continue to make it impossible for their class to support a relative “disciplining” of their fractional interests for the longer-term interests of the system. Once the “progressives” did not cave and insisted on both bills being passed together, not only did the Pelosi/Schumer/Biden plan fail, but the delay of the vote also exposed the irreconcilable interests among the ruling class.

Powerful capitalist associations like the U.S. Chamber of Commerce, the National Association of Manufacturers (NAM), and Business Roundtable, as well as energy company interest groups like the American Petroleum Institute (API) are vigorously challenging the climate elements in the bill. Democratic Party representatives are also getting enormous pressure from the pharmaceutical and health insurance companies.

And the corporate media is constructing a narrative that is shifting the blame for a deal not being done unto the “progressives” as opposed to the two front persons for the neoliberal agenda, which, of course, exposes the con that those two individuals were the real holdouts.

Therefore, Biden and Democrats’ “Keynesianism” is strategic. It is designed to draw the millions of workers back to the Democratic Party that voted for Obama but went over to Trump and reversed the dangerous legitimation crisis generated by the capitalist crisis that began in 2008 and deepened with COVID in 2020 and exposed the precarious nature of the economic rebound that Trump was claiming for himself up to that moment.

The expansion of welfare state spending will do little to mitigate the profound social inequalities of the U.S. Expanded social programs cannot reverse the structural contradictions caused by stagnant wages, escalating housing costs, tendencies toward continued and deepening unemployment with automation, AI, continued offshoring, unaffordable and inadequate access to healthcare, a class-based discriminatory education funding, and a crumbling public transportation system.

The people are starting to understand that radical change is necessary. The question is what kind of change. Those of us on the left who are committed to socialism know that as long as the means of production are in the hands of a few, the wealth that is generated in the production process will continue to produce obscene levels of wealth inequality in capitalist societies that translates into the power to dominate, dehumanize, and degrade the rest of us.

So, we should accept these reforms but fight for more. Workers, in particular women workers, will benefit materially if those provisions that address child poverty, childcare, the grotesque levels of maternal and infant mortality among Black and Brown working class women. And, therefore, cannot be casually dismissed as unimportant.

But we will not give unearned praise to our class enemies. We must fight even more furiously knowing that they fear us, and that victory is ours to claim.. ... ions-stunt

Spot on. They ain't giving nothing away, just trying to buy us off, on the cheap. "Better than nothin'" is another variation on lesser evilism and neither should be taken seriously. If the booj are for it then it must be a scam.
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Re: The crisis of bourgeois economics

Post by blindpig » Thu Oct 21, 2021 2:57 pm

19 Oct 2021 , 4:05 pm .

The collapse of the port of Los Angeles has created shortages throughout the west coast of the United States (Photo: CBS News)

There is an episode of extreme economic upheaval in several countries of the so-called 1st world, as if it were a combination of factors that have now stood out in a disruptive way in the energy, industrial and commercial fabric. The news abounds.

Images of empty shelves appear in many cities on the west coast of the United States as if it were the fury and stampede that the COVID-19 pandemic generated last year. But the reasons are not exactly the same today. In fact, Blackfriday, Thanksgiving Day and the next Christmas are in question, for lack of gifts. Concerns typical of the most consumerist country in the world.

Basically there is a collapse in the port of Los Angeles , after a huge remnant of goods, especially from China, have exceeded port capacities, generating delays throughout the chain put in to the North American nation.

The United Kingdom suffers from a shortage of industrial inputs and consumer goods. Stockouts occur throughout Europe, but in partial terms. In the UK it is more than remarkable. But its petrol and diesel crisis is particularly serious . Huge lines are forming in that country to supply fuel, but also, there are no guarantees that many consumer goods will arrive on time or be produced by December.

The reasons are due to Brexit, the increase in bureaucracy that increases the dispatch time of land transport to the United Kingdom, coupled with other structural conditions, which have caused the freight transport service to fall dramatically, affecting the Kingdom.

The increase, over 60%, of gas in the European Union has also been on the front pages, which has unleashed an increase in electricity rates in several countries, especially in Spain, as a particularly weak link that has already accumulated a crisis structural in this matter. The energy price crisis has many components, but the main ones are decarbonisation processes and a lower-than-expected return from clean energy. The impact of this overall situation is the increase in all cost structures for the generation of goods and services in Europe.

China is not exempt from this seemingly temporary crisis, especially due to the disruption of supply chains and energy prices. Supply chains related to its industrial sectors have suffered potholes during the pandemic. Now that there is a revival of the Western economy marked by an increase in global demand, from microchips to key minerals and polymers, they have suffered delays.

China has warned that prices at the factory gate will increase in many goods and inflation is at 10% . Inflation as a reality is now also pointed out by statements by Miguel Patricio, Executive Director of the multinational Kraft Heinz, who indicated that the population will have to "get used to" higher prices for food. However, the UN FAO has also been warning it, but it is not usually news as the Director of the multinational food company has said.


In March of this year, when an Evergreen company ship got stuck in the Suez Canal, alarms went off, exposing the fragile conditions of the international trade structure. The jam, which lasted only 6 days, generated losses of almost 60 billion dollars according to the specialized international trade magazine Lloyd's List . This is due to the fact that 12% of world trade travels through this important artery.

Let us not forget that precisely in March, the AstraZeneca vaccine produced by the University of Oxford was news, due to the possibility that it generated thrombi in those who received it, hence the event of the Evergreen ship in the Canal meant an episode of thrombus in the world trading system. The ironies to the case were not lacking.

Now, for new combined reasons, there is a process of disturbance in the structures of manufacture, trade and dispatch of goods, which brings collapse, to the height of the scarcity of goods and inflation, in countries where these phenomena are usually unthinkable .

The COViD-19 pandemic, the main cause of the crisis, produced a major disruption in the production, transport and trade apparatus, across developed countries. This process of interruption, which was combined with structural deficiencies in the chains themselves, is now facing the disruptive pattern in consumption and demand in the large consuming countries, just after the health crisis subsided.

In other words, a vortex of consumption and demand momentum was unleashed after the pandemic containments, and this trend has continued to accelerate thanks to the magical power of the US and the European Union to apply stimulus packages. The North Americans have been especially benefited, due to their ability to print more money, increase the ceiling of their debt, without suffering apparent and major consequences.

Empty shelves and fear among American consumers, just before the most consumerist dates in that country (Photo: AFP / Getty Images)

Many families that changed their consumption patterns, orienting them to electronic goods and food delivery during the pandemic, managed to save, but have accelerated their consumption capacity due to the stimuli. Meanwhile, on another sidewalk but within these same economies, many hit by the health crisis who have lost their jobs, have sustained a certain consumption base thanks to the stimulus. The “post-pandemic” sensation has prompted these economies to do what they do best through reflex arc and programming; consume.

Hence, the current moment in the economy of scarcity and inflation in some countries is identical to that of an obese middle-aged man, who for health reasons (in a literal and figurative sense) has had to keep a short diet, But now he has broken it by eating huge amounts of junk food at his leisure, putting an indigestible amount of saturated fat in his blood. Obesity increases the risk of blood clots.

The energy factor component of the crisis is now a factor clearly linked to the impulse of green capitalism, not only in Europe, but throughout the world, including China.

The pressures on green capitalism as the new global economic mantra have imposed decarbonization goals squarely. But the energy transition process has been distorted and asymmetrical.

The energy price crisis in Europe has not sparked debate on the speculative factors that play a role in the construction of energy prices, including the oil and gas futures markets. Therefore, the distribution of blame is also asymmetric.

The energy episode of this combined crisis is not strictly economic, it is also geopolitical. The decrease in Russian gas shipments to Europe via Ukraine is the balance of the geopolitical dispute over Eastern Europe that put the Federation and the North Atlantic Treaty Organization (NATO) in collision for years. Now, the broken dishes of Ukraine on the threshold of the energy and economic depression due to its fall in the gas bill in transit, has a Europe that offers to alleviate a crisis that it cannot remedy itself.

The significant balance of the energetic thrombus remains to be seen. According to Vladimir Putin, crude oil may soon reach $ 100 per barrel, a not-so-distant possibility, understanding that Brent prices have exceeded the $ 83 barrier that they have not known for six years. The northern winter is expected to push prices further.

The new overall situation in developed countries has found eventual solutions.

Joe Biden has said that the port jam in Los Angeles will be resolved "progressively" over the next few weeks, as he has ordered work 24/7 at the port facilities.

Companies that provide transport services to the United Kingdom intend to alleviate the crisis by increasing incentives for carriers and hiring cheap labor, especially immigrants, in order to solve the problems of dispatch to the United Kingdom, while, as in a complicated process of divorce, they resolve with the Europeans the bureaucratic dilemmas and retaliations that have arisen since their difficult separation.

In the European Union, they foresee that next winter, together with the inertia of the current energy crisis, the price of gas will be pushed further upwards, but the good news has come hand in hand, again, from Russia, in another episode of the Russians saving Western Europe. The Nord Stream 2 gas pipeline, by which the US imposed sanctions against European and Russian companies and which torpedoed its construction to its last stages, has begun to be filled with gas to dispatch to Germany through the Baltic Sea.

Long lines for gasoline are now a new situation in the UK (Photo: AFP / Getty Images)

The governments of capitalism of the so-called "1st world" have arranged to use emergency anticoagulants in the face of the crisis. Indeed, let us consider that these critical knots that we must consider eventual, may have a setback for the remainder of the year and could remit by the beginning of 2022.

However, this new large-scale Evergreen case, as occurred in the Canal, leaves the fragility of the scaffolding itself as an open wound. Relocation, "just in time" manufacturing parameters, outsourcing, concentrated supply networks, speculation, planned obsolescence and above all a disproportion in the concentration of consumption. They are all foundational and elementary pieces of modern globalized capitalism, which acquire qualities of dogmas that cannot be renounced in liberal logic.

Assuming that this network has left more benefits than costs (at least for its main beneficiaries and gendarmes), balancing the account in a clear profit margin, it is evident that the system has been galvanized under the uncompromising belief of efficiency and competition. promoting the concealment of frailties. But enough of talking about their weaknesses and better let's talk about ours.


The question to ask ourselves lies in the faculty of international capitalism, Made in Developed Countries, in accommodating and accommodating ourselves from such fragility. That is, what for the countries of the "1st world" is today the economy of eventual scarcity and inflation, could be for developing countries the amplified blows of turbulence that, as usual, were not generated on our side. of the world.

Amid inflationary fears, FAO has issued a serious warning about rising food prices around the world. Its price index is increasing 39.7% in annual terms to reach 2011 levels. Its warning is based on a simple premise; the reopening of developed economies only adds pressure to food producers around the world. The pandemic only temporarily averted the perfect storm over the food sector.

For some developed countries, the current moment consists of a consumer goods crisis and an eventual rise in energy prices, but for the whole world it translates into inflation of all these goods, but also, it especially implies an increase in food .

For the inhabitants of the poorest countries the situation is worse, because with the increase in food prices, the conditions of poverty and famine are reproduced. The FAO also warns that in the most vulnerable countries, the rise in global inflation in unprecedented peaks will have a clear impact on growth, which is already a very difficult item to manage in poor countries since the pandemic began. More than a "domino effect", we could be facing a "butterfly effect".

The key point of structural fragility of the world capitalist scaffolding has no confluence in the sorrows that we see today in the economies of the developed world. The point of convergence of the consequences of such fragilities is precisely the Global South.

As in a multiple thrombosis, although clots develop in the legs, this prevents the normal return of blood to the heart. ... smo-global

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Just this morning while getting my daily dose of propaganda on npr I heard 2 differnt 'solutions' to this crisis from 2 different reports. One, from the port of Baltimore highlighted port 'improvement, dredging deeper channels(an iffy thing in Baltimore harbor, where several hundreds years worth of industrial toxins lie beneath the accumulated ooze. Look out, Chesapeake!) and the building of more better cranes, facilities. The other 'solutions was many more smaller boats that can access other, less 'developed' ports.

Is it moot to discuss why we need such insane volume of transoceanic transport? While some commodities must move around the world due to climate and geological restraints, ya can't grow bananas in Wisconsin and many mineral resources are not equally available around the world. But it seems that what has got the media all worked up is the 'bottleneck' in manufactured goods. With a bit of investment and training these goods can be produced anywhere, negating the cost and expense of all that traffic. Also, manufactured goods have the highest profits because the amount of labor leaves more possibilities for stealing labor. So why then? The main expense of any capitalist is labor, so the capitalist chases the cheapest labor they can access, often with a boost from the comprador governments which imperialism installs.

Some might point to China, certainly not a comprador, but the Chinese absolutely required the breakneck development speed of capitalism in order to keep their sovereignty viable. Without sovereignty ya got nothing. One must remember that China did not 'steal jobs', it was US capitalists who put profits over US workers, and if they didn't do so they could hardly be capitalists. It also should be noted that US workers are not looking out for their own interests, not even trying, the sorry condition of unionism in this country tells that story succinctly. So while their wages were a pittance compared to some better paid US workers they were still better than they had and built their economy to the point where full on improvement of the people's condition was an ongoing process, something US workers haven't seen for 50 years. Sooner or later we'll take the hint...

Automobiles and TV sets can be made anywhere(the question of 'who needs all that crap?' is for another day), we allow the capitalists to set worker against worker when we should and must unite. Socialism or barbarism, those are the alternatives we got.
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Re: The crisis of bourgeois economics

Post by blindpig » Tue Oct 26, 2021 2:51 pm



25 Oct 2021 , 9:58 am .

The hegemonic base of US imperialism is rooted in dollarcentric finance (Photo: Scott Eells / Bloomberg)

US imperialism, it is known, is based on military power (frankly in decline compared to other Eurasian powers) and dollarcentric finances, a resource that has been schooled and described in detail and analytical finesse by the economist Michael Hudson. .

A few days ago American journalists Max Blumenthal and Ben Norton, who lead the project The Grayzone , talked with Hudson about his book Super Imperialism: The Economic Strategy of American Empire (in Spanish: superimperialism: the economic strategy of the American empire ).

Before reviewing the considerations about this new edition, it is important to comment that the economist and author of the book breaks the mold of the economic academy who are accomplices of financial interests, because among his long career in the field, working at Chase Bank Note that international banks consider the export earnings of foreign countries as income that can be used to pay interest on foreign loans, that is, the objective of creditors is to capture the entire economic surplus of a country in debt service payments .

In fact, Hudson comments that the larger the balance of payments deficit, the more money was recycled to finance the US budget deficit to the CIA and the US Department of Defense.

Returning to the review of the book, which already consists of three editions, the first published was in 1972 after the Bretton Woods context and the imposition of Richard Nixon suspending the dollar-gold convertibility and other reserve assets in 1970.

The second edition of the book was published after the events of September 11, 2001 at the World Trade Center in New York, describing the genesis of the political and financial domination of the United States, adding this time, the new phase of imperialism.

This edition is part of the New Cold War, the alternatives to de-dollarize the world economy and the repositioning of Russia and China in the geopolitical arena, taking into account the phase of the end of super-imperialism.

On this issue, Hudson expresses the argued logic that the United States decided to deindustrialize its scheme because the corporations essentially needed to hire cheap labor abroad, that is, the United States economy is high cost because it is oriented to the debt and has been privatized.


For the economist, China and Russia see the United States as an object lesson, to avoid repeating these dynamics, an issue that is not related to ideologies but only to debt issues. In other words, it is not a rivalry with the United States: it is a rejection of the entire neoliberal structure that the United States has put in place.

In fact, the author comments on Evergrande that it does not have a shock wave in China, because the debts are owed to the government and the government can simply write off the debt. Compared to the United States, there it would be a problem because if the big real estate and investment companies like BlackRock went under, that would bring down the banks and, therefore, bring down the entire current system.

Hudson highlights, again, the retrograde role of institutions like the World Bank which was to make Third World countries, the Global South, dependent on the United States for their food supply, financing only export agriculture, plantations of export and not growing your own food.

As for the role of the International Monetary Fund, it was to use debt leverage to force other countries to impose austerity on their populations and, in essence, create the mechanisms of control of governments and that such governments are in line with the interests from United States.

More than what is recurrent in the interference practices of those North American administrations, which cut them off as international organizations when they really pay taxes and maneuver for that single country. In his book, Hudson shows the double standards that have perverted some seemingly international organizations into American nationalist arms, basically through the Department of Defense and the Department of State of the United States.

Simple: the United States will not join any organization in which it does not have veto power.

Therefore, from this trench we deploy some important clues about Hudson's comments to American journalists:

*The most important public utility for China is to keep money creation, banking and credit in the public domain.
*America's mode of control is no longer military: it is financial. And super-imperialism is about how the United States differs from European colonialism by controlling the world financially and, covertly, politically, not by military force.
*The military arm handles it like this: when the United States spent money in Vietnam, or when it now spends it in the Middle East or in the 800 military bases it has around the world, these dollars go to the national economy. The Federal Reserve ends up with these dollars that are released from US military spending, that is, the financial system recycles all this foreign military spending in the United States.
*He points to the example of Japan, which did exactly what the United States suggested: it recycled its automobile export earnings and its electronic exports to help finance the balance of payments deficit and the US budget deficit simultaneously.
*Hudson emphasizes that the change translates into the United States going from being the global creditor to being the global debtor. The difference is that America's debt to foreign countries is a debt that it never expects to pay.
*China has decided to minimize its holdings of dollars, except for those it needs to trade in foreign exchange markets to keep the exchange rate stable.
*He also explains that the World Bank did not make any loans to Chile, Venezuela or other Latin American countries to increase their own food supply, because the condition was to buy food only in the United States and adding the imposition of "sanctions" to enclose more this scenario.
*The United States did not count on the fact that the countries that are under the siege of these unilateral sanctioning practices have developed important phases of productive internal development to shed US coercion.
*He explains the food threat to Latin America with the example of a coup to Honduran President Manuel Zelaya (2009), when he narrates that when Hillary Clinton visited Honduras and observed the development plans for Honduran agriculture, she immediately articulated a coup. Reliance on slang for dominance is critical to the United States.
*The purpose of technology, for China, is not to increase the price of shares in the companies that make it. They are trying to reduce the cost of production and develop new technologies to better develop their technical instrumentation.
*Blumenthal and Norton comment that BlackRock was asking for a massive printing of money from the Federal Reserve, with which they have been doping the economy since then to avoid inflation, the biggest problem that the government of Joe Biden presents. it adds the rise in gasoline prices in the United Kingdom and the gas crisis in Europe.


The endless complex alternatives adopted by all the countries besieged by the United States, which are accompanied by the de-dollarization that it seeks to consolidate, with the option of the digital yuan in tow and the new gold purchase operations of large countries such as Russia, are examples palpable of the new scenarios that are to come in the global spectrum.

Hudson comments in the context of the onslaught of the covid-19 pandemic that the only option for which corporations in the United States are willing to fight to the death is to prevent socialized medicine and thus prevent the installation of a public health system , and this is exemplified by the hoarding of 300 million vaccines .

Given this, the economist assures that the new way to control work and the class war in the United States is to privatize pharmaceutical products and medical care, in order to prevent people from having access to medical care and pharmaceutical products , unless it is through your employer.

Likewise, journalists consulted the economist about the energy crisis in Europe, and he referred to the Nord Stream II gas pipeline and the blockades it has received:

"When a European politician said that we would rather starve in the dark than have to buy from the Russians, what he means is that we prefer to accept the bribes that we receive from the Americans in our bank accounts," Hudson said.

So the solution is just around the corner: what they have to do is open the gas pipeline and the price of gas will drop in Europe.

Finally, Hudson comments that the logic of the European authorities is that if the United States is going to do to them what Hillary Clinton did to Honduras and what Barack Obama did to Libya, then they have to endure and prepare for that.

In short, this US economist dictates multiple data that reveal the domination and interference maneuvers of the United States and, in parallel, clearly explains the elements that dilute the control mechanisms of the outdated hegemon.

China and Russia spearhead the strategies to dynamite the control and constant siege of the United States in the world. New horizons by obligation must be drawn before this decadent phase of super-imperialism. ... ra-de-eeuu

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Oh dear, what will US capitalists do with all that funny money when 'opportunities' for reasonable(heh!) profits overseas are not available? This denial of opportunity is much like an effective labor strike, attacking the very basis of capitalism.
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Re: The crisis of bourgeois economics

Post by blindpig » Tue Nov 09, 2021 1:41 pm



Forty-Seven Trillion Dollars: Exploitation Writ Large
October 27, 2021

“Exploitation” is a word seldom encountered today. Its common usage roughly spans the heyday of socialist thinking, especially the era of Marx’s influence over socialist theory. It was and should still be the cornerstone of Marx’s critique of capitalism.

But the idea of labor exploitation– capitalists taking uncompensated advantage of workers’ labor– has largely disappeared outside of the Communist Parties. It is more common to find the word attached to sexual or animal abuse, cultural appropriation, or other sins outside the bounds of class. But class exploitation, the structural exploitation once fruitfully viewed as the centerpiece of capitalist relations of production, the basis for the era of capitalism, is out of fashion with today’s Western left.

That’s not to deny a concerted outrage over inequality of income and wealth; certainly, the broad spectrum of opinion from the center to the left decries the vast gap between the obscenely wealthy and those equally obscenely impoverished. But there is little attention paid to how that enormous chasm is produced and continually reproduced. Nor is there much imagination of life without it.

Hopefully that might change.

A recent article in Time magazine– a popularization of a scholarly paper from the staid, ultra-conservative Rand Corporation– declares dramatically in sensational headlines: “America’s 1% Has Taken $50 Trillion From the Bottom 90%.”

The Rand paper, Trends in Incomes From 1975 to 2018 argues with a great deal more nuance, but equal force, that if the thirty-year (1945-1975) trend of household income distribution had been maintained over the next forty-two years (1976-2018), the bottom 90% would have earned $47 trillion more over that period!

Put another way, the bottom 90% would have received 67% more income than it actually did in the one year, 2018– the final year of the study; those below the upper 10% threshold would share $2.5 trillion more than they actually received for their labor, $2.5 trillion in 2018 that went instead into the bank accounts of the highest 10% of earners.

As the authors of the Time article emphasize, “This is not some back-of-the-napkin approximation…”, but a rigorous conclusion based upon the premise that 1945 to 1975 was a period of relative stability of inequality. That is, in the thirty-year post-war period, the gap between the rich and everyone else grew little and declined little. The French elites celebrate a similar era in Europe with the expression “les trente glorieuse”– the thirty glorious years of relative prosperity. The majority maintained its lower status, but lost little ground to the rich.

While the Rand authors, C. Price and K. Edwards, do not explain this ‘equilibrium’ of inequality, an explanation is readily at hand. The Western powers were in an intense, winner-take-all competition with socialism and its friends after World War II. The ruling classes made an unspoken compact with respective labor movements in Europe and the US that they would encourage the idea that labor’s income would move proportionally with increases in productivity, effectively “freezing” social inequality in place.

In return, labor was expected to accommodate, even participate in Cold War foreign policy and embrace capitalism. In the political sphere, this compact guaranteed that the urge to reform or change would be contained in the Democratic Party or the European Social Democracies. Where mass Communist Parties emerged, the securities services would go to any length to aid and abet the center-left in denying them access to power.

In the US, the informal compact produced the purging of the left in the labor movement, cultural and intellectual conformity, and entrenchment of the two-party system.

As Price and Edwards demonstrate, the stability of income distribution, of class-income differences, changed dramatically after 1975. Income distribution shifted sharply to the benefit of the top 10% and even more so to the top 1%. The shift was so great in the post-1975 period that the authors calculate that 90% lost $47 trillion by 2018. But, again, they have no clear and comprehensive explanation, beyond noting that the “rise in inequality has been attributed to many different factors including technological advancement, decline in union membership, and globalization.”

While these conventionally cited factors may well have played some role in the shift in income distribution, they were hardly sufficient to explain the extremely sharp turn that Price and Edwards show.

Rather, the reversal came with the profound economic crisis of the 1970s: the oil crisis and intractable stagnation and inflation, two conditions that conventional economics (then Keynesian-influenced) could not even conceive of as occurring together. The concurrent fall in the rate of profit forced a radical reexamination of policy on the part of the ruling class (in the US as well as Europe). Welfare policies and class accommodation were jettisoned for a raw, no-holds barred assault on the income and living standards of the 90%.

With the decline and disappearance of Soviet and Eastern European power, a decade or more later, the last elements of the post-war compact with labor and its allies were also jettisoned. The US ruling class perceived no need for any further accommodation with US working people. Capital mobility and the availability of an enormous new pool of skilled, but low-cost labor capped the period and placed enormous pressure on the incomes of Price and Edward’s 90%. Labor unions received this shock treatment and, without a militant left, struggled to respond. New logistical technologies smoothed the way for a sharp increase in global trade, investments, and job migration.

While Price and Edwards struggle with an explanation for the qualitative changes that occurred after 1975, Marxist theory offers a ready answer. Capital mounted a concerted offensive in the 1970s resulting in a massive increase in the rate of exploitation in response to a profound crisis and the failure of the policies of the immediate postwar era to answer that crisis.

With the rate of profit under siege, the US ruling class unilaterally cast aside the Cold War compromises and ruthlessly attacked the income and living standards of the working-class majority. Wages have been essentially stagnant since the 1970s, while productivity and national product have grown, filling the coffers of the corporations and the bank accounts of the rich.

Characterizing this period as the rise of “neoliberalism,” as much of the left favors, obfuscates the deeper processes that spawned the dramatic shift in the rate of exploitation, the appropriation of an additional $47 trillion from one class to another in a forty-two year span. It wasn’t an intellectual victory in the policy wars, a spark of evil intent, the domination of the political right, or a temporary or contingent aberration of capitalism, but a strategic adaptation– accepted by nearly the entire ruling class and its political minions– in the appropriation of surplus value– the exploitation of labor– that accounts for the dramatic gains of the capitalist class and its hangers-on.

Though they were agents in the change, Carter, Reagan, and Thatcher were only the faces of another stage in capitalism’s course correction. Those who think that the super-exploitation exposed by Price and Edwards can be tempered by a return to the “glory” of the immediate postwar period fail to understand the logic of capitalism. That period has long given way to a new dynamic.

But the Price and Edward revelations succeed in exposing an important point. If the super-exploitation of the last forty-two years– the appropriation of the $47 trillion– is recognized as unjust, as the Time headline suggests, then the “ordinary” exploitation of the previous period is equally unjust since both lead directly to inequalities.

There is no escaping the conclusion that the economic inequality that more and more people are rejecting is itself deeply rooted in capitalism and its profit-generating, exploitative mechanism. Surely the scope of super-exploitation that Price and Edwards spotlight should challenge the legitimacy of capitalism, not only as it is today, but also how it was before it took a vicious turn. ... rit-large/
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Re: The crisis of bourgeois economics

Post by blindpig » Tue Nov 30, 2021 2:52 pm

NOVEMBER 26, 2021

‘They Do Not Tell Both Sides of the Inflation Story’
CounterSpin interview with Jon Schwarz on inflation fears


Janine Jackson interviewed Jon Schwarz about inflation fears for the November 19, 2021, episode of CounterSpin. This is a lightly edited transcript.

CNN: Inflation Is Coming for Your Cup of Coffee Next
CNN (11/18/21)
Janine Jackson: A New York Times headline read, “Inflation Warning Signs Flash Red, Posing Challenge for Washington.” A subsequent Times piece underscored the problem and the solution: “The White House Says Its Plans Will Slow Inflation. The Big Question Is When?”

That framing is echoed and adumbrated everywhere in corporate media. “Inflation Is Coming for Your Cup of Coffee Next,” says CNN. “Inflation’s Wrath Hits Home” was USA Today’s rubric. And then—surprise, surprise—CNBC has “Inflation Has 88% of Americans Worried.”

True, there’s an admixture of, for example, the New York Times columnist Paul Krugman’s “History Says Don’t Panic About Inflation.” But anyone can see that, judging by sheer focus and attention, “serious, smart people” organize their thinking around “inflation” more than many another economic indicator.
Intercept: Inflation Is Good for You
Intercept (11/10/21)
In the recent words of our guest, whenever the corporate media moves en masse like this, it’s a good idea to slow down and consider what’s actually happening and why. Jon Schwarz writes for He joins us now by phone. Welcome back to CounterSpin, Jon Schwarz.

Jon Schwarz: I’m so happy to be here, especially to talk about this in particular. Because this is one issue where you realize that there is no one room where all the people get together and decide what is going to be in the US media, but it really does seem like there is.

JJ: Yeah, exactly. Exactly. We hear media complain about how we used to all talk around the water cooler and agree on everything. And we know that’s not true. And yet, you have to acknowledge the power of media of making it seem as though we’re all in one conversation. And so the phenomenon really here is corporate media alarm, and the worldview that that reflects. But let me ask you, first, about what “there” there is there. What reality is it that these headlines are referring to?

JS: The reality is that inflation went up from last October to this past October by 6.2%, I believe it was, according to one measure that includes food and fuel. And so that tends to go to extremes more than the standard measure, which excludes them. But just to be fair, because food and fuel are important for people, the number to think about is legitimately 6.2%. So that’s over a year. And it happened that inflation went up from September to October by 0.9%, meaning that if something cost $10 in September, it now cost $10.09.

JJ: So is that the bare understanding? Because if I’m reading headlines, I’m reading about costs of things that I want to buy going up in a way that’s really going to affect my life. And it seems as though the increase in inflation is most meaningful in terms of how much it’s going to affect the price of my coffee, or how much it’s going to affect something else that I as an individual are buying. But there’s other things that inflation means that are really maybe more at work behind the alarm here.
Washington Post: Wages are up, but inflation cancels out any gains
Washington Post (11/10/21)
JS: That’s right. It’s funny. The Washington Post had not one but two above the fold stories about inflation this week on one particular day. One talking about how terrible inflation was, and one about how it destroyed Biden’s agenda. And they also had a chart covering, I don’t know, the last 10 or 15 years, that by itself explained that their story was not what they were telling you. It was a chart showing real wages going down a little bit over the last year when inflation is taken into account, meaning that inflation was 6.2% over the last year. Wages for regular people went up by 5.8%, so the purchasing power went down a bit.

But the chart itself showed that people’s purchasing power being eroded, going down in real terms when inflation was taken into account, had happened a lot over the past 10 years. And it wasn’t a gigantic, front-page emergency then. Like, what was the difference?

The difference was this, was that there were not high rates of inflation making that happen in the past, during the Obama administration, and I think even during a little bit of the Trump administration. And the difference is that now it is happening with higher rates of inflation, and higher rates of inflation affect people with tons of money in a way that is never described in the corporate media, to my knowledge. I literally have never seen this.

And the story there is that household debt in the United States is about $14.5 trillion. So that’s a very big number. It’s about 75% of the size of the entire US economy. And when there is inflation, most of that debt is a fixed rate debt like mortgages, student loans, things like that. And the inflation erodes the value of that debt, because it’s set in nominal terms. Like, it stays at $15.5 trillion, no matter what level of inflation there is.

JJ: Right.
Jon Schwarz: “People with a lot of money do not like to lose it. And that’s really at the root of this inflation freak-out.”
JS: And so 6.2% inflation, that works out to a transfer of wealth from creditors to debtors of about $850 billion. So almost a trillion dollars. That is a lot of money. It doesn’t work out precisely, as different people have different levels of debt. It’s not totally a transfer of $850 billion from the rich to the poor. But it is a significant amount. And you may have noticed people with a lot of money do not like to lose it. And that’s really at the root of this inflation freak-out.

It’s that plus the fact that there’s a very tight labor market right now, meaning that there’s low unemployment, and workers have much more power than they generally do. And the standard treatment for an economy with high levels of inflation is to increase interest rates, slow the economy, which throws people out of work. And that is the goal, that they do not like a booming economy. They do not like low levels of inflation, creditors in general do not. And what they would like to see is a slower economy, with lower rates of inflation and higher rates of unemployment. So it’s these two things—their goal to slow the economy, raise unemployment, and the eroding value of the debt that they hold.

JJ: You’re talking about differential impacts, both of inflation and of proposed responses to inflation, and differentiating that impact is exactly what elite media don’t generally do. They talk about us and them in a way that is meant to collapse other folks into the us that really don’t belong there.
New York Times: Who's to Blame for Rising Prices?
New York Times (11/16/21)
And so the New York Times’ Neil Irwin has an explainer that’s a kind of piece where it’s like, you don’t need to know the details, just here’s the nuts and bolts of this issue that you’re hearing about. And it’s called, “Who’s to Blame for Rising Prices?” And this is already collapsing inflation to rising prices in ways that are unnuanced, as you’ve just discussed. But still, in this let’s-make-it-simple, let’s-break-it-down, “Who’s to Blame for Rising Prices?,” one of the New York Times’ acceptable answers is “all of us.”

JS: Ha! Exactly.

JJ: And the reason is we—I’m quoting—”we shifted our spending toward stuff, rather than services.” That’s one of the reasons. And then, also, “and many of us elected to stop working, or work less.” This is the New York Times, the paper of record, trying to talk to people and say: Prices are going up. Here’s why. And their reason is, you messed up, you know? You messed up during the pandemic. You started buying the wrong things, and you made wrong choices about employment.

I mean, we talk about this as an economic issue. But it’s obviously a media, a corporate media issue as well.

JS: Yeah, it’s a class issue. It’s one of the issues where the class bias of the media really shows up in its most powerful form. It’s absolutely unmistakable.

JJ: Yeah, I don’t know what I wanted you to say in response to that New York Times article, except that these kinds of headlines and stories, they’re not just lamentations. They’re also calls for action.

JS: The call for action is to get back to work.

JJ: Exactly. And in terms of actions that are responses from various entities about dealing with this abstract-sounding “inflation,” well, some of those responses are going to also affect people in their day-to-day lives, so it’s meaningful to unpack what media think, or are telling us is the right thing to do here.

JS: Yeah, there is another class-based aspect of this that the media should be covering, and are not. People have generally and rightfully said that you do have to take into account, especially, elderly people who are living on a fixed income. But the reality that, again, many people don’t actually understand this, is that Social Security is not a fixed-income benefit. Social Security is inflation-adjusted, and so people who are anxious about being able to pay their bills, inflation means that Social Security benefits will be raised by 6%, almost, in January. So that is going to be a welcome help for people in that situation.

But, again, not something that people are saying: Hey listen, don’t panic, because your benefits are going up. People don’t hear that, because that is not being covered for the most part.

JJ: Just finally, looking forward in terms of what folks are going to be hearing, including about themselves: Before we got on, I saw a Yahoo Money headline: “Americans Are Feeling Lousy About Their Finances, Even Though They’re Doing Fine.” I mean, I don’t know. Isn’t that gaslighting? Just looking forward to the headlines we’re going to be seeing about inflation, what are some questions you would have folks just keep in mind as they read and hear that media coverage?

JS: Yeah, so just keep in mind the class bias of the media. As I say, it is particularly apparent now. They do not tell both sides of the inflation story by any means.

And also keep this in mind a year from now, when they are going to have completely forgotten about this issue, because inflation almost certainly will dissipate, and will be more like 2 or 3%.

JJ: Absolutely.

We’ve been speaking with Jon Schwarz. You can find his work on Thank you so much Jon Schwarz, for joining us this week on CounterSpin.

JS: Thank you very much for having me. ... ion-story/

I long ago was told that inflation was mostly a problem for the banks, not for workers. Do not worry on behalf of the rich, it's unseemly.
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Re: The crisis of bourgeois economics

Post by blindpig » Sun Dec 05, 2021 2:52 pm

Posted by Greg Godels | Nov 29, 2021 | Featured Stories | 1

When Have We Seen This Before?
November 26, 2021

Fifty years ago, global capitalism came to a crossroads. The enormous costs of the US’s long, costly Asian war produced great debt and pressure on the gold-backed US dollar. The imperialist alliance with Israel brought a disruptive, unprecedented boycott on the part of the oil-producing nations resisting Israel’s occupation of Arab territories. Intense competition between the dominant US economy and the resurgent Euro-Asian economies was shrinking profit margins. Traditional macroeconomic tools failed to meet the challenges of this new situation. The ensuing crisis came to be called the era of stagflation– stagnant economic growth coupled with persistent, intractable inflation.

Stagflation persisted through most of the decade and ended with shock therapy– a radical dose of deregulation, privatization, and market fetishism, a regimen of austerity now prescribed by all mainstream parties.

The crisis of the 1970s bears some similarities with today’s turmoil.

The pandemic, like the oil crisis, has shocked the global economy. The US economy and subordinate economies have been running on the fumes of fiat money and central bank stimulation, exposing remedies that are losing their effectiveness. Despite the lack of even phantom existential threats, the US has conjured costly foreign adventures and an extraordinarily wasteful and large military budget and “security” spending, crowding out social spending and amplifying national indebtedness. Commodity scarcity generates rising prices. And both slow growth and inflation are now reappearing and promise to continue.

Does this mean that we are bound to relive the crisis of the 1970s? Are we seeing a replay?

Maybe, maybe not. Time will tell. But we would be foolish not to study the 1970s to distill the lessons that might apply to today.

Despite the admonitions of the central bankers and financial gurus, inflation seldom self-corrects. It rarely runs its course. Instead, inflation tends to gather momentum because all the economic actors attempt to catch up and get ahead of it.

In the 1970s, it was popular with the capitalist media to blame workers who were demanding cost-of-living adjustments (COLAs) to ward off inflation. “Greedy” unions, welfare, senior, and disability advocacy organizations were claimed as the causes of inflation’s persistence and deepening.

Cynically, all were asked to sacrifice equally, while it was monopoly corporations that were raising the prices that constituted the core of inflation. They were using “catching up” as an opportunity to “profit up.” Under the guise of responding to inflation, dominant corporations raised prices beyond their growing costs to expand their profit margins.

Unlike monopoly corporations, small businesses were limited in their ability to raise prices because of intense competition. They were caught in a profit squeeze between their need to remain competitive and the grinding increases in their costs of doing business. They are especially victimized by inflation.

At the same time, inflation cheapened the value of debt, especially corporate debt, while choking new consumer debt with high interest rates.

Today, rising prices are eating up workers’ gains just as they did in the 1970s. Let the Bureau of Labor Statistics (BLS) explain it: “From April 2020 to March 2021, the 12-month changes in real average earnings were all increases, between 4.0 percent to 7.4 percent. Prior to that, from January 2017 until March 2020, the over-the-year change in real average weekly earnings ranged from −0.5 percent to 2.0 percent.” But: “Real average weekly earnings of employees on private nonfarm payrolls decreased 1.6 percent from October 2020 to October 2021. In every month from April 2021 to October 2021, the 12-month changes in real average weekly earnings have been decreases, ranging from −0.8 percent to −2.6 percent” [my emphasis].

In other words, real average weekly earnings exploded with the labor shortages induced by the pandemic, but they were wiped out by the five months of over 5% inflation culminating in the 6.2% rise in October, a 31-year high.

It is not workers’ wages that are driving inflation, but something else.

In a revealing article, The Wall Street Journal exposes the real cause of escalating inflation. Inflation Helps Boost Profit Margins: Companies seize rare opportunity to increase prices and outrun their own rising costs [print edition] tells that “[n]early two out of three of the biggest U.S. publicly traded companies have reported fatter profit margins so far this year than they did over the same stretch of 2019… Nearly 100 of these giants have booked profit margins– the share of each dollar of sales a company can pocket– that are at least 50% above 2019 levels” [my emphasis]. The authors note: “Executives are seizing a once in a generation opportunity to raise prices…”

It is apparent from this candid article that monopoly capitalism is leading this profiteering. And it is important to recognize that this profit-taking has and will continue to fuel inflation. Once again, the commanding heights of the US economy– the monopoly corporations– are using the excuse of catching-up to profit-up.

If history’s repeat is not to be farcical, the workers’ movement must avoid the mistakes of the 1970s. It must fight against monopoly price increases and not join the purveyors of common sacrifice, like the silly WIN (Whip Inflation Now) campaign of that period.

The workers’ movement must not follow its false partner, the Democratic Party, down the road of wage and benefit restraint. The inflation-directed restraint of the 1970s gave way to the give-backs of the 1980s and 1990s.

Workers must understand that inflation is not a self-inflicted wound, but a feature of the capitalist system, especially in its finance-dominated, monopoly stage. And it must be contained by attacking the profit-taking that spurs the inflationary spiral.

Further, the working class must bring this understanding to the frightened petty bourgeoisie who feel threatened and are threatened by the scourge of inflation, a stratum that otherwise turns in great numbers to the extreme right for answers.

Of course, this task would be made easier if we had a robust Communist movement in all of the capitalist countries.

In the late 70s/early 80s those cost of living checks we got every quarter as part of our Teamster's contract was a huge help, it was the equivalent of 2 weeks pay. But workers don't need unions no more because of the end of history or something...

I think Greg is missing something here, that the biggest losers during inflation are creditors. Yeah, everything gets more expensive but wages necessarily rise too, especially in these times of voluntary labor withholding. Whereas the creditor watches his money's value melt away as the buying power of a dollar decreases. The banks hate that. We can be assured that inflation will be 'fought' with that as the foremost consideration.


Posted by Greg Godels | Nov 29, 2021 | Featured Stories | 0


November 18, 2021

History is a corrective of ideas, serving as a reality check on intellectual inflation. Sometimes it takes years, decades, even centuries for big, even not so big ideas to be properly deflated.

I remember fondly many heated arguments with the late Fred Gaboury, a former union logger from the Northwest, who became an organizer for Trade Unionists for Action and Democracy, editor of Labor Today, and World Federation Trade Union representative to the United Nations. Fred was a serious thinker in ways that many of his contemporaries missed.

When the Eurozone– the European monetary union– was about to be established, I argued that between nationalism and uneven European development, a common currency was not sustainable. Posthumously, I conceded to Fred. But, today, there is plenty more reason to doubt the Eurozone’s future sustainability. History has yet to speak definitively.

As a retired worker, Fred followed trends in production and distribution closely. Me, not so much. When business writers began to herald modularization and just-in-time inventory production, Fred saw it as the next big thing, a profit-driven structural adjustment set to change the course of global capitalism.

With my usual knee-jerk skepticism, I argued that it was just a passing gimmick, something for the TV pundits to talk about. In any case, I argued, it would prove to be unworkable and ultimately disruptive to the production process.

Decades later, it seems that I was both wrong and, possibly, right.

Wrong, because just-in-time distribution became a dominant mode with global supply chains. Virtually all production and distribution organized by monopoly capitalist enterprises moves product through their processes with none of the traditional back-up supply. There are no full-to-capacity warehouses filled with widgets for “just-in-case” scenarios or unanticipated short falls. That thinking has been rendered obsolete.

For the most part, the system works well, saving monopoly capitalism billions in costs. It works… until it doesn’t!

History is speaking.

The pandemic brought the “efficient” system to its knees, demonstrating just how fragile this big idea actually is. The disruptive factor of massive layoffs, consumption declines, volatile production, and unanticipated imbalances today make lean production and instantaneous distribution look like genuinely bad ideas.

Just-in-time has been replaced with never-in-time, as bottlenecks, late arrivals, and displacements choke off consumption.

Shortages abound. Capitalist markets respond to shortages with higher prices. But it is not only material commodities, but also labor “commodities” that are in short supply and commanding higher “prices.” Labor costs rose by 8.3% in the 3rd quarter of 2021 (reflecting a 2.9% increase in hourly compensation and a 5% decrease in labor productivity, due largely to longer hours from the existing workforce).

Workers sent home over the pandemic have been reluctant to return to work, whether it is from fear of infection, withdrawal from the rat race, or a sophisticated understanding of the gains possible from the withholding of labor. The result is a competition for labor, with capital offering bonuses, benefits, and higher wages to entice a shrunken labor market.

Labor compensation is now breaking through imagined barriers that restricted hourly wages to near flat growth for nearly half a century in the US and sapped the political will to advance the minimum wage.

One can only hope that the complacent, risk-averse labor leadership will learn a valuable lesson about the advantages of workers withholding their labor, a grand idea that deserves to be revisited.

While it is true that union workers are also on strike for better compensation (though with a frequency and volume well below that of a few years ago), it is clear that labor’s top leadership is cheering union militancy from the sidelines.

Despite the assurances of those who believe that inflation is a thing of the past, manageably through Central Bank manipulation, rising prices have returned, and returned with a vengeance.

After a long period of rescuing deflated financial values with central bank purchases of overvalued assets, after a lengthy regimen of ultralow interest rates designed to provide nearly free money to reviving risky or marginal investments, funding mergers and acquisitions, initial public offerings, and open-ended SPACs, and generally overcoming post-crisis inertia, the central banks have seemingly overshot their targets.

They have overloaded a deflated and deflationary economy. October’s inflation rate of 6.2% reached a thirty-one-year high, topping 5% for the fifth straight month.

Put simply, the effort by central banks to energize a sluggish economy has created inflation, amplified by supply shortages and a labor force growing at a snail’s pace.

Those living below the highest quintile– the home of the bourgeoisie and the petty bourgeoisie– are seeing any material gains from worker’s advantages in the labor market erased by higher prices. And, of course, those on fixed incomes– the poor and elderly– are hurt the most.

More bad ideas coming home to roost.

It’s safe to say that the Democratic administration, through its own courtship of monopoly capitalism, finds itself caught between the sharp blades of a scissors. On one hand, the party has pledged to provide a constantly shrinking, minimalist, but sorely needed relief package to a major section of its base.

On the other hand, promiscuous spending on managing the empire– military and security services, foreign meddling, corporate giveaways, reflating or isolating capitalist flotsam and jetsam, and the tax coddling of the rich– result in the risk of any future essential spending on human needs becoming inflationary. Crowding out relief for the masses while partnering with monopoly capital is the signature of state-monopoly capitalism.

The return of inflation has quieted the idealist-left’s infatuation with Modern Monetary Theory (MMT), the notion that spending on peoples’ needs could come at no cost to the bourgeoisie, its minions, and the bloated capitalist state.

Adherents saw the massive spending on resuscitating crisis-ridden capitalism with no apparent serious effect on prices and concluded that the same kind of spending could support social welfare programs with no inflationary consequences.

They overlooked the context. Massive Federal Reserve spending took place to address a profoundly deflationary systemic crisis.

From the MMT perspective, it is not necessary to curb insane military spending or tax the rich. Waving the magic wand of MMT will permit solving all of capitalism’s irrationalities and injustices, while meeting the people’s needs through deficit spending. Candide’s best of all possible worlds is in the MMT theorist’s grasp.

The harsh reality of inflation upends this utopian dream. Another bad idea dashed.

If it seems like the US left is addicted to bad ideas, it’s because most of the think-tankers, academic gurus, and labor polemicists that influence the broad left deny that gains for the majority come from a zero-sum game– the wealthy and powerful must lose for the rest of us to win. They pretend that there are roads to social justice that pass through regions of social harmony and equitable sacrifice, a long-held principle that keeps people in the Democratic Party orbit. They look for shortcuts that will avoid a direct confrontation– class struggle– while still challenging capitalism’s privilege to dictate human affairs. When, in fact, we must challenge its very existence.

This misguided approach guarantees that bad ideas steeped in idealism will dominate– ideas that promise success, without pain or confrontation.

MMT will not magically solve the problem of inequality; a chain of coops will not defeat monopoly capital; and two-party theatrics will not establish real democracy.

We need bigger and better ideas for those tasks.

With a near future of a crippling price rise motivated by exploding profits, a do-little political stratum obsessed with fund-raising and securing the approval of the rich and powerful, and a murderous, gangster foreign policy motivated by service to global capitalism, we can’t afford the luxury of toying with bad ideas.
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Re: The crisis of bourgeois economics

Post by blindpig » Wed Dec 29, 2021 2:50 pm

President of El Salvador Nayib Bukele, who accompanied his declaration that cryptocurrency would be recognised as legal tender in June by changing his Twitter profile pic to this version of himself with glowing laser eyes. (Photo: Nayib Bukele)

Cryptocurrencies: a view from the left

Originally published: Red Pepper by Thomas Redshaw (December 27, 2021 ) | - Posted Dec 28, 2021

The use of cryptocurrencies is rapidly increasing across the world. In 2020, scholars at the University of Cambridge estimated there were 101 million people using cryptocurrencies worldwide, an increase from 35 million just two years previously. The rise of cryptocurrency is usually a story of pizzas bought with bitcoins now worth over a billion dollars, kingpins of darknet drugs markets ordering assassinations and hospitals being held to ransom by anonymous hackers. These new levels of activity however are pushing cryptocurrency, and its underlying blockchain technology into the mainstream–with significant consequences.

The first and arguably biggest impact so far is cultural. The origins of cryptocurrency lie with utopian libertarians attempting to construct a basis for the ultimate free market. Bitcoin was designed to be a currency that no centralised organisation, let alone nation state, could control. Instead, digital assets could be exchanged across peer-to-peer networks run, in theory, by anyone with a computer.

Emerging at a time when the reckless lending of financial institutions had crashed the world economy and national governments had shifted its costs onto working people via austerity measures, the idea of a currency run by its users that could challenge the power of the banks appealed to many. These ideas flourished online, particularly in the wake of Edward Snowden’s revelations about mass surveillance, and a new subculture emerged, replete with its own specialised news sites, forums, events, businesses and vernacular. While there was some degree of ambivalence to the politics of early bitcoin users, the anti-establishment populism that now characterises this subculture is fervently right-wing.

On the one hand, this is due to the enduring libertarian ideas that inspired bitcoin’s design. Indeed, because many of these ideas are embedded in its functionality–such as a predetermined limit on how many bitcoins can be created–learning how bitcoin works often involves learning libertarian economic theory and its implicit political premise that free markets are the best solution to social problems. On the other hand, using bitcoin involves financial speculation. Bitcoin has yet to prove itself as a stable currency but it has demonstrated that those who closely monitor its wild price fluctuations can make money if they can buy low and sell high. This has fostered a Wolf of Wall Street-style culture of frenzied trading.

The result is a libertarian subculture that loathes banks and national governments but celebrates volatile markets and fetishises bitcoin as an agent of historical change. In what may be the best expression yet of capitalist realism, a new tool for free market speculation has become for many a populist symbol of resistance to the ravages of finance capitalism. This is the ideological power of bitcoin: to rearticulate free market capitalism in a new, invigorating way that resonates in an era defined by seemingly unaccountable financial institutions, mass surveillance and political inertia.

This has not been lost on political movements on the right seeking to build popular support for neoliberal policies. Indeed, it is arguably the principal reason the right-wing populist president of El Salvador, Nayib Bukele, made the country the first in the world to accept bitcoin as legal tender. Here bitcoin may not function as a stable currency but as a publicity stunt. Bukele has been able to successfully energise his strategy for establishing right-wing hegemony by attracting the interest of a global and growing subculture.

Capital Flow

A second major impact of cryptocurrency concerns the way it has been incorporated into global flows of capital. This has occurred in many ways, from cryptocurrencies becoming so prevalent in the trade for illicit goods that ‘crypto-markets’ are now a key focus for criminologists, to blockchain innovation attracting major investment from an array of transnational corporations such as Amazon, IBM and Mastercard.

The indispensable context to all this is the continuing crisis of overproduction. After decades of neoliberalism in which the global economy has been restructured to facilitate more free trade and diminish the power of organised labour, surplus value has been increasingly concentrated within the capitalist class. To put it bluntly, rich elites have more money than their financiers know what to do with.

Historically, such moments lead to increases in speculative activity as a bloated finance sector seeks ever more ways to make money out of money, such as trading in futures and derivatives or speculating on the future price of gold or artwork. With no real underlying value being produced by such activities, financial bubbles grow dangerously large and threaten to crash the whole system. Similar concerns are growing about the potential consequences of a cryptocurrency crash.

At the heart of this issue is Tether. Tether is essentially a bank for people looking to make quick money by trading cryptocurrencies (because most banks don’t deal with crypto companies). You buy tokens called ‘tethers’, each one of which the company insists are backed by U.S. dollars. With these casino chips you can then go off to cryptocurrency exchanges and start speculating, safe in the knowledge that you can always go back to Tether and cash in your chips for real money.

However, questions are increasingly being raised over the authenticity of Tether’s claims. This is a serious concern as there are now 69 billion tethers in circulation. If confidence falls, as a result of criminal investigations for example, a significant number of people may try to cash in their tethers at the same time. Tether could collapse and trigger a crash in wider credit markets. The potential impact of such a crash grows as cryptocurrency becomes more enmeshed in global finance and everyday life.

The energy question

The final and perhaps most widely known impact of cryptocurrencies concerns their ruinous levels of energy consumption. The amount of energy used to power the bitcoin network alone is more than many countries use in a year.

A cryptocurrency mining farm in Iceland. (Photo: Marco Krohn)

Hundreds of thousands of hardware operators known as ‘miners’ compete with one other to process data on the bitcoin network, incentivised to do so by rewards in units of bitcoin. To successfully process data and receive these bitcoins a miner must set their computer to constantly generate random sequences until one of them effectively wins a lottery operated by the network itself. The more powerful your computer, the more likely it is to generate the winning ticket. This has led to an arms race between miners, the mass production of specialised hardware and the emergence of giant ‘mining farms’–warehouses full of powerful computers all generating random codes with the aim of processing data for the bitcoin network.

Historically the vast majority of bitcoin mining has taken place in China due to cheap access to electricity. Recently, though, the rapid growth of an industry that is both notoriously difficult to regulate and exhibiting all the signs of a dangerous speculative bubble has led the Chinese authorities to clamp down on both mining and trading activities, enforcing a complete ban on cryptocurrency from June this year.

What can the left do?

The impact of this ban on cryptocurrency is still unclear. While many mining operations have shut down or migrated to other regions, some analysts argue the network’s carbon emissions may actually increase. This brings us to the question: what to do about crypto?

Debates on the left broadly fall into two camps: calling on more governments to follow China and ban cryptocurrency; or calling on social movements to engage with the technology and steer its development towards more progressive ends. The first of these responses has received more mainstream media coverage and influenced public figures from Elon Musk to Elizabeth Warren to denounce bitcoin’s energy consumption. The second has revitalised visions for a global commons within some ‘hacktivist’ circles, with blockchain seen as a much needed alternative infrastructure to the monopoly platforms that dominate the internet.

These two camps are both fighting an uphill struggle in a scene dominated by finance capital and libertarian ideology. They are also at odds with one another, with those advocating regulation perceiving no salvageable potential and those advocating adaptation often attracted to blockchain precisely because of its capacity to escape regulation. As financial blockades on organisations such as Wikileaks demonstrate–not to mention those on countries with socialist governments–it is not only right-wing movements that have reason to evade legal and financial restrictions.

One way to reconcile these two positions may be to decentre the technology and focus on practice. It is indisputable that crypto has given rise to problematic practices (for example, ‘mining’) and exacerbated others (for example, unregulated speculation) and these must be opposed. Yet it is also true that the technology has prompted many to experiment with alternative currencies and projects for building a global digital ‘commons’. The technology is only a tool here; the main objectives and real potential lie with the capacity to build networks of solidarity and collaboration aimed at addressing real injustices. Networks such as Crypto Commons, P2P Models, DisCO Coop, Breadchain, Circles UBI, Holochain and Nym (to name but a few) deserve engagement and support from the left in their attempts to address pertinent grievances around inequality, surveillance and concentrations of power in the digital age. ... -the-left/
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