Sitting facing each other in an auditorium filled with nearly 1,000 cheering people at a CNBC-sponsored event at Columbia University in New York, the CEO of Berkshire Hathaway Inc. and Microsoft founder Bill Gates fielded questions from Columbia Business School students on the recession, investing and what’s the next Microsoft.

And you know how late-imperial ruling classes get decrepit, and become unable to acknowledge, let alone redress, their objective problems? Here are your top two “free market” geniuses’ remarks on where they see us standing in history:

Buffett: “The financial panic is behind us…. I did not worry about the overall survival of our economy.”

Gates: “We proved that we can make mistakes. But the fundamentals of the system, a marketplace-driven system where we invest in education and a great infrastructure for the long-term, that’s continued…. Capitalism is great.”

See? This has been merely a “financial panic,” not a huge recession, not a normal and predictable result of the radical mal-distribution of wealth under corporate capitalism, not the onset of Great Depression III, not a harbinger of Peak Everything, not a wake-up call in a make-it-or-break-it century.

Yes, mistakes were made, even though nobody expects a capitalist ever to make one, do they?

Take it from Bill and Warren: The future looks bright for this great system of ever-expanding resource consumption and behavioral manipulation!

In this paper we would like to contribute towards turning this around—to resurrect the socialist project; to do so by deconstructing the discourse on “neoliberal globalization” and reconstructing the actual contemporary dynamics of capitalist development.

This is a major task requiring a closer look at the issues. The modest contribution of this paper is to bring into focus the imperialist dynamics of capitalist development in Latin America. To this end, we present an analytical framework for an analysis of the dynamics of capitalist development and imperialism. We then summarize these dynamics in the Latin American context. Our argument is that the dynamics of capitalist development and imperialism have both an objective-structural and a subjective-political dimension and that a class analysis of these dynamics should include both. This means that it is not enough to establish the workings of capitalism and imperialism in terms of their objectively given conditions that affect people and countries according to their class location in this system. We need to establish the political dynamics of popular and working class responses to these conditions—to neoliberal policies of structural adjustment to the purported requirements of the new world order. The politics of the Left might so be better informed.

The Neoliberal Era of Capitalist Development and Imperialism

Capitalist development in Latin America can be periodized as follows: (1) an initial phase of primitive accumulation and national development dating more or less from the Independence Movement in the 1860s and crystallizing in the Porfiriato, an extended dictatorship of the big landowners and incipient bourgeoisie in Mexico; (2) a period of modernization, incipient industrialization (in the form of “Fordism”) and social reform, dating from the Mexican Revolution in the second decade of the twentieth century; (3) a period of state-led capitalist development with “international cooperation” (technical and financial assistance) dating from the end of the Second World War and the construction of the Bretton Woods world order (1945-70); (4) a period of transition (1971-82) characterized by an extended crisis in the global system of capitalist production and diverse efforts to restructure the system; and (iv) the construction of a new world order designed so as to free the “forces of freedom” from the constraints on capital accumulation imposed by the system of sovereign nation states. This phase, which can be dated from the onset of a region-wide debt and an ensuing “development” crisis, is characterized by dynamic processes of neoliberal globalization and imperialism – the institution of a neoliberal policy framework (the structural adjustment program, as it was termed at the time), a renewed imperial offensive, and the decline but then partial recovery of the capital accumulation process and the self-styled “forces of economic and political freedom”.

The latest period of capitalist development has two dimensions (globalization in theory / imperialism in practice, forces of opposition and resistance), both of which can also be broken down into four phases.
Neoliberalism and Imperialism in Practice: A Framework of Analysis

Phase I (1975-82) of the neoliberal project is associated with the bloody Pinochet regime in Chile constituted with a military coup in 1973. The “bold reforms” implemented by this regime and extended into Argentina and Uruguay were subsequently implemented by Margaret Thatcher and Ronald Reagan, and used by economists at the World Bank as a model for the structural reforms set as the price of admission into the new (neoliberal) world order.

Phase II (1983-90) of neoliberalism (imperialism masked as globalization) includes the foundation stones of renewed process of capital accumulation on a global scale; setting the parameters for a new configuration of economic and political power; implementation of a second round of neoliberal “structural reform”; launch of an ideology (globalization) designed to legitimate this reform process, and the first wave of privatizations as part of this reform process; and a process of redemocratization designed as a means of securing the political conditions of structural adjustment—a marriage of strategic convenience between capitalism /economic liberalism and democracy / political liberalism (Dominguez and Lowenthal, 1996).

Phase III (1990-2000) entails what might be viewed as a “golden age” of massive transfers of public property to the “private sector” (capitalists and their enterprises); an enormous net outflow of capital (“international resource transfers”) in the form of profits on investments, debt payments and royalty charges; virtually no economic growth—less than one percent per capita over the decade and a growing divide in the distribution of society’s wealth and income; huge bailouts of the banks and investors in corporate stock in a situation of financial crisis; and another round of neoliberal policy reform (“structural reform”), this time with a “human face” (adding to the reform process a “new social policy” targeted at the poor,); a second wave of privatizations and an associated denationalization of the banks and strategic economic enterprises; and a post-Washingron Consensus on the need for a more inclusive form of neoliberalism designed to empower the poor (Craig and Porter, 2006; Ocampo, 1998; Van Waeyenberge, 2006).

Phase IV (2000-09) begins with an involution in the system of capitalist production and the collapse of foreign direct investment inflows; and the onset of political crisis viz. widespread disenchantment with neoliberalism, and a process of regime change (Argentina, Bolivia, Ecuador, Brazil, Uruguay, Venezuela—a coup against and the restoration of Chávez to power—and Uruguay. In 2003, the production crisis gives way to a mild economic recovery for a number of countries in the region and a sweeping realignment of political forces into four blocs. The basis of this process of economic and political development is a realignment of global production—a primary commodities boom fueled by the growing demand in China and India for new sources of energy, natural resource industrial inputs and consumption goods for a rapidly growing middle class.

Opposition to Imperialism, Class Rule and Neoliberalism: Forces of Resistance

Phase 1 (1973-82) of the anti-neoliberal project includes a major counter-offensive of the landed proprietors and big capital against the incremental advance of the workers and peasants; a double-offensive of the state against the rural poor and landless peasants in the form of the “Alliance for Progress” (“rural development”) and use of the state’s repressive apparatus against the guerrilla armies of national liberation; the counter-offensive of capital, with the support of the state, against the working class, resulting in a disarticulation of the labor movement, cooptation of its leadership and a weakening in its capacity to negotiate for higher wages and better working conditions; and, with the agency and support of U.S. imperialism, the institution of military coups and the institution of military rule and a war against “subversives” under the aegis of a Washington-designed “Doctrine of National Security”.

Phase II (1983-99) was characterized by a reorganization of the popular movement, particularly in the countryside—in the indigenous communities and among the masses of dispossessed, landless workers and peasant producers; the mobilization of the forces of popular opposition and resistance against the neoliberal policies of the governments of the day; various uprisings of indigenous peasants in Ecuador, Chiapas and Bolivia, resulting in the ouster of several presidents if not regime change, and in the blocking of governments efforts to extend the neoliberal agenda; the division of the indigenous movement (in Bolivia and Ecuador) into a social and political movement, allowing it to contest elections as well as mobilize the forces of resistance in direct action against the state; a general advance in the popular movement with the growth of new offensive and defensive class struggles.

Phase III (2000-03), corresponding to a crisis in production and ideology vis-à-vis neoliberalism, was characterized by the emergence of various offensive struggles and social mobilizations that led to the overthrow of regimes in Argentina, Bolivia, Ecuador. In Venezuela, Hugo Chávez came to power, inciting the complex dynamics of a class struggle characterized by a series of counter-offensives by the ruling class (attempted coups, referendums), growing demands for radical reforms and the institution of the “Bolivarian Revolution” based on an anti-imperialist strategy designed to take the country along a socialist path.

As for Phase IV (2003-09) it saw the rise of a bloc of pragmatic neoliberal, quasi-populist democratic socialist regimes oriented towards the post-Washington Consensus, an ebb in the flow of the popular movements, the radicalization of Chávez’s project of “21st Century Socialism” and the reflux of the popular movement.

Four Cycles of Neoliberalism

“Neoliberalism” in this historic context denotes a national policy—or rather, reform of the then-existing policy of state-led development (“structural reform” or “structural adjustment”)—justified with a neoclassical theory of economic growth and development and an ideology of globalization. In this context, we can identify four cycles of neoliberal “structural reform”. The first cycle, initiated by the Chicago Boys in Chile under Pinochet . After this first round of neoliberal experiments in policy reform, extended to Argentina and Uruguay, crashed in the early 1980s, a second round of neoliberal policy reforms was implemented under conditions of redemocratization, an external debt crisis and the political leverage that this crisis provided the World Bank and the IMF, the agencies that assumed primary responsibility for implementing the Washington Consensus on needed policy reform.

The third cycle of neoliberal policies was implemented in the 1990s. At the outset only four major regimes had failed to fully embrace the “discipline” of structural adjustment. But serious concerns had surfaced as to the sustainability of the neoliberal model and the associated Washington Consensus. For one thing, neoliberalism had utterly failed to deliver on the promise of economic prosperity and mutual benefits to countries north and south of the global development divide. For another, structural reforms had not only released the “forces of freedom” but also forces of resistance that threatened the survival not only the viability of the neoliberal model but the survival of the state itself. To avert an impending crisis the ideologues of globalization and neoliberal architects of policy reform came up with a revised model: structural adjustment with a human face (UNICEF, 1989) in one formulation, productive transformation with equity (ECLAC, 1990) in another, and “sustainable human development” (UNDP, 1996) in yet another. The common feature of these and other such models was a continuing commitment to a neoliberal program of “structural reform” at the level of national policy, the design and adoption of a “new social policy” that “targeted” social investment funds at the poor and their communities, and specific policies that helped shelter the most vulnerable groups from the admittedly high “transitional” social costs of structural adjustment.

Policy Dynamics of Neoliberal Structural Reform

The discourse on “globalization” emerged in the 1980s in the context of efforts in policymaking circles to renovate the ailing Bretton Woods world order—to create a “new world order”. Under widespread systemic conditions of a capitalist production crisis and an associated fiscal crisis, economists at the World Bank and its sister “international financial institutions”, all adjuncts of the U.S. imperial state, formulated a program of policy reforms designed to open up the economies of the developing world to the forces of “economic freedom”, to integrate these societies and economies into the new world order. These policy reforms included various IMF stabilization measures such as currency devaluation and import restrictions, and policies of structural adjustment: (1) privatization of the means of social production and associated economic enterprises (reverting thereby the nationalization policies of the earlier model of state-led development); (2) deregulation of diverse product, capital and labor markets; (3) liberalization of capital flows and trade in products and services; and (4) and administrative decentralization, attempting to “democratize” thereby the relation of civil society to the state, transferring to local governments in partnership with civil society responsibility for economic and social development; that is, privatizing “development” (allowing the poor to “own” and be responsible for improving their lives, changing themselves rather than the system.

By the end of the 1980s, this package of policy reforms had transformed the economic and social system of many Latin American societies. The state-led reforms of the 1960s and 1970s (nationalization, regulation of capitalist enterprise and capital inflows, protection of domestic producers, rural credit schemes, land and income redistribution market-generated incomes, etc.) had been reverted, effectively halting, where not reversing, the process of development and incremental change.

The outcome and social impacts of this social transformation were all too visible and apparent, especially to those groups and classes that bore the brunt of the adjustment and globalization process. With a significant reduction in the share of labor (and households) in society’s wealth and national income, and an equally significant concentration of asset-based incomes and its conversion into capital, Latin American society became increasingly class divided and polarized between a small minority of individuals capacitated and able to appropriate the lion’s share of the new wealth and a large mass of producers and workers who had to bear the costs of this “structural adjustment” and excluded from its benefits. The economic and political landscape of Latin American society was, and is, littered with the detritus of this development process. The objectively given conditions of this process are not only reflected in the all too evident deterioration in living and working conditions of the mass of the urban and rural population. They are also reflected in the evidence of a process of massive outmigration, the export of labor as it were, and an equally massive process of capital export—a net outflow or transfer of “financial resources” estimated by Saxe-Fernandez and Núñez (2001) to amount to over USD 100 million for the entire decade of the 1990s. Recent studies suggest that if anything the process, fuelled by the financialization of development and policies of privatization, liberalization and deregulation, has continued to accelerate, putting an end to any talk, and much writing, about a purported “economic recovery” based on a program of “bold reforms” and “sound economics.” Neoliberalism is in decline if not dead.

Globalization or Global Class War?

It is commonplace among many intellectuals, pundits and policy makers both in Latin America as elsewhere to discuss “globalization” as of it were a process unfolding with an air of inevitability, the result of forces beyond anyone’s control—at worst allowing policymakers to manage the process and at best to push it in a more ethical direction; that is, allow the presumed benefits of globalization to be spread somewhat more equitably. This is, in fact, the project shared by the antiglobalization movement in their search for “another world” and the pragmatic centre-left politicians currently in power in their search for “another development”.

In this discourse, globalization appears as a behemoth whose appetites must be satisfied and whose thirst must be quenched at all costs—costs borne, as it happens but not fortuitously, by the working class. In this context to write, as do so many on the Left today, of the “corporate agenda” and “national interests”, etc. is to obfuscate the class realities of globalization—the existence and machinations of the global ruling class (Petras, 2007) and what Jeffrey Faux (2006) terms a “global class war.”

Faux’s book allows us to view in a different way the globalizing economy, the politics and economics of free trade, and soaring corporate profits on the one hand, and, on the other hand, deteriorating standards of living and the continuing (and deepening) poverty of most of the world’s people. What is behind this reality? A dynamic objective process, working like the invisible hand of providence through the free market to bring about mutual benefits and general prosperity? Or a class of people who in their collective interest have launched a global war with diverse features and theaters. One feature of this class war, one of many (on its manifestation in the European theater, see Davis, 1984; and Crouch and Pizzorno, 1978) entails ripping up the social contract that had allowed the benefits of capitalism to be broadly shared with other social classes. Another feature was the use of the state apparatus to reduce the share of labor in national income waken its organizational and negotiating capacity, and repress any movement for substantive social change.

The globalization discourse hides the class realities behind it. The press, for example, consistently talks about national interests without defining whom exactly is getting what and how, under what policy or decision-making conditions. Thus, American workers are told that the Chinese are taking their jobs. But the China threat, in fact, is but another global business partnership, in this case between Chinese commissars who supply global capital cheap labor and the U.S. and other foreign capitalists who supply the technology and much of the capital used to finance China’s exports. Workers in Latin America are told that it is their inflexibility and intransigence, and government interference in the free market, that hold them back from engaging meaningfully or at all in the many benefits of globalization. Many, including on the Left, view “globalization” in this way. However, it would be better to see it for what it is: a class project vis-à-vis the accumulation of capital on a global scale; and as “imperialism” vis-à-vis the project of world domination, a source and means of ideological hegemony over the system.

Neoliberalism is the reigning ideology of the global elite, a transnational capitalist class that holds its annual meeting in the plush mountain resort of Davos, Switzerland. Hosted by the multinational corporations that dominate the world economy (Citigroup, Siemens, Microsoft, Nestlé, Shell, Chevron, BP Amoco, Repsol-YPF, Texaco, Occidental, Halliburton, etc.), some 2000 CEOs, prominent politicians (including former and the current presidents of Mexico), this and other such meetings allow this elite to network with pundits and international bureaucrats, discuss policy briefs and position papers on the state of the global economy, and to strategize abut the world’s future – all over the best food, fine wine, good skiing and cozy evenings by the fire among friends and associates – fellow self-appointed and nominated members and guardians of the imperial world order.

Davos is not a secret cabal, although it is surrounded by meetings and workings of a host of groupings, meetings and committees and extended networks that is. Journalists issue daily reports to the world on the wit and informal charm of these unelected, self-appointed or nominated members of the class that runs and manages the global economy. In this sense it is a political convention of what Fauz dubs “the Davos Party” that includes solid representation from the economic and political elite in Latin America. The mechanism and dynamics of class membership are unclear; as far as we know it has not been systemically studied. But it likely involves “people” like Henrique Fernando Cardoso, former dependency theorist and later neoliberal president of Brazil, upon or before completion of his term in office, being invited to give a “talk” or address members of the imperial brain trust, the global elite, at one of its diverse foundations and “policy forums”, such as the Council on Foreign Relations (CFR), a critical linchpin of the imperial brain trust and its system of thinktanks, policy forums and geopolitical planning centers. Certainly this is how former Mexican presidents Carlos Salinas and Ernesto Zedillo were appointed and assigned specific responsibilities on diverse working “committees” designed to identify and redress fissures in and threats to the system. It is evident that listing in Forbes’ listing of the world’s biggest billionaire family fortunes, such as Bill Gates, George Soros and Carlos Slim, is sufficient in itself to ensure automatic membership in the club.

The New World Order system easily identifies those members of the global elite in each country that, as Salbuchi (2000) notes, are “malleable, controllable and willing to subordinate themselves to the system’s objectives”. Their careers are then launched so that they may rise to become presidents of their countries or ministers of finance and central bank governors. This was the case, for example, for Argentina’s Domingo Cavallo, Chile’s Alejandro Foxley and Brazil’s Henrique Cardoso, each of whom received suitable local and international press coverage; were honored with “prestige-generating” reviews, interviews, conferences and dinners, etc.; and then invited to address the Council on Foreign Relations, the Americas Society and Council of the Americas, so that the key New World Order players in New York and Washington could evaluate them. If and when they pass muster their election campaigns are generously financed by the corporate, banking and media infrastructure of the “establishment” that has the resources and means to bring them to power legally and democratically—to do the bidding of their masters and colleagues.2 Some are even invited to join elite circles and organizations such as Trilateral Commission and the Carnegie Endowment for International Peace), or one of the CRC’s working committees.

The Left Responds to the Crisis of Neoliberalism

Throughout the 1990s the dominant popular response to neoliberal globalization and associated regimes and policies was in the form of social movements that represented and advanced most effectively the struggle against what Ron Chilcote (1990) called a “plurality of resistances to inequality and oppression”. These movements placed growing pressure from below on the regime and the “political class”. However, by mid-decade, well into the left’s general retreat from class politics, a number of these movements followed Brazil’s labor movement (The PT or Workers’ party) in establishing a party apparatus to allow them to contest both national and local elections—to pursue an electoral strategy. This political development did not require or mean an abandonment of the social movement strategy of social mobilizations, etc. but it did open up a broader opportunity to participate in the electoral process, allowing the populace to participate in party politics.

Local Politics and Community Development

The mobilization of the electorate via the institutional trappings of liberal democracy provided a new impetus to the political left—the segment that opted for party politics over social mobilization as a strategy for achieving state power: influencing government policy from within rather than outside the system. However, a large swath of the Left seem to have heeded Jorge Casteñeda’s call for the Left to switch its electoral ambitions to the municipality, local politics and community development. His argument, advanced in Utopia Unarmed, was that “municipal politics should be the centre-piece of the left’s democratic agenda…because it typifies the kind of change that is viable…a stepping stone for the future” (1994: 244). Engagement in local politics, he argued –and much of the left seemed to have followed this line—would provide the basis for a consolidation of the Left after the so-called “democratic transition” from 1979 (Bolivia, Ecuador) to 1989 (Chile). In addition it would help re-articulate the civil society-local state nexus and restore legitimacy to the Left’s relationship with the popular sector (Lievesley, 2005: 8).

An example of the approach proposed by Casteñeda, and in fact widely pursued by the Left even before his book (the World Bank’s strategy in this regard was already quite advanced) had already is the PT’s experience with municipal government in Porto Alegre, the capital city of Brazil’s state of Rio Grande do Sul (1989-2004). The PT administration opened up municipal institutions with a stated commitment to accountability and transparency, as well as citizen participation in the budget planning process via the mechanism of public meetings (Orçamento Participativa).

The Porto Alegre experience with participatory budgeting was hailed by the World Bank and the International Development “community” of multilateral institutions and liberal academics as a good example of collective decision-making for the common good, a model of grassroots participatory development and politics, and it continues to serve as a guide to similar practices and experiences elsewhere (Abers, 1997). Other examples of this “participatory” approach towards local politics and community development, widely adopted by the Left in the 1990s in its retreat from class, can be found in Bolivia and Ecuador, both countries a laboratory for diverse experiments to convert the municipality into a “productive agent” (the “productive municipality”)3 and exertions by the Left to bring about social change via local politics (North and Cameron, 2003). On the left this shift from macro-politics and development (national elections versus social movements) to micro-politics and development (local politics, participatory development) was viewed as a salutary retreat from a form of analysis and politics whose time had come and gone. Within academe the dynamics of this process has been viewed in some circles as the harbinger of a “new tyranny” (Cooke and Kothari, 2001).

The World Social Forum Process: Is Another World Possible?

On January 3, 2007, Caracas, the capital city of an epicenter of social and political transformation in the region was concerted into the Mecca of the international left. Thousands of activists (100, 00 according to the organizers) arrived in Caracas from some 170 countries to participate in the sixth edition of the World Social Forum (WSF), a process initiated in Porto Alegre, Brazil, six years earlier. It was the first of a then thereafter annual event, extended to and replicated in other regional settings from India, Europe and most recently Nairobi, Kenya in the African subcontinent. In each place and in each annual event, the organizers would bring together hundreds of nongovernmental and civil organizations committed to the search for a more ethical form of globalization, a more human form of capitalism. The process brings together diverse representatives of a self-defined new left committed to the belief in the necessity and possibility of a “new world”, an alternative to globalization in its neoliberal form.

There are, of course, defined limits to this new political process: participants are invited and expected to explore diverse proposals for bringing about “another world” but to limit this search to reforms to the existing system, reforms that no matter how “radical” are expected to leave the pillars of the system intact. This liberal reform orientation to the process is ensured by explicit exclusions—any political organizations that include armed struggle or violent confrontation and class struggle in its repertoire, that are oriented towards revolutionary change.

ATTAC, a Paris-based social democratic organization is the most visible representative of this approach towards social change, but the World Social Forum from its inception morphed into and became a significant expression of what emerged as the “antiglobalization movement”. This movement had its origins in the encounter of diverse forces of resistance formed in middleclass organizations in the “global north” and mounted against the symbols of neoliberal globalization such as the World Trade Organization and the G-7/8 annual summit. A defining moment in this movement, rooted in the organizations of the urban middle class—NGOs, unions, students, etc.–in both Europe and North America, included the successful mobilization against the MAI in Seattle. This mobilization was the first of a number of serialized events scheduled to unfold at important gatherings of the representatives of global capital—Genoa, Quebec, Melbourne, Dakar….

In Latin America the World Social Forum process, is the basic form taken by the “antiglobalization movement” in the search for “another world” (the latest event in this process was hosted by Lula, taking place in Bélem towards the end of January 2009). Apart from the absence of an internal division between the advocates of moderate reform (ethical globalization) and more radical change the antiglobalization process is designed to define and maintain the outer limits of permitted change; that is, controlled dissent from the prevailing model of global capitalist development. Not anti-globalization but a more ethical form. Not anti-capitalism but a more humane form of capitalism, a more sustainable human form of development. Not anti-imperialism because imperialism is not at issue.

The New Left and the Politics of No-Power

In the shape and form of class struggle the path towards social change in the 1960s and 1970s was paved with state power. That is, the forces of resistance, at the time based in the countryside, in the organizations and movements of the landless and near landless peasants, and in the urban-based organized labor movement; and for the most part led by petit-bourgeois middle class intellectuals, were concerned with the capture of state power. In the 1990s, in a very different context—neoliberal globalization—and in the wake of the Zapatista uprising in January 1994, there emerged on the left a postmodern twist to the struggle for social change: “social change without taking state power” (Holloway, 2002).

In the discourse of Subcomandante Marcos, the Zapatismo came to symbolically—or theoretically, in the writings of Holloway and others (for example, Burbach, 1994)—represent a “new way of doing politics”: to bring about social change without resort to class struggle or the quest for state power (Holloway, 2002). However, much of the Latin American Left appeared all o ready to retreat from class politics and engage the new way of “doing politics”. Some of the Left joined the struggle for change at the level of local politics and community development–to bring about social change by building on the assets of the poor, their “social capital” (Portes, 1998, 2000; Ocampo, 2004). Another part joined the “situationists” and other militants of “radical praxis” in an intellectual engagement with the forces of social and political disenchantment in the popular barrios of unemployed workers—in Gran Buenos Aires and elsewhere (Besayag and Sztulwark. 2000; Colectivo Situaciónes, 2001, 2002). This was in the early years of the new millennium. In the specific conjuncture of economic and political crisis, a generalized rejection of the “old way” of doing politics (“que se vayan todos”), the search for redemption and relevance left a large part of the left without a political project, without a social base for their politics.

Dynamics of Electoral Politics: What’s Left of the Left

With the advent of the new millennium, it was clear that the neoliberal model even in its revamped form, had failed to deliver on its promise of economic growth and general prosperity. Instead it had deepened existing class and global divides in wealth and income, and regime after regime was pushed towards its limits of endurance by the forces of popular mobilization. In this context, the political class in each country turned to the left, opening up new opportunities for groups that had hitherto concentrated their efforts on local politics and community development. Governments of the day, many of them neoliberal client regimes of the US, fell to the forces of resistance and opposition.

Political developments in the region regarding this regime change led to a concern in the US, and widespread hopes and expectations on the Left, about a tilt to the left in national politics and what the press (Globe & Mail) has termed a “disheartening” triumph of politics over “sound economics”. A lot of this concern revolves around Hugo Chávez, who appears (to the press and U.S. policymakers) to be taking Venezuela down a decidedly anti-US, anti-imperialist and seemingly socialist path–and taking other governments in the region with him.

Chávez’s electoral victory was seen by many as the moment when a red tide began to wash over the region’s political landscape. In the summer of 2002, the Movement to Socialism (MAS) in Bolivia, led by militant coca growers’ leader Evo Morales, became the second largest party in the Congress while in December it achieved huge victories in municipal elections—in what was billed by the MAS itself as “la toma de los municipios”. The election to state power of Lula da Silva in Brazil (October 2002) wa followed by Nestor Kirchner in Argentina (May 2003), Tabaré Vasquez in Uruguay (November 2004), Evo Morales (December 2005), (December 2006) Rafael Correa in Ecuador (December 2006) and most recently Lucas Longo in Paraguay. The tide was checked in Mexico in the summer of 2006 when Lopez Obrador, presidential candidate of the PRD, fell just short of victory, and in Peru, where the nationalist Humala lost out to Alan Garcia, the once disgraced social democrat but reborn neoliberal. But it appeared to swell again with Daniel Ortega’s victory in Nicaragua—although, given his opportunism and religious rebirth, Ortega could hardly be viewed as on the Left notwithstanding his friendship with Chávez and Fidel Castro—and Rafael Correa.

Thus it appeared that Latin America had turned against the US-inspired—and dictated—neoliberal policies of structural adjustment and globalization by electing to state power a number of parties on the political left—although “moderate” or “pragmatic”. Centre-left regimes, some of which cherish their links with Cuba and relish throwing it in the face of the U.S. administration, which has shown itself to be extraordinarily ideological and non-pragmatic, now outnumber right-of-centre governments in the region. The days of the US-supported and instigated right-wing dictatorships and military rule are over, having long disappeared in the dustbins of history and replaced by a new breed of neoliberal regimes.

Latin America turns left?

These regimes in appearance (that is, as constructed in the rhetoric of public discourse) have changed or are changing economic course, ostensibly moving away from the neoliberal policies pushed by the US. This was the case in Argentina, for example where the Kirchner administration was compelled by the most serious economic and political crisis in its history to confront the IMF and the World Bank, and the US, by halting payments on the country’s external debt, redirecting import revenues towards productive and social investments, including short-term work projects demanded by the mass of unemployed workers that at the time constituted over 25% of the laborforce and who had taken to the streets, picketing highways in protest. The result: some three years later is an annual growth rate of 8%, the highest in the region.

Another example of apparent regime change was in Brazil, where and when in October 2002 the electorate after his third attempt voted Ignacio [Lula] da Silva, leader of the PT, into power, re-electing him in 2006 to a second term in office. The first President on the “left” voted into power since Allende in 1970, Lula is nevertheless (and for good reason, it turns out) very well received by Wall Street, if not Washington, which tends to view him as a thorn in the U.S. side. Indeed Lula played a major role in defeating the White House plan for a hemispheric free trade zone, and continues to annoy the U.S. with his support of Chávez-Morales-Correa axis in Latin American politics. In this context, the intellectual Left associated with the antiglobalization movement choose to see Lula as an opponent of neoliberal globalization. In fact, Lula, on behalf of Brazil’s agribusiness and other capitalist producers simply has been playing and continues to play hardball in negotiations over access to the U.S. market.

Elections of centre-left governments followed in Uruguay (2004), Chile (2005), Ecuador (2006) where the electorate was polarized between a business magnate, Alvaro Noboa, the richest man in the country and a committed neoliberal ideologue; and Rafael Correa, head of a centre-left coalition that appears to be taking Ecuador down the same path as Evo Morales is taking Bolivia, particularly in regard to a constituent assembly that might well, or is expected to, change the economic and social system as well as the correlation of class forces in the country’s politics. In this regard, elements of the political left in Ecuador, especially those associated with the “Coordinadora de Movimientos Sociales” (CMS), see a political opportunity to build a “radical bloc” on the basis of combined action “from above” (the government) and “from below” (the indigenous and popular movement). Whether this will happen (see Saltos, 2006)4 remains to be seen. For one thing, it hinges on the capacity of the popular movement for active mobilization – to pressure the Correa government from below towards the left. On this the historic record is fairly clear. As observed by Pedro Stedile, leader of the MST, “without active mobilization the government gives nothing”.

With the election of Rafael Correa over Alvaro Noboa the popular and indigenous movement in Ecuador at least placed on the agenda of government action issues such as national sovereignty, nationalization of the country’s natural resources, agrarian reform, indigenous rights, subordination of payment on the external debt to social programs, renegotiation of oil contracts will the multinationals, the ending of the military bases in Manta, and Latin American (vs. continental) integration. Whether the government will act on these issues remains to be seen.

The conflict that ensued over the Constituent Assembly (CA) in Ecuador and Bolivia, where the CA was finally approved) is symptomatic of the profound legitimation crisis in the system of class domination in these and other countries (Saltos, 2006). Earlier and other forms of hegemony, such as “globalization” and the trappings of representative “democracy”, have lost their hold over people, having been totally undermined by the all too tangible and visible signs of the negative effects of neoliberal policies. The reign of Washington in the region appears to be in serious decline. Nor can Washington, in its efforts to preserve the status quo or the status quo ante, revert to the use of force—to bring back the Armed Forces to restore order. Its only recourse is to engage “civil society” in the project of “good governance”—to restore political order by means of a broad social consensus that reaches well beyond the state and the political class (Blair, 1997; OECD, 1997; UNDP, 1996; World Bank, 1994b).

What we saw in Quito and La Paz in regard to the Constituent Assembly went beyond a conflict between two branches of government. At issue was that those who elected Correa and Morales had come to the point of refusing to be subordinated to a state controlled by the dominant class and servile to Washington and the interests of global capital. On achieving political representation with the election of Morales and Correa, and Chávez for that matter, the forces in the popular movement were all too aware that the legislature was dominated by the “oligarchy” (the ruling class is understood in Bolivia and Ecuador). In this situation, Morales and Correa were compelled to construct a multi-class alliance and mobilize the forces of resistance to class rule and the neoliberal agenda of previous governments under the post-Washington Consensus. The result is the construction of a multi-ethnic or pluri-national state oriented towards what the Vice-President of Bolivia, Alvaro Garcia, conceives of as an Andean form of capitalism, and a new anti-american axis of regional politics and trade.

These and other such political developments in Bolivia and Ecuador are illustrative of what appears to be a regional trend. For example, in neighboring Colombia in October 2003 the voters elected a former union leader Luis Garzón as mayor of Bogotá. The election marked a swing to the left in Colombia’s second most important elective office, a clear challenge to the pro-US, scandal-ridden right-wing government of Alvaro Uribe. If we take these and other such developments together, especially in Venezuela, Bolivia and Ecuador, there does indeed seem to be a leftward swing in the political winds of change, leading …to declare that democratic elections are not enough: governments in the region also have to “govern democratically”, i.e. place no constrictions on the forces of opposition to the new agenda in national and regional politics.

Whither Socialism in a Sea of Crisis and Neoliberal Decline?

A serious discussion of the prospects for socialism in Latin America today must take into account world economic conditions in the current conjuncture, the state of US-Latin American relations relative to the project of world domination and imperialism, the specific impact on Latin American countries of these conditions and relations, the conditions deriving from the correlation of class forces within these countries, and the class nature and agency of the state relative to these forces.

World Economic Conditions and Their Impact on Latin America

Latin America’s “restructured” capitalist economy emerged from the financial crisis of the 1990s and the recession of the early years of the new millennium with its axis of growth anchored in the primary sector of agro-mineral exports (Cypher, 2007; Ocampo, 2007). From 2003 to 2008 all Latin American economies, regardless of their ideological orientation or political complexion, based their economic growth strategy on the “re-primarization” of their export production, to take advantage thereby of the expanding markets for oil, energy and natural resources and the general increase in the price of primary commodities on the world market. The driving force of capitalist development in this period was agribusiness and mineral exports, export-oriented production of primary commodities leading to an increased dependence on diversified overseas markets and a change in the correlation of class forces, strengthening the right and, notwithstanding a generalized tilt to the Left at the level of the state, a weakening of the Left. Ironically, the primarization of exports led to the revival and strengthening of neoliberalism via the reconfiguration of state policy to favor agro-mineral exporters and accommodate the poorest section through populist clientelistic “poverty programs”. In the context of a primary commodities boom and the emergence of a range of democratically elected centre-left regimes, trade union leaders were coopted and the social movements that had mobilized the forces of resistance to neoliberalism in the 1990s were forced to beat a retreat from the class struggle (Petras and Veltmeyer, 2009).

The link between U.S. finance capital, the growth of industry and the domestic market in Asia, and the primary commodities boom, was responsible for the period of high growth in Latin America from 2003 to 2008, when the boom went bust and most economies in the region succumbed to a financial crisis of global proportions and a system-wide deep recession that threatened to push the U.S. economy, at the centre of the gravitational force of this crisis, towards collapse. With the U.S. empire’s “over-extension” and the exceedingly high costs of prosecuting imperialist war in Iraq and maintaining its enormous military apparatus—military expenditures on the Iraq war alone increasing by millions each minute (as of February 17, 2009 US$ 597.7 billion) and likely to cost well over a trillion dollars before it is over—the capacity of the U.S. to weather the storm of financial crisis and a deepening recession has been seriously diminished. Given the absorption of the U.S. state in the Iraq war, governments in Latin America in the latest phase of capitalist development managed to achieve a measure of “independence” and “relative autonomy” in their relations with the United States. And this has given leaders like Hugo Chavez a free hand in his efforts to push Venezuela in a socialist direction.
Impact of World Recession and U.S. Imperial Revivalism in Latin America

Latin America is feeling the full brunt of the world recession. Every country in the region, without exception, is experiencing a major decline in trade, domestic production, investment, employment, state revenues and income. The projected growth of Latin America’s GDP in 2009 has declined from 3.6% in September 2008 to 1.4% in December 2008 (Financial Times, January 9, 2009). More recent projections estimate Latin America’s GDP per capita as falling to minus two percent (-2%).5 As a result state spending on social services will undoubtedly be reduced. State credit and subsidies to big banks and businesses will increase; unemployment will expand, especially in the agro-mineral and transport (automobile) export sectors. Public employees will be let go and experience a sharp decline in salaries. Latin America’s balance of payments will deteriorate as the inflow of billions of dollars and euros in remittances from overseas workers, a major source of “international financial resource” for many countries in the region, declines. Foreign speculators are already withdrawing tens of billions of investment dollars to cover their losses in the U.S. and Europe. A process of foreign disinvestment has replaced the substantial inflow of “foreign investment” in recent years, eliminating a major source of financing for major “joint ventures”. The precipitous decline in commodity prices in 2008, reflecting an abrupt drop in world demand, has sharply reduced government revenues dependent on export taxes. Foreign reserves in Latin America can only cushion the fall in export revenues for a limited time and extent.

The recession also means that the economic and social structure, the entire socioeconomic class configuration on which Latin America’s growth dynamic in recent years (2003-2008) was based, is headed for a major transformation. The entire spectrum of political parties linked to the primary commodity export model and that dominate the electoral process will be adversely affected. The trade unions and social movements oriented toward an improvement in their socioeconomic conditions and wages, social reforms and increased expenditures of fiscal resources and social spending within the primary commodity export model will be forced to take direct action or lose influence and relevance.

The initial response of the left of center regimes that came to power in the context of a primary commodities boom and neoliberalism in its demise has largely focused on: (i) financial support for the banking sector (Lula) and lower taxes for the agro-mineral export elite (Kirchner/Lula); (ii) cheap credit for consumers to stimulate domestic consumption (Kirchner); and (iii) temporary unemployment benefits for workers laid off from closed small and medium size mines (Morales). The response of the Latin American regimes to date (up to the beginning of 2009) could be characterized as delusional, the belief that their economies would not be affected. This response was followed by an attempt to minimize the crisis, with the claim that the recession would not be severe and that most countries would experience a rapid recovery in “late 2009”. It is argued in this context that the existing foreign reserves would protect their countries from a more severe decline.

According to the IMF, 40% of Latin America’s financial wealth ($2.200 billion dollars) was lost in 2008 because of the decline of the stock market and other asset markets and currency depreciation. This decline is estimated to reduce domestic spending by 5% in 2009. The terms of trade for Latin America have deteriorated sharply as commodity prices have fallen sharply, making imports more expensive and raising the specter of growing trade deficits (Financial Times, January 9, 2009, p. 7).

The impact of these “developments” can be traced out not only in regime politics but on the class structure and the correlation of forces associated with this structure. Thus, the fall in the demand and price of primary commodities is resulting in a sharp decline in income, the power and the solvency of the agromineral exporters that dominated state policy in recent years. Much of their expansion during the “boom years” was debt-financed, in some cases with dollar and euro-denominated loans (Financial Times, January 9, 2009, p.7). But many of the highly indebted “export elite” now face bankruptcy and are pressuring their governments to relieve them of immediate debt obligations. And in the course of the recession/depression there will be a further concentration and centralization of agro-mineral capital as many medium and large miners and capitalist farmers are foreclosed or forced to sell. The relative decline of the contribution of the agro-mineral sector to the GDP and state revenues means they will have less leverage over the government and economic decision making. The collapse of their overseas markets and their dependence on the state to subsidize their debts and intervene in the market means that the “neoliberal” free market ideology is dead – for the duration of the recession. Weakened economically, the agro-mineral elite are turning to the state as its instrument of survival, recovery and refinancing.

In this new context, the “new statism” in formation has absolutely nothing “progressive” about it, let alone any claim to “socialism”. The state under the influence of the primary sector elites assumes the primary task of imposing the entire burden of the recession on the backs of the workers, employees, small farmers and business operators. In other words, the state is charged with indebting the mass of people in order to subsidize the debts of the elite export sector and provide zero cost loans to capital. Massive cuts in social services (health, pensions and education), and salaries will be backed by state repression. In the final analysis the increased role of the state will be primarily directed to financing the debt and subsidizing loans to the ruling class.

The State of U.S. Relations in Latin America in the Current Conjuncture

If the U.S. suffered a severe loss of influence in the first half decade of the early 2000s due to mass mobilization and popular movements ousting its clients, during the subsequent four years the U.S. retained political influence among the most reactionary regimes in the region, especially Mexico, Peru and Colombia. Despite the decline of mass mobilizations after 2004, the after-effects continued to ripple through regional relations and blocked efforts by Washington to return to relations that had existed during the “golden decade” of pillage (1990-1999).

While internal political dynamics put the brakes on any return to the 1990s, several other factors undermined Washington’s assertion of full scale dominance: (i) The U.S. turned all of its attention, resources and military efforts toward multiple wars in South Asia (Afghanistan), Iraq and Somalia and to war preparations against Iran while backing Israel”s aggression against Palestine, Lebanon and Syria. Because of the prolonged and losing character of these wars, Washington remained relatively immobilized as far as South America was concerned. Equally important Washington’s declaration of a intensified worldwide counter-insurgency offensive (the “War on Terror”) diverted resources toward other regions. With the U.S. empire builders occupied elsewhere, Latin America was relatively free to pursue a more autonomous political agenda, including greater regional integrations, to the point of rejecting the U.S. proposed “Free Trade Agreement.”

In this new context the spectrum of international relations between the U.S. and Latin America runs the gamut from “independence” (Venezuela), “relative autonomy” within competitive capitalism (Brazil), relative autonomy and critical opposition (Bolivia) to selective collaboration (Chile) and deep collaboration within a neoliberal framework (Mexico, Peru and Colombia). Venezuela constructed its leadership of the alternative nationalist pole in Latin America, in reaction to U.S. intervention. Chávez has sustained its independent position through nationalist social welfare measures, which has garnered mass support. A policy of “independence” was made possible, and financed as it were, by the commodity boom and the jump in oil prices. The “dialectic” of the US-Venezuelan conflict evolved in the context of U.S. economic weakness and over-extended warfare in the Middle East on the one hand and economic prosperity in Venezuela, which allowed it to gain regional and even international allies, on the other.

The autonomous-competitive tendency in Latin America is embodied by Brazil. Aided by the expansive agro-mineral export boom, Brazil projected itself on the world trade and investment scene, while deepening its economic expansion among its smaller and weaker neighbors like Paraguay, Bolivia, Uruguay and Ecuador. Brazil, like the other BRIC countries, which include Russia, India and China, forms part of newly emerging expansionist power center intent on competing and sharing with the U.S. control over the region’s abundant resources and the smaller countries in Latin America. Brazil under Lula shares Washington’s economic imperial vision (backed by its armed forces) even as it competes with the U.S. for supremacy. In this context, Brazil seeks extra-regional imperial allies in Europe (mainly France) and it uses the “regional” forums and bilateral agreements with the nationalist regimes to “balance” its powerful economic links with Euro-US financial and multi-national capital.

At the opposite end of the spectrum are the “imperial collaborator” regimes of Colombia, Mexico and Peru, which remain steadfast in their pro-imperial loyalties. They are Washington’s reliable supporters against the nationalist Chávez government and staunch backers of bilateral free trade agreements with the U.S.

The other countries in the region, including Chile and Argentina, continue to oscillate and improvise their policies in relation to and among these three blocs. But what should be absolutely clear is that all the countries, whether radical nationalist or imperial collaborators operate within a capitalist economy and class system in which market relations and the capitalist classes are still the central players.

Socialism and the Latin American State in the Current Conjuncture of the Class Struggle

Control of the state is an essential condition for establishing socialism. But it is evident that a more critical factor is the composition of the social forces that have managed to achieve state power by one means or the other. From 2003 to 2008, in the context of a primary commodities boom and a serious decline in the mobilizing power of neoliberal globalization, one state after the other in Latin America has tilted to the Left in establishing a nominally anti-neoliberal regime. However, the only regime in the region with a socialist project is that of Chávez, who has used the additional fiscal resources derived from the sale of oil and the primary commodities boom—specifically the growing world demand for oil – to turn the state in a socialist direction under the ideological banner of the “Bolivarian Revolution”. All of the other center-left regimes formed in this conjuncture for one reason or the other, and regardless of their national sovereignty concerns vis-à-vis U.S. imperialism, have retained an essential commitment to neoliberalism, albeit in a more socially inclusive and pragmatic form as prescribed by the post-Washington Consensus (Ocampo, 1998). A surprising feature of these centre-left regimes is that not one of them—again Venezuela (and of course Cuba) the exception—use their additional fiscal revenues derived from the primary commodities boom to reorient the state in a socialist direction, i.e. to share the wealth or, at least, in the absence of any attempt to flatten or eliminate the class structure to redirect fiscal revenues toward programs designed to improve the lot of the subordinate classes and the poor. Again, Chávez” is the exception in the use of windfall fiscal revenues derived from the primary commodities boom (oil revenues in the case of Venezuela) to improve conditions for the working class and the popular classes. The statistics regarding this “development” (see Weisbrot, 2009) are startling. Over the entire decade of Chávez rule, social spending per capita has tripled and the number of social security beneficiaries more than doubled; the percentage of households in poverty has been reduced by 39%, and extreme poverty by more than half. During the primary commodities boom (2003-2008), the poverty rate in Venezuela was cut by more than half, from 54% of households in the first half of 2003 to 26% at the end of 2008. Extreme poverty fell even more (by 72%). And these poverty rates measure only cash income, and do not take into account increased access to health care or education. However, in the other countries in the region governed by a centre-of-left regimes, not one of which is oriented towards socialism, conditions were and are very different. In a few cases (Chile, Brazil) the rate of extreme poverty was cut, but in all cases, despite recourse to an anti-poverty program following the PWC, government spending was relatively regressive. In only one case (Venezuela) is per capita PSE greater today than it was in 2000 in the vortex of a widespread crisis and a zero growth (Clements, Faircloth and Verhoeven, 2007). In many cases social programs and government spending was allocated so as to distribute more benefits to the richest stratum of households and the well to do than to the working class and the poor.6 Even in the case of Bolivia, where the Morales-Garcia Lineres regime has a clearly defined anti-neoliberal and anti-US imperialist orientation, not only has the government not expanded social program expenditures relative to investments and expenditures designed to alleviate the concerns of foreign investors but the richest stratum of households benefited more from fiscal expenditures on social programs than the poorest (Petras and Veltmeyer, 2009). All of the centre-left regimes that have came to power in this millennium, especially Brazil and Chile, elaborated anti-poverty programs with reference to the PWC. In the case of Bolivia fiscal expenditures on social programs defined by the “new social policy” of the post-Washington Consensus have been supplemented by a populist program of bonuses and handouts, and popular programs in health and education, but these have been almost entirely financed by Cuba and Venezuela. As for the fiscal resources derived from Bolivia’s participation in the primary commodities boom they have been allocated with a greater sensitivity to the concerns of foreign investors than the demands of the working class and the indigenous poor.

In this situation what is needed is not only access to state power, which the social movements managed to ostensibly achieve via the election of Evo Morales, but an ideological commitment of the government to socialism – to turn the state in a socialist direction. In this connection the Chávez regime is unique among Latin American heads of state. Even so the road ahead for the Bolivarian revolution in bringing about socialism of the twenty-first century promises to be long and “rocky”, as in the case of Cuba littered with numerous pitfalls but unlike Cuba with the likely growth in the forces of opposition.

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The Tamil people in Sri Lanka had expectations that they would achieve equal rights and power with the Sinhalese once independence was won from the British colonialists. As the independence movement was winning over colonialization there was no talk of any Tamil separatism.

Even before the defeat of the Axis powers, Britain prepared to decolonize Ceylon. In 1943, the colonial secretary of state stated that a constitution would be drafted will all parties involved. A condition would be that “The Parliament of Ceylon shall not make any law rendering persons of any community or religion liable to disabilities or restrictions to which persons of other communities are not made liable …”²

Britain established the Soulbury Commission in 1944. The leading Sinhalese politician was D.S. Senanayake—a conservative, who founded, in 1946, the rightist pro-independence and pro-capitalist United National Party (UNP). Senanayake became known as the “Father of Sri Lanka.” He convinced a leading Tamil politician, G.G. Ponnamblam—who founded the All Ceylon Tamil Congress (ACTC), in 1944—to partake in independence negotiations.

Another provision of the Soulbury Commission (Constitution) was that any bill which evoked “serious opposition by any racial or religious community and which, in the opinion of the Governor-General is likely to involve oppression or serious injustice to any community must be reserved by the Governor-General.”

The vote on the third reading of the “Free Lanka” bill was supported by all the Muslim members and by most Tamil and Sinhalese groups. “Some of the other minority members who did not want to openly support the bill took care to be absent or abstain. Finally, the debate and the vote of acceptance on the eighth and ninth of September 1945 was the most significant indication of general reconciliation among the ethnic and regional groups. Far exceeding the 3/4 majority required by the Soulbury Commission, Senanayake had 51 votes in favor, and only three votes against the adoption of the constitution. The vote was ‘in many ways a vote of confidence by all communities…and the minorities were as anxious as the majority for self-government.’”

Senanayake’s speech in proposing the motion of acceptance made reference to the minorities and said … “throughout this period the Ministers had in view one objective only, the attainment of maximum freedom. Accusations of Sinhalese domination have been bandied about. We can afford to ignore them for it must be plain to every one that what we sought was not Sinhalese domination, but Ceylonese domination. We devised a scheme that gave heavy weightage to the minorities; we deliberately protected them against discriminatory legislation. We vested important powers in the Governor-General… We decided upon an Independent Public Service Commission so as to give assurance that there should be no communalism in the Public Service. I do not normally speak as a Sinhalese, and I do not think that the Leader of this Council ought to think of himself as a Sinhalese representative, but for once I should like to speak as a Sinhalese and assert with all the force at my command that the interests of one community are the interests of all. We are one of another, what ever race or creed.”

The first national election was held August 23-September 30, 1947. 1,887, 364 people voted for 95 MP (members of parliament). There were six parties and many independents. The results were:

UNP with 39.8% (42 MPs)

LSSP 10.8% (10)

BLPI 6% (5)

ACTC 4.4% (7)

CIC 3.8% (6)

CPC 3.7% (3)

Labor 1.4% (1)

Independents 29% (16)³

“We are one of another, whatever race or creed,” swore the “Father” of the new independent State. It looked good for all ethnic and religious groups, but then the deceit became evident with the new citizenship act.

On February 4, 1948, the new government introduced the Ceylon Citizenship Bill before Parliament. The outward purpose of the bill was to provide a means of obtaining citizenship, but I think its real purpose was to discriminate against the Indian Tamils by denying them citizenship. The Ceylon Citizenship Act no. 18, August 20, 1948 denied citizenship to 11% of the population.

Although the All Ceylon Tamil Congress opposed the bill, it had joined with the UNP. This provoked half of its members to form the Federal Party, led by SJV Chelvanayakam. Next year, the Indian and Pakistani Residents Act, no.3, disenfranchised nearly all Tamils, who were originally from India. Their seven MPs were kicked out of parliament and there were no Indian Tamils in the 1952 parliament elections. It wasn’t until 1988 that the Sri Lanka government granted citizenship to stateless persons, who hadn’t applied for Indian citizenship. In 2003, 168,141 descendants of Indian Tamils were allowed citizenship.

The new government allowed Sinhalese to appropriate land on the Tamil traditional homeland in the north and east. Entire villages were driven out—ethnic cleansing—which the Sinhalese settled, aiming to break a geographic continuity of the Tamil homeland.⁴ Within time, Sinhalese settlers had taken over 30% of Tamil lands and homes—a la Israel in Palestine.

In 1956, The Sinhala Only Act became law. It mandated Sinhala as “the sole official language”, which, at that time was spoken by 70% of the population.

Supporters of the law saw it as an attempt by a community that had just gained independence to distance themselves from their colonial masters, while its opponents viewed it as an attempt by the linguistic majority to oppress and assert dominance on minorities. The Act symbolizes the post independent majority Sinhalese to assert its Sri Lanka’s identity as a nation state, and for Tamils, it became a symbol of minority oppression and a justification for them to demand a separate nation state, which resulted in decades of civil war.

Tamils protested the discriminatory law by using Gandhian tactics of non-violent sit-ins. Although stated advocates of non-violence, Buddhist monks led Sinhalese mobs against Tamils.

The Gal Oya riots… were the first ethnic riots that targeted the minority Sri Lankan Tamils… The riots took place from June 11, 1956 and occurred over the next five days. Local majority Sinhalese colonists and employees of the Gal Oya settlement board commandeered government vehicles, dynamite and weapons and massacred minority Tamils… It is estimated that over 150 people lost their lives due in the violence. Although initially inactive, the Police and the Army were eventually able to re-take control of the situation and brought the riots under control.

Tamil political leader SJV Chelvanayagam began to organize a massive Satyagraha (non-violent resistance). In order to avoid even more bloodshed, Prime Minister Solomon Bandaranayaka signed an agreement with Chelvanayagam promising to restore Tamil as the (or one of two) official language(s) in its minority areas. This infuriated many Sinhalese, especially monks, and they assaulted and sometimes killed Tamils in many areas. Buddhist monks even besieged the official residence of Bandaranayaka demanding that he abandoned the agreement, which he did. But, in 1958, the Sinhalese-led parliament, pressed by the violence and the pro-Moscow and Trotskyist Sinhalese parties, passed an amendment to the Sinhala Only Act (called “Sinhala Only, Tamil Also”) restoring Tamil as a co-official language in their areas of the North and East. Frustrated at the compromise, Sinhalese mobs murdered 200-300 Tamils, including some Sinhalese who gave Tamils refuge. Many Tamil women were raped and some Tamil boys were stripped, bound, and burned alive. This violent hatred evokes the lynching and burning alive of black people by whites in the southern USA.

Some Buddhists were angry that the Sinhalese Prime Minister Bandaranayaka had tried to compromise with Tamils. In 1959, a Buddhist monk assassinated him.

The language law had its intended effect. In 1955, the civil service had been largely made of Tamils, who had benefited more than Sinhalese from western style education provided by missionaries. This fact was used by populist Sinhalese politicians to come to power—or retain power—on the promise of providing more civil service jobs to Sinhalese by demanding that their language be the only one used in public service. By 1970, the civil service was almost entirely Sinhalese. Thousands of Tamil civil servants were forced to resign due to lack of fluency in Sinhala. In the1960s, government forms and services were virtually unavailable to Tamils.

Confrontation became the modus operandi; Sinhalese were the Zionists and Tamils the Palestinians!

It is important to stress, especially with progressive-revolutionary governments, such as the ALBA alliance in Latin America, and their supporters throughout the world, that the Tamils’ history in Sri Lanka is one of constant and widespread discrimination. They are also subjects to a policy of genocide as defined by the United Nations.⁵

Sri Lanka made world headlines in 1960 when a woman, Sirimavo RD Bandaranaike, was elected prime minister—the world’s first female leader. Being the widow of the martyr and founder of the Sri Lanka Freedom Party (SLFP) was an asset. She immediately brought Sri Lanka into the Non-Alignment Movement, founded in 1961. The originators—India’s Nehru, Egypt’s Nasser, Yugoslavia’s Tito and Ghana’s Nkrumah—sought support for each other’s sovereignty without aligning with either super-power bloc at that time.⁶

Nevertheless, Sri Lankan leaders of both predominantly Sinhala major parties continued to be dependent upon economic and military ties with India, the US, the UK, and Israel. Social welfare programs were carried out within a capitalist economic structure. This was a cause for radical opposition. In 1971, thousands of Sinhalese students, and Indian Tamil plantation workers, under the leadership of a new nationalistic and Marxist-oriented political party, Janatha Vimukthi Peramana (JVP), translated as Peoples Liberation Front, engaged in anti-government clashes. Fifteen thousand protestors were killed in the uprising.

Once in power, Bandaranaike’s widow did not alter the Sinhalese policy of genocide: “…an ingenious device was resorted to deprive the Tamils of the constitutional safeguards and the characteristics of the conditional polity. A coalition of three Sinhalese political parties, led by Mrs. Sirimavo R.D.Bandaranaike, called upon the people to give a mandate [in the 1970 General Elections, during her second term] for a new Constituent Assembly to scrap the 1948 dominion polity and create a new Republic of Sri Lanka. Whilst the voters in the seven Sinhalese provinces gave Mrs.Bandaranaike the mandate that she had requested, the Tamil voters in the Northern and Eastern Provinces summarily rejected her call. In the North and East, a mere 14% of the votes polled supported the call for a new constituent Assembly.”

Laws protecting rights of racial and religious minorities were abandoned and Buddhism was made the constitutional religion of Sri Lanka.

Sinhalese claimed 5000 acres in the Tamil farmland “Nochikulam” as theirs, renaming it “Nochiyagama.” Next year, 10,738 Sinhalese families settled in Trincomalee illegally.

“The sovereignty of the Tamil people (who were ethnically, geographically and linguistically separately identifiable and distinct) revived.”

With this setback, a reinvigorated ACTC joined with the Federal Party, in 1972, to form the Tamil United Front (TUF). Separatism or autonomy now became the cry for nearly all Tamils, who sought an Eelam part of Sri Lanka. Thirty Tamil militant groups emerged.

“The operative part is Thamil Eelam and it means the Tamil part of Eelam. The term Eelam is a synonym for Sri Lanka and has been in use in Tamil literature right from the Cankam Period dating as far back as 200 B.C. to circa 250 A.D.”

The second government of Sirimavo Bandaranaike enacted a discriminatory double standard law for admission grades to universities, requiring Tamil students to achieve higher grades than Sinhalese.

Throughout the 1970s, Sinhalese mobs clashed—with impunity—not only with Tamils but also Muslim Moors. In 1976, Sinhalese burned 271 houses and 44 shops, murdering a score of Muslims.

In 1976, the Tamil United Front Party changed its name to the Tamil United Liberation Front (TUFP) at the Vattukottai Conference, and adopted a demand for an independent sovereign state in traditional Tamil homeland in the north and east to be known as the “secular, socialist state of Tamil Eelam.”⁷

By 1975, Tamil militancy increased with the birth of the Liberation Tigers of Tamil Eelam (LTTE), led by Velupillai Prabhakaran, who considered himself a Marxist and follower of Che Guevara. The LTTE engaged in small armed clashes with the military.

The conservative UNP won a landslide victory in the July 1977 elections. But the pro-independence TULF won 6.4% of the popular vote, winning all 14 seats in the Tamil homeland area, and four more seats of the 168-member parliament. In response to Tamil’s peaceful struggle and its parliamentary victory, Sinhalese mobs, led by Buddhist monks, again destroyed many Tamil homes and shops and murdered up to 300 Tamils.

In July 1978, the UNP, led by Prime Minister Junius Richard Jayewardene, changed the constitution and renamed the country the Democratic Socialist Republic of Sri Lanka. An executive presidency was established, allowing the president greater powers than the prime minister, whom the president now appoints. The president is also the commander-in-chief and head of the cabinet. He can dissolve parliament and has judicial impunity.

Jayewardene became the first president and appointed Ramasinghe Premadosa (UNP) prime minister. Despite the new name, “democratic socialist republic,” the capitalist government began deregulating much of what had been government run enterprises. Private enterprise was priority.

On May 31, 1981, the TULF held a rally in Jaffna in the north. Police clashed with Tamils and two policemen were killed. For three days, Sinhalese mobs, policemen, and soldiers went on a rampage. Several Tamils were taken from their homes and killed. The TULF headquarters, a newspaper office, presses, and shops were destroyed. Worst of all was the total destruction of the Jaffna library and its 97,000 volumes of books and irreplaceable historical manuscripts, some made of palm leaves. It is now well known that the fire that destroyed this unique institution of the Tamils in their homeland was masterminded by a handful of ministers of the Sinhala Government in Colombo, who were present in Jaffna the night of the fire.

“The national newspapers did not carry information about the incident and in subsequent parliamentary debates some majority Sinhalese members reminded minority Tamil politicians that if Tamils were unhappy in Sri Lanka, they should leave for their homeland in India. This is a direct quotation from United National Party member MP WJM Lokubandara:

“If there is discrimination in this land which is not their (Tamil) homeland, then why try to stay here? Why not go back home (India) where there would be no discrimination?”

“Twenty years later, the mayor of Jaffna, Nadarajah Raviraj, still grieved at the recollection of the flames he saw as a University student. He was later killed by unknown gunmen in the capital Colombo, in 2006.”

Civil War and LTTE

By summer 1983, the then small guerrilla army of LTTE was well settled in most northern and eastern areas. Their first major assault against the state’s military took place at Jaffna peninsula, July 24. LTTE ambushed a convoy of soldiers passing through land mines and killed 15.

This could have been in response to many random attacks upon Tamils in various areas. One example is in Trincomalee where, on 10 April 1983, a young Tamil died in police custody after having been held without charge for two weeks. At the judicial inquest into his death, on May 31, the Jaffna Magistrate returned a verdict of homicide. Three days later, the government changed the rules permitting the police to bury or cremate bodies without a post mortem or an inquest.

Amnesty International cabled President Jayawardene expressing concern that such a regulation could give rise to grave human rights violations and appealed to him to rescind it. But he did not. On the contrary, on June 3, 1983, the day that the new Emergency Regulation was brought into effect, the attacks on the Tamils in Trincomalee commenced in earnest.

R. Sampanthan, M.P. for Trincomalee, described that mobs of Sinhalese went from village to village setting fire to Tamil houses and shops. A particular modus operandi was observed. Heavily armed service personnel would enter a Tamil area and carry out a search alleging that explosions and dangerous weapons were hidden in that area. Invariably nothing would be recovered other than implements that would normally be available in any house. Sometimes Tamil youths would be arrested on “suspicion” and taken for questioning. After a month of many pogrom raids, the LTTE struck the army convoy.

That night and for weeks Sinhalese rampaged against Tamils, especially in the Colombo area where some Tamils youths were stripped naked and burned alive in petrol. Black July ended with between 2000 and 3000 dead Tamils, among them 53 prisoners, including key political leaders, who were murdered by Sinhalese prisoners at Welikadai. One political prisoner, Kuttimani, had his eyes gouged out and stomped upon under a soldier’s boots.

One hundred thousand Tamils were rendered homeless and that many and more fled to India.

Even non-violent advocates of separatism or independence, such as the TULF, were pushed out of the democratic process. The Sixth Amendment to the Constitution, enacted in August 1983, classified all separatist movements as unconstitutional. That meant that all its members of parliament—16 then—lost their seats. Thousands of Tamil youth joined militant armed groups, especially the LTTE, which became the most disciplined and well organized.

Throughout the 1980s and 1990s, the LTTE established a de facto state, called Tamil Eelam, and managed a government, which provided a judicial court system, a police force, and social assistance in health and education and for the poorest. LTTE ran a bank, a radio station (Voice of Tigers), even a television station. Guerrilla leaders helped organize small cooperative farming units based on traditional methods. The LTTE dismantled the caste system and officially stopped discrimination against women. The LTTE organized a civilian administration under its command. There was order and peace in these areas, as long as everyone obeyed and when the Sri Lanka army did not bomb.

In the 1980s, there was much discontent in other parts of Sri Lanka. Radical Sinhalese youths, such as the JVP, demanded going further towards socialism. In 1987, JVP engaged in another armed uprising. But after 1989, it entered into parliamentary politics. It participated in the 1994 parliamentary general election and joined conservative and liberal party coalitions in opposing equal rights with Tamils.

Ranasinghe Premadasa was prime minister from February 1978 to January 1, 1989, under President Jayewardene, and then he became president until his assassination on Mayday 1993. Many Sinhalese elitists thought he was too common to be their leader and too compromising with Tamils. Controversial policies under his terms included the matter of language, ethnic cleansing, and the role of India in internal affairs. The first controversy was the constitutional amendment allowing “equality” of languages in the Tamil areas: “National languages shall be Sinhala and Tamil,” although, “The official language of Sri Lanka shall be Sinhala. Tamil shall also be an official language. English shall be a link language.”

This compromise spoke in double tongues. Why not just make Sinhala and Tamil equally official, as India has done with a score of languages?

Alienated Tamils

Even a U.S. Library of Congress study characterized Tamils as alienated. In 1988, it published, SriLanka: a Country Study. In the chapter entitled, “Tamil Alienation,” the authors wrote:

Moderate as well as militant Sri Lankan Tamils have regarded the policies of successive Sinhalese governments in Colombo with suspicion and resentment since at least the mid-1950s, when the “Sinhala Only” language policy was adopted…

Several issues provided the focus for Sri Lankan Tamil alienation and widespread support, particularly within the younger generation, for extremist movements…Sinhalese still remained the higher-status “official language,” and inductees into the civil service were expected to acquire proficiency in it. Other areas of disagreement concerned preference given to Sinhalese applicants for university admissions and public employment, and allegations of government encouragement of Sinhalese settlement in Tamil-majority areas.

“Government-sponsored settlement of Sinhalese in the northern or eastern parts of the island, traditionally considered to be Tamil regions, has been perhaps the most immediate cause of inter-communal violence. There was, for example, an official plan in the mid-1980s to settle 30,000 Sinhalese in the dry zone of Northern Province, giving each settler land and funds to build a house and each community armed protection in the form of rifles and machine guns. Tamil spokesmen accused the government of promoting a new form of ‘colonialism’,” but the Jayewardene government asserted that no part of the island could legitimately be considered an ethnic homeland and thus closed to settlement from outside. Settlement schemes were popular with the poorer and less fortunate classes of Sinhalese.”

Che Guevara made no bones about the significance of alienation: “…the ultimate and most important revolutionary aspiration (is) to see man liberated from his alienation.”⁸

India’s Vacillating Role

The role of India in Sri Lanka’s civil war was a major problem. India’s Prime Minister Rajiv Gandhi, son of assassinated Prime Minister Indira Gandhi, first supported the LTTE. His air force even dropped 25 tons of aid in their territory in Jaffna (Operation Poomalai). A month following this, the Indo-Sri Lanka Peace Accord was signed between Gandhi and the reluctant Prime Minister Ranasinghe Presmadasa, under pressure from his president, JR Jayewardene. The July 29, 1987 accord was expected to resolve the ongoing civil war. Colombo agreed to devolution of power to the Tamil provinces, and its military was to withdraw in exchange for the Tamil rebels’ disarmament. The LTTE had not been made party to the talks but reluctantly agreed to surrender arms to the Indian Peace Keeping Force. Within a few months, however, both sides flared into an active confrontation. Indian soldiers died in far greater numbers than Tamil rebels: 1,500 killed and 4,500 wounded.

In January 1989, Premadasa was elected President on a popular platform promising that the Indian Peace Keeping Force would leave within three months. The police action was unpopular in India as well, especially with some 50 million Tamil Nadu people. Gandhi refused to withdraw India’s troops, however, believing that the only way to end the civil war was to politically force Premadasa and to militarily force the LTTE to accept the accord. But, in December 1989, Vishwanath Pratap Singh was elected India’s Prime Minister and completed the pullout.

On May 21, 1991, in an act of revenge over India’s militarist actions, a female LTTE member blew up Rajiv Gandhi in a suicide bomb attack. In 1992, India became the first government, even before Sri Lanka, to declare the LTTE a terrorist group.

President Premadasa resumed the civil war, which became stalemated. Many forces were angry with him, including a rival Sinhalese leader Lalith Athulathmudali, who sought an impeachment motion against Premadasa, in 1991. Lalith was an adamant supporter of Zionism.

When Athulathmudali, a pro-Israeli power broker, challenged Premadasa two years ago with an impeachment motion in the parliament, Premadasa openly accused Mossad, the intelligence agency of Israel, of trying to topple him. In his address to the Sri Lankan parliament, Premadasa said,

“…I had Israeli interests section removed. In such a context there is nothing to be surprised about the Mossad rising up against me. Please remember that there are among us traitors who have gone to Israeli universities and lectured there and earned dirty money…”

cited Sachi Sri Kantha, quoting the prime minister in “The Puzzles in President Premadasa’s Assassination Revisited.”

In April 1993, Athulathmudali was murdered. Eight days later, on Mayday, Premadasa was murdered. The LTTE did not claim responsibility for these assassinations but were so blamed by Sinhalese and the mass media.

“When Athulathmudali was assassinated last April, the members of his party immediately accused Premadasa for ordering the killing. The murder of Premadasa could have been a return hit planned and executed by the Mossad which had lost its major card in Sri Lankan politics.”

The second Eelam war lasted from 1989 until November 1994 when the People’s Alliance (led by SLFP) candidate, Chandrika Bandaranaike Kumaratunga, won the presidency. But peace negotiations broke down and the war continued from 1995 until the end of 2001 when ceasefire negotiations made progress. But not before the LTTE proved to the Sri Lanka government and military, with 230,000 well armed troops, that it was its equal. With somewhere around 5000 guerrillas—along with a small Sea Tigers boat unit, which made some pirate hits for funding, and even a few light civilian aircraft, the Sky Tigers, which sometimes made damaging raids against the Air Force—the LTTE won many military victories.

The Sri Lankan military often bombed civilian Tamils in the LTTE-controlled zones. It claimed that they were legitimate “collateral damage” given that the guerrillas allegedly forced them to remain against their will. The civilian hostage charge was widely reported as truth by the west and its mass media, as was the allegation that the LTTE forces children into armed combat.

On January 31, 1996, the LTTE stunned the nation when it bombed the Central Bank in Colombo, which managed most financial business accounts. One suicide bomber with 200 kilos of explosions drove through the main gate and exploded, wiping out many bank floors and several other buildings. Behind him came a vehicle with two cadres firing rifles and launchers. They escaped but were later captured. Material damage was tremendous but more so was the loss of 53 lives and injuries to 1,400 people, most of them not military targets.

On July 24, 1996, LTTE forces bombed a commuter train killing 70 Sinhalese civilians. By the end of the 1990s, both sides had killed tens of thousands of people. Civilians were targeted by both sides. The Tigers claimed that civilians were targeted only when associated with military installations. But some attacks, such as the train, were unjustifiable. Furthermore, the LTTE has often murdered other Tamils who also seek autonomy but were not part of the LTTE or had made public critiques. It has, for example, killed several leaders of the TULF.

On April 22, 2000 LTTE forces surprisingly overran Sri Lanka’s Elephant Pass military base on Jaffna. Over 1,000 troops were killed and huge quantities of arms and ammunition were taken.

On July 24, 2001, the LTTE again stunned the nation and the world when it attacked the only international airport and the nearby military base.

Around 3:30 am on July 24, 14 members of the LTTE Black Tiger suicide squad infiltrated Katunayake air base… After destroying electricity transformers to plunge the base in darkness they cut through the barbed wire surrounding the base to begin their assault. Using rocket propelled grenades, anti-tank weapons and assault rifles, the militants attacked the air force planes. They were not able to attack the aircraft in the hangars but did destroy eight military aircraft on the tarmac: three Nanchange K-8 trainer aircraft, one Mil Mi-17 helicopter, one Mil Mi-24 helicopter, two LAI Kfir fighter jets, and a Mig-27. Five K-8s and one MiG-27 were also damaged. A total of 26 aircraft were either damaged or destroyed in the attack.

Eight Tigers and three air force officers died in the battle at the air base. The six remaining LTTE members then crossed the runway to nearby Bandaranaike Airport. Using their weapons, they began blowing up any civilian aircraft they could find, which were all empty. One Airbus340 was destroyed by an explosive charge; an A330 was destroyed by a rocket fired from the control tower. In addition, an A320-200 and an A340-300 were damaged in the assault.”

All 14 guerrillas were killed, along with six Sri Lankan air force personnel and one soldier killed by friendly fire; 12 soldiers were injured, along with three Sri Lankan civilians and a Russian engineer… The cost of replacing the civilian aircraft was estimated at $350 million USD. The attack caused a slowdown in the economy of Sri Lanka, to about -1.4%. Tourism also plummeted, dropping 15.5% at the end of the year.

Cease Fire

During two decades of civil war, the LTTE had several times offered a ceasefire on the condition of negotiations to establish peace and ethnic equality. With this military victory, the guerrilla army offered a unilateral ceasefire. Some national voices and many international ones were also pressing for a ceasefire. Norway took concrete steps, but it was this spectacular military victory and the loss to the economy that forced the government to the bargaining table.

The formal Ceasefire Agreement (CFA) was signed on February 22, 2002. Prime Minister Ranil Wickremasinghe and LTTE leader Velupillai Pirabakaran signed the agreement, alongside mediator Jan Petersen representing Norway’s foreign ministry.

Provisions provided for each side holding their ground positions. Neither side was to engage in any offensive military operation or move munitions into the area controlled by the other side.

The LTTE proposed an Interim Self-Government Authority (ISGA) to administer the Tamil homeland, pending final agreement and elections. The ceasefire was monitored by the Sri Lanka Monitoring Mission. It was staffed by designees from Norway, Sweden, Finland, Denmark and Iceland. The US, UK and other EU countries had observers. Headquarters were established in Colombo, and there were 60 monitors in six district teams and two naval ones. The SLMM monitored violations and mediated between the two parties but could not enforce sanctions. Many Sinhalese considered the Monitoring Mission, especially Norway, of being partial to the Tigers.

During the ceasefire, progress was made in agricultural development and general infrastructure in the Tamil Homeland. Many foreigners were invited to observe and participate in building Tamil Eelam. Impressive first-hand accounts have been written about the progress in many areas: administrative, economic and a social welfare network. While voices friendly to this process praised the advances made, many also questioned the lack of civilian input in the decision-making process.

The LTTE did not emphasize an international political solidarity movement. It did appeal for economic donations, which poured to it, especially from Tamils in the Diaspora. The LTTE stopped speaking of Marxism or building a socialist independent state. It emphasized winning militarily—if Sri Lanka continued preventing an autonomous Tamil homeland—and constructing a social welfare state with cooperative and private enterprises. The Tigers became so respectable they could openly purchase weaponry from some countries not directly under the thumb of US-EU-Israel or their partial antagonists: China, Iran and Pakistan. A May 29, 2009 Times Online piece quotes the editor of Jane’s Terrorism and Insurgency Centre, saying that the LTTE used 11 merchant ships to deliver weapons, many of which they got from Bulgaria, Ukraine, Cyprus, Thailand and Croatia. Even the World Bank recognized the LTTE as an unofficial State, according to its representative in Sri Lanka, Peter Harrold, in 2005.

The LTTE was even building a Tamil University where Tamils in the Diaspora would have taught. I spoke with one of them, a man who had earned a doctorate degree in environmental science and taught in European universities. He frequently visited the homeland he had left three decades previously. He hoped that he would return and teach once the university would be opened.

An activist in independence forces using peaceful methods, he wished to remain anonymous. His impressions were that the Tigers were the dominating factor in civilian administration but that as long as no one objected one felt safe in the Homeland areas whenever Colombo’s armed forces were not bombing. He was critical that the LTTE armed forces had resorted to terrorist methods in their history, such as assassinating political critics. The professor, however, did not think the LTTE forced children into combat or used civilians as human shields, generally.

“Tigers were good people, intelligent and sensitive to people and nature. But contradictions did exist. They were a strange animal.”

Cease Fire Ends

On December 26, 2004, the greatest earthquake-tsunami ever recorded (9.3) hit Southeast Asia. Eleven countries were deeply affected: 230,000 were killed or missing. Sri Lanka was one of the worst disasters. About 40,000 people were killed or missing; 1.5 million were displaced from their homes. International aid poured in but did not arrive in the North and East due to Sinhalese political party opposition. The LTTE organized all the aid it could muster for hundreds of thousands in the Tamil homeland. Foreign volunteers and emergency relief organizations praised the LTTE for its effective and caring work. There are many accounts of this.

Mahinda Rajapakse was appointed prime minister April 6, 2004, and then elected President on November 19, 2005 with just 50.3% of the vote. He was the pro-war candidate of a new coalition, the United People’s Freedom Alliance (UPFA). Tamil political parties and many foreign relief groups accused Rajapakse of diverting Tsunami relief funds designated for their homeland. In this complex reality, those parties most adamant about refusing aid to suffering Tamils and who demanded an end to the ceasefire with the objective of launching an all-out war were those claiming to be either hard-core Marxist-Communist-Trotskyists or self-proclaimed non-violent Buddhists.

“United People’s Freedom Alliance [is] undoubtedly the broadest coalition of progressive forces in the country. This coalition, which came into being in 2004 upon a platform of new liberal socio economic program and a resolve to defeat separatist terrorism, has since mobilized people around a social democratic agenda.”

This coalition is not just made up of alleged “progressives” but of “social” capitalists and self-styled “democratic socialists.” At the start, the coalition parties were: Sri Lanka Freedom Party, Janatha Vimukthi Peramuna, Sri Lanka Mahajana Pakshaya, Muslim National Unity Alliance, Mahajana Eksath Peramuna, Democratic United National Front, and Desha Vimukthi Janatha Party.

The Communist Party of Sri Lanka and the Lanka Sama Samaja Party signed a memorandum of understanding with the SLFP so their candidates would take part in parliamentary elections in the new coalition. They also joined the UPFA. On April 2, 2004, the alliance won 45.6% of the popular vote and took 105 out of 225 seats.

A Buddhist political party, the Jathika Hela Urumaya (JHU), was founded in February 2004 and participated in the 2004 parliamentary elections, winning 6% of the vote for nine seats. In 2007, it formally joined the hodge-podge UPFA coalition government and was given a ministry post.

On April 3, 2008, JHU’s leader gave his reasons for warring against Tamils to the United States government financed Voice of America radio station.

Athurliye Rathana, a Buddhist monk who heads the Jathika Hela Urumaya party in Sri Lanka’s parliament, wants to end the suffering by putting a quick end to the war. Speaking with VOA at a seaside hotel in this former tourist haven, Rathana says he supports the government’s latest military offensive to quash the rebel Liberation Tigers of Tamil Eelam.

“Anytime a militant group is harmful to peaceful people, then government should have the right to exercise constitutional law and order,” Rathana said. “And, LTTE is unlawful and so, under our constitutional law, anyone cannot exercise militancy. But [with] the LTTE separatist movement, the government has some duty to control their military activities. I say only one thing, ‘Please do your duty.’”

For comments like that, the Sri Lankan media has branded Rathana the “war monk,”… his sentiments are common in Sri Lanka’s majority ethnic Sinhala community.

Rathana is a celebrated figure in this predominantly Buddhist nation, where monks are cherished for their spiritual guidance. The pro-war activism of Rathana and others has spurred as many as 30,000 Sinhalese young men to join the army in the past few months.

The UPFA alliance of apparently conflicting ideologies and economic policies is so strange that one can easily be confused about who is who and why their politics are such that they are. After a month’s research, having begun as a total novice to this region, I am unclear about why various political forces take the position they do not only about the Tigers but about the entire Tamil ethnic group. For many Sinhalese, an engrained racism is clearly a major motivation. But how can one explain that a Tamil group, Eelam People’s Democratic Party, also takes part in this coalition of Sinhalese racists? The EPDP is a paramilitary group fighting against the LTTE alongside the government. It even has one member in parliament. EPDP also assassinates civilians, including BBC reporter Nimalarajan Mylvaganam.

The Cease Fire Agreement was a thorn in the side of the new ruling coalition. Although the government claimed that the Sri Lanka Monitoring Mission favored the Tiger guerrillas, its monitors had lodged 3006 violations committed by the LTTE and only 133 by the government, as of June 30, 2005. From May 2006 onward to its termination in January 2008, the Monitoring Mission was hampered by worsening hostilities, especially following a Sea Tiger boat attack on a navy convoy, May 11, 2006.

The European Union then placed the Tigers on its terrorist list, while appearing to be even-handed by calling upon the Sri Lankan government to end its “culture of impunity” and to “curb violence” in its areas of control.

Sweden, Finland and Denmark, as members of EU, also considered the Tigers to be terrorists, and the LTTE objected to their membership on the Monitoring Mission. They withdrew leaving only Norway and Iceland with 20 monitors. The reduced Sri Lanka Monitoring Mission disbanded in 2008. The path for a full war was clear.

1. John Pilger, “Distant Voices, Desperate Lives,” New Statesman, May 13, 2009.
2. See Article 29 of Soulbury Commission.
3. LSSP=Ceylon Equal Society Party comprised of Sinhalese Trotskyists; BLPI=Bolshevik-Leninist Party of India also Trotskyists; CIC=Ceylon Indian Congress, which soon changed its name to Ceylon Workers Congress, represented the Indian Tamils of the Estates Workers Trade Union; CPC, the Communist Party of Ceylon, with a pro-Moscow line; Labour was fashioned after Clement Attlee-led British Labour party. The Marxist parties later colluded with capitalist Sinhalese parties in opposing equality with Tamils. The CPC is now the Communist Party of Sri Lanka, which is part of the United People’s Freedom Alliance that includes the Sri Lanka Freedom Party-led government of Mahinda Rajapaksa.
4. “The Unspeakable Truth,” British Tamil Forum, 2008, p.8.
5. See part 1, “Justice for Sri Lanka Tamils.”
6. In 1976, Colombo was the summit site. In 1979, the Havana Declaration ensured “the national independence, sovereignty, territorial integrity and security of non-aligned countries” in their struggle against “imperialism, colonialism, neo-colonialism and racism.” In 2006, there were 118 member nations, representing 55% of the world’s population. Many of these nations have been at war with one another, and many have aligned with one or other of the previous super-powers.
7. My reading of Tamil history shows many discrepancies in dates and events. Different writings on the LTTE contend it was created at different times, either in 1972, 1975 or 1976.
8. Che Guevara, Socialism and man, Marcha, Uruguay, March 12, 1965.

We are fast approaching the stage of the ultimate inversion: the stage where the government is free to do anything it pleases, while the citizens may act only by permission; which is the stage of the darkest periods of human history, the stage of rule by brute force.

– Ayn Rand¹

Industrial civilization has been a dirty affair. While it helped give rise to the wealth we see in the Industrialized core nations—typically associated with the United States and Europe—it has also led to an unprecedented centralization of power and left the people of the world dependent on its industrial infrastructure; and so for example, 75% of humans today live in the city, away from farms and the soil. To be sure, the city has allowed us much opportunity, not among the least of which is a tight knit framework in which to trade ideas, materials and useful stuff. All of this stuff, though, had to come from somewhere, and to meet that need importation from ghostly elsewheres has kept cities the world over running. And now, monumental problems face all of us as individuals and communities today, and the challenges and associated tasks ahead threaten the fairness strived for and achieved by concerned ancestors similar to ourselves. The gains of these people’s are encapsulated in such documents as the Magna Carta, Declaration of Independence, US Constitution and Bill of Rights. A history of arts, also, reminds of our sometimes vibrant past. However, plans by political, financial and industrial elites to forge new institutions unaccountable to the people represent new monopolies on force and favors which threaten the very social fabric of civilization.

In an article published by the Wall Street Journal, Janet Albrechtsen covers what she describes U.N. plans for a new government “scary.” She states:

We can only hope that world leaders will do nothing more than enjoy a pleasant bicycle ride around the charming streets of Copenhagen come December. For if they actually manage to wring out an agreement based on the current draft text of the Copenhagen climate-change treaty, the world is in for some nasty surprises. Draft text, you say? If you haven’t heard about it, that’s because none of our otherwise talkative political leaders have bothered to tell us what the drafters have already cobbled together for leaders to consider. And neither have the media.

The article cites for the most part the words of Lord Chris Monckton, the former advisor to Margaret Thatcher, who, at an address at Bethel University in St. Paul, Minnesota in November, blew the whistle and exposed the new governmental entity. He exposed the 181 page draft text, which entails United Nations Framework Convention on Climate Change, planned to be signed in December.

The ultimate aim of the treaty, as Monckton and myriads others are warning, is to erect a transnational government.

There is a provision under the Convention calling for a “government” which will have the power to directly intervene in the financial, economic, tax and environmental affairs of all nations that sign the Copenhagen treaty.

And so institutions which need not answer to the public are taking it upon themselves to solve environmental problems, but what do we do when their solutions are astoundingly wrongheaded?

The treaty requires developed countries to pay what is termed an “adaptation debt” to developing countries under the guise of supporting climate change mitigation. But the premise that the nation-state is the keystone institution in our social system is a misnomer, for the corporation fills that role. The largest associations and bodies are corporations and, as we will see, it is, to use a phrase made popular in the past year, the too-big-to-fail corporation which owes the rest of a massive “adaptation debt.” Moreover, many of the developing countries are servicing crippling IMF debts. It is therefore unlikely representatives of the West, especially Britain and the US, are interested in repaying the developing nations; unless, of course, much of these credits go towards fueling speculative economies in which those who sit on enough capital can line their bulging pockets.

Politically concerning are the number of “alternatives” and “options” featured in the treaty which officially undermine the democratic and republican bases of the modern Democratic Republics and give plenipotentiaries and policy makers room to do as they please.

In an interview with Alan Jones on Sydney radio Monday, Lord Monckton said, “This is the first time I’ve ever seen any transnational treaty referring to a new body to be set up under that treaty as a ‘government.’ But it’s the powers that are going to be given to this entirely unelected government that are so frightening…. The sheer ambition of this new world government is enormous right from the start—that’s even before it starts accreting powers to itself in the way that these entities inevitably always do.”

So, the power grab initiated last year with the collapse of Lehman Brothers—what actually was an assassination by other oligopolists—continues.

In his talk at St. Paul Monckton told attendees: “in the next few weeks, unless you stop it, your President will sign for freedom, your democracy, and your prosperity away forever.”²

Ron Paul echoed Lord’s sentiments, stating November 9, 2009 on the Alex Jones show:

If it works it will work for a little while and companies like Goldman Sachs and a few others will rip us off and get even more wealth. But it cannot help the economy; it has to hurt the economy. And it can’t possibly help the environment because they are totally off track on that. It might turn out to be one of the biggest hoaxes of all history this whole global warming terrorism that they’ve been using.

Paul is referring to the siren song of global warming, which is being touted by many of the well-connected as the sole reason for a revolutionary reorganization of human life on our planet. In fact, in books published by the Club of Rome, a premiere think tank, climate change is touted as a mean by which the global order based on the nation-state ought to be reconstructed; the think tank champions the politically useful reasons for this as opposed to concerning themselves with the environment—of which we the people are a part—at hand. When the threat is global warming, the Club of Rome has stated:

The common enemy of humanity is man. In searching for a new enemy to unite us, we came up with the idea that pollution, the threat of global warming, water shortages, famine and the like would fit the bill. All these dangers are caused by human intervention, and it is only through changed attitudes and behavior that they can be overcome. The real enemy then, is humanity itself…. The old democracies have functioned reasonably well over the last 200 years, but they appear now to be in a phase of complacent stagnation with little evidence of real leadership and innovation…. Democracy is not a panacea. It cannot organize everything and it is unaware of its own limits. These facts must be faced squarely. Sacrilegious though this may sound, democracy is no longer well suited for the tasks ahead. The complexity and the technical nature of many of today’s problems do not always allow elected representatives to make competent decisions at the right time.³

A who’s who of popular political figures and CEO’s has echoed the sentiments of that of the Club of Rome.

I believe it is appropriate to have an ‘over-representation’ of the facts on how dangerous it is, as a predicate for opening up the audience.

– Al Gore, Climate Change activist

I believe that the mere mass of industrial civilization poses a threat to the biodiversity of the planet: the building blocks which are responsible for us, for our ideas and emotions, inventions and systems. But, it is increasingly lucid that the framework by which climate-change and environmental degradation is framed by social engineers through political enunciations and the corporate media leaves much to be desired. For brevity’s sake, I will only mention that there is an intimate connection between plant life and carbon dioxide. So, why have we determined carbon dioxide is the main threat? We exhale it! Should we continue playing our roles, hanging on the false realities created by the leaders?

Humanity is sitting on a time bomb. If the vast majority of the world’s scientists are right, we have just ten years to avert a major catastrophe that could send our entire planet’s climate system into a tail-spin of epic destruction involving extreme weather, floods, droughts, epidemics and killer heat waves beyond anything we have ever experienced — a catastrophe of our own making.

– Al Gore, An Inconvenient Truth

This is rather alarming rhetoric for someone who, in the same breath, claims to have the near-ubiquitous support of the scientific community in his corner. He admits himself though that he is a pathological liar? Jokes on us if we let him cash in on our apathy and ignorance. By the way, when politicians and the propagandists refer to the “scientific community” they usually mean scientists who are members of corporate or governmental funded associations. Independent thinkers need not apply.

Isn’t the only hope for the planet that the industrialized civilizations collapse? Isn’t it our responsibility to bring that about?

– Maurice Strong, founder of the UN Environment Programme

Ok, so bringing down industrial civilization sounds pretty damn cool: Can we keep The Clash and Kurt Vonnegut? Hmm, I guess I could get a beer with this Maurice Strong fellow. Thing is, we probably have different ideas about ways, means and outcomes. Rule of thumb: During crises, the rich have almost always outsurvived poor, in many cases benefitting. For instance, the founder of the Krupp fortune, a wealthy burgher during the time of the Black Death of 1349, bought up the properties left vacant by families eradicated by the plague for pennies on the dollar. His descendants greatly prospered. I highly suspect Strong has an idea of this.⁴

In the US a Cap-and-Trade bill has been proposed, but as of yet not passed. While arguing the bill would leave to capital flight from the US, Ron Paul stated:

The Cap and Trade Bill HR 2454 was voted on last Friday. Proponents claim this bill will help the environment, but what it really does is put another nail in the economy’s coffin. The idea is to establish a national level of carbon dioxide emissions, and sell pollution permits to industry as the Catholic Church used to sell indulgences to sinners. HR 2454 also gives federal bureaucrats new power to regulate a wide variety of household appliances, such as light bulbs and refrigerators, and further distorts the market by providing more of your tax money to auto companies.

Spain legislated such progressive energy policy by massively diverting capital from the private sector into politically favored environmental projects for nearly ten years. Their economy currently has a 20 percent unemployment rate, and for each green job created, 2.2 normal jobs are eliminated.

The legislation in the US will cement more governmental regulations, taxes, fees and bureaucracy dissuading companies from doing business in the US, as well as how many employees they can afford to hire. This added governmental red tape will cause capital flight and job losses. Jobs, therefore, are increasingly likely to go overseas.

Over the summer, approximately 30,000 scientists signed a petition disputing the claim that global warming is an anthropogenic phenomenon.⁴ What’s more, the US Department of Defense is the largest polluter in the world, producing more hazardous wastes than the five largest US chemical companies together. Hazardous wastes employed by the military include, among others, pesticides and defoliants, like Agent Orange, many solvents, petroleum, perchlorate, lead mercury and depleted uranium.⁵

Health problems associated with these toxins include miscarriages, low birth weight, birth defects, kidney disease and cancer. Most affected are those on whom such weapons are used, those in the military, and those who live near a military site. In the US one out of every ten persons lives within ten miles of a military site listed as a priority cleanup site. Many corporations are right up there with the DoD. So, then, why are their fellow conspirators the ones wording such legislation? The best argument in favor of the environment, I conclude, is also an argument against war. Therefore any true and honest environmental movement has, at its core, an argument against war!

Depleted Uranium (DU) has been a hot topic since the war began, similar to Agent Orange use in Vietnam. As a radioactive and chemically toxic heavy metal, it remains wherever it is lodged, in the body on the ground or in rivers, for decades. In the human body particles of depleted uranium are a source of alpha particles. Much research suggests that DU is linked to serious damage to the human body.

In Iraq alone hundreds of tons of Depleted Uranium have been fired and exploded in high populated areas such as Basrah, Baghdad, Nasriya, Dewania, Samawa, and other cities. Exploration programs have found Depleted Uranium related contamination over most Iraqi territories.⁶

Iraq’s Minister of Environment said in July of 2007 in Cairo that “at least 350 sites in Iraq are contaminated with Depleted Uranium.” She also said that Iraq is facing an unprecedented number of cancer cases and called on the international community to help Iraq alleviate this problem. I will spare you the photos, but encourage you to look.⁶

On domestic turf, the United States Forest Service and Bureau of Land Management sell trees from public forests—that is trees owned, I mean shared, by all of us—to big timber corporations at reduced prices; in short, we subsidizes the destruction of the biodiversity which gave rise to ourselves. In the Tongass National Forest in southeastern Alaska, four-hundred-year-old hemlock, spruce and cedar are sold to timber corporations for less money than a cheeseburger. Taxpayers funded, also, are the construction of the logging roads. The Forest Service—the public—loses hundreds of millions of dollars a year on timber-sale programs. Now we are being told we have to pay taxes in order to preserve our collective land base.

In the continental United States just five percent of native forest still stands. 440,000 miles of logging roads run through National Forests, despite that the Forest Service maintains there are 383,000 miles. The National Forest Service, exactly like the major financial institutions such as Goldman Sachs, JP Morgan, Bank of America, Citigroup and Well Fargo, cook the books and routinely lie.⁷

The logic behind the new global authority is flawed. It targets nations funded by taxpayer’s—us. But damage caused by human households is nowhere near as criminal as the damage done by corporations. Municipalities and individuals consume ten percent of the nation’s water. The other 90 percent is guzzled by agriculture and industry. Individual consumptions of energy, furthermore, accounts for about one-fourth of all energy consumption. The other 75 percent is consumed corporations. Municipal waste represents three percent of total waste production in the US.⁸

So we now see that we the people are unjustly carrying the burden of climate-change. Further, there are strong indicators that a current push for power accumulation employs climate-change and environmental degradation as its smoke and mirrors.

Many analysts are insisting the only in which to rebalance and harmonize the global human community is by revolution, and many of them contend violent revolution is inevitable. I don’t necessarily think “violent” need be so; but, it has to be global. We have to aim for the fences and raise consciousness all over the globe.

The push for global government and the New World Order must be slowed by us and our environmental communities—our land base, families and friends—protected.

1. Quote featured in the 7 November edition of Bob Chapman’s The International Forecaster.
2. Janet Albrechtsen. “Has Anyone Read the Copenhagen Agreement?” Wall Street Journal, 10-28-2009.
3. The Green Agenda and the First Global Revolution
4. Howard Bloom. 2000. Global Brain: The Evolution of Mass Mind From the Big Bang To The 21st Century. John Wiley and Sons: New York.
5. Ron Paul. “Cap and Trade Another Nail in the Economy’s Coffin,” June 29, 2009.
6. Lucinda Marshall. “Military Pollution: The Quintessential Universal Soldier.” Dissident Voice, March 29 2005.
7. Dr. Souad N. Al-Azzawi. “The Responsibility of the US in Contaminating Iraq with Depleted Uranium.” Global Research, Nov. 9, 2009.
8. Derrick Jensen and George Draffan. Excerpt from Strangely Like War.

Such is the market for heroin, a product of simple manufacture from the opium of the poppy plant, 70% of which is grown in the ideal conditions of Afghanistan. Heroin is a narcotic, a substance that is a personal and individual consumer good — it is consumed in very small amounts by individual end users based on the unique value each attaches to it. For a very substantial part of the human world, heroin has enough value to create a lively and fluid global market with a value added chain that stretches from a strung out junkie in Portland Oregon — the end user in more ways than one — to the father of 15 scraping out an existence under biblical conditions a half a globe, and many worlds away.

That value chain, the capitalism that allows it, and the inherent contradiction between free markets and liberal democracy, are at the root of the quagmire that is Afghanistan.

Afghanistan is the political creation of an era long past, with a climate and land suitable for almost nothing. Human beings have eked out enough of an existence to sustain a “civilization” there stretching back to the earliest days of recorded time. Sparsely populated and spread thin across the barren landscape, a pragmatic people got on by reaching an accommodation with reality. They still do.

The industrial era was a boon(doggle?) for humanity, but particularly cruel to the unassuming subsistence societies of Afghanistan. Competing western states — flush with infant nationalisms and burgeoning global interests — closed in and around the scattered tribal extended families of the Pashtu, Tajic, Uzbek, and a multitude of others. English aristocrats crayoned out borders to fit their scattered global interests, and Afghanistan the nation state was born, ephemeral as it was, existing only in the minds of those who wanted — or needed — to see it.

One of those British interests was the opening of the small Afghan opium trade to international markets. Properly irrigated, the plains of southern Afghanistan made for the perfect strategic location for Britain’s huge opium business with the Far East, specifically China. The British found that it was possible to block Russian expansion, provide a land buffer to India, and use the otherwise useless real estate of Afghanistan for mercantilist design. It was thinking like that which sustained one of the world’s truly great empires.

Thus was born in Afghanistan the opium business, a gift of free markets and capitalism. Still operating from fields established along British engineered irrigation systems, the opium trade has grown with international changes in global markets and geopolitics. Suffering from the loss of the Eastern markets at the close of the British era, and then arriving again at the opening of American markets in the American era, Afghanistan has clung doggedly to a pragmatic crop throughout. Opium alone can provide enough surplus for an Afghani farmer — bereft of capital — to feed and clothe himself and his family in near prehistoric conditions. Ideology, rhetoric, and politics never fed a single child, a deep set cultural understanding of the practical Afghani.

A full two thirds of the entire economy of modern Afghanistan is based on the opium business, every tribal family depending entirely on its markets in some way. Only once since its inception has the British installed opium system collapsed. In the decade preceding the rein of the Taliban, both opium market prices and Afghani hectares under production remained stable under the controlled market philosophy of the Soviets, who put the markets to work for the collective under a sweeping series of agrarian reforms. However, on the ascension of The Taliban regime, religious dogma collapsed the opium trade in Afghanistan by a full 97% by 2001, wiping out the Afghan economy in a single stroke. Dogma turned out to be a poor source of calories, and subsequently, the Taliban regime collapsed like a house of cards.

With the introduction of the world’s greatest capitalists to Afghanistan, opium production not only returned, but thrived. Under the Americans, the combination of access to the massive US heroin market, a vicious “War on Drugs” that kept prices high, and international finance structures to handle the money, Afghani production soared from the anaemic Taliban era where only 8 thousand hectares were under production, to a prodigious 193 thousand hectares in 2007. Clearly a triumph for free markets and capitalism, as the best the Soviets could manage was 91 thousand hectares in 1999.

Left to its own devices, Afghanistan is a very stable place. It has a simple, agrarian market economy which functions seamlessly with its diffuse, decentralised tribal hierarchy. It is a system so simple it confounds the minds of western thinkers, where they attempt to think about it at all. More often than not they don’t, and the simple existence of the Afghani is shackled with the problems of the complex western world. The humble Afghani can lay legitimate claim to the bitter epithet, “nasty, brutish, and short”.

The nut of the thing is this; there is no Afghani “state”, and what social cohesion that does exist, exists because of the agrarian nature of the Afghan economy and its most rational economic resource, opium. Afghanistan has two thirds of its national productive capacity invested in a sole commodity, and it is precisely because Afghanistan has this singular productive capacity, that markets exist to fill that capacity. Smack addled high school kids in Toledo (Spain or Ohio) keep the economy of Afghanistan afloat, and allow the meanest of existence for some 70 million of the planets most wretched people. A symbiotic convenience of human agony.

Onto this landscape walked a series of successive geopolitical interests — Empires, Communism, the Soviet Union, the Cold War, Fundamental Islam, democracy, and chaos. Not one of which is indigenous to the local populations, and not one of which understood the primitive simplicity of the local economies, or even cared to.

In Afghanistan, a farmer raises poppy plants over any other for three principle reasons. First, there is a ready and liquid market for the product. Second, opium is not capital intensive, and what capital is necessary is provided by each farmer’s purchaser. Finally, opium is community intensive, and well suited to the social structure of the local tribal systems. Growing Poppy plants and harvesting their opium is a delicate, touchy feely process that is very labour intensive, not unlike rice production in many ways. Large Afghani clans — where schooling reduces the labour necessary to increase the family surplus — are ideally suited for the maximum production of opium.

The clan/farmers raise their crops and sell them to the regional “Strong Man” — sometimes warlord, sometimes politician, most times… both. The Strong Man guarantees the purchase of the farmer’s entire marketable crop, provides seed capital and security, and demands in return loyalty and a price that will sustain the farmer and the system. Given their visceral connection to an entire regional population, these “drug lords” are de facto law and order in their regions. The “State”, for its part has a different, western, democratic liberal set of laws. Under this set, drugs are illegal. This effectively nullifies the respect for these laws in the local Afghan communities. However, it also leaves the local strong men in monopoly position, and awards to that monopoly the entire contract for opium in his region.

Not coincidentally, the local Strong Man is rich, relative to his suppliers. That is because it is his job to shoulder the risk of getting that product out to market as efficiently as possible. Without air, rail, or sea available, prodigious quantities of heavy opium must be moved across hundreds of miles of the earth’s most formidable, natural landscape. Once the cargo reaches the border at either Pakistan or Iran, the opium must transit a series of modern, strong state systems that both provide the demand and prosecute the supply at the same time. The penalty for drug trafficking in or through Iran is either death, or profit.

Afghani farmers earned about 1.2 billion dollars in 2002, a whopping 17% of the nations GDP, ostensibly the amount drug agents paid for harvested crop. Sadly, there are a lot of opium farmers on small family plots, and despite the size of the aggregate crop, it still means subsistence to the farmer. The drug lords are not in resources, however; they are up on the next floor in distribution. There, a much smaller group collect a further 1.3 billion dollars, the lions share going to the strongest and the fittest.

The local Strong Man then, counts as a cost of doing business the employment of large, personal armies armed to the teeth with the latest in lethal weaponry. Each member of these armies is drawn from the landless and otherwise surplus population, and is entirely dependent on the Strong Man, for whom each would gladly die, as they often do. Each understands his place in the chain that holds the opium business together, each a member of a community that depends on their selfless instinct. Without the beneficent local drug lord/strong man, whole populations of tightly knit families will suffer and die.

In modern history, the Soviets tried to supplant this system with their own understanding of an efficient central state. The drug lords were pissed, and their farmers starving. A genuine rural, agricultural revolt began. Radical Islam took up the cause, as did regional interests in Pakistan, India, China, and Iran, as well as the interest of the United States of America. The Soviets wilted and left, the Americans not long after. This left Afghanistan an open battle ground between powerful drug lords, a shattered state, and a kaleidoscope of international proxies backed by regional interests for control of the national apparatus, such as it was. Among this group was the predominantly Pakistani based Pashtu Taliban, the eventual winners. They attempted to break the back of their indigenous rivals by destroying the opium business on which they depended. This meant even more agony for the now long suffering locals who loved Allah, but one supposes, loved food more.

Of course, the young Taliban regime had international relations issues as well, fundamental missteps which brought about their eventual downfall. The Afghani drug lords, who were beaten and sidelined when their international support went home, were only too happy to now get paid for doing it all over again. With virtually no popular support, the Taliban were strangers in a strange land, their collapse so swift and complete they were able to slip away in the night to their sole sponsor Pakistan, unbowed and undefeated.

The Afghani farmer, the local economy, and the greater part of the population were back in business.

State apparatus was never anything more than a heavily armed aristocracy in Afghanistan. A gilded tribe that traded access to the nations pathetic and few urban areas in exchange for bribes. With traditional pomp and circumstance, the old order was reinstalled, this time with the full backing and support of the western world. In exchange, the western world demanded liberal democracy, law, and order. As queer a set of ideas as that sounded to the humble subsistence farmer of Afghanistan, anything was alright with him as long as he could sell his crop and feed his children. Which of course he could not, according to the new state laws that made drugs illegal, and every farmer a criminal.

Neither the Soviets nor the Taliban were completely at ease with the raw capitalist system of the opium business, and were for the most part incorruptible. The Americans were a breath of fresh air. State democracy provided ample opportunities to “advance” individual interest, and American capitalism celebrated the accumulation of wealth. Drug lords and tribal chiefs were born to work a flakey system like democracy the world over, and in Afghanistan they soon learned to maximize their opportunities by bringing in record amounts of opium, and having themselves invited into government. Farm gate prices stabilized, and as the Americans turned their attention to Iraq, opium production settled in at over twice the rate of the Soviet era. Good Times.

Western interests, and American interests in particular, demand an Afghani state that is malleable and responsive to their needs. This requires at least the tacit support of the rural population, which is pretty much everybody in Afghanistan. That support was always tenuous, as it always is for foreign occupiers, and it is in the interest of the local opium system to keep it that way. Control of the sad nation’s economy rests with the drug lords, regardless of any number of elections or federal departments. It is the nature of markets that they constantly strive to reduce externalities, and in the opium markets, that means open warfare where needs be.

Struggles continue between the American backed Northern Alliance of deadly Warlords, the corrupt apparatus of state that quickly shrank to the daylight hours of urban areas, the competing Warlords of the Taliban friendly Pashtu, American led Western forces, Pakistani supported groups of various stripe, and indigenous groups of local Afghani with little better to do than fight.

The failure of the west to control the economy of Afghanistan ensured the impossibility of advancing their political, moral, and cultural agendas. A gap the size of the Khyber Pass opened up between the economics and the politics, and into this gap flooded the competing geopolitical interests of the region. Specifically, a new generation of more practical Taliban, a reconstituted umbrella of loosely confederated interests, now much more willing to accept the economics of the region in exchange for control of the state.

The Taliban and their supporters all realize the impossibility of the American position, completely at odds as it is with the economy. Free market democracy would have to embrace the drug business and suborn politics to it. Ham handed western attempts at buying off the population with schools, roads, and Coca-Cola only ignores the issue. American attempts at sustaining liberal democracy against the grain of an essential and illegal economic system is futile, electoral corruption the only possible result, permanent damage to the worlds third great social system in as many tries the effect. Communism, Fundamentalism, and Democracy all failed the acid test of unfettered capitalism and free markets.

You hear it over and over again in every similar situation — the common person simply wants security for him and his family (in this part of the world, it is always “him”). That is a universal given. But when the Afghani pleads for security, it is not just from death from the sky, but more so for the security of his market economy and the stability of his food source — opium. The only way to provide this security is to embrace the opium business and protect it, something tribal Warlords can do with a compliant state government of any persuasion — a circle western ideologues have absolutely no chance of squaring.

We in the west are embarking on a tortured debate on the future of our interests in the Afghanistan debacle. This involves the consideration of an exponential multitude of geopolitical interests, military chest thumping, and inane ideological babbling. Virtually all of it pointless unless the economic interests of a subsistence economy (where opium is the reserve currency and store of value) are satisfied. No viable solution to anybodies problems are possible unless the liberal democracies of the west can come to grips with the forces of free markets in Afghanistan they allegedly represent.

More than anywhere else in the world, Afghanistan represents the collision of democracy, liberalism, free markets… and ideological hypocrisy. Heroin is destroying millions of satisfied customers, the supply chain enriching a rope line of banks, small businessmen, entrepreneurs, and farmers. The resource point is a single place on earth where the stability of a deadly crop alone dictates the fortunes of empires past, present, and future. Destroy the crop and suffer generations of endless war, suffering, and potential nuclear events. Embrace the crop, and bankrupt one hundred years of moral sermonizing in the teeth of a culture itching to destroy another pillar of western imperialism.

More soldiers… ?

Ironically, most wealthy capitalists will themselves be destroyed in this looming Jungle.

Capitalists need government almost as badly as we do, but they will not admit it. As Adam Smith taught long ago, capitalism and capitalists can survive only with a rule of law controlling private property rights and business promises, a government to enforce those laws, and a certain level of morality. He cannot be concerned with the common good lest some competitor captures his profit. Capitalist ideology thus prohibits capitalists from protecting their own common good. As we see from the daily news, no capitalist will speak out in support of regulation of Wall Street. Capitalists say that they will discipline themselves, but they have not, can not and do not.

We ordinary citizens and voters cling to an illusory idealistic assumption that we retain the right to govern ourselves, and that if we only work hard enough in the political process, we can change things through the ballot box. We cling to this false deadly assumption despite the vast accumulation of evidence that our political process is totally dominated and controlled by approximately 5000 very wealthy individuals acting through their ownership of their corporations and their mainstream advertising agencies, TV, radio, newspapers, and magazines. Thus in these desperate times, our government has given Trillions of our tax dollars to the big banks of the wealthy without any conditions, while our government has given little or nothing to create jobs for us. This money controlled government can afford to give Trillions to the wealthy, but this government cannot afford to provide VA hospitals and medical care for everybody. We citizens and voters are kept quiet and non-rebellious because of our own brainwashed state, fueled by our addiction to consumer goods, electronic gadgets, computers and TV.

Part of the trance and delusion is maintained by liberals. My definition of a “liberal” is one who vaguely wants a civilizing government and to make things right, but only if it does not deprive him of his standard of living. Thus a liberal will protest wealth inequality, the corruption of our elected leaders by money, imperialism, wars abroad, torture, rendition, and civilian collateral damage, but a liberal will not rebel, stop work, strike, picket, vigil or boycott. A liberal knows at some level that his material well being depends ultimately on these very evils that he protests against, specifically including torture. A liberal, like a conservative capitalist, cannot face the fact that he himself is in a dangerous suicidal trance. So he does not challenge the trance either.

Even under the best of circumstances, we have limited time and interest in governing ourselves. Our civic impulse is in very short supply. We see this in the low voter turnout and in the superficial slogans that lead many voters make up their minds. We see it also in political parties, local governments, charities, clubs and unions where aggressive individuals rise to power, and the ordinary person does not bother to attend meetings or to vote.

The blunt truth is that we are now ruthlessly governed by these few wealthy individuals who have accumulated their vast fortunes. One might almost say that we are “ungoverned,” but of course we are taxed to benefit these rulers, and to pay for their losses on their risky financial investments. The government is operated and controlled by and for these few wealthy individuals. For all practical purposes, it is if we are ruled by a selfish greedy king who rules us and taxes us for his own pleasure and his own benefit. This “king” has his royalist earls, dukes, nobles and toadies in the form of Presidents, Senators, elected officials, journalists, college professors and economists who fawn around him. These toadies tell the “king” what he wants to hear (however insane and stupid) hoping for his favor and crumbs from his table. President Obama himself is such a toady to the “king.” Obama’s economic advisors, former Harvard President Larry Summers and University of California Professor Christina Romer are perfect examples of such fawning advisors to the “king.” They study and report only what the “king” wants to hear.

The truth is that our capitalism and our self governing democracy are beyond repair or reform. Both are terminal, and dysfunctional. Our material well being is rapidly falling, and it will fall much further. Our trance prevents us from dealing with the death throes of capitalism, with the few wealthy individuals who control democracy with their wealth, with diminishing reserves of oil and gas, and with deadly global warming. This is not to say that we will find it easy to make changes even if we become aware of our trance. We will have to attend meetings and vote. We will have to accept a lower standard of living because of the depletion of oil and live like Cubans. Other civilizations in the past have fallen into dark ages because those in power did not recognize the falsity of their political-economic-cultural ideas, and did not take corrective action in time. Millions of us are destined to starve and those who do survive will be serfs allowed to grow a little food on the estates of the very rich. This is inevitable, unless we awaken and face the truth very soon.

Taxpayer bailouts saved Wall Street from choking on its own greed. Now, as the Wall Street Journal reports, “Major U.S. banks and securities firms are on pace to pay their employees about $140 billion this year — a record high.”

$140 billion is more than the combined budgets of the U.S. Departments of Commerce, Education, Energy, Housing and Urban Development, the National Science Foundation and the Environmental Protection Agency.

Typical workers, meanwhile, make less today adjusting for inflation than they did in the 1970s. Wall Street rewarded CEOs who cut employee wages and benefits and offshored manufacturing, services, and research and development; feasted on Bush’s tax cuts; turned mortgages into loan sharking; and vacuumed up home equity, college funds, retirement funds and other private and public investments into their rigged casino.

Goldman Sachs, for example, “peddled billions of dollars in shaky securities tied to subprime mortgages on unsuspecting pension funds, insurance companies and other investors when it concluded that the housing bubble would burst,” McClatchy reports in a new investigative series.

The Great Depression gave way to the New Deal. The Great Recession has become the Great Ripoff.

The TARP inspector general’s latest report to Congress says, “The firms that were ‘too big to fail’ … are in many cases bigger still, many as a result of Government-supported and -sponsored mergers and acquisitions; the inherently conflicted rating agencies that failed to warn of the risks leading up to the financial crisis are still just as conflicted; and the recent rebound in big bank stock prices risks removing the urgency of dealing with the system’s fundamental problems.”

Enabled by the Bush and Obama administrations, the megabanks are lending less and gambling more — using taxpayer money to pay bonuses, float a new stock market bubble and make even riskier bets.

The U.S. Treasury and Federal Reserve have become Wall Street’s ATMs, while unemployment, foreclosures and homelessness rise, states slash public services, and small businesses are starved of credit.

Outside the TARP, trillions of dollars are flowing to the banksters in the form of near-zero interest loans, bond guarantees and extreme leverage for toxic assets. You can follow the money at www.nomiprins.com. Nomi Prins, a former managing director at Goldman Sachs, is author of It Takes a Pillage.

The megabanks are not too big to fail. They’re too big and irresponsible to exist.

Just months after taking office in 1933, President Roosevelt signed into law the Glass-Steagall Act, which separated the commercial banking of savings, checking and loans from investment banks doing underwriting and speculative trading. The former got depositor insurance, not the latter.

Glass-Steagall lasted until Citigroup and other power players killed it in 1999 through the Financial Services Modernization Act, taking us back to the pre-New Deal casino economy on steroids. Now former Citigroup CEO John Reed has joined the growing call to split commercial banking and investment.

In 2000, Congress passed the Commodity Futures Modernization Act, ignoring the warnings of Commodity Futures Trading Commission head Brooksley Born who said that unregulated trading in derivatives could “threaten our regulated markets or, indeed, our economy.”

By 2002, the four largest bank holding companies — Bank of America, JP Morgan Chase, Wells Fargo and Citigroup — had 27 percent of FDIC-insured bank assets. Now, reports the Economic Policy Institute, they have nearly half. They overlap with the biggest derivatives dealers — JP Morgan, Goldman Sachs, Bank of America, Morgan Stanley and Citigroup.

The government heavily subsidizes the megabanks, but it’s the small banks that provide higher savings interest, lower fees, lower loan and credit card rates, and do much of the lending to small business, who in turn create most new jobs.

Behind their Main Street rhetoric, Congress and the Obama administration have so far been the change Wall Street can believe in. The administration and Federal Reserve are loaded with revolving door Wall Streeters and their proteges. Campaign donors and lobbyists are working Congress to minimize and distort reform.

Make your voices heard. We need to enact tough regulations and bust the banks who busted our economy — before they do it again.

Laird begins each section with an anecdotal tale about some aspect of capitalism’s globalization process and those it affects. From the big box shoppers in North America and Europe to the manufacturing centers of China and from the massive ports of Los Angeles to the homeless individual displaced by the corporate race to the bottom, the narrative describes the nature of these phenomena. The reader is introduced to the health problems suffered by those near the factories producing cheap goods and the increase in the incidence of asthma in the ports cities of Los Angeles county. All of this is backed up with statistics and reportage that proves over and over again that the situation Laird describes is not isolated, but the norm. The economic fallout is presented as well. Laird is spot on in his description of the collusion between capitalist and government to lower wages, purchase materials on the cheap, create an economy based on debt and the transfer of debt and ignore the consequences. He describes how that collusion puts people out of work, moving the responsibility for their welfare onto the taxpayer while the government simultaneously undoes whatever safety nets designed precisely for the purpose of helping capitalism’s castoffs. Although he never comes out and says it directly, Laird’s book provides the reader with clear and familiar examples of the shortcomings of monopoly capitalism. He describes a paradox where most national economies depend on low-cost consumerism at the exact moment that such consumerism is stumbling. Why? Because it is dependent on unsustainable factors like cheap labor, cheap transport, trade imbalances, consumer debt and cheap oil.

In addition, he describes how the very construction of the discount marketplace virtually ensures its own destruction. After all, he writes, prices can only go so low before there is no longer any profit in their selling. More importantly, as regards the current economic situation is the fact of energy resources and their consumption. In a chapter titled “All is Plastic” Laird breaks down the essential link between the price and availability of fossil fuels and the price and availability of bargain goods. From the plastic most of the goods are made from to the cheap fuel used to transport them around the globe, cheap and available hydrocarbons are essential. This means that eventually the consumer will have to accept higher prices to compensate for fuel costs or the corporation will have to decrease its rate of profit even further–something difficult to accomplish since lower rates of profits require more sales to compensate. Laird suggests that this explains why Wal-Mart and other major discounters are looking for new customers in Asia and looking to move some of their manufacturing operations closer to the source of fuel. When one considers this latter fact, the claims that the wars and occupations of Iraq and Afghanistan are about oil and natural gas don’t seem far fetched at all. After all, if those military exercises succeed in the way Washington wants them to, then the way will be open for anything Wall Street wants in that region.

Laird’s book is a fine piece of reportage on a world where the economy’s collateral damage includes oil spills and the poisoning of China’s (and other developing nations) working poor; the low wages and illegal labor practices of Wal-Mart leading to the ultimate collapse of a system based on minimizing costs, high volume sales and low profit margins; and a world where debt is the cornerstone of the economy. It is, to paraphrase Laird, a system that represents capitalism in its ultimate creative and destructive capacity. Most likely, it is also our future.

      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.