Democrats For Change - the short version (Brian) by Winston

Tomorrow (June 2, 2009), empowered citizens of New Brunswick, under the name Democrats for Change, will seek to bypass and in fact directly challenge machine gatekepers by gaining seats within the Democratic power structure of Middlesex County, New Jersey. At first glance, it is easy for many on the "left" to ask, "How is this revolutionary? Seeking to be part of the system? Let alone through being part of a major party?" In reality, this campaign is a living, breathing example of revolutionary democracy's goals in the simplest sense - (do what is necessary, including infiltrating constituted, entrenched, "system" power to) increase democracy, build dual power (not to mention the campaign itself has been organized and conducted in the most democratic of ways, and includes a clearly people-power preliminary "platform").

I commend these citizen candidates and wish them success on this important day. I look forward to longer, more reflective analyses of the campaign on this blog from those who fortune has made more than the mere cheerleader I am.

Reverse Cassandras by Tim Horras

For those of you who haven't read your Greek mythology, Cassandra was a prophet who is said to have lived during the Trojan war. The gods gave her the ability to predict the future, but doomed her to be ignored by everyone and made powerless to change anything.

Today we're faced with a glut of Reverse Cassandras.

What's a Reverse Cassandra? A Reverse Cassandra is somebody with the power to change things and who everybody listens to and heeds, but really this person doesn't have a clue and is promoting an innaccurate, rosy view of the future.

Emissaries from the global ruling classes have been telling us that we've hit the bottom of the economic downward slide. Fed Reserve Chairman Ben Bernanke said as much yesterday, President Obama has been talking for weeks about "glimmers of hope", the EU says we're no longer in freefall - the latter even going so far as to send the French minister of finance to that red-white-and-blue bastion of mainstream American liberalism, The Daily Show, to tell us that, indeed, we may have reached the bottom. Even the usually dour (neo)liberal talking-head Paul Krugman is seeing the "green shoots" of new growth!

But on what basis are they making these claims?

Now, I'm no trained economist, and I certainly don't have Cassandra's prescience, but I'd like to explain my reasons for thinking that these people are wrong.

Firstly, these people are career liars whose sole purpose is to mislead and keep down the working class.

That's an opinion, of course, but it's an opinion based on evidence. These folks bought into the neoliberal lie -- hook, line and sinker. In 2002, Bernanke said thanks to the guiding influence of that godfather of free-market fundamentalism, Milton Friedman, we would "never again" have another Depression-like economic crisis. As for Krugman, who is portrayed in the media as the far-left alternative to the status quo, you should remember that this was the same guy who thought that US monetary policy would solve all employment problems, and that folks who thought the financial and economic problems of the 1930s would repeat themselves were not "sensible people". [1]

From a more evidential perspective, having gone through the reports these bodies have published -- looking with all my little heart of hearts for the glimmers of hope -- I've found very few positive signs.

For example, the EU had to revise their predictions this month, because economic contraction has been shown to be twice as bad as they had expected. However, measures like consumer confidence are high. Well that's just great! Unfortunately, confidence has little to do with reality -- wages are likely to continue declining, meaning less purchasing power for workers, meaning even lower demand, etc. The only good news these days seems to be coming out of China, which even before the crisis was producing massive surpluses (literature on China is extensive, but David Harvey has the best analysis out there for my money).

So while the Reverse Cassandras tell us the sky is not, in fact, falling, the situation continues to get more and more dire.

If I haven't already made this clear, the existing ruling class in the US is incapable of getting us out of this mess. They're already preparing us for permanent, mass unemployment, as remarks by former Fed Reserve Chairman and current Chairman of the President's Economic Recovery Board Paul Volker indicate. According to Volker, the new, "natural" rate of unemployment will be much higher. If this indeed does come to pass, this will mean a jobless recovery which is even worse than those we've experienced before.

I'd like to end on a somber note. I'm currently reading Jeffry A. Frieden's Global Capitalism: Its Fall & Rise in the Twentieth Century, which is a flawed but comprehensive overview of global economic history from the late nineteenth century til 2000. I'm getting to the part right now where World War I has just ended, and the new postwar economic order is coming into being. This proves to be disastrous, and a young John Maynard Keynes goes on to write a best-selling polemic outlining its failures. The important thing here is this: the ruling classes of Europe failed miserably. They led their societies into a maelstrom of destruction and horror which lasted almost forty years, leading from world war to hyperinflation, to depression and world war all over again.

I leave it to the reader to draw any contemporary parallels.

After all, the only thing worse than a Reverse Cassandra is the genunine article.

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[1] The reason I'm so adamant about pushing socialism to the forefront of the public debate, is that there needs to be another set of alternatives in the discussion about our collective futures. Our current range of options leave us with little room to maneuver -- from the psuedo-Keynesianism of Paul Krugman on the "left", to the "centrist" policies of the Geithner-Summers banking elite - fully backed by the administration of Barack Obama (policies which amount to a massive robbery of public coffers to pay off the bad investments of the financial class), and on the right, the Alice In Wonderland/living-in-a-fantasy world economics of the Tea Baggers and the Republican Party.

"An angry army to give the government back to those who have always been the champions of special privilege" (Brian) by Winston

The contemporary recruitment of which could have been started at the "tea parties"??

J'Accuse! (Aug. 19, 1939) Sen. Claude Pepper (who himself later became a Cold Warrior), from The Progressive:

Democracy on the march: Gay Marriage in Iowa (X.) by X.

If gays start getting married in Iowa within a few weeks, it will truly mark the beginning of the end for the religious right as a dominant force in the US. The so-called "culture" wars are slowly fading into irrelevance for all generations transitioning into the 21st century. We should expect other struggles to rise to prominence, especially economic ones. We better get ready. But for today, let's celebrate yet another victory for justice and equality... long overdue for all our GBLT sisters & brothers!

Harvey Milk lives!!!

From the AP.

Iowa court says gay marriage ban unconstitutional

By AMY LORENTZEN, Associated Press Writer

DES MOINES, Iowa – The Iowa Supreme Court issued a unanimous ruling Friday finding that the state's same-sex marriage ban violates the constitutional rights of gay and lesbian couples, making Iowa the third state where gay marriage is legal.
In its decision, the court upheld a 2007 district court judge's ruling that the law violates the state constitution. It strikes the language from Iowa code limiting marriage to only between a man a woman.
"The court reaffirmed that a statute inconsistent with the Iowa constitution must be declared void even though it may be supported by strong and deep-seated traditional beliefs and popular opinion," said a summary of the ruling issued by the court.
The ruling set off celebration among the state's gay-marriage proponents.
"Iowa is about justice, and that's what happened here today," said Laura Fefchak, who was hosting a verdict party in the Des Moines suburb of Urbandale with partner of 13 years, Nancy Robinson.
Robinson added: "To tell the truth, I didn't think I'd see this day."
Richard Socarides, an attorney and former senior adviser on gay rights to President Clinton, said the ruling carries extra significance coming from Iowa.
"It's a big win because, coming from Iowa, it represents the mainstreaming of gay marriage. And it shows that despite attempts stop gay marriage through right wing ballot initiatives, like in California, the courts will continue to support the case for equal rights for gays," he said.
Court rules dictate that the decision will take about 21 days to be considered final, and a request for a rehearing could be filed within that period. That means it will be at least several weeks before gay and lesbian couples can seek marriage licenses.
But Polk County Attorney John Sarcone said the county attorney's office will not ask for a rehearing, meaning the court's decision should take effect after that three-week period.
"Our Supreme Court has decided it, and they make the decision as to what the law is and we follow Supreme Court decisions," Sarcone said. "This is not a personal thing. We have an obligation to the law to defend the recorder, and that's what we do."
The case had been working its way through Iowa's court system since 2005 when Lambda Legal, a New York-based gay rights organization, filed a lawsuit on behalf of six gay and lesbian Iowa couples who were denied marriage licenses. Some of their children are also listed as plaintiffs.
The suit named then-Polk County recorder and registrar Timothy Brien.
The state Supreme Court's ruling upheld an August 2007 decision by Polk County District Court Judge Robert Hanson, who found that a state law allowing marriage only between a man and a woman violates the state's constitutional rights of equal protection.
The Polk County attorney's office, arguing on behalf of Brien, claimed that Hanson's ruling violates the separation of powers and said the issue should be left to the Legislature.
Lambda Legal scheduled a news conference for early Friday to comment on the ruling. A request for comment from the Polk County attorney's office wasn't immediately returned.
Around the nation, only Massachusetts and Connecticut permit same-sex marriage. California, which briefly allowed gay marriage before a voter initiative in November repealed it, allows domestic partnerships.
New Jersey, New Hampshire and Vermont also offer civil unions, which provide many of the same rights that come with marriage. New York recognizes same-sex marriages performed elsewhere, and legislators there and in New Jersey are weighing whether to offer marriage. A bill that would legalize same-sex marriage in Vermont has cleared the Legislature but may be vetoed by the governor.
The ruling in Iowa's same-sex marriage case came more quickly than many observers had anticipated, with some speculating after oral arguments that it could take a year or more for a decision.

Hit & Run 1: Campus Movement vs. Student Movement (X.) by X.

A massive increase in organizing activity in New Brunswick and at Rutgers is keeping most of us too busy to post regularly (more on the new campaigns soon). But this new organizing intensity provides a lot of insight that needs to be discussed! So I'll be logging in some quick notes (a Hit & Run series) on a few topics to get conversations started.

CAMPUS MOVEMENT vs STUDENT MOVEMENT

The ongoing campaign for ward-based elections in New Brunswick was initiated by the Tent State University movement at Rutgers and led to the formation of the growing and vibrant off-campus grassroots movement Empower Our Neighborhoods (check out empowernb.com).

What made a significant difference in the building of the emerging citywide coalition of neighborhoods for democracy was that the students approached other communities in New Brunswick as part of a longstanding campus movement rather than a newly-founded student movement. The campus movement at Rutgers today (Tent State) has a history and -more importantly- a memory of organizing both on- and off-campus (even if most of the student organizers from previous generations have moved on). It has allies and contacts in various off-campus neighborhoods as well as on campus among faculty, staff, unions, even administrators. It benefits from an extraordinary new generation of student organizers that inherited the movement's past experience and knowledge. The Tent State students are now taking organizing to a whole new level, working hand-in-hand with revolutionary democratic alumni that organized at Rutgers up to twenty years before they did. Above all, this campus movement is fully conscious of itself as a permanent social, political, cultural and economic power base in New Brunswick. Today, brand new student organizers rapidly learn that although many individual students move on (after graduation), the student community, its interests and its role as an agent of change remain.

Back in the early 90's, the student movement at Rutgers was spontaneous, relatively naive and totally unaware of its place in relation to other class forces at the university and in the city (like most student movements across the US today). The Rutgers-based campus movement of the new millenium daily grows more aware of its origins, its potential, its friends and enemies and its shared goals with other communities in New Brunswick that will unite around Revolutionary Democracy (the great majority of Afro-Americans, Latinos, women, creative class professionals, intellectuals, artists, new economy workers, immigrants, etc). The campus movement is becoming a movement for-itself, grown from a student movement that was at first just a movement in-itself. This difference is the key to understanding the unprecedented organizing successes of the past two years, both in terms of the campus movement's ability to run its own campaigns and in terms of its ability to build strong, long-lasting bonds with allies on- and off-campus.

That the maturing of the Rutgers campus movement coincides with the advent of the Obama Movement is in fact... not a coincidence. The same economic, political, social and cultural forces that made the Obama Movement possible shaped the opportunities to build a campus movement in New Brunswick over the past two decades. Which tells us what incredible potential lies out there to build a nationwide network of revolutionary democratic coalitions in university towns and cities. More on that soon...

PS: See Marx on class struggle for the reference to the class in-itself vs. the class for-itself. You can start with this wikipedia entry.

Reverse Robin Hood (Posted by Keith) by Keith

Thi

This piece by Jeffrey Sachs is good explaination of  the latest bank plan.  

Obama’s bank plan could rob the taxpayer

By Jeffrey Sachs

Published: March 25 2009 23:14 | Last updated: March 25 2009 23:14

The Geithner-Summers plan, officially called the public/private investment programme, is a thinly veiled attempt to transfer up to hundreds of billions of dollars of US taxpayer funds to the commercial banks, by buying toxic assets from the banks at far above their market value. It is dressed up as a market transaction but that is a fig-leaf, since the government will put in 90 per cent or more of the funds and the “price discovery” process is not genuine. It is no surprise that stock market capitalisation of the banks has risen about 50 per cent from the lows of two weeks ago. Taxpayers are the losers, even as they stand on the sidelines cheering the rise of the stock market. It is their money fuelling the rally, yet the banks are the beneficiaries.

The plan’s essence is to use government off-budget money to overpay for banks’ toxic assets, perhaps by a factor of two or more. This is done by creating a one-way bet for private-sector bidders for the toxic assets, then cynically calling it “private sector price discovery”. Consider a simple example: a toxic asset with face value of $1m pays off fully with probability of 20 per cent and pays off $200,000 with probability of 80 per cent. A risk-neutral investor would pay $360,000 for this asset.

Along comes the government and says it will finance 90 per cent of the investor’s purchase and, moreover, do so as a non-recourse loan. Non-recourse means the government’s loan is backed only by the collateral value of the toxic asset itself. If the pay-out is low, the loan is defaulted and the government ends up with the low pay-out rather than full repayment of the loan.

Now the investor is prepared to bid $714,000 (with rounding) for the same asset. The investor uses $71,000 of his/her own money and $643,000 of the government loan. If the asset pays off in full, the investor repays the loan, with a profit of $357,000. This happens 20 per cent of the time, so brings an expected profit of $71,000. The other 80 per cent of the time the investor defaults on the loan, and the government ends up with $200,000. The investor just breaks even by bidding $714,000, as we would expect in a competitive auction.

Of course, the investor has systematically overpaid by $354,000 (the bid price of $714,000 minus the market value of $360,000), reflecting the investor’s right to default on the loan in the event of a poor pay-out of the toxic asset. The overpayment equals the expected loss of the government loan. After all, 80 per cent of the time (in this example) the government loses $443,000 (the $643,000 loan minus the $200,000 repayment). The expected loss is 80 per cent of $443,000, equal to $354,000.

The idea of “private sector price discovery” is therefore flim-flam. There would be price discovery if the government’s loan had to be repaid whether or not the asset paid off in full. In that case, the investor would bid $360,000. But under the Geithner-Summers plan the loan is precisely designed to be a one-way bet, for the purpose of overpricing the toxic asset in order to bail out the bank’s shareholders at hidden cost to the taxpayers.

The banks could be saved without saving their shareholders – a better deal for taxpayers and without the moral hazard of rescuing shareholders from the banks’ bad bets. Most simply, the government could provide loans to buy the toxic assets on a recourse basis,therefore without the hidden subsidy. Alternatively, the plan could give the taxpayers an equity stake in the banks in return for cleaning their balance sheets. In cases of insolvency, the government could take over the bank, the much dreaded nationalisation, albeit temporary. At the end of the Bush administration, Congress voted for the $700bn (€517bn, £479bn) troubled asset relief programme (Tarp) on the assurance the taxpayer would get fair value for money (for example, by taking equity stakes in the rescued banks). The new plan does not offer that.

Tim Geithner, Treasury secretary, and Lawrence Summers, director of the White House national economic council, suspect that they cannot go back to Congress to fund their plan and so are raiding the Federal Reserve, the Federal Deposit Insurance Corporation and the remaining Tarp funds, hoping that there will be little public understanding and little or no congressional scrutiny. This is an inappropriate institutional use of the Fed, the FDIC and the Tarp. Mr Geithner and Mr Summers should at the very least explain the true risks of large losses by the government under their plan. Then, a properly informed Congress and public could decide whether to adopt this plan or some better alternative.

Jeffrey Sachs is director of The Earth Institute at Columbia University

Copyright The Financial Times Limited 2009

Class Struggle Heats Up, Bankers on the Ropes, Geithner Must Resign (Keith) by Keith

Today's Financial Times has the banner headline "Banker fury over tax 'witch-hunt." The article has quotes from dismayed bankers: 

"Introducing this 90 per cent tax is like taking the the fiannce industry out the back and shooting it." --London Bank Exedcutive 

"The tax measures will send the U.S. back to the stone age." 

-Frankfurt Banker 

"It is like a McCarthy witch-hunt"

Wall St. banker (who deosn't know much about history)

"The is the most profoundly anti-American thing I have ever seen."

-Wall St. Banker 

the quotes show Financial Capital is starting to swaet and they are taking a lot of punishment, we must make sure that Obama doesn't lose the will to take the fight to the end. Geithner must be our target, he is financial capital's the weak link. 

Tim Geithner, the Treasury Secretary and former Goldman Sachs exec, and sturdy ally of financial capital is under increasing pressure to resign. The Financial Times and the Financial Capitalist class for which they speak have been defending Geithner (last week the FT wrote an editorial defending Geithner and today McCain came out asking the country to give Geithner a chance).  

We should go all out against Geithner but we must combine the demand that he resign  with the demand that his successor not have a history in the finacial sector, -- someone like Eliot Spitzer (As Client #9 Spitzer is out but we need someone like him) or Paul Krugman. 

Galbraith: "No Return to Normal" - Forget the Banks, Bring on the New Deal (X.) by X.

The prominent liberal economist James K Galbraith just published an essay titled No Return to Normal in the Washington Monthly in which he unambiguously argues that the scale of the current financial crisis will radically transform the capitalist economic system for the foreseeable future. Galbraith argues that the banking system, no matter how much cash it is handed over by the Feds, cannot and will not provide consumer credit since consumers are already mired in debt that they cannot repay with their current level of income.

Galbraith, a Keynesian capitalist (i.e. he believes that capitalism is the best available economic system but that it requires strong government intervention to remain "stable") of course does not consider either of the two principal revolutionary democratic proposals to address that fundamental problem: 1) Forgive the debt (which revolutionaries can help bring about by building a nationwide debtors' union) and increase workers' share of the wealth they produce at the expense of the capitalists (which revolutionaries can help bring about by encouraging workers to struggle for democratic governance and a share of the profits at their companies, or even better, developing cooperative businesses jointly-owned and operated by the workers). Like the conservative economists crying "let them eat bread", Galbraith only considers the possibility of people massively reducing their consumption and increasing their savings. As a liberal Keynesian economist, he worries about people's welfare however and thus recommends a fairly radical New Deal plan that should give us a sense of how far we can push the Obama administration to provide resources that could be channeled to build dual power. Check out this excerpt:

"That being so, what must now be done? The first thing we need, in the wake of the recovery bill, is more recovery bills. The next efforts should be larger, reflecting the true scale of the emergency. There should be open-ended support for state and local governments, public utilities, transit authorities, public hospitals, schools, and universities for the duration, and generous support for public capital investment in the short and long term. To the extent possible, all the resources being released from the private residential and commercial construction industries should be absorbed into public building projects. There should be comprehensive foreclosure relief, through a moratorium followed by restructuring or by conversion-to-rental, except in cases of speculative investment and borrower fraud. The president’s foreclosure-prevention plan is a useful step to relieve mortgage burdens on at-risk households, but it will not stop the downward spiral of home prices and correct the chronic oversupply of housing that is the cause of that.

Second, we should offset the violent drop in the wealth of the elderly population as a whole. The squeeze on the elderly has been little noted so far, but it hits in three separate ways: through the fall in the stock market; through the collapse of home values; and through the drop in interest rates, which reduces interest income on accumulated cash. For an increasing number of the elderly, Social Security and Medicare wealth are all they have.

That means that the entitlement reformers have it backward: instead of cutting Social Security benefits, we should increase them, especially for those at the bottom of the benefit scale. Indeed, in this crisis, precisely because it is universal and efficient, Social Security is an economic recovery ace in the hole. Increasing benefits is a simple, direct, progressive, and highly efficient way to prevent poverty and sustain purchasing power for this vulnerable population. I would also argue for lowering the age of eligibility for Medicare to (say) fifty-five, to permit workers to retire earlier and to free firms from the burden of managing health plans for older workers.

This suggestion is meant, in part, to call attention to the madness of talk about Social Security and Medicare cuts. The prospect of future cuts in this modest but vital source of retirement security can only prompt worried prime-age workers to spend less and save more today. And that will make the present economic crisis deeper. In reality, there is no Social Security "financing problem" at all. There is a health care problem, but that can be dealt with only by deciding what health services to provide, and how to pay for them, for the whole population. It cannot be dealt with, responsibly or ethically, by cutting care for the old.

Third, we will soon need a jobs program to put the unemployed to work quickly. Infrastructure spending can help, but major building projects can take years to gear up, and they can, for the most part, provide jobs only for those who have the requisite skills. So the federal government should sponsor projects that employ people to do what they do best, including art, letters, drama, dance, music, scientific research, teaching, conservation, and the nonprofit sector, including community organizing—why not?

Finally, a payroll tax holiday would help restore the purchasing power of working families, as well as make it easier for employers to keep them on the payroll. This is a particularly potent suggestion, because it is large and immediate. And if growth resumes rapidly, it can also be scaled back. There is no error in doing too much that cannot easily be repaired, by doing a bit less."

The whole article is worth reading, find it here.

Class Struggle and AIG (Posted by Keith) by Keith

Eliot Spitzer, the “disgraced” former Governor of New York  (he was caught with an expensive prostitute but he was “caught” as a part of the class struggle—he had been going after financial capitalist before it became a congressional past time, and they brought him down in a scandal) published this essay in Slate.com this week.  Although he speaks about “insiders” rather than the financial capitalist he points out the relationship between AIG and Goldman Sachs.   Goldman Sachs is basically merged with the U.S. state and have their tentacles all over Obama’s administration.  An immediate task is to defeat the financial class within the Obama administration.  Jim wrote a nice essay about some of the class struggles within the Obama administration. 

Here is the Spitzer article:

The Real AIG Scandal

It's not the bonuses. It's that AIG's counterparties are getting paid back in full.

By Eliot Spitzer

---

Everybody is rushing to condemn AIG's bonuses, but this simple scandal is obscuring the real disgrace at the insurance giant: Why are AIG's counterparties getting paid back in full, to the tune of tens of billions of taxpayer dollars?

For the answer to this question, we need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke last fall. Post-Lehman's collapse, they feared a systemic failure could be triggered by AIG's inability to pay the counterparties to all the sophisticated instruments AIG had sold. And who were AIG's trading partners? No shock here: Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and on it goes. So now we know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already.

It all appears, once again, to be the same insiders protecting themselves against sharing the pain and risk of their own bad adventure. The payments to AIG's counterparties are justified with an appeal to the sanctity of contract. If AIG's contracts turned out to be shaky, the theory goes, then the whole edifice of the financial system would collapse.

But wait a moment, aren't we in the midst of reopening contracts all over the place to share the burden of this crisis? From raising taxes—income taxes to sales taxes—to properly reopening labor contracts, we are all being asked to pitch in and carry our share of the burden. Workers around the country are being asked to take pay cuts and accept shorter work weeks so that colleagues won't be laid off. Why can't Wall Street royalty shoulder some of the burden? Why did Goldman have to get back 100 cents on the dollar? Didn't we already give Goldman a $25 billion capital infusion, and aren't they sitting on more than $100 billion in cash? Haven't we been told recently that they are beginning to come back to fiscal stability? If that is so, couldn't they have accepted a discount, and couldn't they have agreed to certain conditions before the AIG dollars—that is, our dollars—flowed?

The appearance that this was all an inside job is overwhelming. AIG was nothing more than a conduit for huge capital flows to the same old suspects, with no reason or explanation.

So here are several questions that should be answered, in public, under oath, to clear the air:

What was the precise conversation among Bernanke, Geithner, Paulson, and Blankfein that preceded the initial $80 billion grant?

Was it already known who the counterparties were and what the exposure was for each of the counterparties?

What did Goldman, and all the other counterparties, know about AIG's financial condition at the time they executed the swaps or other contracts? Had they done adequate due diligence to see whether they were buying real protection? And why shouldn't they bear a percentage of the risk of failure of their own counterparty?

What is the deeper relationship between Goldman and AIG? Didn't they almost merge a few years ago but did not because Goldman couldn't get its arms around the black box that is AIG? If that is true, why should Goldman get bailed out? After all, they should have known as well as anybody that a big part of AIG's business model was not to pay on insurance it had issued.

Why weren't the counterparties immediately and fully disclosed?

Failure to answer these questions will feed the populist rage that is metastasizing very quickly. And it will raise basic questions about the competence of those who are supposedly guiding this economic policy.

Thug Life (Tim) by Tim Horras

One possible scenario as to what the future will look like in the coming years (which is gaining increasing popularity) comes from Russian blogger Dmitry Orlov. I would highly recommend anybody interested in the future of this country read some of his essays, for example, his "Social Collapse Best Practices". Essentially, Orlov's thesis is simple. In fact, it's almost facile in nature and lacks a solid theoretical basis. [1] At the same time, it offers to me a much more persuasive vision of what sorts of situations the course of events than I've seen from any mainstream media sources, who still stubbornly refuse to imagine a world in which an advanced capitalist economy ceases to function. For this reason alone, it merits attention. [2]

Orlov's premise is that the United States as a superpower (he seems to shy away from using the term "imperialism") is in a place analogous to Russia in the late 80s and early 90s. He enumerates some of the similarities: "a severe and chronic shortfall in the production of crude oil, a severe and worsening foreign trade deficit, a runaway military budget, and ballooning foreign debt", etc.

Right now I have neither the time nor the energy to fully dig into this article. Read it for yourself. The resurgence of interest in post-collapse societies (obviously previsaged by a revivified horde of new zombie movies) is very real: Fallout 3, anyone? [3] The questions which surround social collapse are serious questions and deserve more lengthy analysis and exegesis.

One aspect of social collapse which I'll finish this post talking about is the rise of organized crime.

As the protective power of the state recedes, the functions which were once handled by the state (waste disposal, physical protection, etc.) either get done by somebody else, or they don't get done at all. Into this power vaccuum steps anybody who is organized. In Berlin of the 1920s and 30s, the Communists provided services such as housing to people. However, it's rare that organizations spring up with a fully-formed political agenda. Usually political awareness is one of the later stages of organizational development. More likely are enterprises that organize around a more primitive (in the orthodox sense) forms of organization -- such as the feudalism of the crime "family".

The great socialist literary critic Frederic Jameson has written extensively that the fascination with the crime film genre has at its root a way of understanding and fantasizing about "primitive accumulation" i.e. the first stage of capitalism. [4] Anyone who's seen movies like the Godfather or Scarface (or played Grand Theft Auto) can tell you the basic narrative: young punk rises to the top of the cartel (capitalist enterprise) by brutally killing off rivals, taking over other people's businesses and turf, then living the high life at the top (until, presumably, they themselves are taken out by a young upstart). Myself, I have found it interesting how the gangster fantasy has been appropriated and remixed, so to speak, for a younger generation. The new film Gomorra, which looks at mob activities in Naples, has a sequence where these kids are acting out their fantasy of being Tony Montana. One could look at the appropriation of this imagery in hardcore hip hop for an analagous example.

What Jameson pointed out was that the supposedly reprehensible criminal enterprises such as gangs and the mafia were in fact capitalist enterprises no different than the robber barons of the 19th century. For example, in 1868, when American financer "Jay Gould was fighting Vanderbilt for control of the Erie Railroad, Gould and his men were forced to flee across the Hudson River in a rowboat, and barricaded themselves in a New Jersey hotel". Jay Gould would later bring the United States and Canada to the bring of war. That is to say, capitalist enterprises are just criminal enterprises writ large.

Even though the state marks certain areas as off-limits to capitalist enterprises (e.g. prostitution, drugs, etc.), enterprising capitalists get involved anyway -- if there is a profit to be made. The logic of capitalist development goes like this: after a phase of primitive accumulation (see above), there need to be some kind of game rules in order to prevent a cycle of continued violence. Thus, when the state begins to referee and regulate these enterprises, it cuts down on the level of competitive violence between corporate entities (crime "families", syndicates, etc.).

But if the state refuses to step in and regulate an industry for the capitalists, it becomes stuck in a repetitive pattern of primitive accumulation. This was (is?) something of the case in Russia after the fall of the Soviet Union. Ordinary business ventures became dangerous because the state had completely stepped back (or was rendered powerless) from many of its traditional roles.

If we are likely to witness a further tidal withdrawal of the state (as has already been forced with the attack on and diminution of the welfare state since the 1980s) in the coming months or years, we are also likely to see a correlative rise in criminal activity and specifically organized criminal activity.

Sure enough, Alternet reports that collusion of "illegitimate" criminal enterprises and "legal" business enterprises is increasing. Business owners are increasingly looking to organized crime to fill in the credit gap. A Mexican drug lord made the Forbes list of the world's richest human beings, while our southern neighbors face continued violence which threatens to both consume their government and spill over into US territory. The Mexican Economy Secretary even went so far as to speculate that if the government loses the current battle, "the next president of the republic would be a drug dealer"!

There are a whole bunch of other examples of this, but I don't have the time to list them all. Hopefully I can take on the issue of social provision in a blog post sometime in the near future; as I feel that leftwing organizations have a moral duty and a political imperative to begin setting up alternative economies of social provision to aid people in this period of economic contraction.


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[1] I find a systemic, materialist analysis to be the most persuasive method of interpreting history. However, one should always be on guard against orthodoxy. I grew up around religious fundamentalists, and I have come to find that fundamentalist tendencies (e.g. the need to "go back" to the "original" texts or figures in a movement) cut across ideological boundaries. One should approach with great caution those who insist we ascribe to "what Marx said" or some other such nonsense.

[2] As a caveat, the progressive left-leaning techno-utopian James J. Hughes, author of Citizen Cyborg: Why Democratic Societies Must Respond to the Redesigned Human of the Future, writes of the need for healthy awareness of and skepticism toward the millennialist tendencies which arise when contemplating the future, and apocalyptic threats such as global climate change or social collapse. His essay is without a doubt the best short piece on millenialism and utopianism (and I should know, having read many of the studies he cites). We should take seriously his warning that when thinking about and discussing the future, we are prone to couldn't agree more, having witnessed firsthand the folks who stocked up on guns and bibles, thinking that Y2K was going to end civilization as we know it, as well as the folks on the other end of the spectrum who thought that casino capitalism would last forever.

[3] Regarding zombie-related puns, I will say only: *groooooan*

[4] These stages are not necessarily chronological. Long story. Read something like David Harvey's Limits to Capital.