The possibility of reformation of the economic system to a degree where citizens may enjoy a standard of living similar to the 'middle classes' in the 20th century may not exist (as implied in the previous article). This article will make the argument that even if reformation was possible, doing so is not desirable. But, that is debatable.
Reformation aims to maintain the existing institutions, tweaking them to suit our needs. Revolution on the other hand, aims to take control of the institutions that dominate our lives. It aims to place control of them into the hands of those that have made them work in the first place. It aims to remove control from those that have a goal in mind and one goal only. To serve themselves to the detriment of everybody else. Instead, the aim should be to abolish or change institutions that do not serve the public good.
Fundamentally, the plight of the general population is the same now as it was for hundreds of years under feudalism. Under feudalism, wealth was created on the ground and made its way, forcibly, to the lords and monarchs. The serfs, slaves, of yesterday and wages slaves today have little control of the whims of power that control our lives. Under feudalism, power was exercised through violent repression. Whatever arbitrary whim His majesty may entertain, at His pleasure, would be adhered to. Under capitalism, it is not a matter of arbitrary decisions made by some personality with power but rather, the fluctuations of global capital dictate life on the ground.
These fluctuations and processes affect us and our response is far from homogeneous. On the one hand citizens swallow the notion that we have but two choices; free market capitalism (so called) or, communist totalitarianism. They will naturally gravitate toward reform (if they can muster any tolerance of change at all). The second strain will see a myriad of choices about how we can produce and distribute goods and services. Unfortunately for the former group, there has never been any system and probably never will be as radical and shape shifting as capitalism. Especially now. Instability and insecurity are two features the system will never shake. Just when we get used to certain ways of doing things, more efficient and innovative means are invented. The results can be both good and bad.
In times of great upset and insecurity, as are occurring now, more radical overall changes are demanded by citizens, many of whom are now out of work and without income. They become less reform minded and demand revolutionary change. We are entering these times. The days of relative stability and security are behind us.
The Current Context
Over the past three decades the so-called 1% have declared, through institutions like the World Bank, the IMF, and their runners (politicians), that government is the enemy and particularly, wealth redistribution. They have called for alarming reductions in government influence and control of financial and non financial matters. And as we have seen, they have ensured that government programs and institutions that serve the 99% are reduced or abolished but have made sure that the 1% is protected through bailouts and vast sums spent on their collective bodyguard, the military. As has been observed, it is a system of socialism for the rich, capitalism for the poor.
The upper classes, the 1%, are fast becoming explicit controllers of states. They are tossing political baggage such as Berlusconi and Papandreaou out into the street. Governments have been put into the hands of economists in the service of his majesty's pleasure. They demand, through the IMF and other sock puppets that governments follow the neo liberal line to the letter. This always means; privatize and control everything that can be bought and sold and to slash and burn anything and everything that looks like wealth distribution. The infrastructure that large portions of the population relied upon can't be scrapped quick enough for them. We are entering a bizarre and frightening twilight zone.
In response to all this, citizens are voicing outrage and disaffection with the capitalist system itself. Mainstream media and wealthy capital gamblers repeat endlessly the lie that the protesters do not articulate their anger. And in the meantime, the protesters repeat, over and over and over again that the top 1% have everything and are taking more and they (we), the general population, have little and are getting less. Implicit in this complaint is a call to end the capitalist system altogether. Perhaps the ruling class can't hear it out of disbelief; they may be in a state of shock and awe.
Protests like this are not altogether new. Prior to the September 11 terrorist attack on the World Trade Centre, anti-capitalist protests were large and angry. The most memorable occurred in Seattle and in Quebec City. They were spreading and becoming a force to be reckoned with. After 9 11, the protests disappeared, the mood changed.
Anti capitalist protests had been absent in the heart of the hegemony prior the Seattle/Quebec City uprisings. Protests themselves however, are nothing new. We have become accustomed to single issue protests that are implicitly reformist in nature. There were civil rights protests, women's rights, gay rights, environmental protests, and protests for many various issues. They all had in common the underlying desire to tweak the system, to make the plight of a certain segment of the population better.
Protests against capitalism itself are a direct result of the excesses of modern monopoly capitalism. This is a result of neo liberal policies that have been shoved down our collective throats. This is a result of the policies of governments that have been at the beck and call of the ruling class. These statements would be viewed as excessively radical and unrealistic only a few short years ago. Now, they are hardly controversial.
Organizing A Substantial Movement
The breadth and depth of this organic movement is truly revolutionary. This movement is both radical and widespread. These are the conditions that make capitalist monarchs shudder, and with good reason. These are conditions that are revolutionary. The capitalist world is pregnant with revolution.
Thus far however, the comfortable minority have little to fear. So far, it is a protest movement and that's all it is. This movement is simply a reaction to excessive money hoarding and Imperial brutality. To take it a step farther would require organization.
Taking that step requires vision. An alternative to the status quo needs to be articulated. What would that society look like? How do we get there?
For the most part, much of our collective mentality is mired in traditional reformist mode. Reformation is all about redistributing wealth and tinkering and modifying the current system. At this point, there isn't much stomach for it either in the halls of parliament or on the ground. There certainly is not any ideas about redistribution of wealth amongst the rulers of us all. It's not that they don't want to. They couldn't, even if they did want to. The reasons for that are discussed in the previous article (Reform or Revolution: Facing Into the Abyss).
We are collectively in a bit of a pickle, so to speak. Do nothing and we are going to lose jobs, homes, and many of our vital needs. We need to do something but we are utterly unorganized. We can continue to protest. We can complain and make noise. But so what?
Our first step is to bring the debate out into the open. We need to reach some consensus as to where we go from here and we need consensus on broad goals. Will we aim to reform the crippled capitalist system? Can we? These questions need debate. If we can, and if we want to, let's get at it. Let's work together and make sure it happens. If we agree that we cannot, we have a lot of work to do.
At this point we need to sustain the protest movement. And as it develops, we will need to build solidarity and alliances. We need to develop broad goals and specific tactics. Secondly, we need to formalize alliances between individual organizers, writers, news outlets, and organizations. We need to call on past reformist groups; women's rights, gay rights, unions, anti-poverty activists, greens, and reds. We also need socialists, communists, social democratic parties, anarchists and we need to communicate in a genuine way. We need to accommodate and compromise within this movement and we need to develop a vision; a grand goal.
There will be distrust and conflict within the movement but that cannot deter us. There will be great efforts to fracture and splinter the movement. There will be fights among broad sections and there will be groups aimed at controlling and commandeering it. In response, we accept nothing less than democracy. If the majority want reform, we reform. If the majority want revolutionary changes, we aim for that. If the majority want to live off the avails of crass capitalism, so be it. It is vital to listen to others and to be willing to change our minds.
Let the best, and hopefully the most democratic and rational arguments carry the day. Now is no time to be rigid. The time for energetic, honest, and fearless debate has arrived.
One thing is clear. Reform occurs only when the threat of revolution is real.
This blog is an archive of articles I've published in MWC News, Indymedia, and on Newsgroups.
Saturday, November 12, 2011
Saturday, November 05, 2011
Reform or Revolution: Facing Into the Abyss
The gravity of the current economic situation appears to be sinking in. Day by day, week by week, and month by month, we are waking out of our docile slumber. People are hitting the streets. This is not the handiwork of some dissident group with an ideological agenda. It is the natural outpouring of citizens anger, frustration, and hopelessness. The nature of the problem; capitalism, corporate greed, and careerist politicians has been expressed and expressed very well in many different forums. There seems to be some general consensus that we are in deep trouble.
Solidarity is crucial. We need to stick together and work together. The 1% will aim to fracture this new organic movement. We need to ensure that we don't do their dirty work for them. And no doubt, we will have enormous disagreements. Reformers will argue with revolutionaries, liberals will argue with socialists and so on. We need to use those differences of opinion to strengthen ourselves. The crux of the problem needs to be assessed and thoroughly analysed.
What is crucial is that we don't get mired in 'my opinion' or 'my ideology' and that we listen to each other. Debate is important and it is healthy. That is how we learn and grow. It is vital that you look at what I say and that I look at your analysis. After all, we all want the same things. We want stability, peace, and we want governance 'by, for, and of the people'. We want our kids and our neighbours to be able to eat. We are bound together by common goals. How we get there will need to be worked out.
What is presented here is a view, an opinion. You may not agree with it but please, take a minute to read it. If it is correct, our collective response then must take on a particular shape. If it is wrong, then we will need to point that out. We need to develop an assessment. We need to uncover the crux of the problem. If we can find some agreement on the nature of the problem, and we can, we may then develop a plan of action to correct it.
This then is an assessment of the current problem.
Analysis
The following analysis may describe the nature and scope of the problem. And if this analysis is correct, there is no easy way out. The upshot of this analysis is that capitalism itself has outlived its usefulness. Further to this, it has become financially toxic to all but those on the top of the heap. And the longer we depend on it, the worse the situation will become.
This view suggests that capitalism, due precisely to its efficiency and energy, has become antithetical to human needs. While the profit motive has served the majority in the developed world well, it will no longer do so. It will render the lot of us serfs without lords, slaves with no master. It will impoverish us and it will kill us. It will steal our vital needs or prohibit them from ever being produced.
The efficiency aspect, while impressive, is turning on us all. The wizard technology we've become used to has rendered many occupations obsolete. It can manufacture all we need with very little labour input. And, given time, it may be able to produce all we need with the push of a few buttons. While that may sound good, this condition does not suit capitalism. In fact, capitalism cannot survive this condition. It is impossible.
While capitalism may spit employees out onto the street, it needs consumers. Unfortunately for capitalism, an individual needs to be a worker before he or she is a consumer. The worker and consumer inhabit the same physical body.
The Diminishing Rate of Profit
As capitalism matures, the rate of profit from a given unit of labour diminishes. That is, it becomes more difficult to squeeze a dime of profit from an hour of labour. To make matters worse, global competition has rendered the old formula where firms were subsided by the state to pay decent wages, dead. Workers are now competing with the most oppressive terms of exploitation on the planet. The old (so called) 'American dream' is finished. It's time to wake up.
Individual firms are under constant strain from two sources; competition from other firms and ongoing costs such as maintaining payment of wages to employees.
Firms aim to increase productivity as much as possible. This is accomplished through improving technology and through squeezing as much work from a worker as is manageable. It is in their interests to get workers to work as hard as possible for as little pay as possible. On both counts, they are doing very well.
It is vital to out-compete other firms; to drive costs down. This allows the firm to lower prices. Efficiency and low prices are the objective. Profit is the goal.
Large scale production has become impressive in its efficiency. To lower costs firms utilize lateral acquisition of resources that are required goods and services that go into production or, they contract out to sources that will fetch the product at lower prices than anyone else. Generally speaking, the pressure to cut costs also cuts the rate of profit.
Suppose the rate of profit were to remain constant. In that case profit would expand according to what was invested in stocks. If the rate is falling however, profit is naturally more difficult to achieve. And when this occurs, the incentive to invest in manufacturing diminishes. As investing in stocks grows more risky, the growth of capital in stocks falls. The rot of the integrity of the value of liquid capital spreads. Capital itself loses its integrity and value. And as long as they depend on worker's wages to pay the bills when in reality they can't, the crisis related to the value of money is magnified.
Additionally, the ensuing lack of wages results in not only lack of demand but in an evaporation of the tax base. Workers that depend on the tax base such as civil servants and teachers are thrown out of work as a result, further eroding the diminishing tax base. This exacerbates the problem by driving down demand for goods and services which in turn forces more firms out of business and workers onto the streets. We are entering an economic black hole, a period of crisis.
This crisis is fundamentally different than cyclical fluctuations (recessions) which may be remedied in various ways such as investing in public works with tax dollars and borrowing until the ship is righted again. Similar crisis occurred in the periods 1873 to 1893 and from 1929 to 1941.
In its heyday, the capitalist system saw increased real wages in western economies. From 1947 to 1967 real wages grew in the United States by approximately 50%. Unemployment was not an issue, and deficits were miniscule. The so-called Western world was the base of manufacturing and consumption. But, as Professor Ismael Hossein-Zadeh points out in a recent article: "By the late 1960s and early 1970s ... both US capital and labor were no longer unrivaled in global markets. Furthermore, during the long cycle of the immediate post-war expansion US manufacturers had invested so much in fixed capital, or capacity building, that by the late 1960s their profit rates had begun to decline as the capital-labor ratio of their operations had become too high. In other words, the enormous amounts of the so-called “sunk costs,” mainly in the form of fixed capital, or plant and equipment, had significantly eroded their profit rates."
As the rate of capital accumulation decelerates, and capital, like a shark, needs to continually eat and grow, or die, the shark itself becomes more aggressive and ruthless. It will squeeze an extra dime from any unit of labour it can and, when that dries up, it will look elsewhere.
Since the 1980s capitalists and politicians have been kicking the can down the road. This mess has been coming at us for some time. Avoidance was helped by real growth due to the building of high tech infrastructure, which in turn has helped crucify the employee. The infrastructure, once built, will not need to be built again. And it's maintenance is not going to save us.
Various bubbles (like the dot com bubble) had put the reality of our collective abyss out of view. Some bubbles were based in widespread criminal behaviour on the part of large corporations, bodies like the Federal Reserve in the United States, and scores of politicians. They have propped up the illusion (with the help of mainstream media and whores that have degrees in economics) that all is well - for three decades. In the meantime, the rot of the capitalist system has been eating away at our real security. We have continued to depend on something we can no longer depend on.
John Maynard Keynes is Dead
In the coming months and years there will be sincere and intelligent arguments from the left to return to Keynesian economic policies. After all, this formula has worked, arguably, better than anything else in history to provide a decent standard of living for the most people. The good ship Fabian appears to have sailed however. As Professor Hossein-Zadeh points out:
"The US capitalist class pursued the Keynesian-type policies in the immediate post-war period as long as political forces and economic conditions, both nationally and internationally, rendered those policies effective. Top among those conditions, as mentioned earlier, were nearly unlimited demand for US manufactures, both at home and abroad, and the lack of competition for both US capital and labor, which allowed US workers to demand decent wages and benefits while at the same time enjoying higher rate of employment.
By the late 1960s and early 1970s, however, both US capital and labor were no longer unrivaled in global markets. Furthermore, during the long cycle of the immediate post-war expansion US manufacturers had invested so much in fixed capital, or capacity building, that by the late 1960s their profit rates had begun to decline as the capital-labor ratio of their operations had become too high. In other words, the enormous amounts of the so-called “sunk costs,” mainly in the form of fixed capital, or plant and equipment, had significantly eroded their profit rates.
More than anything else, it was these important changes in the actual conditions of production and the realignment of global markets that precipitated the gradual abandoning of Keynesian economics. Contrary to the repeated claims of the liberal/Keynesian partisans, it was not Ronald Reagan’s ideas or schemes that lay behind the plans of dismantling the New Deal reforms in fact, steps to hammer away at those reforms had been taken long before Reagan arrived in the White House). Rather, it was the globalization, first, of capital and, then, of labor that rendered Keynesian or New Deal-type economic policies no longer attractive to capitalist profitability, and brought forth Ronald Reagan and Neoliberal austerity economics."
Let's not get caught up in the notion that the capitalist class and their paws (politicians) had decided to be kind to working classes or middle classes. Each and every benefit, including decent wages, social security, free medical care (except the USA), in developed countries were won through hard and sometimes deadly struggle. It was the threat of revolution and the preservation of the privileged class that compelled Keynes himself to distribute wealth.
We are about to witness a period unlike anything we have seen before. The tension on global capital, the increasing and continuing falling rate of profit, and the ensuing hunger of capital itself will reduce or eliminate your wages, your pension, social security, and it will find the change under the cushions of your sofa.
As we become increasingly dissatisfied with the status quo, as our kids lose hope for a decent future, as homeless people stand alongside burning barrels next to empty and foreclosed homes, we will hit the streets. Predictably, we will aim, at first, to resurrect John Maynard Keynes. We will discover, eventually, that Mr. Keynes is as dead as a doornail. Perhaps it is best to let him rest in peace.
Solidarity is crucial. We need to stick together and work together. The 1% will aim to fracture this new organic movement. We need to ensure that we don't do their dirty work for them. And no doubt, we will have enormous disagreements. Reformers will argue with revolutionaries, liberals will argue with socialists and so on. We need to use those differences of opinion to strengthen ourselves. The crux of the problem needs to be assessed and thoroughly analysed.
What is crucial is that we don't get mired in 'my opinion' or 'my ideology' and that we listen to each other. Debate is important and it is healthy. That is how we learn and grow. It is vital that you look at what I say and that I look at your analysis. After all, we all want the same things. We want stability, peace, and we want governance 'by, for, and of the people'. We want our kids and our neighbours to be able to eat. We are bound together by common goals. How we get there will need to be worked out.
What is presented here is a view, an opinion. You may not agree with it but please, take a minute to read it. If it is correct, our collective response then must take on a particular shape. If it is wrong, then we will need to point that out. We need to develop an assessment. We need to uncover the crux of the problem. If we can find some agreement on the nature of the problem, and we can, we may then develop a plan of action to correct it.
This then is an assessment of the current problem.
Analysis
The following analysis may describe the nature and scope of the problem. And if this analysis is correct, there is no easy way out. The upshot of this analysis is that capitalism itself has outlived its usefulness. Further to this, it has become financially toxic to all but those on the top of the heap. And the longer we depend on it, the worse the situation will become.
This view suggests that capitalism, due precisely to its efficiency and energy, has become antithetical to human needs. While the profit motive has served the majority in the developed world well, it will no longer do so. It will render the lot of us serfs without lords, slaves with no master. It will impoverish us and it will kill us. It will steal our vital needs or prohibit them from ever being produced.
The efficiency aspect, while impressive, is turning on us all. The wizard technology we've become used to has rendered many occupations obsolete. It can manufacture all we need with very little labour input. And, given time, it may be able to produce all we need with the push of a few buttons. While that may sound good, this condition does not suit capitalism. In fact, capitalism cannot survive this condition. It is impossible.
While capitalism may spit employees out onto the street, it needs consumers. Unfortunately for capitalism, an individual needs to be a worker before he or she is a consumer. The worker and consumer inhabit the same physical body.
The Diminishing Rate of Profit
As capitalism matures, the rate of profit from a given unit of labour diminishes. That is, it becomes more difficult to squeeze a dime of profit from an hour of labour. To make matters worse, global competition has rendered the old formula where firms were subsided by the state to pay decent wages, dead. Workers are now competing with the most oppressive terms of exploitation on the planet. The old (so called) 'American dream' is finished. It's time to wake up.
Individual firms are under constant strain from two sources; competition from other firms and ongoing costs such as maintaining payment of wages to employees.
Firms aim to increase productivity as much as possible. This is accomplished through improving technology and through squeezing as much work from a worker as is manageable. It is in their interests to get workers to work as hard as possible for as little pay as possible. On both counts, they are doing very well.
It is vital to out-compete other firms; to drive costs down. This allows the firm to lower prices. Efficiency and low prices are the objective. Profit is the goal.
Large scale production has become impressive in its efficiency. To lower costs firms utilize lateral acquisition of resources that are required goods and services that go into production or, they contract out to sources that will fetch the product at lower prices than anyone else. Generally speaking, the pressure to cut costs also cuts the rate of profit.
Suppose the rate of profit were to remain constant. In that case profit would expand according to what was invested in stocks. If the rate is falling however, profit is naturally more difficult to achieve. And when this occurs, the incentive to invest in manufacturing diminishes. As investing in stocks grows more risky, the growth of capital in stocks falls. The rot of the integrity of the value of liquid capital spreads. Capital itself loses its integrity and value. And as long as they depend on worker's wages to pay the bills when in reality they can't, the crisis related to the value of money is magnified.
Additionally, the ensuing lack of wages results in not only lack of demand but in an evaporation of the tax base. Workers that depend on the tax base such as civil servants and teachers are thrown out of work as a result, further eroding the diminishing tax base. This exacerbates the problem by driving down demand for goods and services which in turn forces more firms out of business and workers onto the streets. We are entering an economic black hole, a period of crisis.
This crisis is fundamentally different than cyclical fluctuations (recessions) which may be remedied in various ways such as investing in public works with tax dollars and borrowing until the ship is righted again. Similar crisis occurred in the periods 1873 to 1893 and from 1929 to 1941.
In its heyday, the capitalist system saw increased real wages in western economies. From 1947 to 1967 real wages grew in the United States by approximately 50%. Unemployment was not an issue, and deficits were miniscule. The so-called Western world was the base of manufacturing and consumption. But, as Professor Ismael Hossein-Zadeh points out in a recent article: "By the late 1960s and early 1970s ... both US capital and labor were no longer unrivaled in global markets. Furthermore, during the long cycle of the immediate post-war expansion US manufacturers had invested so much in fixed capital, or capacity building, that by the late 1960s their profit rates had begun to decline as the capital-labor ratio of their operations had become too high. In other words, the enormous amounts of the so-called “sunk costs,” mainly in the form of fixed capital, or plant and equipment, had significantly eroded their profit rates."
As the rate of capital accumulation decelerates, and capital, like a shark, needs to continually eat and grow, or die, the shark itself becomes more aggressive and ruthless. It will squeeze an extra dime from any unit of labour it can and, when that dries up, it will look elsewhere.
Since the 1980s capitalists and politicians have been kicking the can down the road. This mess has been coming at us for some time. Avoidance was helped by real growth due to the building of high tech infrastructure, which in turn has helped crucify the employee. The infrastructure, once built, will not need to be built again. And it's maintenance is not going to save us.
Various bubbles (like the dot com bubble) had put the reality of our collective abyss out of view. Some bubbles were based in widespread criminal behaviour on the part of large corporations, bodies like the Federal Reserve in the United States, and scores of politicians. They have propped up the illusion (with the help of mainstream media and whores that have degrees in economics) that all is well - for three decades. In the meantime, the rot of the capitalist system has been eating away at our real security. We have continued to depend on something we can no longer depend on.
John Maynard Keynes is Dead
In the coming months and years there will be sincere and intelligent arguments from the left to return to Keynesian economic policies. After all, this formula has worked, arguably, better than anything else in history to provide a decent standard of living for the most people. The good ship Fabian appears to have sailed however. As Professor Hossein-Zadeh points out:
"The US capitalist class pursued the Keynesian-type policies in the immediate post-war period as long as political forces and economic conditions, both nationally and internationally, rendered those policies effective. Top among those conditions, as mentioned earlier, were nearly unlimited demand for US manufactures, both at home and abroad, and the lack of competition for both US capital and labor, which allowed US workers to demand decent wages and benefits while at the same time enjoying higher rate of employment.
By the late 1960s and early 1970s, however, both US capital and labor were no longer unrivaled in global markets. Furthermore, during the long cycle of the immediate post-war expansion US manufacturers had invested so much in fixed capital, or capacity building, that by the late 1960s their profit rates had begun to decline as the capital-labor ratio of their operations had become too high. In other words, the enormous amounts of the so-called “sunk costs,” mainly in the form of fixed capital, or plant and equipment, had significantly eroded their profit rates.
More than anything else, it was these important changes in the actual conditions of production and the realignment of global markets that precipitated the gradual abandoning of Keynesian economics. Contrary to the repeated claims of the liberal/Keynesian partisans, it was not Ronald Reagan’s ideas or schemes that lay behind the plans of dismantling the New Deal reforms in fact, steps to hammer away at those reforms had been taken long before Reagan arrived in the White House). Rather, it was the globalization, first, of capital and, then, of labor that rendered Keynesian or New Deal-type economic policies no longer attractive to capitalist profitability, and brought forth Ronald Reagan and Neoliberal austerity economics."
Let's not get caught up in the notion that the capitalist class and their paws (politicians) had decided to be kind to working classes or middle classes. Each and every benefit, including decent wages, social security, free medical care (except the USA), in developed countries were won through hard and sometimes deadly struggle. It was the threat of revolution and the preservation of the privileged class that compelled Keynes himself to distribute wealth.
We are about to witness a period unlike anything we have seen before. The tension on global capital, the increasing and continuing falling rate of profit, and the ensuing hunger of capital itself will reduce or eliminate your wages, your pension, social security, and it will find the change under the cushions of your sofa.
As we become increasingly dissatisfied with the status quo, as our kids lose hope for a decent future, as homeless people stand alongside burning barrels next to empty and foreclosed homes, we will hit the streets. Predictably, we will aim, at first, to resurrect John Maynard Keynes. We will discover, eventually, that Mr. Keynes is as dead as a doornail. Perhaps it is best to let him rest in peace.
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