What is happening
      Has not happened,
      And if it has,
      We do not want to know.

      People I worked with yesterday,
      Today are suddenly whisked away;
      No one asks where they go –
      Or even really wants to know.

      There is no blood to show
      For all their disappearance;
      They just are
      Not around any more.

      The signs all
      Read the same –
      On the highways, in the stores,
      On the elevators, in the halls:

      What is happening
      Has not happened,
      And if it has,
      We do not want to know.

The Triad of Change-Loss-Grief and the Tyranny of Corporatism

Since the early 1980’s the tyranny of corporatism in the United States has left in its wake widespread organizational inconsolability and despair. The triad of change-loss-grief characterizes the experience of all the forms of managed social change – except that mourning is short-circuited.

To begin to awaken from our cultural nightmare, it is vital to name and honor those organizational and personal experiences that would otherwise be lost, and unconsciously repressed. In this spirit, I offer three vignettes that typify our Age of Organizational Inconsolability. Following the vignettes, I discuss their broader implications for understanding organizational despair.

Vignette 1: Of Downsizing and Disappearance

My first vignette developed from an interview I had with a computer company’s chief financial officer during an organizational consultation. I will first provide some of her narrative:

Am I glad to see you today! Howard, the strangest thing happened Monday. I was off sick Friday. I came in to work on Monday morning and the office next to me was cleared out. There was a desk, a chair, a computer, a couple of file cabinets and bookcases, a wastebasket. And that’s it. Empty. I still can’t believe it, and it’s already Friday. It’s like there’s a big hole in this place. I knew the guy ten years. His name is Don. He was one of our numbers crunchers. A quiet guy, just did his work. It seemed like he was always here, always working. He is a computer whiz anyone in the unit could go to for a computer glitch. We aren’t – maybe I should say weren’t, since he’s gone ‑‑ weren’t exactly friends, but we worked together a lot on projects. He was kind of part of the furniture.

It’s so eerie. I’m numb over it. I keep going next door to look in his office expecting to see him. Maybe I’m imagining that he’s gone, and he’s not. But the place is so empty. I’ve heard of this kind of thing happening other places when people get RIFed. Here today, gone tomorrow. But I’ve not heard of this here. It’s like he disappeared. Like he never was here. Howard, I’m not being sentimental about him. He and I didn’t have something going – if you’re thinking that. I just can’t believe they’d do it – and the way they did it. I asked around the firm, and everybody gave the same story. Because it wasn’t just him. It happened all over the place. About five hundred people RIFed in one day.

I asked around, and nobody knows where Don went. No forwarding address or telephone number. It’s weird, Howard. Like he just disappeared. You wonder if you’re next. You try not to think of it. Work harder, maybe they’ll keep you. It’s ridiculous, because you know it’s not true. But you’ve got to believe that you’re valuable to them.

Events and experiences like this have occurred millions of times in American workplaces since the mid-1980’s. Forms of “managed social change” variously called RIFs (Reductions in Force), downsizing, rightsizing, outsourcing, offshoring, separation, and deskilling, when they occur, give those who are fired no warning or preparation – except perhaps gossip and rumor. They are experienced as terrifying, dehumanizing attacks. Sometimes they occur as unexpected letters of dismissal in the U.S. mail or as e-mail. Sometimes they take the guise of a fire drill, where everyone is supposed to leave the building, and those who are summarily fired are not let back in after the false drill is over.

However the firings are executed, they are designed to maximize surprise and to achieve a “clean break” from those who are cast away. They psychologically terrorize the workplace. People are suddenly and efficiently “disappeared.” There are no metaphoric bodies to see and step over. The carnage is attested to by absence, void. Those who remain are left with only images in mind. The symbolic kill is swift and clean. Work is expected to continue within this empty shell.

Frequently, security guards show up on a Monday morning or a Friday morning all over the plant at the offices and workstations of people who have been designated to be fired. They escort them to the big auditorium over in the corporate conference center. They don’t even tell them why they have to go, except that there is an important announcement. After they walk them in, they leave and lock the doors behind them. The CEO or CFO then enters and delivers a brief speech on how the company has to downsize radically in order to survive and be competitive. He tells them not to take it personally, that it’s just business, and maybe thanks them for their service to the company.

The security police escorts them back to where they worked, helps them clear out their personal belongings, then takes them down to administration to hand over all their keys and receive their last paycheck. The police walk them to their cars, and that’s the last they see of the corporation. They are told not to come back. They virtually disappear. They are rarely talked about. Management often justifies managing the firing this way because those who are about to be fired could not be trusted not to sabotage the computers, or to steal equipment.

Following the firings, employees, managers, and executives try to work at their jobs as if nothing has happened. They rarely speak of those who are now gone; still, they are haunted by their absence. Those who remain are told that they should be grateful they still have a job. They all know that they could be next, so they live in dread of the future, trying to do the job of two if not three people. Admonished to forget the (devalued) past and those who occupied it, many of those who experience themselves as “survivors” of the RIF are afflicted with the survivor syndrome, feel pangs of guilt for having survived, and then attempt to rid themselves of the guilt by finding fault with those who were fired. The thought of randomness is unbearable.

Those who remain behind with jobs often have “survivor guilt,” wondering why they were spared and others fired. Sometimes, survivor guilt is quickly repressed, rationalized, and projected in the form of saying to oneself and to others, “They must have done something to get fired.” And conversely, stories arise about the specialness and value to the organization of those who were temporarily spared. Often those who remain feel like the “living dead.” The sense of individual responsibility, culpability and guilt (“I must not be good enough”; “I must have done something.”) militates against any resistance or other collective action.

Whatever sense of vital and interconnected community existed prior to all the firings and rearrangement of people and tasks, there is little sense of “we” or “us” afterwards. In its place is a collectivity of frightened monads. Those “old timers” who knew whom to contact “to get things done” in the informal system of relationships, and those whose “Rolodexes” of contacts were once seen as the lifeline that kept the corporation going, have long been fired. Life proceeds now impersonally by protocol, “by the book.” Unable to mourn for whom and what all has been lost, those who remain become an inconsolable organization who try through pep-talks, admonitions, threats, and dogged productivity to console themselves.

Vignette 2: A Corporate Pep-talk: The Finger in the Waterbowl

I now offer a vignette of what might seem to be a tiny, discountable incident – but one that goes to the heart of the experience of downsizing and its wake. In 1999, following a presentation I had made about corporate downsizing and reengineering, I spoke with a secretary who had worked for many years for a multinational petrochemical firm that had undergone several waves of firings. First thanking me for validating her own experience during my lecture, she said that she wanted to offer an example of what I had been talking about. A new mid-level manager had arrived and was eager to make his mark on the organization. At a meeting of his supervisees, he admonished them: “We have a lot of work to get done here. Don’t think for a minute that you’re essential to this corporation. Everyone here is dispensable. There are a hundred people out there hungry for your job. And if you leave, your absence will be as noticed as a finger taken out of a bowl of water. They won’t even know that you’d been here.”

She and I both shuddered. We briefly mused on the effect of this meeting for worker morale: inducing, perhaps, identification with the aggressor, and feverish productivity, accompanied by chronic terror, indifference, and deep rage at such humiliation. We also wondered about the new manager’s own sense of vulnerability and expendability, and about the kind of childhood that might have set the stage for such drivenness. Does the conviction of inner worthlessness cultivate, via projective identification, worthlessness – and hopelessness – in others in order for one to feel superior and momentarily invulnerable? Here, a third managerial philosophy – management by terror – supplements the traditional distinction between “carrot” (reward) and “stick” (threat of punishment).

What in the workplace, we wondered, does the threat of symbolic homicide look and sound like? The employees were not only threatened with the loss of their job, but their very dignity and self-respect were also attacked. Even as they labored to increase their productivity to try to create the illusion of indispensability, they were thrown into inconsolable grief over the loss of self. They lived and worked in the knowledge that at any moment they could be made to disappear, and never be missed.

Under these circumstances of psychological assault and the expectation of assault, what happens to the organization and to the remaining people? The organization that remains behind can no longer contain the anxiety, dread, and even terror that management inspires. It becomes what Michael Diamond calls a “defective container.” The workplace is increasingly experienced as persecutory. A “paranoid-schizoid” atmosphere prevails, in which employees experience themselves as a “them” at the mercy of management “us.” An employee is expected to do the work of another who has been “downsized” as well as his or her own, and to do so not only without complaint, but with gratitude for still having a job.

For many employees, where once there was loyalty to a company, there is now the garnering of skills and the readiness to move on to the next job at a moment’s notice. One feels redundant even before he or she is fired. From the stockholder’s obsession with the next quarterly report to the employee’s uncertainty about tomorrow, there is only short-term planning and the palpable presence of symbolic death and loss. Meanwhile, upper management touts slogans of “excellence” and “higher productivity” as evidence of having “turned around” the organization. For middle management and employees, the picture is surreal.

Vignette 3: The Threat at the Christmas Party

My third and final vignette illustrates the nationwide (and increasingly global) psychological terrorizing of managers and workforce into capitulation and dependency upon corporate decision-makers. The process affects blue collar and white collar workers alike. Consider the following:

At one American Great Plains hospital’s mid-1990’s Christmas party, the invited speaker, a physician-administrator, admonished his largely healthcare professional audience to accept managed health care (HMOs, PPOs, etc.) as the inexorable wave of the future. He told the group to make up their minds that it was simply a matter of altering their thinking to conform to the changes that made them primarily responsible to the corporation rather than to the customers (patients). To make his point, he showed a cartoon depicting a steamroller smashing down one doctor in the asphalt, while another wisely sidestepped his destruction. The caption read: “You can become part of the solution or part of the pavement.” The physicians’ response was uncharacteristic of prairie decorum, in which you politely listen to someone with whom you disagree, then go about your business as you had been doing. Instead, several physicians got up in the middle of the talk and walked out in disgust.

A week later, a physician colleague who had been in the audience wrote to me: “Does this [cartoon, presenter’s haughty attitude] not instill a sense of helplessness? A sort of ultimatum? This doesn’t smack of fascism, does it?” What he inquires in the negative, he affirms in the act of asking. It is as if what is not supposed to be happening – in the caring professions, of all places – is in fact happening. It is a matter of trusting – and mistrusting – one’s senses and one’s emotional response. The heavy boot of managed health care promises to crush all opposition. The looming threat, the anxious wait, conspire to create an organizational atmosphere in the medical community at once of dread, rebellion, siege, resolve, and anticipatory, inconsolable grief at the prospect of losing their way of practicing medicine and their very autonomy as physicians.

Increasing numbers of physicians in the United States feel demoralized, robbed of their identity as professionals, and treated as disposable employees. Many become disillusioned, embittered, pulled to be more answerable to medical insurers and healthcare corporations than to their patients. What had begun for many physicians as a “calling” to care for sick people, has turned out to be a grueling job in which seeing as many patients as possible and income generation become the central corporate virtues.

The core value of the physician-patient relationship is replaced by the invisible industrial time-clock according to which each patient merits but 7 ½ minutes. The psychological control of workers studied and advocated a century earlier by Frederick Winslow Taylor triumphs in the practice of medicine. Many physicians feel trapped in their careers and betrayed by their employers. Physicians’ own proud individualism militates against effective collective action in their own behalf.

Discussion of the Three Vignettes

These three vignettes do not prove the existence of inconsolable organizations, but I think that they give the concept a certain plausibility. As illustrations, I think they provide at least preliminary encouragement for “inconsolable organization” as a working hypothesis. They also suggest that inconsolable organizations can occur in a variety of situations of organizational change: downsizing or RIFing, managed health care, and organizational crisis. At the conscious and unconscious level of what these organizations feel like, how they are experienced, and what they are like in the fantasies of their members, they are indeed the same phenomenon in different institutional forms. The vignettes offer support for the concept of inconsolable organization as at least approximating organizational reality.

In the first vignette, the CFO felt the horror of sudden absences that characterize RIFs, restructuring, reengineering, and other forms of radical organizational change. Here, people do not so much leave the organization as they are abruptly severed from it. Loss takes the form of vast holes, gaps, in experience, both in space and time. One day co-workers are present, performing their jobs, taking part in the everyday relationships of the workplace. The next day they are gone. There is no group-sanctioned transition for either those who are fired or those who remain behind. There is neither permission nor assistance to grieve the loss. Only work – productivity – counts. Here the living dead commingle with the haunting presence of those who vanished from sight. The atmosphere is thick with spiritual deadness. The absent ones wander the halls like the characters in Marc Chagall’s paintings. Inconsolable loss is experienced as horror.

The second vignette is the story of another hole in time. If in the first the void consisted of the sudden absence of others, the second is the undisguised threat of one’s own annihilation from institutional memory. The employees addressed in this surreal pep-talk are good only for productivity, and their very existence is already declared to be nonexistence. They are nothings now, and will be nothings if they are fired or leave. They will not be missed; their absence will not even be noticed. It will be as if they never existed. They will not be grieved over, for there is nothing, no one to mourn. Their very existence is already tainted with nonexistence. Their life already embodies the death that is projected into them. Here, someone else is not the hole, but one is the hole oneself. One is thrust into inconsolable, anticipatory grief over the loss of one’s self.

The third vignette is yet another surreal experience: a Christmas party that threatens death. Eerily, the “savior” the speaker touts is not the “Prince of Peace” (the Christ Child), but an Angel of Death who threatens to crush anyone in its path. One is “saved” as a physician if one joins the momentum of the steamroller – that is, if a physician, a healer, joins league with the agent of death! Managed care is depicted as an invincible juggernaut. The wave of the future of medical practice lies in identification with the aggressor and a repudiation of those “softer” values and virtues that characterized the covenantal relationship between doctor and patient. Paradoxically, if one chooses to “live,” one also chooses death-in-life. In the Brave New World of corporately managed health care, one loses, gives up, the allegiance to the patient and swears primary fealty to the corporation. Corporate totalitarianism creates and enforces clinical totalitarianism. I have heard many physicians despair over being ever again adequate to relate to their patients and to deliver thorough medical care. Beneath the frenzy of productivity and high “patient volume” and “patient flow” (a borrowing from the hydraulic model of physics) is inconsolable grief, a loss of professional vitality, spiritual death, and all-consuming miasma.

Is There a Way Out of the Tyranny of Corporatism and Organizational Inconsolability?

In order for an organization to get “unstuck” in inconsolable grief and miasma, it is first necessary for executives, manager, employers, and shareholders to acknowledge that something – and many “someones” – has been lost. Those who have been so cavalierly disposed of are not “dead meat” or “dead wood” or “fat to be trimmed” – to cite three widespread euphemisms of managed social change. Those who have been symbolically killed off, together with those who remain behind as survivors to perform the job of two or three people, are vulnerable human beings who are stuck in a miasma of grief and organizational despair.

Transition to a renewed future requires coming to terms with the past. To lessen the traumatic impact of the change, those who are to be fired and those who remain as survivors need to be emotionally prepared for what is going to happen to them. This will help them to feel as human beings rather than as disposable objects, and give them at least some sense of control. To help create a healthier and less haunted workplace, the names and identities of those who have been fired need to be uttered, remembered, honored, and assimilated into the evolving organizational identity. Instead of being told to “suck it up” and “Be glad you still have a job,” employees need to have their fears, dreads, and anticipatory loss acknowledged.

In place of acknowledging that great loss has taken place and collectively mourning it, the organization, from leaders to employees, attempts to negotiate, manage, and fix it through a frenzy of various magical remedies, ranging from frequent, peremptory firings to spasms of restructuring and reengineering. Beneath what Yiannis Gabriel calls the “organizational miasma” lurks an inconsolable organization that creates and sustains the miasma. Until the inconsolable grief can be thought, named, and felt; until the sense of guilt, shame, loss, futility, and hopelessness can be acknowledged, the miasma can only deepen.

To facilitate the recognition and mourning of losses, management and consultant need to create a safe and trusting interpersonal environment for the organization. Genuine organizational renewal does not come through endless waves of “sacrifices” – these only deepen the miasma of despair. Rather it comes about through recognition of the trauma that has been visited on the people who were and are the organization.

Genuine organizational renewal also rests upon group empowerment. This means that individuals would need to have the emotional capacity to make collective decisions rather than act as frightened, isolated monads who hold their heads down hoping they will not be noticed. In our cultural climate this will be difficult if not impossible. American individualism carries with it self-blame and guilt for losing one’s job or for not being able to find a better job. Misperceptions and indoctrinated cliches such as, “I must have done something wrong,” and “There must be something wrong with me,” make it difficult to recognize one’s corporate victimization and traumatization. Certainly, persecutory paranoia can play a role in any perception of victimization. And self-blame is a kind of wresting some sense of power over the acknowledgment of utter powerlessness. Notwithstanding whatever explicatory factors legitimize the RIFs, the beginning of personal, organizational, and cultural resilience is the courage to perceive and accept the reality of corporate traumatization and its decisive role in creating inconsolable organizations.

Suggestions For Further Reading:

Allcorn, Seth, Baum, Howell, Diamond, Michael., and Stein, Howard F. (1996). The Human Cost of a Management Failure: Downsizing at General Hospital. Westport, CT: Quorum Books; Ehrenreich, Barbara. (2006). Bait and Switch: The (Futile) Pursuit of the American Dream. New York: Henry Holt; Ehrenreich, Barbara. (2009). This Land is Their Land: Reports from a Divided Nation. New York: Henry Holt; Faludi, Susan. (2000). Stiffed: The Betrayal of the American Man. New York: Harper; Stein, Howard F. (1994). “Change, Loss and Organizational Culture: Anthropological Consultant as Facilitator of Grief-Work,” in National Association of Practicing Anthropologists (NAPA) Bulletin 14, “Practicing Anthropology in Corporate America: Consulting on Organizational Culture,” (1994), p. 66-80. Ann Jordan, Ed. Washington D.C.: American Anthropological Association; Stein, Howard F. (1998). Euphemism, Spin, and the Crisis in Organizational Life. Westport, CT: Quorum Books (Greenwood Publishing Group); Stein, Howard F. (2001). Nothing Personal, Just Business: A Guided Journey into Organizational Darkness. Westport, CT: Quorum Books (Greenwood Publishing Group); Stein, Howard F. (2005). “Corporate Violence,” Chapter 23, in A Companion to Psychological Anthropology. Conerly Casey and Robert Edgerton, Editors. Blackwell. p. 436-452; Stein, Howard F. (2005). Beneath the Crust of Culture. New York and Amsterdam: Rodopi; Stein, Howard F. (2008). “Organizational Totalitarianism and the Voices of Dissent,” in Stephen P. Banks, Editor. Dissent and the Failure of Leadership. Cheltenham Glos, UK: Edward Elgar Publishing Ltd, 2008. p. 75-96. New Horizons in Leadership Studies; Uchitelle, Louis. (2006). The Disposable American: Layoffs and Their Consequences. New York: Knopf.

Command economy is basically a slave enterprise where supply and price are regulated by the government rather than market forces.

The only thing I will agree with about the “law of supply and demand” is that supply at a downward-manipulated price, can create demand.

Downward manipulation is an uneconomic aberration first discovered in the precious metals market by the noted silver analyst, Ted Butler.

We are conditioned to believe free enterprise supply and demand would lead to inflated prices so the greedy corporations can make more money, but Ted Butler’s research in the silver market concludes the opposite.

The beneficiaries of this type of manipulation are the consumers because corporations can sell their products affordably and still make a profit.

Butler’s investigation has identified JP Morgan Chase, one of the founding members of the Federal Reserve, as the prime suspect, in the “ongoing intentional, not accidental” great crime of keeping the price of commodities low so the middle class can afford the American dream, a nightmare for the planet.¹

I’ll get right to the point: McDonalds in the 1950s made a profit by selling a product for less than the competition, but a not-so-invisible hand produced cheap calories in great abundance so Ray “Crock” could sell a cheeseburger, fries and a large Coke for a price equal to less than an hour of labor at the minimum wage — and still make a profit.²

You don’t eat the hamburger at McDonalds because it’s a dollar: It’s a dollar to get you to eat it.

How did we get a food system that produced what should be a $35 hamburger downwardly manipulated to $1?³

“Taxpayer subsidies basically underwrite cheap grain, and that’s what the factory-farming system for meat is entirely dependent on,” Doug Gurian-Sherman, a senior scientist in the Food & Environment Program at the Union of Concerned Scientists (UCS).⁴

In other words, the Scoundrels behind the Federal Reserve, Rothschild, Rockefeller, Kuhn, Loeb and JP Morgan Chase, underwrite cheap grain and the factory-farming system for meat, so you can get a hamburger for a dollar.

Our current food system—characterized by monocultures of corn and soy in the field and cheap calories of fat, sugar and feedlot meat on the table—is not the product of any free market but rather the result of a specific set of governmental and monetary policies (from those Scoundrels at the Fed) and the free gift of fossil fuels from the world’s richest man in history and another founding member of the Federal Reserve, John D. Rockefeller.

He didn’t just give dimes away, he gave away his oil so you could get inexpensive fuel and food.

If you fly over Iowa from October to April you will notice the land is completely bare— black—because you are seeing an agricultural landscape created by cheap oil from John D.

Cheap energy enabled the creation of monocultures and vastly increased the productivity both of the American land and the American farmer but at the same time, subsidized monocultures of grain also led directly to monocultures of animals.

Since factory farms could buy grain for less than it cost farmers to grow it, they could now fatten animals more cheaply than farmers could.

So America’s meat and dairy animals migrated from farm to feedlot, driving down the price of animal protein to the point where an American can enjoy eating a hamburger or chicken McNuggets for a dollar.

Taking the animals off farms made no economic, environmental or ecological sense: their waste, formerly regarded as a precious source of fertility on the farm, became a pollutant—factory farms are now one of America’s biggest sources of pollution.

As Wendell Berry has tartly observed, to take animals off farms and put them on feedlots is to take an elegant solution—animals replenishing the fertility that crops deplete—and neatly divide it into two problems: a fertility problem on the farm and a pollution problem on the feedlot. The former problem is remedied with fossil-fuel fertilizer; the latter is remedied not at all.

After World War II, the US government pursued a monetary policy, at the direction of the Fed, subsidizing commodity crops by paying farmers (money created out of thin air) by the bushel for all the corn, soybeans, wheat and rice they could produce. One secretary of agriculture after another implored them to plant “fence row to fence row” and to “get big or get out.”

The chief result was a flood of cheap grain that could be sold for substantially less than it cost farmers to grow because a government (Scoundrel) check helped make up the difference.

As this artificially manipulated cheap grain worked its way up the food chain, it drove down the price of all the calories derived from that grain: the high-fructose corn syrup in the Coke, the soy oil in which the potatoes were fried, the meat and cheese in that burger until the price reached a dollar.⁵

ADM Gets Caught Putting Money In The Cookie Jar

The Informant! is a movie about the lysine price-fixing scandals that Archer Daniels Midland found themselves in the center of back in the 90s.

ADM was caught fixing the price lysine, an amino acid and very attractive animal feed additive used to make chickens fat, dumb, and happy, back up, after it was manipulated too far down for anyone to make a profit.

Price-fixing is a crime no matter how many people ADM feeds.⁶

From cradle to grave we are brainwashed to believe everything is about profit.

So, in the film, when Mark Whitacre tells the FBI that ADM cheated millions from the consumer by colluding to fix prices, we forget that Americans spend less than 10% of their incomes on food (down from 18% in 1966). When we eat inexpensive burgers and fries, it’s thanks to ADM downward-manipulating the price of lysine.⁷

Our not-so-free market economy based on consumer products, that is, products we are downward manipulated to want, not need, was never FREE or sustainable. Consumers consume…the resources of the planet.

The huddled masses should be thanking those scoundrels at the Federal Reserve for 60 years of downward manipulating the price of commodities: It resulted in unprecedented prosperity, but don’t forget to blame them because the American dream was an environmental nightmare for the planet.⁸

1. ”The Real Story,” Theodore Butler; “Silver But No Silver Lining,” Atlantic Free Press, Robert Singer.
2. ”Farmer in Chief, Michael Pollan,” October 9, 2008, Erwan Frotin, The New York Times
3. Economist Douglas McDonald estimates that if water subsidies were withdrawn from California livestock producers, the income of the state’s other businesses and workers would rise over $10 billion annually (1987 figures).

   Other economists have exposed the cost of water subsidies to the meat industry that are hidden in the state’s rising prices for water rights, and thus, housing. Fields and Hur calculate the overall price of subsidizing the California meat industry’s water to be $24 billion (1987 figures). The Food Revolution by John Robbins, President of the EarthSave Foundation.

4. Time Magazine, “Getting Real About the High Price of Cheap Food,” Bryan Walsh Aug. 21, 2009.
5. In years past, except in the dead of winter, you would have seen in those fields a checkerboard of different greens: pastures and hayfields for animals, cover crops, perhaps a block of fruit trees. “Farmer in Chief, Michael Pollan,” October 9, 2008, Erwan Frotin, The New York Times.
   Before the application of oil and natural gas to agriculture, farmers relied on crop diversity (and photosynthesis) both to replenish their soil and to combat pests, as well as to feed themselves and their neighbors.
6. Each day, the 28,000 people of Archer Daniels Midland Company transform crops such as corn, oilseeds, wheat and cocoa into food ingredients, animal feeds, and agriculturally derived fuels and chemicals.
   The editors of World Watch state that “the human appetite for animal flesh is a driving force behind virtually every major category of environmental damage now threatening the human future—deforestation, erosion, fresh water scarcity, air and water pollution, climate change, biodiversity loss, social injustice, the destabilization of communities and the spread of disease.”
   Lee Hall, the legal director for Friends of Animals, is more succinct: “Behind virtually every great environmental complaint there’s milk and meat.”
7. Archer Daniels Midland has been sued for colluding to fix prices in the citric acid and high fructose corn syrup markets among others, but their most noteworthy violation of the Sherman Antitrust Act of 1890 was the part ADM played in fixing the price of lysine, an amino acid used in animal feed. Lysine is especially good at making chickens fat, dumb, and happy, which makes it a very attractive feed additive. Unlike any other price-fixing conspiracy before or since, ADM’s involvement in forming and participating in a cartel was meticulously recorded by a mole inside the organization while the crime was being committed, offering an incredible insight into the nuts and bolts of an international corporate conspiracy.
8. ”A Sure Thing?,” Ted Butler Commentary; “Silver But No Silver Lining,” Atlantic Free Press, Robert Singer.

Gross inequalities exist in the U.S.:

Top 1% own 38.1%
Top 96-99% own 21.3%
Top 90-95% own 11.5%
Bottom 40% of population has 0.2% of all wealth.

In the language of the founding fathers, citizens “owned” property, which implies one was not indebted to a creditor.¹ But, such stark inequality, which effectively undermines the ability of markets to function at equilibrium, has to a great extent been normalized in the minds of many — a system in which modern indentured servitude is seen as the path to prosperity, despite that over the past thirty years, as Americans have had to take out loans to make up the difference for falling wages, the standard of living in the US has fallen dramatically. The distribution of wealth represents a system in which rent is owed by the people to finance capital. Recently, a Goldman Sachs International adviser argued in favor of the finance industry’s extravagant compensation and his company’s plans for a near-record year in pay. He argues the spending will boost the economy.

“We have to tolerate the inequality as a way to achieve greater prosperity and opportunity for all,” said Brian Griffiths, formerly a special adviser to then British Prime Minister Margaret Thatcher, at a panel discussion in London’s St. Paul’s Cathedral. Discussed was the question, “What is the place of morality in the marketplace?”

Goldman Sachs Group Inc., based in New York, put aside $16.7 billion for compensation and benefits in the first nine months of 2009, an increase of 46 percent when compared with a year earlier. This total is enough to pay each worker $527,192 for the period in question. In many states, the nation is suffering from Depression level unemployment, whilst government figures drastically understate true levels by half. 100,000 teachers, also, have been laid off, and class sizes have exploded to more than 40 students per class. Over one million US students are homeless. Foreclosures are at a record high.²

The bailout programs were designed in such a way, that the destination of the money cannot be accounted for, according to Elizabeth Warren, the Harvard law professor who oversaw the bailout for Congress. Instead of taking the saner approach of the taxpayer purchase of all major US banks, since total market capitalization of all major US banks was less than $300 billion or less than a tenth of the amount given away, we’ve insured the major financial institutions at the cost of stability for the taxpayer. Now, should there be any future volatility in the markets, the taxpayer owns shares in the companies.

Instead of a corporate bailout, the banks should have been forced to write-down the value of the mortgages they, according to the FBI, illegally filed, and negotiated a new loan at a lesser price for the homeowners. The power of monetary policy ought to be shifted to the Treasury for the payment of public goods and services and the cost of credit for people should be minimized.

The federal budget deficit is $1.4 trillion, and the federal debt $12 trillion with annual interest rate payments of $450 billion each year. No coherent debate about how to alleviate these problems has been brought to the public. The US debt altogether is $70 trillion.

Since last October the taxpayer has bore witness to the largest transfer of wealth in, perhaps, the history of man, with potentially $23.7 trillion going to banks and financial institutions after the socialization of their risk on illegal sub-prime mortgages and credit default swaps. The FBI concluded that 80% of all sub-prime criminal fraud began with the lenders.³ There is an old proverb: “The creditor becomes the lenders slave.”

Carrol Quigley, a mentor of former President Bill Clinton, had this to say about finance-capital’s motives:

The Power of financial capitalism [has a] far reaching plan, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.

This system was to be controlled in a feudalistic fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences.

The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world’s central banks, which were themselves private corporations.

Each central bank sought to dominate its government by its ability to control treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence co-operative politicians by subsequent rewards in the business world.⁴

In short, the motives of these firms were and are to expand market share and make profits for the shareholders.

Due to the breakdown in trade, pointedly demonstrated by a ghost fleet larger than the US and British fleets combined anchored east of Singapore, also the largest group of ships in the history of maritime travel without crew, no cargo and no destination, the concept of deglobalization has been floated around. Whereas the definition offered by Quigley points towards a collection of impotent localities unable to exercise sovereignty, other more positive definitions exist, such as that offered by Walden Bello.⁵

He envisages deglobalization as a process that enables production for domestic markets to become central to the economy rather than production where labor is cheap for export markets. Subsidies should be encouraged for projects at the level of the city-state, state and at the national level if this can be done at a reasonable economic and environmental cost with an agenda of preserving community and creating abundant, inelastic resources. Trade policy including quotas and tariffs should protect local economies from predatory corporate-subsidized commodities and their artificially low prices. Equitable income distribution and urban land reform creating a vibrant internal market would kickstart parts of the economy and make available capital for local financial resources for investment. Investment should emphasize not growth, but, rather the quality of life. Environmentally congenial technology in both agriculture and industry would be a massive, New Deal style endeavor, and funds for such projects should be diffused equitably, as opposed only to the energy cartel. Economic decision-making ought not be left to technocrats, but instead to Congress and the Treasury — in other words, those agencies accountable to the public. Questions include what industries to develop or phase out, what proportion of the government budget to devote to agriculture, etc. Markets should refer to a mixed economy of community cooperatives, private enterprise, state enterprise, and no transnational corporations. To replace the transnational corporation, networks of free associations with demarcations or firewalls between local associations may develop.

Despite an unresponsive Washington, overextended budget and rampant corruption which seems hopeless, there are still ways in which our economic problems can be stabilized indefinitely. During the Civil War, for example, English bankers exercised an astonishing amount of influence over Lincoln’s government, just as Wall Street determines Congresses policies today. The North needed money to fund the war, and the bankers lent them money at impossible-to-repay interest rates of 24 to 26 percent. Lincoln noted that this would bankrupt the North and requested that Colonel Dick Taylor of Illinois search for a solution. Taylor informed the President that under the Constitution the US had the power to solve its financing problem by printing its money as a sovereign government. Taylor said:

Just get Congress to pass a bill authorizing the printing of full legal tender treasury notes … and pay your soldiers with them and go ahead and win your war with them also. If you make them full legal tender … they will have the full sanction of the government and be just as good as any money; as Congress is given that express right by the Constitution.⁶

And so Lincoln funded the war by printing paper notes supported by the credit of the government. These legal-tender U.S. Notes, otherwise known as “Greenbacks,” represented receipts for labor and goods sold to the United States. Soldiers and suppliers received them as pay and they were tradable for goods and services of a value equivalent to their service to the community. The period of the Greenback was also one of large-scale economic expansion. During this period, the steel industry was launched and the continental railroad system was initiated; farm machinery and cheap tools were bankrolled, free higher education was offered, government support was provided to the sciences, the Bureau of Mines was organized, and labor productivity was increased by 50 to 75 percent.

The Greenback was not the lone currency used to bankroll these projects, but it was key to the process. Such growth, moreover, would not have been achieved by money borrowed at the rates London was demanding.

Lincoln’s presidency represents an era in which the government recognized its power to issue a national currency, despite being opposed by powerful special interests. Believed to have been published in the London Times in 1865, the following report sums of the establishment spirit of times in regard to the monetary issue:

If that mischievous financial policy which had its origin in the North American Republic during the late war in that country, should become indurated down to a fixture, then that Government will furnish its own money without cost. It will pay off its debts and be without debt. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and wealth of all countries will go to North America. That government must be destroyed or it will destroy every monarchy on the globe.

Eventually a private institution was put in charge of the technocratic printing of money within the country. The Federal Reserve is a privately-owned central bank bequeathed the power in 1913 to print Federal Reserve Notes or dollar bills and lend them to the government. Since that date, the government has suffered an increase in debt which today stands at $11 trillion.

About this system, Henry Ford noted: “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

California’s current economic woes portend a fate that awaits the rest of the country. The Golden State is currently attempting to solve its $26 billion budget deficit through massive cuts in public funding. California’s residents, making up the world’s eighth largest economy, have refused further tax hikes, and Democratic leaders have refused further cuts in services or auctioning of public assets. California should not pay for the crisis with increased taxes or decreased services or public parks.⁷

In the meanwhile, the state has begun paying the State’s bills with IOU’s.

Such was the idea, in fact, that helped the colonies emerge from under a pile of British debt back in the 18th century, a time during which they lacked the silver and gold used in the Old World for conducting trade. The Massachusetts Assembly then proposed a different kind of paper money, a “bill of credit” representing the government’s “bond”; in other words, an IOU. The new fiat currency was backed by no more than “full faith and credit” of the government.

Following such a model, the Federal Reserve’s current Quantitative Easing Program could potentially represent the correct monetary policy in a time of high unemployment and threat of inflation or deflation. Historically, Quantitative Easing has resulted in hyperinflation and currency devaluation, but this does not necessarily need to lead to a doomsday scenario. According to Paul Krugman, a weaker dollar might serve as benefit for the U.S.:

Although there has been a lot of doom saying about the falling dollar, that decline is actually both natural and desirable. America needs a weaker dollar to help reduce its trade deficit, and it’s getting that weaker dollar as nervous investors, who flocked into the presumed safety of U.S. debt at the peak of the crisis, have started putting their money to work elsewhere. But China has been keeping its currency pegged to the dollar — which means that a country with a huge trade surplus and a rapidly recovering economy, a country whose currency should be rising in value, is in effect engineering a large devaluation instead. And that’s a particularly bad thing to do at a time when the world economy remains deeply depressed due to inadequate overall demand.⁸

One reason why China has yet to let their currency rise against a weakening dollar is due to their being more concerned about sustaining consistent demand than weaknesses with the greenback.

According to the Economist:

The simplest explanation for the currency’s decline is based on risk aversion. On the days when risky assets fall, the dollar tends to go up. When risky assets rise, the dollar falls. The dollar has fallen fairly steadily since March, a period which has seen stockmarkets enjoy a phenomenal rally. Domestic American investors may be driving the relationship, repatriating funds in 2008 when they were nervous about the state of financial markets and sending the money abroad again this summer because of a perception that the global economy is reviving.⁹

Many concern themselves with record deficits, creating headwinds for more stimulus, which might be useful were it printed through Congress or another public entity within the government concerned with the well-being of citizens. Japan, however, has deficits twice the size of GDP and bond yields hovering below 2 percent. The Japanese are staving off deflation. On the other hand, US deficits represent 12 percent of GDP. The dollar does not need to be crushed by deficits even much greater than this. Nonetheless, as soon as the government stops spending money and running up the deficit, unemployment will soar, banks and business already tottering on the brink will default, foreclosures will go up, and the economy will slip further into Depression. Important to note, is that the US economy, unlike Japan, is nearly 50 percent based in the financial and service sector. It also boasts the world’s reserve currency.¹⁰

Currently, to be sure, consumer credit is decreasing at a year-over-year rate of 5 percent, whilst savings are up and spending is down. Unemployment sits at U6 20 percent. The nation is suffering record foreclosures, delinquencies, bankruptcies, and defaults are sucking credit from the system. Should the Federal Reserve terminate Quantitative Easing, there would be no way to increase jobs or spending.

This line of reasoning suggests that the debate about the fall of the dollar is misdirected, and that the jugular of the issue lies in wage growth and full employment. One way in which these two issues can be resolved is by printing up the two trillion in another stimulus, which, regrettably, would amount to another bailout, unless, of course, the public money creation model was followed.

The nation’s only state-owned bank, the Bank of North Carolina, was created 90 years ago, in 1919, as a result of a populist movement across the northern plains. The movement, led by the Nonpartisan league, created an industrial program, out of which both the Bank of North Dakota and a state-owned mill were created. The funding and deposit model is what truly makes the bank unique, for the bank functions as the depository for all state collections and fees, has a captive deposit base, and pays a competitive rate to the state treasurer. From those funds the banks then pays those deposits back to North Dakota as loans. Therefore, it invests back into the state in economic development type of activities.

The bank employs certain programs designed to spur growth in certain sectors of the economy, be it agricultural or economic development programs useful in the state or energy, as well as education in the form of student loan financing. Certain loan programs with low interest rates promote activity along certain lines. The bank even promotes the movement of cash to disaster loan programs meant to aid businesses, enabling the state to act quickly should it need.

The bank all on its own, however, is not the sole reason the state has avoided such the hardships of other states. Rather, the bank’s choice to stay away from subprime lending and inability to get into the derivatives markets and put on swaps and callers and caps and credit default swaps. The bank also provides a dividend back to the state: approximately half of what it makes goes to the state general fund. Over the last 12 years, the bank has contributed a third of a billion dollars to this general fund to alleviate taxes or to aid in funding public sector type of needs. This in a state of 650,000 people.

And how has the current crisis affected the state of North Dakota? According to bank president Eric Hardmeyer:

“The State of North Dakota does not have any funding issues at all. We in fact are dealing with the largest surplus we’ve ever had. So our concern is how do we spend it wisely and make sure we save it for the future.”¹¹

Corruption in New York City and Washington DC amounts to a collusion between the political and corporate centers of power; in a word, corporatism. Representatives of finance capital are funded in elections, and quite often money talks to get certain cronies elected. When the numbers are considered, this is surely the case in the last presidential election. The expansion of Bush’s militarist and economic policies on the part of Obama is an argument in favor of the idea that the US political system is composed of one party with two factions, whose policies overlap on issues important for the aforementioned top 1-10 percent. There is very little debate carried out in the public forum and a general trajectory of centralized power continues.

The Federal Reserve enables money to be printed at near-zero interest. Along with the Treasury Department, the Federal Reserve controls the purse strings of the US. Taxation and Debt have reached such crippling levels that the majority of citizens are dispirited, hopeless, and exhausted. We should all take a breather: debts that can’t be repaid, won’t. The system of taxation and debt is an old one and has been effective in keeping people in line.

The world’s economic and financial superstructure is, at present, very weak. Policies in Washington and the movement of volume for volatility on behalf of the major financial institutions hint that this is desired by the movers of money. Thankfully, through the internet many more people today are aware that crises, more often than not, do not arise by mysterious and trans-human social forces, but from insatiable greed.

HR1207 and SB604, bills in Congress to audit and investigate the Federal Reserve, have helped to further inform people of the heretofore secretive nature of policy making in these two institutions. In democratic and open societies, nothing less than total transparency are deserved by the people. The job of monetary policy belongs to the Treasury under the Constitution. A firewall between Wall Street and Washington is the next step.

The credit crisis and the breakdown of our economic and financial institutional infrastructure began two years ago. The system of so much fraud and corruption has been kept functioning through cheap money and interest rates, as well as bailouts and stimulus packages. A majority of citizens in the US do not comprehend the problems we all face. The Uberclass, as Griffith’s comment at the top of this article reflects, exist outside the realm of traditional morals and laws and maintain a malfunctioning system or status quo.

Meanwhile, the US is held captive by its creditors, while the state, due to deindustrialization and financialization, stark inequality, a minor tax revolt, and lavish spending will experience inability to pay its debts to foreign creditors and respond to future crises at home or abroad.

But some of the solutions above remind us that there is still a world of hope out there.

What is desirable is a centrifugal system in which the exchange of goods and services follows a decentralizing or peripheral trajectory. Under the current system, centripetal forces attract goods, services and therefore wealth and power to the center, in this case not Marx’s industry, but instead creditors’s industry.

1. U.S. Wealth Distribution: 10% of US Citizens own 70.9% of all US Assets. Daily Paul, October 18.
2. Caroline Binham. Goldman Sachs’s Griffiths Say Inequality Helps All, October 21. Bloomberg.
3. Carl Herman. 2009 US Economy: largest transfer of wealth to financial/political elite in global history, October 20. Examiner.
4. Carrol Quigley. Tragedy and Hope: A History of the World in our Time. The Macmillan Company.
5. Waldon Bello. The Virtues of Deglobalization. Global Research, October 25.
6. Ellen Brown. Revive Lincoln’s Monetary Policy: An Open Letter to President Obama. April 8, 2009.
7. Ellen Brown. California Dreamin’: How the State Can Beat It’s Budget Woes, July 8 2009.
8. Paul Krugman, “The Chinese Disconnect,” New York Times.
9. ”Down with the Dollar,” The Economist, Oct, 2009.
10. Mike Whitney, Dollar Collapse Update: “Obama Demands Pay in Euros.” Global Research, October 25.
11. Josh Harkinson. How the Nation’s Only State-Owned Bank Became the Envy of Wall Street. Mother Jones, March 27.

Greed has certainly been good for executives and directors of Canada’s largest media conglomerate who have been looking after themselves while ordinary workers get screwed as the company restructures.

When Canwest filed for court protection against creditors for the TV portion of the company on Oct. 6, 2009, dozens of recently laid-off employees learned they would lose promised severance pay. For Pat Vanderburg, who has worked for CHBC TV in Kelowna, B.C. for the past 23 years, this will amount to a loss of over $95,000.

About 80 non-union retirees will lose promised Canwest-paid medical, dental and life insurance benefits. In addition, 120 former employees are facing reduced pensions.

Current shareholders, whose stock was worth $20 a few years ago (25 cents when trading was halted Oct. 6), will receive just 2.3 per cent of the new company when it emerges from the Companies’ Creditors Arrangement Act [CCAA] process.

Hundreds of suppliers, including Twentieth Century Fox (owed $8,524,006.05), Maple Leaf Sports & Entertainment ($485,803.70), CBC ($35,809.46), Mark Steyn Enterprises (US) Inc., ($428.04), Toronto Star ($95,627.64), Van Press ($55,877.77), Calgary Flames Foundation ($42,465.32), Adbusters Media Foundation ($9,060) and Pete’s Pest Control in Saskatoon ($54.60) will go into a line-up of unsecured creditors and receive a few cents on the dollar at best.

But three directors, four top executives and 13 other senior members of Canwest management will share $9.8 million in Key Employee Retention Plan (KERP) bonuses, in addition to their already substantial salaries, simply to keep working.

Of course this defies common sense, which tells all but those soaked in “business logic” that he who destroys a business should not be rewarded for it.

But the bonuses are but one manifestation of the ways in which the Canwest rich get richer through the power our economic and legal systems offer a corporate aristocracy. In addition to the bonuses:

• Certain “current and former management employees” who were participants in the Canwest Global Communication Corp. and Related Companies Retirement Compensation Arrangement Plan were paid out, on Sept. 4, 2009, the approximately $47 million promised to them. (Part of the payment will be made later, after a tax refund from Revenue Canada.)
• Certain unnamed Canwest senior executives will continue to receive their current benefits until at least one year after the company emerges from CCAA and then retirement benefits for life. (The cost per year of these benefits is blacked out on documents.)
• Canwest directors will be protected against any financial liability, up to $20 million. This protection receives priority over almost every other debt the company owes.

Incredibly, when the newspaper side of the business also enters CCAA, more such examples of Canwest executives helping themselves to the last tasty remnants of a corporate carcass will likely be revealed.

Those with the power to look after themselves have done so and it is all deemed perfectly legal. In fact, the “insolvency system” seems designed to allow a select few to have one more big slurp from the bowl of gravy, along with the lawyers and other bankruptcy specialists. How else to explain the KERPs that are an ordinary part of the insolvency process in Canada?

Of course, would you expect anything different from an economic system that proudly trumpets: “Greed is good!” Or from a legal system designed, shaped and paid for by those with the most wealth to protect?

In fact, greed seems to be the one constant as corporate empires are built and then destroyed.

The problem is that the logic of greed means they’ll stop only when nothing is left. If we don’t soon rein in the greedy, they’ll take everything: Our wealth, our health, even our planet.

It’s at moments like this, while light is shone on the unfairness of the system and its excesses and absurdities, that we need to consider our core principles.

Perhaps need should replace greed as the foundation of our economy. Perhaps equity and one-person-one-vote should replace wealth and one-dollar-one-vote as our way of governing the essential institutions that we call corporations. Perhaps a half measure of common sense could replace “business logic.”

Michael Yates: Corporate America began to wage what turned out to be a one-sided war against working people in the mid-to late-1970s, when it became apparent that the post-World War Two “Golden Age” of U.S. capitalism was over. As profit rates fell, businesses began to develop a strategy for restoring them. This strategy had many prongs, and one of them was ideological, that is, a struggle for “hearts and minds,” to use a military term now being applied to Afghanistan. The presumed failure of Keynesian economics, marked by the simultaneous existence of escalating inflation and unemployment, gave the ideological struggle its foundation. Maybe there had been too many restrictions placed on the market, and these restrictions (minimum wages, health and safety regulations, laws facilitating union organizing in labor markets; public assistance in the form of money grants, housing subsidies, and the like; restrictions on the flow of money internationally) had led to results opposite those that liberal Keynesians had thought most likely. If these complex arguments could be tied to simple cliches, like “get the government off our backs,” “the unions have gotten too powerful” (with always a hint that they are too radical thrown into the argument), and “welfare queens” (with that always popular whiff of racism), they could provide ideological cover for what was really a matter of corporate economics, namely the making of money.

This ideological attack bore fruit quickly. President Carter appointed Paul Volcker to chair the Federal Reserve Board of Governors, and Volcker, under the guise of fighting inflation, immediately began to snuff the life out of working class communities by forcing interest rates up to nearly 20 percent. Today, Volcker is treated like a hero by Democrats and above reproach (though ignored by President Obama’s more right-wing economic advisors), which shows just how far to the right economic discourse has moved. What Carter began, Reagan completed, firing the Air Traffic Controllers and putting the nail in labor’s coffin. Behind the scenes in all of this and growing in strength for the next twenty years (funded by wealthy business leaders) or so were the right-wing think tanks you mention. Just as retired generals go to work for military contractors and defeated politicians become lobbyists, government economic advisors get jobs at Heritage or the American Enterprise Institute or the Cato Institute. The staffs of these ideological centers churn out endless position papers and studies, which find their way into our newspapers and the offices of our congresspersons. A gigantic network of professors, journalists, politicians, lobbyists, and, today, a television network (Fox) bombard us with right-wing propaganda. That all of this has been successful is seen by the fact that the shibboleths of neoliberalism—such as the needs for privatization of public entities, the free reign of markets, the obviousness of the success of welfare reform, the evils of raising the minimum wage—are all commonplaces today.

While the public now knows that something is rotten, I am not sure that neoliberal ideas are so under attack that they will lose their sway. I think that the tenacity of these ideas owes something to the lack of an ideological alternative, which, in turn, is due to the abject failure of organized labor to provide one. For example, we need universal health care. Labor, however, has not consistently argued in favor of this or supported it at all. Now Congress is poised to enact healthcare legislation that might well be worse than the profit-driven system we have all come to hate. Labor should refuse to support this legislation, but I doubt it will. Then, when the new healthcare plans fail to deliver the goods, the right-wing will be lying in wait, ready to pounce and say, “See, we told you so. The government always makes things worse.” In other words, until there is a radical ideology to replace right-wing thinking, the latter is unlikely to lose its drawing power.

Fred Magdoff: Although these institutions were very successful, along with a number of other forces, in shaping public attitudes toward the economy, the reality of the current severe economic conditions are causing many, including some economists, to rethink their views of how “efficiently” markets function in the real world (as opposed to their ideological make-believe world) and that some different approaches may be needed. People seem to understand that the “big players” played a major role in the crisis, but most of the anger has been placed on the outrageous salaries of the top echelon. Of course, this is just “chump change” compared to the massive amounts at that are transferred to the wealthy through the speculative casino that our economy has become.

　
MW: Socialism has a huge public relations problem. Wouldn’t you agree that socialism has been effectively discredited in the U.S. media and that, even now–with unemployment soaring at 10 percent and more than 300,000 foreclosures per month–the average American worker still believes in the virtues of capitalism? How do you explain this phenomenon?

Michael Yates: Part of my answer here can be seen in my response to your first question. Socialism has, indeed, been discredited here, partly due to its rejection by its natural supporter, namely the labor movement. The CIO expelled in the late 1940s and early 1950s the left-wing forces who built the great industrial unions. When it did this, it abandoned the worker-centered ideology that might have laid the basis for support here for at least the kind of social democracy we find in the Scandinavian nations. This left the ideological field to the enemies of social democracy and socialism. Of course, we cannot ignore the long and inglorious history of police-state repression of those persons and organizations that championed socialism. Our government has never hesitated to arrest, imprison, and even kill the enemies of capitalism. So it has been dangerous to be a radical here, though not so much today when radical ideas aren’t taken seriously and there are no powerful radical organizations left. Suppose that after the Second World War, the left in the labor movement had grown, and the left-led unions had continued to successfully organize workers and win good collective bargaining agreements. Suppose that they had built upon their impressive worker education programs, made inroads in the South, and fought hard against U.S. imperialism and the Cold War. We might have a much different political terrain on which to fight today.

Two other factors that must be considered in the attachment of the working class to capitalism are racism and imperialism. In the past, employers routinely pitted white workers against black, and one weapon they used was to associate black workers (and the civil rights movement) with communism (It was interesting to note in this connection the attempts to make Obama out to be a radical socialist). The claim that black union supporters were reds helped to solidify white support for capitalism. By the same token, anti-imperialist struggles in the poor nations of the world (often former colonies of the rich countries) were typically led by political radicals. These could be made out to be anti-American, and then those in the United States who allied themselves with these struggles could also be labeled anti-American, despite the fact that they might also be supportive of policies that would benefit working people. The schools and the media could be counted out not to try to set anyone straight on any of this.

Now, having said this, I must also say that to the extent that left forces in the United States identified themselves uncritically with the former Soviet Union and its extremely undemocratic political system, they sometimes played into the hands of those opposed to socialism. And I must also admit that socialist forces were, at their strongest, never powerful enough here to force their best ideals permanently into the consciousness of the working class majority. Finally, in the past, the success of capitalism in the United States allowed for some sharing of the wealth with workers, and this, too, made people less willing to entertain radical ideas.

Old and deeply ingrained ideas die hard, and unless there are forces at work to develop new ones and unless there is at least widespread experimentation with new ways to organize production and distribution, little is likely to change, even in the face of economic catastrophe, such as so may working men and women are facing right now. Quite the contrary, workers might be persuaded that actions detrimental to their long-term self-interest need to be taken, such as, for example, draconian measures against immigrants.

Fred Magdoff: There is no question that the term socialism has a public relations problem. But while it’s true that most people don’t fully understand the basic workings of the capitalist system nor what socialism is, there are indications that many people are ready to talk about alternatives—and that includes socialism. The positive public response to Michael Moore’s movie, Capitalism, is one indication. But a Rasmussen poll last spring found that only 58% of American’s say that capitalism is better than socialism. For adults under 30, 37% preferred capitalism and 33% preferred socialism. It’s not clear what the poll results really mean. But it does indicate that people are willing to hear about and talk about alternatives to capitalism.
　
MW: In a chapter titled “Neoliberlism” you focus on the disparity of wealth in the US today. Here’s an excerpt:

By 2006 the top 1 percent of households received close to a quarter of all income and the top 10 percent got 50 percent of the income pie. In 2006, the 400 richest Americans had a collective net wealth of $1.6 trillion, more than the combined wealth of the bottom 150 million people. This degree of income and wealth inequality was last seen just before the beginning of the Great Depression. (pg 50)

Let’s ignore the moral issue for now, and focus on the supply/demand question. Is it possible for an economy to produce sufficient demand when more and more of the wealth and income goes to the upper 5 or 10 percent of the population? (isn’t this proof that capitalism is inherently crisis-prone?)

Michael Yates: If a certain amount of output is produced, an equal amount of income is generated. So, conceptually, there could be enough demand to buy the output, no matter that the incomes generated are getting more unequally distributed. It certainly has been the case that the rich people now getting such a large share of the pie spend gobs of money. And rich foreigners spend a great deal of money in the United States as well. However, the rich also save a lot of money (the more they get, the more they save), and this money does not enter immediately into the spending flow. Working people, on the other hand, can be counted on, by virtue of the limited income that they command, to spend all of their income. Therefore, the more income the rich have, the more savings there will be, and, unless some way is found to convert all this saving into spending on newly-produced goods and services, the more likely it is that there will be a crisis caused by not enough spending (and its corollaries of unsold goods and services and unemployed labor). If we understand that growing inequality is the normal trajectory of capitalist economies, a trajectory only mitigated by the power of organized working people to win a bigger share of the pie for themselves and to compel the government to intervene in the marketplace on their behalf, then it is correct to say that capitalist economies are crisis-prone for this reason alone.

Growing inequality also creates other potential problems for the system. Sometimes it can generate a political crisis, a crisis of legitimacy so to speak. The rich exert tremendous political power, and this power grows as those at the top command a larger and larger share of a society’s income. To the rest of us, the game looks increasingly rigged, with us having little chance to improve our circumstances through individual efforts. More inequality also has harmful social and economic consequences that we don’t normally think of. Recent research has shown that if we compare two entities (two states in the United States, for example) with equal average incomes but different degrees of inequality, then the place with more unequal incomes will also have higher rates of infant mortality, arrest and imprisonment, school dropouts, low infant birth weights, and many other measures of social well-being. Growing inequality actually kills some of us, makes some of us sicker, and puts some of us in jail.

I want to add an important point. To say that capitalist economies are crisis-prone, because of a tendency toward income inequality or whatever other reason, is not the same as saying that these economies are on their deathbeds, no matter how severe a crisis may be. It is possible for an economy to exist in a crisis or a prolonged period of slow growth (stagnation) without it being ready to collapse. In the end, it is political struggle, that is, class struggle, that truly destabilizes an economy and generates conditions in which it is possible to imagine the birth of a new system.

Fred Magdoff: It is one of the many contradictions of the system. If ordinary folk are paid well they can buy a lot of stuff and help keep the system going. So from the point of view of the system as a whole, higher paid workers would help the economy. However, there is only one driving force for individual capitalists–and that’s to make as much money as possible. What might be better for the overall economy can be of no concern to the individual trying to maximize profits. For an analogy, let’s take a look at ocean fishing. Almost every fish species is being fished to the point at which the population crashes. It would make sense for all of the companies operating the large trawlers to cooperate and fish less in order to preserve the resource on which they depend. So what’s good for their long-term future is sacrificed as each individually tries to maximize their catch and therefore profits.

MW: Here’s another excerpt from the book: “In 2006, the financial sector employed about 6 percent of the workers but ‘produced’ 40 percent of the profits of all domestic firms.”(pg 56) A few paragraphs later you add that, “Making money without actually making something turned out to be the largest growth sector of the U.S. economy from the early 1980s to the present crisis.”

This seems to imply that as manufacturing and other parts of the “real” economy have become less lucrative, the trading of paper assets has become Wall Street’s new profit-center, the Golden Goose. What impact has the “financialization” of the economy had on ordinary working people?

Michael Yates: I think that an answer here has two parts. First, it was the neoliberal “revolution” begun in the 1970s that did immense harm to working people. For example, unionization rates began to fall dramatically in the 1980s, as Reagan began his “magic of the marketplace” assault on the working class. Real wages (the purchasing power of our paychecks) began to stagnate in the 1970s and are not much higher today than then. Relatively high-wage public employment began to endure a long period of privatization, which also damaged working class living standards. The move toward “free trade” did workers here no good, as manufacturing began to flee our shores for low-wage havens abroad. None of these things had to do with financialization per se.

Second, however, once the neoliberal attack on working class living standards took hold and incomes began to flow upward, those with a great deal more money began to look for ways to put this money to work. The corporations that they owned also had higher profits, and they did the same. The United States has always had a robust financial sector, though in the past, it was not the tail that wagged the dog as far as our system of production and distribution was concerned. Neoliberalism brought with it a deregulation of international movements of money and goods and services. [It is important to note that we see neoliberalism as a political response to capital’s quest for restored profits beginning in the mid-1970s when the post-Second World War two economic boom ended and the slow growth (stagnation) common to mature capitalist economies reasserted itself.] These, in turn, required a certain amount of financial innovation, to reduce, for example, the risks of fluctuations in currency exchange rates and sharp changes in political conditions that could threaten investments. From these innovations came still more, until finance began to take on a life of its own. And while neoliberalism and direct corporate actions inside workplaces did reduce costs and raise profits, they did not create nearly enough capital spending opportunities (investment) to absorb the growing individual savings and business profits. Finance of one kind or another then began to be seen as a place to dispose of surplus and make still more money. Leveraged buyouts, stock market speculations, real estate “investments,” all took off from the 1980s on, absorbing money that could not find enough opportunities in the real economy of production. As these things happened, financial “innovation” exploded, with all of the alphabet soup of financial instruments we describe in our book.

This explosion of finance proved detrimental to working people in a number of ways. Leveraged buyouts inevitably resulted in the hollowing out of what were often perfectly viable businesses. Companies were saddled with debt, assets were stripped and sold, and workers were furloughed by the tens of thousands. The inflation of asset values gave rise to the notion that it was the job of managers to increase the share price of their businesses—in any way possible. Businesses came to be thought of as mere collections of assets rather than entities that produced things. Asset inflation gave rise to asset speculation and the development of ever more complex financial instruments, all leading sooner or later to financial bubbles and the inevitable bursting of the bubbles. As we have seen, the bursting of financial bubbles has had tremendously negative impacts on working people: shuttered workplaces and unemployment to name but the primary ones. The last bubble, in real estate markets, was harmful to workers not only after it burst but also as it was developing. In the aftermath of the dot.com bubble, Alan Greenspan, former Chairman of the Fed Board of Governors, directed Fed policy to pressure interest rates down to very low levels. This helped to push loose money into real estate. As house prices began to rise, banks and brokers started to encourage working people to do two things: borrow money against the appreciated value of their homes and buy homes, either as first-time buyers or as purchasers of more expensive homes (after selling old ones). Working people were eager to do both because they saw houses as sources of cash to compensate for stagnating household incomes and as a form of wealth that could help secure them against the hazards of ill health, lost pensions, or college-age children needing money for school. Working class households began to take on large amounts of debt, making themselves more vulnerable, even as they thought they were making wise financial decisions. Ironically, those who saw their incomes rise so high because of neoliberalism were now, in effect, loaning money to those who didn’t fare so well. As banks accumulated mortgages, farsighted Wall Street swindlers saw golden opportunities to develop a slew of new financial instruments based upon the packaging and repackaging of mortgages into new and exotic instruments. Greenspan played their shill, arguing that they had uncovered the secret of hedging infallibly against risk. From here it was but a short step to the criminal schemes of Countrywide and a host of other financial institutions. The billions of dollars made were used not only to finance a new gilded age of revoltingly lavish consumption but to corral the most tractable politicians money could buy.

Fred Magdoff: Financialization of the economy created the possibilities for people to take on more and more debt—credit cards, new cars, 2nd mortgages, etc. It was the selling of a lifestyle way beyond people’s ability to pay for it plus the easy access of loans that created the bind that many people find themselves in today. In essence, it allowed people to live beyond their means. They were encouraged to take on debt as their house values seemed headed up forever, and the great rise in foreclosures and bankruptcies is the unfortunate result of the financialization of the economy. Also, those people who had retirement money in individual accounts or with pension systems and thought that they had become very wealthy, now found themselves with much less to rely upon.

MW: In the last couple of decades, consumer debt has skyrocketed, as you note, “doubling from 1975 to 2005, to 127 percent of disposable income.” (pg 60) Have we gone as far as we can without deleveraging and paying down debts? What happens to a credit-dependent economy when the consumer can no longer increase his/her debt-load? Is this just the beginning of a decades-long down-cycle?

Michael Yates: Certainly no entity—not a person, a family, a business, even a government— can take on rising levels of debt (relative to income) indefinitely. Sooner or later, the piper has to be paid. Working-class consumers took on large amounts of debt, to compensate in part for stagnating wages and incomes, and, it is important to note, to pay for health problems and other household traumas. This meant that the burden of the debt rose, since income wasn’t rising as fast as the debt, and also because the interest rates charged on credit cards and subprime mortgages were so high. We at Monthly Review have been decrying the rise of consumer debt for many years, and we said that the debt chickens would come home to roost sooner of later. I must say that I was surprised that debt could be broadened and deepened for so long. The ingenuity of creditors in extending loan periods and devising so many new forms of debt has to be admired for its audacity. Then, the ways in which these debts were packaged and sold so that more debt could be extended was truly breathtaking. Unfortunately, consumers ultimately couldn’t pay and all hell broke loose. Now, with so much unemployment, workers are truly strapped. They will not be borrowing so much or spending so much anytime soon. [One interesting recent development is that, as some households have defaulted on debts or simply stopped making payments, consumer spending has showed a bit of an upward tick!] So the question arises: what spending will fuel a sustained recovery? It won’t likely be consumer spending. Capital spending was stagnating to begin with and was the root cause of the crisis. There are no new “epoch-making” innovations on the horizon that would generate the amounts of investment that were brought forth by the automobile. U.S. exports seem a very unlikely demand support. That leaves the government. In a capitalist economy, especially one like the United States with its lack of a history of generally accepted public spending, it seems very unlikely that public spending will make up for shortfalls in aggregate demand. Already, there are widespread entreaties (and not just from the far right) urging the federal government to wind down in spending programs—well before, I might add, the economy has recovered. As we see it, the United States is, indeed, in for a long period of stagnation, a “down cycle” as you put it.

Fred Magdoff: This is one of the major constraints on the system. The economy is in a process that economists call “deleveraging,” which is just another way of referring to somehow getting rid of debt. Some are able to pay off what they owe, a few are able to renegotiate down some of their debt, many are losing their homes, and some are going bankrupt. Until this works its way out, and a lot of debt is shed one way or another, there will be a drag on the “consumer” portion of the purchases. This is particularly significant to the U.S. economy because it is so dependent on consumer purchases—in 2007, these absorbed approximately 70% of the goods and services produced.

MW: The ABCs of the Economic Crisis: What Working People Need to Know is as lucid and compelling summary of the financial crisis as any I have read. In the closing chapter you state that capitalism is undergoing a “crisis of legitimacy” and that “the system can never deliver what is needed for us to realize our capacities and enjoy our lives… That “instead of private gain” the purpose of society and the economy is “to serve the needs of people, by providing the necessities of life for all, without promoting excessive consumption (consumerism) while protecting earth’s life support systems.”

All of the things that which kept capitalism in check–progressive taxation, crucial regulations, and the power of unions–have either been reversed, repealed or greatly eroded. More and more people are beginning to see the greed which governs the system, and it scares them. But is the country really ready for structural change or will the vision of an economy which “serves the needs of its people” be dismissed as “pie-in-the-sky” Utopianism?

Michael Yates: Well, first thank you Mike for the kind words. They are much appreciated. Typically, the best we have been able to hope for from the public in the United States has been an amorphous populism; people are willing to say that the system is corrupt and that it is biased in favor of the rich. But proposals for change, much less a radical transformation of the economic system, are rare commodities. I think things would be different, however, if we had a real labor movement, one that was rooted in communities, broad in its composition, and not afraid to have principles and stand by them come hell or high water. This should be the lesson that progressives learned from the right-wing. The talking heads of Fox may seem insane to us, but they and their intellectual gurus almost never deviate from the set of reactionary principles with which they began to transform the “common sense” of the nation. We suggest at the end of our book that we ought to ask ourselves if a return to the pre-economic crisis status quo is what we want. In the best of times, there is plenty of unutilized labor, a degraded environment, poverty, dead-end jobs, and much more that is not so desirable. So we chose a number of alternative outcomes to what we have now that we think have mass appeal, from universal healthcare to basic food guarantees. However, as you say, these might well, and I think will cause people to react with a pie-in-the-sky indifference. What might make working men and women stand up and take notice would be for these goals to have a mass-based advocate, one that would make these goals matters of rigid principle and begin to fight for them through mass actions. We might think that the right-wing ideologues we see on television are insane. Yet, come hell or high water, they stick to their guns. Their political and economic adherents have wielded tremendous power for a long period of time, and even today when they seem to be losing their grip on the national “common sense,” they can still mobilize the faithful. The left needs to take a lesson from this. More particularly, the labor movement must take a firm and rigid stand on issues like national health care, food security, environmental degradation, full employment, good and cheap housing, U.S. war-making and imperialis, racism, and a host of others. Then it must educate members rigorously and constantly about such principles. Most importantly, it must begin to actively fight to achieve them, activating its millions of members and allies, wherever it can find them. It is through action, bold and unafraid, that people’s minds will get changed and a new “common sense” developed.

Having said this, I think it is clear that the labor movement, as currently constituted, is not up to the tasks at hand. Too many unions are moribund, stuck in the failed labor-management cooperation mind set of the past and run by people too old and infirm to do much of anything. So, not only will we have to have a worker-led opposition to the status quo, fighting to change it radically, but this opposition will have to be built on a new basis. There are some hopeful signs, such as the development of community-based worker centers, mainly in immigrant communities. These may be models for the labor movement of the future.

Fred Magdoff: Just getting what should be the most reasonable reforms through Congress is a major effort, which usually fails or is corrupted in the process. Look what’s happening with health care “reform.” Even if a “public option” is finally part of the bill, it will be a bill that helps some people, but is primarily a boon to the health care industry, which will get a lot of new revenue. It’s not a bill designed with the single purpose in mind: how can we supply medical care for everyone at reasonable cost. Rather it’s a bill designed with significant input from the for-profit sector that will end up supplying them with extra profits. It is clear that government-run systems (and there are a variety of ways to do this) are far cheaper and more efficient and can actually cover everyone. SO, it seems as though piecemeal reform is a) very difficult to obtain and b) can be reversed as the power of the wealthy increases. A system is needed that can break the power of the wealthy and create a real political and economic democracy in order to be able to meet the basic needs for all the people.

I don’t want to just end the [Iraq] war, but I want to end the mind-set that got us into war in the first place.
– Presidential candidate Barack Obama, January 31, 2008

Behind the ostensible government sits enthroned an invisible government owing no allegiance and acknowledging no responsibility to the people.
– Theodore Roosevelt (1882-1945), 26th US president

If we are strong, our character will speak for itself. If we are weak, words will be of no help.
– John F. Kennedy (1917-1963), 35th US President

If the Nuremberg laws were applied, then every post-war American president would have been hanged.
– Noam Chomsky, linguist and political expert

Barack H. Obama was a good presidential candidate but, so far, in crucial areas, he has been a somewhat disappointing president.

In November 2008, Democratic presidential candidate Barack H. Obama, and the first black American to have that chance, got to the U.S. presidency on the coattails of a despised Bush-Cheney administration. Indeed, it was a relief for a majority of Americans to have Senator Obama replace “facts-do-not-matter” George W. Bush as president of the United States. His Republican opponent, Sen. John McCain was little more than a Bush-retread. It was therefore unavoidable that such an election would generate big expectations that things would change for the better. As a matter of fact, candidate Obama’s electoral slogans were “Yes we can” and “change we can believe in”.

Because President Obama is America’s first black President, he is symbolically the culmination of Martin Luther King’s Civil Rights movement. Because of that, many have hesitated to criticize him or his administration. But his record, so far, speaks for itself. In two central areas, defense and the economy, his performance has been, at best, lackluster. In fact, Obama’s performance in these areas has betrayed a lot of highly held expectations.

He seems to have been ill prepared for such a big time job. It is true that the function of president of the United States, as the country becomes more and more a militaristic empire and less and less a democratic republic, is most demanding. Possibly, nobody can be qualified and prepared enough for such a challenge.

In Obama’s case, he was promoted from being a junior senator with a limited staff (one secretary and a few assistants), and no real administrative experience, to running the huge U.S. government with its three trillion dollar budget. And, moreover, he had not had the time or the wisdom to build around him a strong enough “brain-trust” to intellectually control the agenda. Rather the agenda seems to have been imposed upon him. It can be said that he asked for it when, after moving into office, his first move was to keep at their job key Bush appointees to implement the all-too-important defense and economic policies. As it is said in French “Plus ça change, plus c’est pareil” (The more things change, the more they remain the same!)

In Obama’s case, the disappointment is not only a question of poor performance due to a lack of depth, formation or experience. It is a question of promises not kept and of vision betrayed. The disappointment is palpable in polls. His job approval rating hovers around 50 percent (only 45 percent of adults), while only 43 percent of Americans say they would vote to reelect him, and 48 percent say they would vote for someone else. Obama’s performance has reinforced the cynicism and disillusion felt by many voters and their uneasy feeling that most politicians are either corrupt, incompetent, deceitful or hypocrites, or all of the above. In such an environment, it appears to many that voting has become a waste of time. Voter turnout in the U.S., already one of the lowest in the world, may take a turn for the worse if confidence is not restored soon. On that score, the 2010 turnout should be watched closely, especially among young disillusioned voters.

As far as foreign wars are concerned, Obama’s record is less than positive. Although there has been a timid beginning of troop withdrawals in Iraq—notwithstanding the promises—in Afghanistan, things have taken a turn for the worse. Indeed, President Obama has only made things worse in that remote part of the world, by accelerating the killing and by illegally upgrading the killing in Pakistan with the Pentagon’s drones. This is dangerous politics because this open-ended military adventure is all too reminiscent of the Vietnam quagmire that destroyed President Johnson, mired the last days of President Nixon’s term, and tarnished America’s reputation in the world.

Similarly in financial matters. Under Obama, the causes of the 2007-2009 financial crisis have not been clearly identified, let alone corrected or eradicated. Instead, they have been swept under the rug and covered with tax money bailouts and an orgy of newly created money. In fact, just as for defense, President Obama has delegated his economic and financial policies to the troika of Bernanke-Geithner-Summers, just as President Clinton had delegated the same responsibility to the troika of Greenspan-Rubin-Summers, and just as President G. W. Bush had done with the troika of Bernanke-Paulson-Geithner. We cannot help but detecting a pattern here.

It must be recorded that the Bernanke-Geithner-Summers team was deeply involved in the financial deregulation that led to the securization banking crisis and to the subprime mortgage crisis. When one considers the trillions of dollars in public money that have been used to camouflage the large N. Y. banks’ bad debts, it is obvious that the Obama administration has adopted the old political technique of pandering to the rich with the blind support of the poor. (N.B.: The top 23 Wall Street banks and financial firms are expected to hand out a record $140 billion in bonus compensation during this year of 2009—$10 billion more than the previous record year of 2007. It has since been announced that the seven largest bailed out banks may see their bonus plans scaled down, and the Obama admistration should get the benefit of the doubt for this small and possibly symbolic step toward public morality.)

Such practically unconditional bailouts of “too-big-to-fail” banks can be seen as some plush state socialism for the rich, coupled with harsh and unregulated market capitalism for the poor, saddled as they are with unlimited home foreclosures and personal bankruptcies.

The epicenter of the unprecedented banking salvage operation has been the Federal Reserve System, sort of a parallel government with the power to impose hidden taxes. Even more than the Treasury’s generous Troubled Asset Relief Program (TARP) of purchasing preferred equity in troubled banks, and other similar Treasury plans, the bulk of the banking bailouts came from the Federal Reserve system. The list of the Fed’s bailout programs is very long and very complicated and remains mostly off screen, because it is mostly camouflaged within a super-easy monetary policy.

The U.S. Fed is a sort of semi-private central bank that often caters to private banking interests at the expense of the public good. Many Americans realize that the Fed is as much a creator of financial crises as it is an instrument to fight them. In fact, the Fed is presently busy preparing the next big financial crisis, i.e., the collapse of the bond market two or three years from now. That could explain why the remote and mysterious semi-private Fed is the least popular of all American federal institutions, and why grass roots efforts to submit it to a public audit are gaining momentum.

In fact, the U.S. Fed is an institution that has gone much further than the U.S. Treasury in socializing the large N.Y. banks’ losses and in privatizing their huge profits in the hands of profiteers, at a time, especially after the Sept. 15 (2008) demise of Lehman Brothers, when many of them were technically insolvent.

Thus, by buying large amounts of toxic and unmarketable assets from the large N.Y. banks and from large insurers, such as the huge American International Group (AIG), at close to zero cost to them, and by creating new deposits in exchange, and by paying interest on such bank deposits, the Fed has in effect transferred all or most of the seigniorage of money creation from the public to the private sector. Everybody holding U.S. dollars has paid a huge hidden tax imposed by the Fed to salvage the large “too-big-to-fail” N.Y. banks. Sooner or later, somebody will have to calculate that hidden tax and make it public. Most likely, this could only be done if the Fed were to be thoroughly audited, which it has so far staunchly refused.

All and all, and where it counts the most, in matters of wars and peace and in economic matters, things have hardly changed under the new Obama administration. It is likely that an even more pugnacious McCain administration would have been worse, considering Sen. McCain’s public declarations and pronouncements. Nevertheless, this is poor consolation to those who had high expectations and who were led to believe that President Obama’s election would really bring fundamental change.

Gilad was recently here for the JZ Festival in Shanghai’s Pudong district and he also taught; I’m assuming, at the JZ school. I can imagine the experience. The JZ Festival went off without a hitch in a beautiful park in the Pudong New Zone. The JZ school is situated in the former French concession among old houses and tree lined lanes. Between the lanes, the Jazz and the skyscrapers of Pudong, it must have been an intoxicating week. But we are supposed to be dissidents and radicals and some parts of Gilad’s article are lazy and dangerous. We need perspective.

Gilad writes, “China is a financial miracle.”

I have lived in Shanghai for eight years and a large part of my life is given to the underground music scene. But before we get to the reality of that we have to address the big problem. The myth of the “economic miracle”. This is not specific to China. This is a global myth. Let us start with a reminder of the state of the global system. According to the World Bank development indicators for 2008, 80% of the world, or 5.15 billion people, live on less than ten dollars a day with 3.14 billion of those, or half the world’s population, living on less than two dollars fifty.² The top 20%, as we are all aware, is divided into the so called middle classes and the super rich.

China is a fair reflection of this global trend. The most recently touted indicator has been the internet usage stats.³ China recently approached the 300 million mark for internet users. Economic commentators foamed at the mouth and noted that was equal to the entire population of the USA. Of course, what it actually represents is the creation of a 20% middle class to go with it’s remaining billion people who are on or below the subsistence mark. Gilad also states, “It is a miracle because it somehow manages to restrain hard capitalism with a unique socially orientated system.” That is simply not true. It is purely hard capitalism. Period. There is no restraint, there is a free for all that is destroying the countryside and resulting in monthly riots across the land.⁴

In any region of the world, a system which enriches a minority of the people while plunging the rest downwards — while destroying their land rights and environment — should never be called a miracle. It should be called a disaster.

It is also dangerous to freely mix ideas of state or government with people or culture. I love to live here and my experiences on the underground rock scene and with local artists have been amazing. However, a little reading or asking around the subject will reveal that writing, music and art has a glass ceiling that is directly imposed by state censorship. For every Jazz Festival that goes on there are a slew of cancelled events.⁵ During the Olympics, the entire music scene was forcibly shut down for a month by the police.⁶ The underground is allowed to exist, as long as it doesn’t try to go public. I might also mention that no word gets published in print media without being first read by the Xinhua Agency.

I love living in China and Shanghai. The people are great and the issues I bring up are not only relevant to China. I myself don’t like ‘China Bashing’ and the countless lazy stereotypes that appear in journalism about this complex country. However, Shanghai is the glossy facade for the rest of the country and it’s our job as radicals to always keep our perspective.

1. ”Autumn in Shanghai” by Gilad Atzmon
2. ”Global Issues Poverty Facts.”
3. ”China has close to 300 million internet users AFP.”
4. ”58,000 mass incidents in China in first quarter as unrest grows to largest ever recorded.”
5. ”Modern Sky Festival 2009” from China Music Radar.
6. ”The Clampdown” from China Music Radar.

My spouse grew up dirt poor on the East coast of Canada. With ten mouths to feed, household economics meant both tuna and lobster in everything. Both were cheap and plentiful, with easy access to communities that had lived off the sea for centuries. Each year the family would load into small, aluminum boats laden to the gunnels, and cruise the rivers for fiddleheads; tightly wound new shoots of the fern plant, and a local delicacy served fried with butter and garlic. These they would sell and barter for the tuna and lobster (amongst other things) that fed the family. Families of similar station owned the tuna boats and lobster trap-lines, and there was a primitive harmony to the economics, one that had sustained their ancestors for generations. That’s the way it was in 1974.

I grew up in the industrial heartland of Canada, with steel mills and toxic waste pouring into the lake, pleasantly hidden beyond “hissing summer lawns” and well cared for hedges. My memories of tuna are quite different. Ours came from a tin can, casually tossed into my mother’s overflowing shopping carts as a lunch supplement or terrifying tuna casserole (bless her heart, my mother couldn’t cook). Two cans maybe, four if it was on sale. My sister and I demanded tuna — Star-Kist tuna, “the chicken of the sea”, made palatable no doubt by that irascible cartoon mascot, Charlie. We knew Charlie from TV of course. My spouse on the other hand missed it not having a TV, and so our motivations for tuna were civilizations apart. They got to eat, and we got to participate in the emerging industrial corporatism that had swallowed up tuna — and everything else on the earth.

Know your tuna. There are several species of tuna, all in various states of depletion. The “Bluefin Tuna” is, by some estimates, a scant two years from complete extinction. Not surprisingly, it is the most popular tuna species amongst its only real predator, humans. The Giant Blue Fin can exceed ten feet in length, and weigh in excess of 310 pounds. Some live to 30 years or more. Or used to at least. They can cruise at depths of up to 1500 feet and cover 4,800 miles in under 4 months. They can reach 40mph. Yet, the Bluefin Tuna has still melted like snow on hot summer asphalt before the wholesale corporate industrialization of tuna fishing.

There are three main ways to kill a tuna. One is the small scale, ancient method of harpooning the things one at a time from an open boat, still used today wherever tuna and fishing are found. Industrialization solved this sustainable quaintness of steady speed and simple efficiency however, by employing boats that move across the ocean with the horsepower to pull drag lines up to 80 miles long behind them, each line dangling baited hooks by the hundreds up to depths of 500 feet or more. Purse Seine fishing is all that and more. Giant nets a mile in circumference and 600 feet deep are deployed around great schools of fish, and drawn up from the bottom, trapping hundreds of flailing dolphins, sharks, turtles — and of course tuna — at the surface. There the tuna are slaughtered on a true, industrial scale, and hauled aboard company boats by hook and gaffe. The unfortunate sea borne collateral damage sinks to the bottom as so much surplus chum.

Horrible. But hey, ya gotta kill ‘em if ya want to eat ‘em, right?

The shoreline communities who could catch their meals on a daily basis, and eat them fresh before they spoiled consumed tuna — as well as other water borne foods — at sustainable levels for centuries. This was in the era before the refrigerated container or beverage-dispensing refrigerator, as it remains in many places today. However, amongst the many benefits of industrial technology, there lay the Trojan horse that opened up the earth’s oceans to every man, woman, child, and household pet on the planet. Mechanized fishing fleets and robotic assembly line production, distribution, and retail of the humble tuna had brought great, fresh chunks or tin cans of the stuff to every remote station of the earth. At that point, it was just simple math as a billion or more munching cats and humans a day relentlessly gnawed away at the ever-dwindling fish stock.

For the Bluefin Tuna, the math has run down to single digits.

Scientific and regulatory bodies all agree that the Bluefin Tuna stock cannot sustain a catch greater than 15,000 tonnes (think 15,000 compact cars) in the Mediterranean, home of the greatest tuna runs on the planet. Last year the quota was set at 29,000 tonnes. European member nations, some of them a day’s long drive from any water at all, overfished the limit by 25,000 tonnes. This year, Turkey alone will fish 25,000 tonnes, thumbing its nose at both regulatory agencies and the future. These Nations will also fish during spawning season in June, out of both capitalist ignorance and the fact that large fish are simply impossible to find, the younger, smaller ones now the most plentiful Tuna demographic in the sea. Estimates are that even the breeding stock will be gone by 2012, which means gone forever. There are now only three years to forever.

While over 70 countries fish tuna, Japan and the United States account for two thirds of the consumption. The largest fleet is Japanese, and the largest company in that fleet is Mitsubishi – think compact cars, coincidentally. Last year Mitsubishi alone fished 60,000 tonnes of tuna. 20,000 of those tonnes were not immediately taken to market, but frozen and warehoused against the day that tuna disappears, which should be sometime in the third or fourth quarter of fiscal 2012. Did I mention a single large tuna will fetch $100,000 at market? Mitsubishi, the giant Japanese mega corporation, is deliberately fishing the species to death in an attempt to drive up prices and unload its investment.

The story of the Bluefin Tuna is the story of everything. It is a unified theory of the human universe. Its laser straight tale contains within it an entire understanding of the state of civilization, all the pillars that hold up the shiny, creaky edifice that is us.

In the beginning, there was capital. Excess stuff. Things you didn’t need as much as things other folks had. A bag of grain for a jar of salt. A bale of fiddleheads for a few pounds of tuna. A professional class developed (as they always do), and traders became intermediaries bartering goods and services for others, earning a primitive existence from the economies of scale that yielded even more stuff left over, which in turn was “invested’ in even more stuff, earning a “return” to the trader of even more stuff again. And in this way was born an insidious virus with an insidious name, hidden for eons in the thick dull pages of Lipsey and Stiener, the holy grail, the secret code to the universe… Return on Investment. Alternatively, as it is colloquially known, ROI.

Beg, borrow or steal excess stuff (literally, that’s what the term was coined for), and invest it for return or profit. It’s a hell of a gig. You consume nothing but your own, otherwise useless time, and get stuff out of thin air, like magic. We call that stuff wealth now. Too many problems hauling salt up and down hill and dale caused the creation of promises to pay; to many problems collecting on promises to pay caused the creation of script. We call script money now. Further problems collecting script caused the creation of governments, laws, and communities.

Of course, the power of ROI became irresistible, and the sight of well-dressed folks apparently doing nothing for their salt, while you busted your hump in the salt mines didn’t help matters much either. Class structures developed, all variations on the theme of have excess stuff, and have not excess stuff. The haves needed protection from the have not’s — and each other — the government needed the wealth these wizards were creating to pay armies to protect themselves in turn. A lasting marriage of convenience was formed welding the ruling class to the wealthy class, and with it a consolidating of laws and rights progressively honouring the achievement of Return on Investment.

The next step was the sudden realization that several wealthy traders, mine owners, and government types who pooled their capital would, through the magic of arithmetic, yield even greater amounts of wealth. The magic of human greed created fraud, theft, and lawyers. Here in the western world, it was that feisty group of capitalists, lawmakers, and lawyers who invented the corporation, a legal fortress created to pool great lumps of capital for the express purpose of maximizing its investors Return on Investment.

It is a simple alchemy. Find something somebody wants and make it worth their while for you to get it for them. Find a lot of stuff a lot of people want, and you are a capitalist member of the ruling class in any civilization. The people want salt to preserve their foods and add to tuna casseroles, but are to otherwise involved in scraping a mean harvest from the earth? Go and figure out a way to dig enough of the stuff out of the earth to sensibly trade for whatever the other guy produces. Risk death, starvation, or worse in exchange for opportunity to work the magic of ROI. Roll the dice and come up sevens enough times, you transit the barriers of class at the speed of compound interest. Crap out, and you vaporize into that invisible demographic, the statistically irrelevant cohort unknown as those that failed.

The winners write history, and law.

The ancient trade of Fish Monger is a simple case in point. Fish, and other bounty of the sea, lakes, and streams, is an essential foodstuff powerful with calories and proteins. Fish, along with loaves, were the classic staples of the burgeoning human food chain. An early problem was however, that fishing was capital intensive. You needed a boat, a net, and a sea stocked with fish. Trading these things with folks without them for the grains and meats your sea didn’t provide gave rise to the fish trader, who transferred the produce from one geography to the other. Better diets all around gave rise to larger populations, each one of whom represented additional demand for fish and loaves each way. Traders made out like bandits, as did all members of the process of producing and investing for return — including bandits.

In Japan, the large capital costs involved in feeding an Island nation naturally developed into conglomerated groups of fishermen to do the fishing, mongers to handle the transactions, bankers to raise the money, private “security” to protect the investment, and on top of it all, a CEO who became a de facto member of the national ruling class. These family owned businesses set the rules that allowed themselves to develop unfettered, becoming the fabric of culture and society itself by the time of the Meji Restoration of the 19th century, as “Zaibatsu”.

With the defeat of Japan at the end of the second world war, these Zaibatsu’s were easily transferred into law and put to work rebuilding Japan on the American model. Mitsubishi (remember them?) became stupid wealthy as one of the big four, ancient “Keiretsu” organizations controlling, among other things, the business of feeding the people fish. The Industrial Revolution visited Japan as it did Europe, and the Mitsubishi Keiretsu harnessed the emerging technology better than most, that technology aiding and abetting the chemistry of ROI just as it would everywhere else. More people, more demand, more supply. World markets were opened, and Japanese fish began to emerge in places a thousand miles from any ocean.

Where demand did not exist, the suckerfish of the great capitalist whale created some. We call that marketing now. Kids demanded “Chicken of the Sea”; thirty something’s in Peoria began to eat Sushi on Saturday nights. Pets consumed trailer loads of their less fortunate, wondrously free friends of the ocean — an incredible feat of return on investment.

Great scads of wealth were created, wealth that was reinvested in other, better, faster ways to maximize return on investment. The occasional gold bidet was purchased, as were billion-dollar fishing fleets; an investment specifically intended to return the maximum, its holy charter not just protected, but also limitless by law. Be it an American hedge fund churning out insane algorithms for digital cash, or Japanese Keiretsu machine harvesting the oceans, all are protected by law, and sanctioned by various forms of corporate charter to brook no opposition in the single-minded pursuit of return on investment.

A simple exchange of goods, the magic of grade school arithmetic, and the pure, innate curiosity and inventiveness of man (we call that greed today), all combined to bring us the funky western civilization we love and enjoy. The creation of wealth and capital so long ago has allowed a handful of powerful, professional “interests” to organically develop around the world. Protected by laws they themselves write, and the willing acquiescence of a population that depends on the efficient functioning of the system for its plasma TV’s, the modern free market capitalist enriches his nation as he enriches himself, spreading wealth by ever reinvesting, ever creating and filling demand. If he isn’t the de facto ruling class or government, he (there are the occasional “she’s”) is the power behind it. It is not economics as much as it is religion and as such, nobody but heretics is going to screw with that.

Extracting stuff from the earth, then creating a system that magically creates wealth by leveraging it a million times over, sanctioning the whole thing in law, and then demanding by natural right limitless return… does beg a series of humble questions. If the infinite and exponential creation of wealth depends entirely on the very limited resources of the earth, is there a point where the two lines on some graph may sometime cross? A point where unlimited demand meets exponentially diminishing supply? What happens then? What would it look like? How would we, simple earthlings, know when it was coming or if it had arrived?

Which brings us back to the Bluefin Tuna, completely fished out by 2012, and not a damn thing to be done about it. I thought about that recently when shopping at the local mega grocery outlet. Tuna was on sale, two cans for 99 cents. The daughter threw a few cans into the cart. “Sorry,” she said sheepishly “gotta have tuna”.

God had spoken for the Bluefin Tuna.

The process of globalization was the result of ‘external’ and ‘internal’ conditions and class coalitions embedded in the social structure of both the imperial and ‘recipient’ or targeted countries. The expansion of capital was neither a linear process or continual expansion (accumulation) nor of sustained collaboration by the targeted countries. Crises in the imperial centers and regime transformations in collaborator regimes affected the flow of capital, trade, rules and regulations.

One of the unintended consequences of the ascendancy of global ruling classes was the rise of large scale and tumultuous social movements, especially in Latin America, which challenged the rulers, ideology and institutions sustaining the global empire.

The relations between imperial globalization and social movements are complex, changing and subject to reversals or advances. This study, with its focus on Latin America, addresses several hypotheses exploring the relation of globalization and social movement over a thirty-five year period: from the onset of the free market doctrine which is the motor force of globalization (1975) to the present 2010. This time frame provides us with a sufficient period to observe the long term operations of global capital and the historical trajectories of social movements. By including Latin America as a whole, we incorporate an entire continent and lessen the possibility of idiosyncratic developments specific to a single country.

Our inquiry is guided by a specific set of hypothesis that will be tested through a historical analysis of global economic tendencies and the trajectory of social movements. We will proceed by providing a brief overview of the dynamics of globalization and the growth of social movements in Latin America and then proceed to specify our key hypothesis regarding the relationships between globalization and social movements.

Globalization: Class, State and Economy

The onset of a new and dynamic phase of imperial capital expansion, which we will call globalization, owes a great deal to the favorable political outcome of the capital – labor struggle on a world scale. The defeat and retreat of the working class in the West, particularly in the US and England, and the self-destruction of the Communist regimes of the East laid the groundwork for an aggressive global crusade against leftwing regimes and movements in the Third World, especially in Latin America. The ‘rollback’ of the working class movements was particularly vicious and successful in Latin America, where the major part of the continent experienced the onset of military dictatorship, which dismantled the national constraints on capitalist flows and trade tariffs.

Within this new global framework of imperial empire builders and authoritarian collaborator regimes, several factors enhanced global economic expansion.

   1. Technological innovations, especially information technologies accelerated the flows of capital and commodities.
   2. Large scale accumulation of capital in the imperial states, a relative decline in rates of profits and the growing role of finance capital spurred the drive for overseas investments, speculation and buyouts of privatized firms.
   3. Intensified competition between the US-EU-Asia drove MNC to seek advantages by securing banks, resources; market shares within Latin America.
   4. The rise of pro-western rightist dictatorships provided exceptionally favorable socio-economic conditions for buyouts and acquisitions of local enterprises and resources, extraordinary returns on financial speculation and minimum opposition from repressed trade unions and nationalist and leftist parties.

As a consequence of these structural changes, free-market doctrines and neo-liberal policies were put in practice resulting in bilateral free trade agreements (NAFTA),and deregulation of the economies. The growth of speculative activity took root and prospered, at the same time that social safety nets was dismantled.

After over two decades of highly polarized development and mediocre growth the neo-liberal economies stagnated and went into crises: commodity prices fell, the financial bubbles burst, large scale banking swindles impoverished middle class depositors, investors were defrauded, leading to a virtual economic collapse and mass unemployment. By the beginning years of the new millennium, Latin America faced a systemic crisis in which neo-liberal regimes were overthrown, social movements were in ascent and economic bankruptcies were multiplying. Center-left parties and coalitions were elected and moved to implement ameliorative measures which lessened the impact of the crises. Stimulus packages were passed to revive the economies. The vertical rise of agro-mineral prices in world market facilitated economic recovery which lasted till the onset of the world recession of 2008.

Social Movements

Growing out of the polarized growth, intensified exploitation of labor and displacement of peasants and farm workers, endemic to free market policies, social unrest spread in rural areas, especially among the landless rural workers, peasants and Indian communities. A new generation of militant leaders emerged, with a capacity to link local grievances to national and international structural policies. By the early 1990s mass movements took hold and launched a series of mass campaigns and mobilizations which spread to the cities and engaged the growing mass of unemployed urban workers, public sector employees and impoverished downwardly mobile middle class business people and professionals.

The crises precipitated large scale uprisings led by the new social movements, demanding systemic changes but settling for the election of center-left regimes. The first decade of the 21st century witnesses the ebb and flow of movement activity eventually settling into varying niches in the new order presided over by the center-left regimes.

Key Hypothesis

The expansion of ‘globalization’ or the imperial centered development model was accompanied by the growth of mass social movements. This raises the fundamental question of the relationship between the two processes. We set out several hypotheses to explore the relationship.

   1. The greater the deregulations of the economy leads to the acceleration of globalization and spurs the growth of the social movements.
   2. The crises and breakdown of deregulated globalization leads to a greater role and radicalism of the social movements up to and including social upheavals overthrowing incumbent regimes.
   3. The stronger the regulatory regime controlling the globalizing process the lesser the impact of the crises, the more moderate the activities of the social movements and the less likely a popular rebellion.
   4. The weaker the social safety net in time of crises the bigger the social movements and the more radical their demands. Conversely, the stronger the social safety net in time of crises the slower the growth of the social movements and the more reformist their demands.
   5. Depressed world commodity prices are more likely to engender radical social movements than periods of buoyant prices.

By combining our four principle variables into a single hypothesis on the relation of globalization and social movements, we come up with the following two propositions.

The optimal conditions for radical mass social movements occur when an economy is highly deregulated, in times of financial crises and productive recession, when commodity prices are depressed in the context of a weak social safety net.

Conversely, radical mass social movements are less likely to emerge under a highly regulated economy with a strong social safety net when world commodity prices are rising and the economy is buoyant.

Testing the Hypothesis: Latin America 1980-2010

Between 1980-1990, Latin America experienced a period of moderate growth and stable world prices for its commodities. This was a period of major dismantling of state regulations of the economy and weakening of the social safety net. Yet there were not major social uprisings nor mass social movements, except in Chile between 1985-1986, which ended with a US backed political pact between the Pinochet dictatorships and the Socialist-Christian Democratic parties and their subsequent ascent to government in 1990.

During the first half of the 1990’s world commodity prices declined to historic lows, the social safety net continued to deteriorate; capitalist profits soared in an orgy of privatizations and foreign takeovers, while overall growth stagnated. Social movements grew, mass mobilization, extended from the countryside to the cities but few popular rebellions occurred.

The period between the late 1990’s to the early 2000’s (roughly 1999-2003) experienced a major socio-economic and political crisis, including economic and financial crises in Argentina, Bolivia, Brazil, Venezuela, Ecuador, Peru and Uruguay. After over twenty years of free market policies accompanying the globalization process, the social safety net was in tatters. Commodity prices remained low and financial deregulation deepened the vulnerability of the economies to the US recession.

Between 2000-2005, neo-liberal regimes were overthrown or replaced in Argentina (3 regimes in 2 weeks) 2001-2002, Bolivia (2003, 2005) Ecuador (2000, 2005), Peru, Uruguay, Brazil, Venezuela (coup regime 2002 lasted 48 hours). Social movements grew precipitously throughout the region and their demands radicalized, including fundamental structural changes. The Brazilian Landless Rural Workers Movement (MST) led massive land occupation movements throughout the country. Worker, peasant, Indian uprisings in Bolivia ousted two incumbent electoral regimes. In Ecuador, Indian-urban movements in coalitions overthrew an incumbent neo-liberal regime in 2000 and a broad based urban citizens movement ousted a corrupt neo-liberal regime in 2005. In Argentina, a popular rebellion led by unemployed workers impoverished middle class neighborhood organizations ousted neo-liberal presidents and dominated politics throughout 2001-2003. In Venezuela a mass popular mobilization with military allies ousted the US backed business – military junta of April 2002 and restored President Chavez to power.

The period between 2003-2008 witnessed a sharp rise in commodity prices to record levels; the ascent of center-left regimes was accompanied by capital controls and the partial restoration of the social safety net, rapid economic recovery and relatively high growth. Social movements receded, their demands focused on immediate reforms, mobilizations were more infrequent and some of their key leaders were co-opted.

The period between 2008-2010 witnessed a sharp decline of growth, reflecting the impact of the world recession and the decline of commodity prices. While most countries entered a recession, the financial system did not experience a collapse comparable to the earlier period (2000-2002), in part because of the capital controls in place since the earlier part of the decade. While unemployment grew and poverty levels increased, the improved social net ameliorated the impact of the recession. The social movements increased their activity and experienced mild growth but with few if any direct challenges to state power, at least during the first two years of an ongoing crises.

Conclusion

Our historical survey demonstrates that single factors such as implantation of neo-liberal changes and deepening globalization in and of themselves do not lead to the growth of massive, radical social movements: witness the period of 1980-1990. Nor do low commodity prices a weak social safety net and declining state revenues provoke popular uprisings and radical mass social movements. Likewise an economic crises, such as the recession of 2008-2010 has not led to a resurgence of mass radical social movements and popular rebellions.

Only when a combination of internal factors, such as a weak social safety net and a deregulated economy and an external crises such as a global recession and declining world commodity prices do we have optional conditions for the growth of dynamic mass radical social movements.

Writers who focus or start from a ‘world system’ or other ‘globalist’ perspectives’ in attempting to address the rise of social movements as a function of the ‘operations’ of the market fail to take account of the internal political and social struggles and the resultant state social polices as determining factors.

We should note that social movement rebellions do not suddenly occur because all of the contingencies are in place. The social upheavals at the end of the nineties and early half years of the new millennium had a decade of gestation: organizing, accumulating social forces, creating alliances with institutional dissidents – like radical church people – and developing leaders and cadres. Economic crises, at best, were “trigger” events which severely discredited the ruling class, undermined the dominant ‘globalization’ ideology, and allowed the movements to make a qualitative leap from protest to political rebellion and regime change.

Finally though, it is not central to this paper, we should note that while social movements at their height were able to oust incumbent neo-liberal regimes, they were not able to take political power and revolutionize society: to their upheavals allowed center-left politicians to come to power. Ironically, once in power they passed sufficient social economic reforms to fend off the re-radicalization of the movements when the world economic crises struck again at the end of the first decade of this century.

The debate has revealed a deep division over the causes and remedies, with Anglo-Franco American (AFA) politicians, columnists and economists on one side and their Asian-German (AG) counterparts on the other. In general terms the AFA spokespeople put the blame for the crises on external factors, or more specifically they point their finger at the positive trade surpluses, dynamic export sectors and high investment rates in productive sectors and low levels of consumption in the AG countries as the cause of ”unbalances” or “disequilibrium” in the world economy.¹

In contrast, the AG countries reject this argument which speaks to prejudicial external practices. They emphasize the internal “imbalances” within the AFA countries, which has weakened their international, commercial and financial position.

In this paper, I am going to argue that both internal economic policies and external empire building strategies of the AFA countries have been the driving force for global imbalances. The structural differences between the two regions and the differences in class structure and economic configurations in each bloc precludes any easy or immediate solution. On the contrary, for the foreseeable future, the conflict between dynamic emerging export powers and the declining western bloc is likely to intensify, leading to greater trade conflicts and possible military confrontations.

The AFA charges against China’s commercial ‘imbalances’ conflates trade with the West with Beijing’s relations with the rest of the world. China has balanced trade or even trade deficits with Asian, African, Middle Eastern and Latin American countries. Moreover, the AFA countries have trade imbalances with other regions including the Middle East and Germany. Even if the AFA countries curtailed imports from China, it is most likely that other Asian countries would replace them, including Vietnam, South Korea, Taiwan, Bangladesh and India. The resulting trade deficits of the AFA would remain about the same.

The AFA countries blame China’s “undervalued” currency, and claim that Beijing authorities manipulate the exchange rate to under price exports and beat out competitors (namely producers within the AFA). Yet China’s currency has been revalued steadily upward over 20% the past five years, and yet the AFA still run a deficit, suggesting that their domestic producers have still not been able to compete with Chinese manufacturers.² More recently AFA writers have complained about low interest rates set by the Chinese government as a “subsidy” to its exporters. Yet AFA interest rates are at zero percent or even negative, to no avail. Moreover, the AFA have provided over 1.5 trillion in bailout funds and over 1.3 billion in stimulus spending – a subsidy five times greater than China’s stimulus package, without improving their trade balance. What is telling, given the sectoral allocations, of each regime’s bailout – subsidy – stimulus packages, China has fully recovered and is growing at 8% by mid 2009, while the AFA continue to wallow in negative territory and continue running up trade deficits. This points to the centrality of internal factors, namely, the economic sectors which receive the state subsidies and how they invest it and as a result how their decisions affect trade balances.

The AFA charge that China’s low cost labor, its exploitation of workers accounts for trade imbalances. Yet an increasing percentage of China’s exports are based on technological advances, not cheap labor. This is because low labor cost competitors are emerging in Asia.

The AFA complain that China over emphasizes its ‘export’ strategy at the expense of producing for the domestic market. Yet nearly half of China’s exports to the US are made by US owned multi-nationals who have invested, subcontracted and co-produced with Chinese counterparts. In other words, US internal policy, the deregulation of capital flows, has facilitated the movement of US manufactures abroad resulting in a decline of local production, an increase in imports and greater trade deficits.

Internal Causes of Trade Deficits (and Unbalanced World Economy)

The most obvious and striking correlation with the growth of AFA trade imbalances is the growth and dominance of the financial sector.³ The financialization of the AFA economies and Wall Street’s CEOs dominant role in the strategic economic positions of the state is transparent to the mass of the people and has even been acknowledged by most private economists and academics. Trade deficits increased in direct proportion to the growing political and economic power of the financial sector. In large part, this was due to the transfer of capital from manufacturing to financial services, leading to the decline of the manufacturing sector’s investments in innovations and competitive management strategies. The financial sector’s, high salaries, bonuses and quick returns attracted most of self-styled “best and the brightest”. MBA graduates multiplied while advanced engineering school graduates diminished. Advanced skilled worker training programs disappeared while low skill retail sales recruitment grew.

The problem was that financial services did not, could not replace the overseas earnings which formerly accrued to the country through manufacturing sales. Least of all in the highly regulated financial markets of China, Japan, India and the rest of Asia, where banking was subordinated to the expansion of manufacturing — namely financing industries targeted by state officials. The dominance of finance capital and the related sectors of real estate and insurance, led to a highly polarized class structure: in which billionaire and millionaire investment bankers presided at the top and an army of low paid service workers (retail employees, cleaners and sweepers, etc.) immigrant and non-union workers occupied the bottom. Presently income inequalities in the US exceed those of any other “advanced” capitalist country. The inequalities in Manhattan exceed those of Guatemala. The growing concentration of wealth is accompanied by decline of median wages over the past three decades. As a result the purchasing power of US workers is declining, thus reducing the demand for locally produced quality goods. The purchase of imported cheap textiles, shoes and other accessories results. The result was a decline in local saving and domestic investment in manufacturing leading to a decline in competitiveness. Moreover, the competition among financial lenders furthered consumer spending and greater individual indebtedness at a time when manufacturing exports were declining, starved of investments.

Most manufacturing firms transformed themselves into financial corporations, channeling investment funds in sectors not earning foreign exchange. Worst of all in pursuit of higher profits, manufacturers turned into commercial vendors, closing down plants and sub-contracting production to China and other Asian countries and importing final products into the US creating the trade imbalances. The large scale relocation of US multi-nationals abroad further exacerbated the trade imbalances.

The key role of the state in creating domestic imbalances leading to global disequilibrium is a result of the financial sector’s takeover of the state,and the deregulation of financial markets. The result was the long term promotion of an economic policy, in which the central bank (the Federal Reserve) and Treasury encouraged the growth of finance ,real estate and insurance sectors over manufacturing. The finance based strategy was justified by a large army of academics and publicists who spoke of a “post industrial”, or “service” or “information” economy as a “higher stage”, rather than a perversely unbalanced, unsustainable and unjust economy.

Financial supremacy coincided with the growing militarization of US foreign policy. Throughout the last thirty years, US overseas economic expansion was gradually eclipsed by the growing reliance on military intervention, and the build-up of military bases in hundreds of sites. As financialization weakened the productive capacity of US manufacturing exporters’ efforts to capture markets, US policymakers increased their reliance on the supremacy of military power. The channeling of billions into military spending drained resources from efforts to upgrade the competitiveness of US civilian industry and was a major factor-in its declining share of export markets. The end result of militarization was a loss of export earnings and the growth of trade deficits.

If we combine the three great internal imbalances in the AFA economics, but especially in the US, the financialization of the economy, the militarization of foreign policy and the concentration of wealth at the top, we can best understand why the US has such a huge and growing trade deficit.

China Export Driven Strategy

China’s emphasis on an export driven strategy and the resultant growing class inequalities is largely a result of the class composition of the state and its social structure. In other words internal factors are the driving force of its pursuit of trade surpluses. What is ironic is that some of the AFA critics, who rightly point to the internal ‘imbalances’ in China, overlook similar problems in the West. Namely, no mention is made of the absence of a national health plan in the US, the growth of inequalities and declining mass purchasing power – even as they point to these deficiencies in China. What Western advocates of greater social welfare in China do not discuss, is the capitalist class power, privilege and profits which hinder greater mass consumption. Least of all do they discuss the motor force for lifting working class and peasant living conditions, namely the class struggle. Instead they rely on technocratic appeals to Chinese elites for greater social spending.

The Chinese state has evolved into a powerful machine for manufacturing goods and billionaires. Today China has the highest growth, the highest rate of exploitation and the greatest class inequalities in Asia. Increasing wages to stimulate local consumption means reducing profits, anathema to all capitalists including Chinese. Increasing public spending on universal health coverage especially for the 700 million uninsured peasants and rural workers means higher taxes on the rich, including the families and colleagues of the governing elite. In contrast, producing for export markets does not require increasing domestic consumer power, on the contrary it requires lower wages.

A shift from an export-driven to a domestic market driven strategy, requires not only a ‘change in policy’ but a deep shift in class power, from the current capitalist class and its state backers to the workers and peasants. To realize large scale, long term commitments of public revenues to social services for the rural poor and higher wages for exploited workers requires sustained popular mobilizations, uprisings, strikes to secure the independent trade unions and peasant associations necessary to secure a shift in state allocations toward domestic consumption.

China’s “imbalances” are largely internal, social and political. An imbalance of social power between an all powerful capitalist state and a repressed powerless mass of workers and peasants; an imbalance in income between a super-rich banking, real estate, manufacturing export elite and a low paid working class and subsistence peasantry;an imbalance between a highly organized state linked by family, ideology and economic interests to the capitalist class and a dispersed, fragmented and isolated mass of working people.

China’s ruling class, its outward billion dollar investments in western capitalist enterprises via its sovereign wealth funds, its billion dollar investments in overseas extractive enterprises, is driven by the mass of capital accumulated that is extracted via intense levels of labor exploitation and the elimination of state funded pensions, health plans and education. China’s role as an emerging imperial power is rooted in the imbalance between global power and social welfare decay.

The fact that western capitalist writers, policymakers and their academic camp followers point to the same social imbalances in China as its domestic working class critics should not obscure a basic point. The Wall Street critics are defending the AFA financial elite against China’s export industrialists’ greater productivity; while the domestic working class critics are criticizing the capitalists and the state for their high rates of exploitation and concentration of wealth.

The key to reducing imbalances in world trade is reducing socio-economic inequalities within each region. The US requires a profound shift from a finance dominated economy to a manufacturing economy, where finance, high tech and higher education is directed to creating a competitive, productive economy based on skilled labor. The link at the top between Wall Street and the Pentagon must be replaced by a link from below between the industrial working class, low paid service workers and public sector employees and professionals.

The structural transformation of the US economy is necessary but not sufficient. If US efforts to pursue a military driven empire persist, this will divert resources away from domestic and overseas economic priorities. Military driven empires alienate trading partners, have high costs and low returns, isolate economic investors and traders from productive partnerships and are destructive of domestic and overseas civilian productive facilities.

The way out of the massive imbalances is for the US to engage in a large scale, long term domestic structural transformations – namely de-financialization and de-militarization. But the political and economic forces benefiting from the current configuration are deeply entrenched, in control of both major parties and dominate the mass media and its message. Yet, despite their profound institutional power they suffer several fatal flaws. In the first instance they have created unsustainable global imbalances, which will sooner or later lead to a collapse of the dollar and renewed and more virulent and costly financial bubbles. Secondly, the free market which is the main ideological prop of the deregulated financial power elite is totally discredited as evidenced by the single digit support and trust of Wall Street. Thirdly, military driven empire building has run its course: after nine years of war in Afghanistan the vast majority of the US public has sent a message to the political elite of both parties, the White House and Congress, that its time to shift from funding failed overseas adventures to solving the problem of 20% under and unemployed Americans (30 million), the 100 million or 33% of Americans with no or costly and inadequate health coverage. No amount of media and political pundit scapegoating of China for our own self-induced “imbalances” can divert American opinion from their direct experiences with our own internal inequalities and policy failures.

1. Martin Wolf, “Why China must do more to rebalance its economy” Financial Times, September 23, 2009, p 11. See also Financial Times, October 3, 4, 2009. p 3 and Financial Times, September 21, 2009 p 9.
2. Financial Times, October 9, 2009 p 1.
3. Gerald Davis, Managed by the Markets: How Finance Re-Shaped America (New York: Oxford University Press 2009).

It appears as though the savior may be riding in on a pale horse.

According to a September 5 New York Times article, banks like Credit Suisse and Goldman Sachs are exploring new investment schemes that involve buying up life insurance policies from sick and elderly people, bundling them into huge securities, and selling shares in the securities to investors.

Buying shares is essentially a bet–that the people whose insurance policies on which the securities are based will die “on time” or earlier than expected. According to the Times, “The earlier the policyholder dies, the bigger the return–though if people live longer than expected, investors could get poor returns or even lose money.”

Just when it seemed impossible for Wall Street–still counting the trillions in taxpayer dollars it received in a government bailout to save it from collapse–to sink any lower, greed came to the rescue with the development of a grim new market.

As Karl Marx and Frederick Engels wrote in the Communist Manifesto, “The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere.”

Now, the financial crisis has driven capitalists to the nursing and retirement homes, and to the bedsides of the sick and dying.

The credit rating agency DBRS–whose Senior Vice President Kathleen Tillwitz informed the Times that “our phones have been ringing off the hook with inquiries”–is studying how to rate pools of life insurance policies. The main challenge is figuring out how to pool people together. As the Times wrote:

The solution? A bond made up of life settlements would ideally have policies from people with a range of diseases–leukemia, lung cancer, heart disease, breast cancer, diabetes, Alzheimer’s. That is because if too many people with leukemia are in the securitization portfolio, and a cure is developed, the value of the bond would plummet.

If the sub-prime mortgage market boom is any indication, an increased demand for existing life insurance policies spurred by increased securitization would lead to widespread abuse and fraud–with policy originators faced with the same incentives that encouraged mortgage brokers to deceive borrowers with “teaser” interest rates that ballooned several years into repayment.

In this case, the victims would be the elderly, the sick, and those who depend on life insurance benefit payouts in the case of the death of a loved one.

A further element of instability would be added if life insurance-backed securities take off–the likely proliferation of illegal “stranger-owned life insurance” or “STOLI” policies.

A STOLI is a policy created when a broker or investor convinces someone, usually a senior citizen, to take out a life insurance policy, with the promise to sell it quickly for a one-time payment. According to Reuters, “The death benefits are immediately transferred to investors, usually hedge funds.”

The securitization of life insurance policies would likely lead to an increase in the number of illegal STOLIs, once the banks exhaust the possibilities of buying up existing, legitimate policies to package into securities. In turn, insurance companies would have an incentive to crack down on this practice to avoid paying death benefits to the investors, leaving the market prone to crisis.

Other challenges for a credit rating agency like DBRS include figuring out what “would happen if health reform passed, for example, and better care for a large number of Americans meant that people generally started living longer? Or if a magic-bullet cure for all types of cancer was developed?” These eventualities, while prolonging and improving the lives of millions, would be bad for investors’ bottom line.

The “potential risk for investors,” the Times continued, is that “some people could live far longer than expected. It is not just a hypothetical risk. That is what happened in the 1980s, when new treatments prolonged the life of AIDS patients. Investors who bought their policies on the expectation that the most victims would die within two years ended up losing money.”

According to an ABC News story:

The industry for selling life insurance [policies to investors] first sprang up during the AIDS epidemic of the late 1980s. “Companies loved AIDS because it was a predictable death sentence,” says Gloria Wolk, a life-settlement expert who learned about the practice while volunteering at AIDS services clinics. “The shorter and more certain the life expectancy, the higher the returns promised to investors and the greater the lump sum offered to patients. It was a grim mix of free-market capitalism and human mortality.”

Wolk nevertheless said she “saw the industry make a huge difference in the lives of terminally ill patients and their families”–by providing victims with funds to pay for the exorbitant health care and other costs associated with dying from AIDS, while it was ignored by a government run by Ronald Reagan.

The only conceivable defense of the practice of bundling life insurance policies into securities and selling them to investors to profit from the deaths of policyholders is that it enables those who sell their policies to get more than they would if they simply sold policies back to the insurance company.

But this option is only attractive because health care costs in the U.S. place quality care out of reach–for the nearly 50 million people without health insurance, and for tens of millions more who are insured, but can’t afford the co-pays and deductibles that pile up when they get sick or injured.

Similarly, for the elderly whose retirement savings have been eroded by the current crisis, the inadequacy of Social Security, and by the long-term shift from defined-benefit pension plans to 401(k)s based on the stock market, the main reason most would be tempted to sell their life insurance policies is that our government neglects to provide a decent standard of living for elderly workers who have outlived their usefulness to the exploiting class.

In other words, the market for securities backed by life insurance policies depends on the absence of universal single-payer health care for all and the lack of a sufficient social safety net for senior citizens.

Almost as disturbing as first-tier financial institutions betting on death is the matter-of-fact reporting of the New York Times.

The Times article, titled “Wall Street Pursues Profit in Bundles of Life Insurance,” ignores completely the question of the morality of human beings gambling on the lives of others, indexing the sick based on the nature of their affliction and when it is likely to kill them, and crossing their fingers that no cure for cancer is discovered. This is a brilliant illustration of Marx’s assertion that capitalism “has left no other bond between [people] than naked self-interest, than callous “cash payment.”"

It says a lot about capitalist society’s brutality and indifference to human life that the newspaper of record could cover this story without pause, going no deeper than the pros and cons from the perspective of investors–while “Ads by Google” accompany the story, inviting readers to “sell your life insurance policy” and “find low cost life insurance.”

Nor does the Times question the logic of devoting massive wealth to a market that creates no new value in the form of goods or services, and is of no use to anyone but the few who will profit from it.

According to the Times article, there are $26 trillion in life insurance policies in the U.S, and “some in the industry predict the market [for life-insurance-backed securities] could reach $500 billion.” That sum is nearly three times the total of all the budget shortfalls of every state government for fiscal year 2010.

A just society based on human need would use that $500 billion to preserve and expand essential services that are on the chopping block as states balance their budgets.

A just society based on human need would devote those resources not to betting on death, but providing top quality care to the sick, researching new cures and treatments (and making them available to all), and ensuring that the elderly live the last years of their lives in dignity and security.

According to the economic “experts,” the U.S. economy is beginning to “recover.” But the very nature of the recovery–a return to big bonuses and salaries for Wall Street executives alongside deepening and sustained unemployment, cuts in social services and health care “reform” that amounts to a massive government handout to the health insurance industry–demolishes any idea that the U.S. is not a class society.

It is time to build the socialist alternative. Our lives and dignity depend on it.

Even if the stock market can be shored up by more government borrowing for “stimulus” spending, it’s a temporary reprieve, because nothing can bring back the consumer purchasing power that was lost when the banks stopped pumping money into the economy through out-of-control mortgage lending. We simply no longer have the job base for people to earn the income they need to live.

The underlying cause of the crisis is in fact the debt-based monetary system, whereby the U.S. ruling class long ago sold out our nation and its people to the international banking cartel of which the Rockefeller and Morgan interests have been the chief representatives for over a century. It was lending on a previously unheard of scale for overpriced assets to people and businesses unable to repay that created the bubbles that burst in 2008, not only in the housing market but also in such areas as commercial real estate, equities, commodities, and derivatives. It was an explosion that reverberated throughout the world.

The Obama administration’s response to the crisis has been to print Treasury bonds both for the financial system bailouts and the sputtering Keynesian stimulus that so far has gone substantially into military infrastructure. This bond bubble is what I have referred to as “Obama’s Last Picture Show.”

Government debt is fundamentally inflationary. For a generation, the U.S. dollar has been inflating at an increasing rate, with the economy being kept in a growth posture by selling our debt instruments abroad or allowing foreigners holding dollars to purchase property and other assets on our own soil. The website EconomyinCrisis.org reports that in 2007, the most recent year for which data are available, “foreign entities spent $267.8 billion to acquire or establish U.S. businesses.”

Foreigners are spending their dollars as fast as possible, because they are now plummeting in value. It’s increasingly clear that sooner rather than later, the dollar will be dumped by foreign purchasers of bonds, particularly China, and possibly even the oil-producing nations.

These nations know full well that bonds denominated in dollars can never be completely repaid, even if the bonds can be rolled over into fresh debt. It’s this dynamic that is dragging the U.S. economy to the cliff, because real economic growth stopped long ago when our manufacturing jobs were exported. This is because most of the growth since Ronald Reagan was elected president in 1980 has been only on paper through financial bubbles. This included the dot.com bubble of the Clinton years that blew up in 2000-2001.

Now, after the Treasury bond bubble of 2009, there is nothing left in America to inflate. With so many jobs gone, the American family home was the last thing of value we owned.

So the air is going out of the tires. Americans who are struggling to work for a living are passive spectators as their jobs, savings, health insurance, pensions, and homes continue to erode in value or even disappear. Last Sunday the Washington Post reported a massive crisis in state and local government pensions. Reporter David Cho wrote, “The financial crisis has blown a hole in the rosy forecasts of pension funds that cover teachers, police officers and other government employees, casting into doubt as never before whether these public systems will be able to keep their promises to future generations of retirees.”

So what, if anything, can be done about it?

Well, the first thing an intelligent physician does is diagnose the disease. Thomas Greco, in his new book The End of Money and the Future of Civilization (Chelsea Green: 2009) , outlines the increasingly familiar story of how things got so bad, and he tells it as well as anyone has ever done. His style is precise and sometimes academic. Behind it, though, is a passion for truth and the type of rock-solid integrity that refuses to sugar-coat a very bitter pill.

More than that, Greco writes about how to change what has gone wrong. His credentials as an engineer, college professor, author, and consultant are impeccable. His book is among the most important written in this decade. It is truly a book that can alter the world and, if taken seriously, give large numbers of people a practical way to survive the gathering catastrophe.

But unlike most commentators, what Greco offers is not another phony prescription for what the financiers and government should do for us, whether through “restarting” lending or another round of stimulus spending. Rather it’s what we should do for ourselves, and could do much better, if we understood what to do and if big banking and big government just got out of the way.

As I said, at the root is the monetary system, whose failure cannot be understood without a history lesson. So Greco writes about the struggle between banking and democracy that took place in the 1790s when the ink on our new national constitution was barely dry.

It was Alexander Hamilton, the first secretary of the treasury, who compromised the new nation, through what he admitted was “corruption,” by giving the wealthy speculators in Revolutionary War bonds the benefit of federally-sponsored redemption and then by establishing the First Bank of the United States. This early drift toward elitist rule was opposed by Thomas Jefferson, James Madison, and others who figured in the creation of what later became the Democratic Party.

Greco writes: “While Jefferson favored a stronger union than that which emerged under the Articles of Confederation, he was vehemently opposed to the reconstruction of monarchic government on the American continent.” Hamilton had said frankly that the British monarchy was the best system of government known to man. Part of the monarchic system was the Bank of England, which Hamilton copied when setting up the First Bank.

But Jefferson, who repudiated Hamilton’s elitist platform, was elected president in what was then called “The Revolution of 1800.” Congress refused to renew the Bank’s charter by a single vote when it was up for renewal in 1811.

But the Second Bank of the United States was chartered in 1816 due to the government debt left behind from the War of 1812 against Great Britain. Thus was set up what became known as the “Bank War.”

It was President Andrew Jackson who dethroned the bankers from power by pulling government funds out of the Second Bank in 1833. Greco writes that in Jackson’s view: “The ‘Bank War’ was a contest for rulership—would the United States be governed by the people through their elected president and representatives, or by an unelected financial elite through their central bank instrument?”

The modern takeover began in earnest during the Civil War when Congress passed the National Banking Acts in 1863-64 which mandated use of government bonds as bank lending reserves, thereby creating a direct linkage between bank profits and the debt the government was starting to load on the shoulders of taxpayers.

The nation’s fate was sealed with the passage of the Federal Reserve Act in 1913. The deal was that the bankers would control the currency, and thereby the nation’s economy, while the government would be provided with an unlimited amount of inflated dollars to fight its wars.

The bookkeeper’s trick of creating money out of thin air, charging interest for its use, then forcing it down the throats of weaker nations by threat of violence, is what has allowed the Anglo-American empire, since the founding of the Bank of England in 1696, gradually to conquer the world. Though President Woodrow Wilson signed the Federal Reserve Act into law, he saw what that action meant. Greco cites Wilson as writing: “There has come about an extraordinary and very sinister concentration in the control of business in the country…. The great monopoly in this country is the monopoly of big credits.”

Among other ill effects, the system has ruined the value of the currency. The inflation caused by large issues of bank-created loans is seized upon by the government which goes along because inflation reduces the cost of its deficits. Investors buy Treasury bonds denominated in Federal Reserve Notes then watch their value evaporate over time. In fact Federal Reserve Notes have lost over 95 percent of their value since they were first introduced.

Moreover, it’s additional inflation caused by bank-generated interest that drives up the costs of goods and services, forcing everyone in the economy to try to defend themselves by raising their prices to the max. Greco spells this out too, which almost every economist in the world, with the exception perhaps of Australia’s James Cumes, overlooks.

Bank interest has other tragic effects. It was high interest rates, for instance, that destroyed the Idaho potato industry. A farmer from that region told me at a conference a few years ago that when interest rates skyrocketed in the early 1980s, he asked the president of one of the Federal Reserve Banks why they did it. The answer was they were “ordered” to raise interest rates by the international banking system.

Make no mistake, it’s the banking system, facilitated by the Fed, not unwary borrowers, who brought on the collapse of 2008.

Now, in 2009, the bankers, mainly those in the U.S., have so shattered the world economy by debt mounted on debt that there may be no reprieve except the creation of a slave society based on rule by the rich over the masses of whatever peons should happen to survive the downturn and its tragic effects on employment, health, the food and water supply, and even our ability to cope with climate change.

The political establishment, expressing itself in pronouncements by organizations like the Council on Foreign Relations, see a future, not of economic democracy or increased financial pluralism, but consolidation of world currencies into a small number overseen at the top by the world’s financial oligarchy. Citing the writings of Benn Steil, the CFR’s Director of International Economics, Greco writes: “The ostensible plan is to reduce global exchange media to three—one each for Europe, the Americas, and Asia. One might reasonably suppose that at a later stage, those three would be combined into one currency also under the control of the global banking elite.”

Greco concludes: “The New World Order is upon us.”

With ample justification, he even goes apocalyptic, citing The Book of Revelation in demonstrating the import on a spiritual plane of the elitist takeover: “And he causeth all, both small and great, rich and poor, free and bond, to receive a mark in their right hand or in their foreheads: And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name.” (Revelation 13: 16-17)

But is it really the end, or is there a new world waiting to be born? Greco thinks so. He speaks of the end of an era when unlimited economic growth fed by massive influxes of debt-based money is no longer sustainable. He writes: “That our global civilization cannot continue on its current path seems evident….But I think our collective consciousness is beginning to change. We are becoming aware of limits and are reaching that part of our evolutionary program that says, ‘Stop!’”

Part of the awareness of how to stop must focus on the institutions responsible for the crisis. Greco praises Ron Paul for calling out the Federal Reserve in the 2008 presidential campaign. He cites a statement Paul made to Federal Reserve Chairman Alan Greenspan in a 2004 hearing where Paul told Greenspan that the power of the Fed “challenges the whole concept of freedom and liberty and sound money.” Thus Paul and other monetary reformers, though largely ignored by the mainstream media and political establishment, have made it clear that change must start with what really lies at the bottom of elite control: how money is made and who makes it.

Unfortunately, few progressive economists, including Paul Krugman, Joseph Stiglitz, and Robert Reich comprehend the monetary causes of today’s disasters. Instead of demanding reforms that would make money the proper servant of a sustainable economy, most call for more stimulus spending; i.e., more government debt, along with “reform” of a financial system that is corrupt down to its very DNA.

So do we really need the bankers’ fake currency, today backed by nothing but a federal deficit of $12 trillion and growing by the day?

Greco says we don’t, and this is what his book about. But it’s not about doing without the necessities of life, or heading for the hills with a gun and backpack. Nor is it about important efforts at macro-level monetary reform like those of the American Monetary Institute, Congressman Dennis Kucinich, or advocates for a basic income guarantee. Rather it’s about individuals, groups, and communities taking control of the monetary system at the grassroots level and creating an entirely new basis for trade than bank-owed debt.

Greco writes about “a new paradigm approach to the exchange function.” The solution, he says, “is to provide interest-free credit to producers within the process of mutual credit clearing. That is the process of offsetting purchases against sales within an association of merchants, manufacturers, and workers. It will eventually include everyone who buys and sells, or makes and receives disbursements of any kind.”

Greco is one of the world’s leading experts in describing alternative or complementary currencies. These are self-regulating systems that facilitate “reciprocal exchange,” not using government legal tender but which are still allowed under the currency laws so long as taxes are not evaded.

Greco discusses the large and growing worldwide “LETS” movement—Local Exchange Trading Systems, like the Ithaca HOURS system in Ithaca, New York. He describes the Swiss WIR Bank, the longest-running credit clearing system in the world, with over 70,000 members. He writes about the national and international barter exchanges that involve over 400,000 businesses trading at an annual level of $10 billion.

Greco also describes the world-famous Mondragon Cooperatives from the Basque region of Northern Spain. Started by a Roman Catholic priest in 1941, the Mondragon system, he says, is “the hub of what is probably the most successful and progressive social cooperative economy in modern history.”

He also tells the inspiring story of the Argentine trading clubs—the trueques—which, when used with “provincial bonds” issued by regional governments, rescued that country during the 2001 economic collapse brought on by the collusion between the Argentine government and the International Monetary Fund.

Credit clearing is not new. Greco traces it to the medieval European fairs. These exchanges are like banking clearing houses. The world’s largest is the automated clearing house—ACH—operated by the Federal Reserve.

But as Greco points out: “The clearing process need not be restricted to banks; it can be applied directly to transactions between buyers and sellers of goods and services. The LETS systems that have proliferated in communities around the world use the credit clearing process, as do commercial trade exchanges. Credit clearing systems are, in essence, clearing houses—but their members are businesses and individuals instead of banks.”

Alternative currency and trading systems, says Greco, are the wave of the future. Even though most only mount up to partial local successes, they show what can be done. Greco likens these efforts to the Wright Brothers’ first flight that covered 120 feet. They show, he says, that the potential exists for local, regional, then national and international money-free exchanges that eventually could be joined by a single web-based trading platform. This could eventually get rid of the corruption of debt-money altogether.

Chapter 16 of the book is about “A Regional Economic Development Plan Based on Credit Clearing” that shows the potential. Greco writes, “The credit clearing exchange is the key element that enables a community to develop a sustainable economy under local control and to maintain a high standard of living and quality of life.”

This would be a real revolution. What can governments do to help? Perhaps only by removing, as Greco recommends, the privileged position of bank debt-money as legal tender. Instead, let bank money compete with market-based alternative currencies and credit exchanges, if it can.

Greco’s book is a how-to-do-it manual that updates and expands on his previous books, Money and Debt: A Solution to the Global Crisis, New Money for Healthy Communities, and Money: Understanding and Creating Alternatives to Legal Tender. Greco also operates a website that offers advice and support to worthwhile community initiatives.

My own view is that no one should wait to see who takes the lead in creating the monetary and credit-clearing systems of the future. The time is now. There is no more reason to delay. If the people of the world do not join together in this kind of action, they can likely kiss their economic future and perhaps their livelihoods good-bye. The controllers of the world, those with the big money, the ones who run the banking systems, who own the global corporations, and who finance politicians like Obama, the Bushes, and the Clintons, are now poised in their blindness to extinguish the light of democracy on the planet for good.

Greco is implying that the power of the elite is not only dated but illusory. Thus the way to proceed is not just to oppose them. If they are opposed, they’ll do what they always do, which is to roll out the SWAT teams, the military in the streets, the tear gas, the sound cannon, the concentration camps, the Patriot Acts, the torture chambers, because that is all they know, and it’s what they do best.

The money monopoly translates into a monopoly on violence on an ascending scale. We know that the U.S. sells more weapons abroad than any other nation, and we know that it is war above all that makes the bankers rich.

So let them have their weapons and wars. With all due respect to those brave enough to protest, it’s time for people simply to walk away and set up their own economic and monetary systems as a prelude to a rebirth of humanity as ethical beings in sustainable communities of choice.

The keys, says Greco, are simple: “Promote the establishment of private complementary exchange systems—and use them. Buy from your friends and neighbors wherever possible. Contribute your time, energy, and money to whatever moves things in the right direction.”

Greco also recommends that the unit of exchange for alternative currencies be based on the value of commodities—not necessarily gold or silver, which bankers and governments manipulate, but those commodities readily available within a trading system. State and local governments should do everything possible to protect, encourage, nourish, and participate in these systems.

The irony is that what may appear on the surface to be technical changes in how the exchange of goods and services takes place can have such profound effects. The answer is that systems of exchange reflect entirely different perceptions of the world. Bank-money exchange reflects and creates a system of elite control and human slavery. Reciprocal credit exchange reflects and creates a democratic system on a level monetary playing field.

The difference points to the fact that such reform is, above all, a spiritual endeavor. Thomas Greco has devoted decades to this quest and is one of its foremost visionaries. In an Epilogue he writes: “We will either learn to put aside sectarian differences, to recognize all life as one life, to cooperate in sharing earth’s bounty, and yield control to a higher power—or we will find ourselves embroiled in ever-more destructive conflicts that will leave the planet in ruins and avail only the meanest form of existence for the few, if any, who survive.”

It’s a vision we can all strive to embrace.

Take the case of Elliot Madison. The 41-year-old anarchist was arrested in Pittsburgh September 24 at the height of G20 protests.

Madison, a social worker and volunteer with The People’s Law Collective in New York City, was busted by a combined task force led by the Pennsylvania State Police (PSP) and Pittsburgh’s “finest.” The activist was charged with “hindering apprehension or prosecution, criminal use of a communication facility and possession of instruments of crime,” according to The New York Times.

Did the cops uncover a secret anarchist weapons’ cache? Were Madison and codefendant, Michael Wallschlaeger, a producer with the radio talk show “This Week in Radical History” for the A-Infos Radio Project, about to detonate a “weapon of mass destruction” during last month’s capitalist conclave that witnessed the obscene spectacle of our masters avidly conspiring to impoverish billions of the planet’s inhabitants?

Hardly! In fact, Madison and Wallschlaeger’s “crime” was to set up a communications center in a hotel room that alerted demonstrators to movements by the police, who after all, had viciously attacked protesters–and anyone else nearby–with heavy batons, tear gas and a Long Range Acoustic Device (LRAD), a so-called “non-lethal” weapon.

Kitted-out with police scanners, computers and cell phones, the intrepid activists used a Twitter account to assist protesters eager to elude a thrashing by some 5,000 heavily armed camo-clad cops who had sealed-off downtown Pittsburgh to keep the area safe–from the First Amendment.

National Lawyers Guild on-scene legal observers reported an “unwarranted display and use of force by police in residential neighborhoods, often far from any protest activity.” According to the civil liberties’ watchdog group:

Police deployed chemical irritants, including CS gas, and long-range acoustic devices (LRAD) in residential neighborhoods on narrow streets where families and small children were exposed. Scores of riot police formed barricades at many intersections throughout neighborhoods miles away from the downtown area and the David Lawrence Convention Center. Outside the Courtyard Marriott in Shadyside, police deployed smoke bombs in the absence of protest activity, forcing bystanders and hotel residents to flee the area.

Later, while some protests were ending, riot-clad officers surrounded an area at the University of Pittsburgh, creating an ominous spectacle that some described as akin to Kent State. Guild legal observers witnessed police chasing and arresting many uninvolved students.

Among other questionable tactics, officers from dozens of law enforcement agencies lacked easily-identifiable badges, impeding citizens’ ability to register complaints. (National Lawyers Guild, “National Lawyers Guild Observes Improper Use of Force by Law Enforcement at the G-20,” Press Release, September 25, 2009)

The Times reported that after his arrest the FBI raided the home that Madison shared with his wife, Elena, and conducted an exhaustive 16-hour search of the premises seizing computers, books and a poster (horror of horrors!) of the old mole himself, Karl Marx.

Criminalizing the First Amendment

“Anyone can tweet, but the truth is, sometimes speech can be criminal,” John Burkoff, a professor at the University of Pittsburgh School of Law, told The Pittsburgh Post-Gazette.

By that standard, anyone who has the temerity to question the legitimacy of a system that drives millions into poverty, wages preemptive war to secure (steal) other people’s resources, destroys the environment or uses “speech” to oppose said crimes against humanity–and cheekily urges others to do the same–is, by definition, guilty, in “new normal” America.

Witold Walczak however, the legal director of the Pennsylvania American Civil Liberties Union told the Post-Gazette, “investigating the government and broadcasting information about it would seem to be a constitutionally protected communication.”

The ACLU director elaborated, “If the police want to communicate privately, there are certainly ways to do that, and police radios are not one of those. How can it be a crime? It’s not a secure communication.”

The good professor had another take on the matter and told the Post-Gazette, “Were they sending it to people simply to protest, or to commit further crimes?”

“Further crimes”? What crime? Oh yes, legally protesting the depredations of the capitalist system, that crime!

That such a statement can be uttered by a purported legal expert is rather rich with unintended irony. Burkhoff’s maneuver to cast the best possible light on repressive police operations is all the more absurd given the fact that none other than the Obama administration’s State Department had stepped-in and pressured Twitter to forego a service upgrade, and downtime, just scant months earlier.

But context as they say, is everything. Champions of other people’s freedom (particularly when they are geopolitical rivals), the State Department intervened and told the instant messaging service in no uncertain terms that Iranian protesters relied on Twitter to monitor police movements in Tehran and other cities as protests over disputed elections took center stage in the Islamic Republic.

The New York Times reported back in June that the U.S. State Department “e-mailed the social-networking site Twitter with an unusual request: delay scheduled maintenance of its global network, which would have cut off service while Iranians were using Twitter to swap information and inform the outside world about the mushrooming protests around Tehran.”

According to Reuters, “Confirmation that the U.S. government had contacted Twitter came as the Obama administration sought to avoid suggestions it was meddling in Iran’s internal affairs as the Islamic Republic battled to control deadly street protests over the election result.”

Twitter said in a blog post it had delayed the firm’s planned upgrade because of its role as an “important communication tool in Iran.”

A day earlier, President Obama had said he believed “people’s voices should be heard and not suppressed”–in Iran.

Message to the American people: Official enemy: Twitter good! Official friend (grifting multinational corporations and the criminals who do their bidding in Washington): Twitter bad! How’s that for an imaginative interpretation of the “new media paradigm”!

“Go massive. Sweep it all up. Things related and not”

Echoing the execrable logic of former Defense Secretary Donald Rumsfeld, America’s premier political police force, the FBI, executed a search warrant on Madison that authorized agents to look “for violations of federal rioting laws,” according to the Times.

Madison’s attorney, Martin Stolar, told the Times that “he and a friend were part of a communications network among people protesting the G-20.” Denouncing the raid, Stolar averred that “there’s absolutely nothing that he’s done that should subject him to any criminal liability.”

On October 2, Stolar argued in Federal District Court in Brooklyn “that the warrant was vague and overly broad. Judge Dora L. Irizarry ordered the authorities to stop examining the seized materials until Oct. 16, pending further orders,” the Times reported.

This is not the first time however, that the secret state has sought to curtail text messaging by activists during large-scale demonstrations.

In 2008, as a result of the heavy repression of legal protests–and subsequent lawsuits by victims–during the far-right Republican National Convention in New York City in 2004, lawyers representing N.Y.’s “finest” demanded that M.I.T. graduate student Tad Hirsch and the Institute of Applied Autonomy, the inventors of TXTmob, turn over all “text messages sent via TXTmob during the convention, the date and time of the messages, information about people who sent and received messages, and lists of people who used the service,” The New York Times reported last year.

The FBI however, already possess the technological ability to hack into Wi-fi and computer networks as Wired revealed in April, citing internal Bureau documents released to the magazine under a Freedom of Information Act request.

According to a follow-up story by the publication, the Bureau’s Cryptographic and Electronic Analysis Unit, CEAU, has deployed software called a computer and internet protocol address verifier, or CIPAV, that is “designed to infiltrate a target’s computer and gather a wide range of information, which it secretly sends to an FBI server in eastern Virginia.”

Antifascist Calling reported in 2008, that when a whistleblower, security consultant Babak Pasdar, stepped forward and blew the lid off the Bureau’s massive telecommunications’ surveillance network, the agency’s so-called “Quantico circuit” in Virginia, he revealed that major wireless providers, including AT&T, Sprint and Verizon, had handed the state “unfettered” access to the carrier’s wireless networks, including billing records and customer data “transmitted wirelessly.”

According to Pasdar’s sworn affidavit, Verizon provided the FBI with with real-time access to who is speaking to whom, the time and duration of each call as well as the locations of those so targeted.

The Electronic Frontier Foundation (EFF), the San Francisco-based civil liberties’ watchdog group, has posted Madison’s motion and his attorney’s supporting declaration on their web site. It makes for very interesting reading indeed! According to the search warrant obtained by FBI Special Agent Edward J. Heslin from the U.S. District Court, the FBI were allowed to seize:

Computers, hard-drives, floppy discs and other media used to store computer-accessible information, cellular phones, personal digital assistants, electronic storage devices and related peripherals, black masks and clothing, maps, correspondence and other documents, financial records, notes, ledgers, receipts, papers, photographs, telephone and address books, identification documents, indicia of residency and other documents and records that constitute evidence of the commission of rioting crimes or that are designed or intended as a means of violating the federal rioting laws, including any of the above items that are maintained within other closed or locked containers, including safes and other containers that may be further secured by key locks (or combination locks) of various kinds. (Honorable Viktor V. Pohorelsky, Magistrate Judge to FBI Special Agent Edward J. Heslin, United States District Court, Eastern District of New York, Search Warrant, Case Number M-09-962, September 26, 2009)

Madison’s attorney, Martin Stolar averred that “a number of documents and other properties” seized by the FBI have “nothing to do with the governments investigation into what the search warrant characterizes as violations of ‘federal rioting laws’.”

According to Stolar “the seized items include political writings, notes, political associates and ideas, materials protected by the attorney-client and social work privileges, as well as property belonging to other persons residing in the premises which have no connection to any pending or contemplated criminal investigation.” Stolar declared that “the illegality of the search is in the overbreadth of the seizures and the vagueness of the term ‘federal rioting laws’.”

In other words, driftnet surveillance of American citizens is the norm for our secret state minders; an unambiguous sign of America’s slide into an extra-constitutional police state.

Fusion Centers: Leading the Charge

While Madison and Wallschlaeger’s arrest came as a result of actions undertaken by the Pennsylvania State Police, one cannot rule out that (a) informants had tipped off the cops to the pair’s activities, (b) CEAU had penetrated protest organizer’s computer net and therefore, were well aware of what the duo were up to, or (c) through some combination of the above, the FBI and presumably, their local fusion center allies, alerted PSP who then conducted the raid and shut the anarchist’s communications center down.

Federal Computer Week noted September 30, that the Department of Homeland Security “is establishing a new office to coordinate its intelligence-sharing efforts in state and local intelligence fusion centers,” and that the secret state’s new “Joint Fusion Center Program Management Office will be part of DHS’ Office of Intelligence and Analysis.”

Among other things, the publication revealed that DHS Secretary Janet Napolitano said the new office will:

• Develop ways to assess threats and trends by gathering, analyzing and sharing local and national information and intelligence through fusion centers.

• Coordinate with state, local and tribal law enforcement leaders to ensure that DHS is providing the correct resources to fusion centers.

• Promote a sense of common mission and purpose at fusion centers through training and other support. (Ben Bain, “DHS established new office for intelligence-sharing centers,” Federal Computer Week, September 30, 2009)

Since Bushist–and now, Obama–securocrats designated fusion centers “a central node for the federal government’s efforts for sharing terrorism-related information with state and local officials,” the federal government has pumped some $327 million in taxpayer-funded largesse into these spooky “public-private partnerships.”

In Pennsylvania for example, the Criminal Intelligence Center (PaCIC), is described by the Electronic Privacy Information Center (EPIC) as a “component of the Pennsylvania State Police.”

Washington Post investigative journalist Robert O’Harrow Jr., the author of No Place to Hide, revealed that “Pennsylvania buys credit reports and uses face-recognition software to examine driver’s license photos” and have “subscriptions to private information-broker services that keep records about Americans’ locations, financial holdings, associates, relatives, firearms licenses and the like.”

One can only wonder whether these or other intrusive surveillance tools, including the CEAU’s CIPAV software were deployed against Madison and Wallschlaeger prior to their Pittsburgh arrest.

But gathering information on fusion centers is often an exercise in Kafkaesque futility. Investigative journalist G.W. Schulz reported that when the Center for Investigative Reporting (CIR) attempted to obtain information from the Colorado Information Analysis Center on that state’s fusion center, they ran into a brick wall.

CIAC spokesperson Lance Clem refused to release what should be public documents to CIR claiming that releasing the records would be “contrary to the public interest” and “not only would compromise [the] security and investigative practices of numerous law enforcement agencies but would also violate confidentiality agreements that have been made with private partner organizations and federal, state and local law enforcement agencies.”

As of this writing, it cannot be determined with any certainty what role the Pennsylvania Criminal Intelligence Center played in repressing G20 protests. However, if past fusion center practices in Denver and St. Paul during last year’s Democratic and Republican National Conventions are any guide, their management of pre-G20 intelligence along with their federal partners, was in all probability considerable.

One lesson that can be gleaned however, from the federal witch hunt targeting activists Elliot Madison and Michael Wallschlaeger, is that dissent in post-9/11 America, as during the COINTELPRO-era of the 1960s and ’70s, has been criminalized.

“O.K., my little Veggies,” he asked, “what important lesson have we learned from this cautionary tale?”

Peter Parsnip was the first to germinate a reply, “That animals can talk!” he shouted with flatulent enthusiasm.

“Fair enough,” responded farmer Midland, barely concealing his highbrow contempt. “What else?”

“That pigs like to wear clothes and get drunk,” offered Spudwell Potato Head, one of the simpler complex carbohydrates on this or any corporate farm. Midland’s eyes rolled involuntarily as he grimaced ever so slightly. Frankly, he was beginning to question the wisdom of reading allegorical literature to life forms as congenitally unsophisticated as vegetables. Just at that moment, however, he was pleasantly surprised by a bright green head of lettuce.

“We learned that socialism is evil,” said Mr. Green the Head Lettuce thoughtfully.

The ebullient farmer unleashed a toothy grin that spanned from ear to ear. “Exactly!” he exclaimed.

Unfortunately, the profundity of Head Lettuce’s revelation was clearly lost on the rest of the audience, which remained in what can best be described as a persistent vegetative state. Undaunted, Farmer Midland sought to capitalize on what he at least viewed as a teachable moment.

“In fact,” he began, “the animals in this story represent the unbridled lust for power of an out-of-control government bureaucracy.”

“But Mr. Midland, sir, wasn’t it the animals who were suffering at the beginning of the book?” inquired a somewhat naive bale of new mown hay. “I mean, obviously horses and cows are evil, but I actually felt sorry for the cats and dogs on that farm. Wasn’t Mr. Jones kinda mean to them, too?”

At this point, the sycophantic Mr. Green intervened to buttress his corporate master’s argument. “Admittedly, this particular farmer may not always have acted in the interest of his livestock, but we should be careful not to extrapolate generalities from any one individual case…” As Head Lettuce searchingly scanned the crowd of crudités and locked eyes with of a bunch of carrots, he could see they were thickly glazed.

Meanwhile, Farmer Midland lost no time in resuming the rhetorical offensive. “Look, whatever you think of Mr. Jones’s actions in the story, you must admit they indicate he was under a lot of stress due to unwarranted government interference in his business. Government regulators not only unfairly penalized Jones for storing raw pork in an unrefrigerated warehouse warm enough to incubate flies, they further hampered his profit-making ability by restricting the sale of meat from diseased animals too sick to lift themselves off the ground.”

“There’s one thing I still don’t understand, though,” interjected Rudy Rutabaga. “Are you saying that when the animals in the story chased the farmer away, that was kind of like the government taking over the farm?”

“That’s right, rootboy,” chimed in Mr. Green, running out to patience. “Remember, all you need to know is this:

“1) Animals make up the government;

“2) Animals eat plants (i.e., us); therefore,

“3) The government will eat us if we let them.”

The medley of mixed vegetables wilted in horror. “Then who can we turn to to protect us from the government?”

“That’s where we farmers come in,” declared Mr. Midland proudly. “We represent the free market garden established to serve your unhybridized ancestors, the cause for which so many of them were willing to be sliced, diced, mashed, and pureed. So don’t let their sacrifice be in vain. Take my advice: gather up your fiber, lock tendrils together, go march into those livestock pens while you still can, and show those government farm animals who’s boss!”

After some initial debate, the intrepid vegetables finally agreed with Mr. Midland and Mr. Green, and resolved that they’d better act quickly if they were going to save themselves. So they formed up in ranks, raised up a mighty battle cry, and charged off into the holding pens where they were immediately trampled and eaten by the grateful livestock.

“Now all we have to do is drag these government animals into the bathtub and drown them,” said Farmer Midland with a wry smile. “Then we can enjoy a proper feast.”

Mr. Green laughed nervously. “How do I know you won’t try to eat me?” he asked.

Mr. Midland was quick with his answer. “That’s simple. You remind me too much of money, and only a fool devours the thing he loves.”

Upon hearing this, the head of lettuce breathed a miasmic sigh of relief.

“Besides,” the farmer added, almost as an afterthought, “salad sucks.”

If one explores this idea in the context of recent history both on Wall Street and in Washington’s current overseas adventures, it become clearer why very few folks in Imperial Washington — though not in the rest of the country — want to get out of Iraq or Afghanistan. The projection of military power overseas becomes compensation for the shrinking economic power of Wall Street. Liberal and right-wing believers whose stock in the church of capital has fallen can still feel good about themselves as long as their mission continues overseas against the Muslim and peasant hordes. As for the heretics within, let the loudmouth preachers of right wing radio condemn those citizens to the mercies of the angry white men and Sarah Palin — their Joan of Arc. Once the heretics have been burned at the stake of right wing rhetoric, the armies of the right will end their Tea Parties, pick up their weapons and take back the White House, installing a white person back in the Presidential bedrooms. Once done, that black man who’s in those bedrooms right now would no longer be a threat, having been emasculated just like a Scottsboro Boy.

So, while Mr. Obama (that black man) ponders whether or not he should continue the US projection of power into Afghanistan begun by his predecessor, Texan George Bush, or pull out, one wonders if Obama is part of the hunting party on par with the plantation’s generals or is he just the guy who must retrieve and dress the kill?

If he accepts General McChrystal’s call for more troops and the consequent increase in bloodshed, does Obama then become a trusted equal to the generals or the Pentagon’s Stepin’ Fetchit? If he rejects this and future calls to escalate this fruitless war, will he be sent back into the kitchen to wait for the bell telling him to bring out the next course or will it represent a defeat for the current crop of General Custers?

Then again, there’s the Biden option. This proposal would repackage the war in Afghanistan under its original wrapping as part of the “war on terror.” This repackaging would require a bit of convoluted convincing since national security adviser Ret. General James Jones told the media that “fewer than 100 Al-Qaida (the bogeymen of Islamic terror) are operating in Afghanistan.” Of course, the hawks in DC counter this statement with the argument that it is precisely because there are US troops in Afghanistan that Al Qaida’s strength has diminished. However, the fault in this line of reasoning can be found in the supposition of its supporters that the Taliban must be defeated to keep Al Qaida on the run. Why? Because at the same time that Al Qaida’s activities in Afghanistan have diminished, the strength of Taliban and other resistance forces have grown. In other words, even though Al Qaida forces have almost ended operations in Afghanistan, the resistance to western occupation has grown.

Then there’s the question of Pakistan. In recent weeks, US officials have begun to suggest the existence of a Taliban formation in the Baluchistan province of Pakistan. Furthermore, US Ambassador Anne W. Patterson and a junior US diplomat — Deputy Head of Mission Gerald Feierstein in Pakistan — have threatened US air strikes on the city of Quetta where this grouping — called the Quetta shira by western media — are supposed to be quartered. These threats have been met by calls for the expulsion of these diplomats in at least one Pakistani media outlets. If US troop numbers are increased in Afghanistan, the staging of a ground invasion into Waziristan or Baluchistan or air strikes not carried out by drones launched in Nevada becomes that much easier. If changing the situation in Pakistan is a dominant reason for the current debate over mission and troop numbers in Afghanistan and the battle in Afghanistan is considered just part of that equation, then there is little doubt that US troops will remain in that country for the foreseeable future. Furthermore, the likelihood of their numbers increasing becomes even greater. On Monday Obama said withdrawal from Afghanistan wasn’t an option. Bearing in mind Lao Tzu’s observation that he who rejoices in victory delights in killing, this writer awaits.

But, aren’t tough times good for union organizing? Unfortunately the answer, so far in this economic crisis, is no. So far there has been no rush to join unions, no mass mobilizations of the unemployed and no growth of militancy of any kind. Perhaps if the crisis continues workers will once again become militant, just like in the Depression of the 1930s when it wasn’t until five years into the economic crisis that there was an explosion of organizing, which included sit-down strikes, factory occupations, mass political movements and the creation of huge new industrial unions.
But it won’t happen without hard work.

The truth is the Depression only became “good times” for union organizing once millions of workers had lost faith in capitalism. The truth is unions grew along with political movements that claimed to offer alternatives to capitalism. And there is every reason to believe the same will be true today.

Why is this so? Because if workers believe in capitalism, or are satisfied by their personal situation under capitalism, they are more likely to buy into the ideas of capitalism. And joining a union is not at the top of the list of things recommended by Ayn Rand or the Wall Street Journal. In fact, ideologues of the system usually claim unions and collective bargaining to be an illegitimate interference in the “proper” working of capitalism.

In other words, organizing a union is seen as a challenge to the rules of capitalism. This is true despite the motivations of actually existing unions, some of which claim to be “just part of the system.”

The key to most successful union organizing drives is motivated members, both in the organizing target and in the larger union. History and common sense tell us that the number of people committed to union organizing rises and falls in inverse proportion to the popularity of capitalism. The more people are dissatisfied with capitalism, the more people believe another economic system is possible and unions can help bring about change, the more people will be motivated to put themselves on the line to build unions.

In other words, if we want to grow our unions, if we want to organize the unorganized, we need to focus on the flaws of capitalism and begin defining an economic system that is a realistic and attractive alternative.

The good news is there seems to be a vast and growing discontent with the existing economic system as shown by the opening this weekend of Michael Moore’s new film, Capitalism: A Love Story and the popularity of books such as Naomi Klein’s The Shock Doctrine.

The more difficult task, however, will be describing an alternative that is both attractive and realistic. We need to develop a vision of a better system that can be a powerful motivation to do the hard work that is necessary to create a better society.

If people think capitalism is the best that is possible, of course they will continue to follow the true believers in the system. If people believe there is no better way, disenchantment with the existing capitalist system will breed nothing more than cynicism and a retreat to private spaces. In fact, that is the result purveyors of capitalism are banking on.
It is time for unions and our allies to offer hope that a better world is possible. Professing loyalty to a sick system that glorifies greed and promotes war will only make the rut we are in deeper.

It’s time for unions to regain their momentum by offering a vision of society in which one person one vote is the basis of both our political and economic system.

It’s time for economic democracy.

Ironically, the Fed’s original plan for the TALF would have involved a $20 billion loan from the Treasury levered 10 to 1 to provide up to $200 billion in funding support for applicants. In other words, the Fed was planning to borrow money, to lend to people (investment banks and hedge funds) who were borrowing money to lend to people who were borrowing money (consumer credit cards, mortgages, car loans etc). Read that sentence again to fully appreciate how utterly fouled up the credit system really is. The Fed and Treasury are like private equity hucksters overseeing an inherently corrupt and immoral system. Michael Moore is right.

Fortunately, Bernanke’s plan to rebuild securitization has no chance of succeeding. The system can’t be restored because it required conditions which no longer exist; a strong currency, mega-surplus capital, and credulous investors who were unaware of the implicit risks of illiquid assets. Today, the dollar is wobbly, money is tight, and the pool of dupes ready to be fleeced has been greatly reduced. The notion that Wall Street can better perform the tasks traditionally left to highly-regulated banks, has also been called into question and rightly so. Unfortunately, the largest banks in the country — which have transformed themselves into investment casinos — don’t have the ability to return to the more conservative model of long-term lending to qualified applicants. They are stuck in a post-Glass Steagall mold, incapable of turning a profit on conventional loans to consumers and businesses. There’s a glaring need for some opportunistic entrepreneur (Warren Buffet?) to step into the breach and create a bank where depositors feel comfortable leaving their life savings knowing their bank is at least a notch-or-two above a Monte Carlo roulette table.

Bernanke will not give up the hope of resuscitating securitization because the financial mandarins who employ the Fed chief see it as an exportable model which will give them greater control over the global financial system. This is not taken lightly by the powers behind the curtain. The beauty of securitization is its utter simplicity; it simply transfers the authority to generate credit (money) from highly-regulated banks to rogue players in the shadow banking system. By borrowing short to invest in dodgy long-term assets, fund managers and PE smarties are able to expand credit to unimaginable levels, skimming off fat bonuses and salaries for themselves while the monster bubble limps slowly towards earth.

This is the system that Bernanke is trying to electroshock back into consciousness, albeit with negligible results. The Fed is essentially pumping blood into a corpse hoping for some fleeting sign of life. But dead is dead. Capitalism requires capital. This is the disturbing truth behind securitization — which was not developed to allocate resources to productive activity more efficiently but to allow credit expansion on smaller and smaller chunks of capital, further enriching a handful of well-connected speculators. This is the sole function of off-balance sheets operations and unregulated derivatives — to conceal the abysmal lack of capital that supports the debt. When trillions of dollars in complex debt-instruments, derivatives contracts, and loans to unqualified applicants are stacked atop a tiny scrap of capital, disaster is inevitable.

Bernanke is now busy sifting through the rubble trying to reassemble Wall Street’s Golden Goose for one-last wild credit fling, but with no luck. So far, he’s come up snake-eyes, which is probably best for everyone.

What’s worse? Seeing animal and environmental advocates drawn into this dangerous game. Activists try to improve husbandry practices or promote supposedly sustainable animal farms because it’s an easier sell than the go-vegan-or-else approach; but many experienced and thoroughly practical gardeners consider dabbling in animal agribusiness reforms misguided.

In 1944, when just over two billion people occupied the planet and before the era of mass-scale industrial farming, Donald Watson and a few like-minded people founded The Vegan Society based on the opinion that the truly idyllic and sustainable animal farm didn’t exist in the early 1900s, and never will. Watson was a vegan-organic gardener — steering clear of animal manure, bonemeal and blood, and instead using compost for fertility. Why aren’t more animal and environmental advocates following this example?

In the 1970s, Peter Singer’s Animal Liberation (followed by Animal Factories, authored with Jim Mason in 1980) described large animal processing plants as horrifying places; but Singer has steadfastly maintained that breeding and killing can co-exist with the idea of treating animals fairly. In other words, Singer appears to believe that the animal factory, not animal farming per se, constitutes the ethical problem. Singer is often credited with propelling the animal-rights movement; but by framing advocacy as a challenge to factory farming, Singer interrupted vegan activism.

Today, major grocery chains are asking producers to be less like assembly lines and more like old times — then cashing in. Whole Foods Market claims “to assist and inspire ranchers and meat producers around the world to achieve a higher standard of animal welfare excellence while maintaining economic viability.” Peter Singer, together with an alarming number of animal-protection groups, endorsed Whole Foods’ Animal Compassion Foundation, which turned out to be quite lucrative in North America — and beyond. “Sausages made from humanely treated animals,” the Guardian Observer announced in early 2006, summing up the hype surrounding Whole Foods Market’s British debut.

Pig Business, aired on British television just this summer, is a much-heralded documentary by Tracy Worcester, who has worked on behalf of Friends of the Earth. Brimming with disturbing images (some of which were excised for the television audience), the film decries pig crates, rough handling, and cheap meat. Worcester points out that foreign pigflesh — from the US-based multinational Smithfield, for example — would fail British expectations of handling and housing standards. The film’s promoters laud small farms and local butchers. Agreeing is Zac Goldsmith, former editor of Ecologist magazine and now Conservative Parliamentary candidate for Richmond Park, London: “I think small farming in a localised economy is the answer.” Goldsmith cites Pig Business as helping to “address the unfairness of the system allowing local farmers to be out competed [sic] by cheap imports of much lower standard.”

“I think we all fundamentally like pigs, don’t we?” asks Tracy Worcester, who is married to Henry Somerset, Marquess of Worcester — heir of the Duke of Beaufort and a farmer. But is this factory-crit trend its own form of denial? Worcester will eat bacon, the Telegraph assures its readers — as long as it’s from “really, really happy pigs.”

Those pigs aren’t happy, dear readers; they’re dead. Meanwhile, all this idyllic farming of the affluent people, by the affluent people, for the affluent people pushes free-living animals out of once-thriving biocommunities to make room for the supposedly thrilled pigs. Moreover, animal agribusiness is notorious for its heavy use of fuel to transport crops and animals from place to place.

To get around that, our affluent role models give us the “locavore” trend — exhorting us to buy dairy, eggs, and animal flesh as well as vegetables from area farmers or hobby farms, and to eat roasts and quiches at restaurants with local sources. But even Forbes has run an opinion piece questioning these ideas, citing a study by Rich Pirog of the Leopold Center for Sustainable Agriculture that connects transport to just 11% of food’s carbon footprint. “No matter how you slice it,” the comment observes, “it takes more energy to bring meat, as opposed to plants, to the table. It takes 6 pounds of grain to make a pound of chicken and 10 to 16 pounds to make a pound of beef.”

The conclusion? “If you want to make a statement, ride your bike to the farmer’s market. If you want to reduce greenhouse gases, become a vegetarian.”

The word “vegan” would have been more straightforward, because egg companies use space and feed and are significant polluters; dairy cows, who live longer than beef cattle and are overfed to stay as productive as possible, are associated with high methane emissions and feed demand. If you really want to reduce greenhouse gases, become a vegan.

And support vegan-organic growers. They’re offering a new path for the human journey. They’re cultivating respect, shielding and celebrating the freedom that’s still possible for animals who live in local ecologies. They are genuine liberators, freeing the land from grazing and fodder production, taking no more water than necessary, avoiding pollution, and returning part of the harvest to other beings and to the land. They know much of global grain harvest is fed to domesticated animals, and that feed crops are invasive — planted where rainforests once flourished. They know financially well-off regions siphon vast quantities of grain unnecessarily from others, and that animal husbandry puts enormous pressure on the world’s water. They point to a way out of these problems.

Activists who prefer to pursue humane animal agribusiness say we must do something for animals suffering in factory farms right now. Some think vegan education is just too slow, or that a vegan humanity isn’t possible anyway. They sound like realists, so they’re pretty effective at making vegans sound marginal. But are they right?

Copernicus must have felt marginal in a society that generally assumed our planet was the central fixture in the cosmos. Relatively quickly in the course of history, humanity’s perspective was radically changed; likewise, the vegan movement offers a fresh perspective, and it’s poised to make human the supremacist view obsolete. Environmentalists have discovered how incorrect that old view is. Earthworms, bees and other supposedly insignificant beings are now understood as enormously influential in the biocommunity. Meanwhile, the vegan philosophy has posited that we cannot give animals some kind of moral rank; all are entitled to live on their own terms, bees and earthworms included.

We all have the wonderful potential to accept this philosophy today. Trying to get there in increments — say, by switching to “cage-free” eggs or supporting free-range concepts — means forgetting that Earth’s space is finite, that animals are displaced by commercial landscapes, that the spread of pasture-based farming uproots free-living beings and snuffs out their lives.

When the idea of human supremacy — and its corollary, the treatment of the world as our warehouse — is understood as a destructive myth, it will be replaced by a new paradigm. By learning to cook vegan dishes or to cultivate vegan-organic gardens, many people are preparing for that shift today. The social change could become apparent relatively quickly, and that’s good. By most predictions, we have little time to spare.

Forty-three year old Edith Rodriguez lost on both of those counts. Her life was needlessly brought to a tragic end. She spent her last time on earth writhing in pain. Why? Was Edith in some desolate third world country? No, she was in the United States. Was Edith in an isolated location, far from medical help? No, she was in the Emergency Room of a California hospital. Was this tragedy caused by the fact that she might not have had health insurance? Maybe. Was the problem that she was sick while being Hispanic? Could be.

The news reports have painted a picture that is difficult to think about. Edith writhing in pain in the Emergency Room — falling out of the wheel chair, vomiting blood while lying on the cold Emergency Room floor, excruciating pain, a possible bowel perforation — the janitorial staff cleaning the floor around her limp body, while the medical staff ignored the pleas for help from her family. This is not meant to be a condemnation of all doctors, nurses, and other medical personnel. It is meant to be a condemnation of the system, a system that has lost any hint of humanity.

Why did no one help Edith? What mistake did Edith make that caused this tragedy? Was this death-by-geography? If Edith had been almost anywhere else in the industrialized world, she probably would still be alive. She died because she was in the United States. Living in the US can be hazardous to your health. This is a nation that puts profits before patients; capitalism before compassion.

Sadly, Edith is not alone. In the United States 45,000 die every year from lack of medical care. That is like having fifteen 9/11s every year. It is worse than 9/11 because these are needless deaths that we are imposing on ourselves. These deaths will continue until there is a strong grassroots movement for a universal, single payer health care system.

Think that the Democrats or the Republicans will change things? Think again. Both political parties have been bought and paid for by the lobbyists. It is the lobbyists for the pharmaceutical companies, the HMOs, the insurance companies, and the for-profit medical centers who lurk through the halls of Congress and help write the legislation.

The US is in a crisis. Extortion by Insurance Company lobbyists must end. We need a Single Payer system immediately. Single Payer will save lives, and it also will save money. The exorbitant salaries of Insurance Company CEOs will be eliminated. The profit motive for investors will be eliminated. Administrative costs will be reduced because one single payer will replace a large number of insurance companies — all with different forms, different standards, and different requirements for an endless stream of confusing paper work. Single Payer will save money. Repeating, Single Payer will save money.

Health care by Wall Street standards does not work. Just ask the family of Edith Rodriguez.

Within the past year, Republican Sen. Jim DeMint of South Carolina has called Obama “the world’s best salesman of socialism.” Conservative economist Donald J. Boudreaux of George Mason University has acknowledged that Obama isn’t really a socialist, but warns that the “socialism lite” of such politicians “is as specious as is classic socialism.”

Silly as all this may be, it does provide an opportunity to continue talking about the promise and the limits of socialism in a moment when the economic and ecological crises are so serious. So, let’s start with the basics.

As with any complex political idea, socialism means different things to different people. But there are core concepts in socialist politics that are easy to identify, including (1) worker control over the nature and conditions of their work; (2) collective ownership of the major capital assets of the society, the means of production; and (3) an egalitarian distribution of the wealth of a society.

Obama has never argued for such principles, and in fact consistently argues against them, as do virtually all politicians who are visible in mainstream U.S. politics. This is hardly surprising, given the degree to which our society is dominated by corporations, the primary institution through which capitalism operates.

Obama is not only not a socialist, he’s not even a particularly progressive capitalist. He is part of the neo-liberal camp that has undermined the limited social-democratic character of the New Deal consensus, which dominated in the United States up until the so-called “Reagan revolution.” While Obama’s stimulus plan was Keynesian in nature, there is nothing in administration policy to suggest he is planning to move to the left in any significant way. The crisis in the financial system provided such an opportunity, but Obama didn’t take it and instead continued the transfer of wealth to banks and other financial institutions begun by Bush. Looking at his economic advisers, this is hardly surprising. Naming neo-liberal Wall Street boys such as Timothy Geithner as secretary of the treasury and Lawrence Summers as director of the National Economic Council was a clear signal to corporate America that the Democrats would support the existing distribution of power and wealth. And that’s where his loyalty has remained.

In short: Obama and some Democrats have argued for a slight expansion of the social safety net, which is generally a good thing in a society with such dramatic wealth inequality and such a depraved disregard for vulnerable people. But that’s not socialism. It’s not even socialism lite. It’s capitalism — heavy, full throttle, and heading for the cliff.

In reaction to the issues of the day, a socialist would fight to nationalize the banks, create a national health system, and end imperialist occupations in Iraq and Afghanistan. That the right wing can accuse Obama of being a socialist when he does none of those things is one indication of how impoverished and dramatically skewed to the right our politics has become. In most of the civilized world, discussions of policies based in socialist principles are part of the political discourse, while here they are bracketed out of any serious debate. In a recent conversation with an Indonesian journalist, I did my best to explain all this, but she remained perplexed. How can people take seriously the claim that he’s socialist, and why does applying that label to a policy brand it irrelevant? I shrugged. “Welcome to the United States,” I said, “a country that doesn’t know much about the world or its own history.”

Let’s take a moment to remember. Socialist and other radical critiques of capitalism are very much a part of U.S. history. In the last half of the 19th century, workers in this country organized against expanding corporate power and argued for worker control of factories. These ideas were not planted by “outside agitators”; immigrants at the end of the 19th and early 20th centuries contributed to radical thought and organizing, but U.S. movements grew organically in U.S. soil.

Business leaders saw this as a threat and responded with private and state violence. The Red Scare of the 19-teens and ‘20s tried to wipe out these movements, with considerable success. But radical movements rose again during the Great Depression, eventually winning the right to organize. In the boom times after WWII, management was willing to buy off labor (for a short time, it turned out) with a larger slice of the pie in a rapidly expanding economy, and in the midst of Cold War hysteria the radical elements of the mainstream labor movement were purged. But radical ideas remain, nurtured by small groups and individuals around the country.

One of the reasons that “socialist” can be used as a slur in the United States is because that history is rarely taught. If people never hear about socialist traditions in our history, it’s easy to believe that somehow socialism is incompatible with the U.S. political and social system. Add to this the classic tactic of presenting “false alternatives” — if the Soviet Union was the epitome of a socialist state and the only other option is capitalism, then capitalism is preferable to the totalitarianism of socialism — and it is easy to see how people might wonder if Obama is a Red to be Scared of.

This long-running campaign to eliminate critiques and/or critics of capitalism — using occasional violence and relentless propaganda — has always been a threat to basic human values and democracy. The promotion of greed and crass self-interest as the defining characteristics of human life deforms all of us and our society. The concentration of wealth in capitalism undermines the democratic features of the society. Socialist principles provide a starting place to craft a different world, based on solidarity and an egalitarian distribution of wealth.

But capitalism is not only inhuman and anti-democratic; it’s also unsustainable, and if we don’t come to terms with that one, not much else matters. Capitalism is an economic system based on the concept of unlimited growth, yet we live on a finite planet. Capitalism is, quite literally, crazy.

But on this question it’s not fair to focus only on capitalism. Industrial systems — whether operating within capitalism, fascism, or communism — are unsustainable. The problem is not just the particular organization of an economy but any economic model based on high-energy technology, endless extraction, and the generation of massive amounts of toxic waste. Extractive economies ignore the health of the underlying ecosystem, and a socialist industrial system would pose the same threat. The possibility of a decent future, of any future at all, requires that we renounce that model.

This reminds us that one of capitalism’s few legitimate claims — that it is the most productive economic system in human history in terms of output — is hardly a positive. The levels of production in capitalism, especially in the contemporary mass consumption era, are especially unsustainable. We are caught in a death spiral, in which growth is needed to pull out of a recession/depression, but such growth only brings us closer to the edge of the cliff, or sinks the ship faster, or speeds the unraveling of the fabric of life. Pick your metaphor, but the trajectory is clear. The only question is the timing and the nature of the collapse. No amount of propaganda can erase this logic: Unsustainable systems can’t be sustained.

To demand that we continue on this path is to embrace a kind of collective death wish. So, while I endorse socialist principles, I don’t call myself a socialist, to mark a break with the politics associated with industrial model that shapes our world. I am a radical feminist anti-capitalist who opposes white supremacy and imperialism, with a central commitment to creating a sustainable human presence on the planet. I don’t know any single term to describe those of us with such politics.

I do know that the Republican Party is not interested in this kind of politics, and neither is the Democratic Party. Both are part of a dying politics in a dying culture that, if not radically changed, will result in a dead planet, at least in terms of a human presence.

So, socialism alone isn’t the answer. In addition to telling the truth about the failures of capitalism we have to recognize the failures of the industrial model underlying traditional notions of socialism. We have to take seriously the deep patriarchal roots of all this and the tenacity of white supremacy. We have to condemn imperialism, whether the older colonial style or the contemporary American version, as immoral and criminal. We have to face the chilling facts about the degree to which humans have degraded the capacity of the ecosystem to sustain our own lives.

I’m not waiting for Obama or any other politician to speak about these things. I am, instead, working in local groups — connected in national and international networks — to create alternatives. There is no guarantee of success, but it is the work that I believe matters most. And it is joyful work when done in collaboration with others who share this spirit. But to get there, we have to find the strength to break from the dominant culture, which is difficult. On that question, I’d like to conclude by quoting Scripture. In the Sermon on the Mount, Jesus said:

“Enter by the narrow gate; for the gate is wide and the way is easy that leads to destruction, and those who enter by it are many. For the gate is narrow and the way is hard that leads to life, and those who find it are few.” [Matt. 7:12-14]

I end with Scripture not because I think everyone should look to my particular brand of radical, non-orthodox Christianity for inspiration, but because I think the task before us demands more than new policies. To face this moment in history requires a courage that, for me, is bolstered by tapping into the deepest wisdom in our collective history, including that found in various religious traditions. We have to ask ourselves what it means to be human in this moment, a question that is deeply political and at the same time beyond politics.

At the core of these traditions is the call for humility about the limits of human knowledge and a passionate commitment to justice, both central to finding within ourselves the strength to pass through that narrow gate.

My advice to any of you who want to be part of a decent future: Find that strength wherever you find it, and step up to the narrow gate.

[This is an expanded version of a talk given to the University Democrats student group at the University of Texas at Austin, September 23, 2009.]