Monday, March 30, 2009

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.

Thursday, March 26, 2009

Reverse Robin Hood (Posted by Keith) by Keith

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

Saturday, March 21, 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. 


Thursday, March 19, 2009

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.

Wednesday, March 18, 2009

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.

Tuesday, March 17, 2009

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.


--------------------------------------------------------------


[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.

Monday, March 16, 2009

Zizek against protest mode (Posted by Keith) by Keith



Here is Zizek critiquing protest mode. He doesn't use the term protest mode. The interview is a few years old but he makes the point well. Of course he doesn't put forth a strategy or any tactics for a struggle for power either. 

Sunday, March 15, 2009

More From the Credit Card Front (Brian) by Winston

I know - it seems like I'm obsessed with their chicanery, tomfoolery, and shenanigans...well, at least the tomfoolery - so I'll make this a quickie (I'm doing lesson planning on the Lowell mills anyway)

This piece describes what represents a new low...figuratively and perhaps literally...

Basically, you could wake up tomorrow with your credit limit very close to or below your actual current balance... yikes!

Thursday, March 12, 2009

GM Looking Into the Past? (Chloe) by Chloë


Last night, for the first time I saw the documentary, Who Killed the Electric Car? It is an enjoyable movie and I highly recommend it. It seems though that I watched this movie at a rather ironic time.

GM has developed a new electric car, the Chevy Volt, as its argument for government bail out money. President Obama's task force visited GM on Monday and test drove the new car. The task force is charged with figuring out if GM is still an economically viable company and if it deserves bail out money.

It seems ironic though that GM is going back to a car, the EV1, that it developed in the late 90's and later took off the market because it wasn't deemed profitable. The new economic shift is forcing GM to revive the old idea in search of a way to revive their company. The Chevy Volt is expected to be available in 2010. If you would like to follow the Volt, check out this blog or if you are just a bit bored CHECK out some other electic cars like Aptera 2e which will be available in Cali in October!

Tuesday, March 10, 2009

The future of human beings is what matters (by Luiz Inácio Lula da Silva) by Keith

This essay by the Brazilian presidnet was published today in the Financial Times

For me, capitalism has never been an abstract concept. It is a real, concrete part of everyday life. When I was a boy, my family left the rural misery of Brazil’s north-east and set off for São Paulo. My mother, an extraordinary woman of great courage, uprooted herself and her children and moved to the industrial centre of Brazil in search of a better life. My childhood was no different from that of many boys from poor families: informal jobs; very little formal education. My only diploma was as a machine lathe operator, from a course at the National Service for Industry.

I began to experience the reality of factory life, which awoke in me my vocation as a union leader. I became a member of the Metalworkers’ Union of São Bernardo, in the outskirts of São Paulo. I became the union’s president and, as such, led the strikes of 1978-1980 that changed the face of the Brazilian labour movement and played a big role in returning democracy to the country, then under military dictatorship.

The impact of the union movement on Brazilian society led us to create the Workers’ party, which brought together urban and rural workers, intellectuals and militants from civil society. Brazilian capitalism, at that time, was not only a matter of low salaries, insalubrious working conditions and repression of the union movement. It was also expressed in economic policy and in the whole set of the government’s public policies, as well as in the restrictions it placed on civil liberties. Together with millions of other workers, I discovered it was not enough merely to demand better salaries and working conditions. It was fundamental that we should fight for citizenship and for a profound reorganisation of economic and social life.

I fought and lost four elections before being elected president of the republic in 2002. In opposition, I came to know my country intimately. In discussions with intellectuals I thrashed out the alternatives for our society, living out on the periphery of the world a drama of stagnation and profound social inequality. But my greatest understanding of Brazil came from direct contact with its people through the “caravans of citizenship” that took me across tens of thousands of kilometres.

When I arrived in the presidency, I found myself faced not only by serious structural problems but, above all, by an inheritance of ingrained inequalities. Most of our governors, even those that enacted reforms in the past, had governed for the few. They concerned themselves with a Brazil in which only a third of the population mattered.

The situation I inherited was one not only of material difficulties but also of deep-rooted prejudices that threatened to paralyse our government and lead us into stagnation. We could not grow, it was said, without threatening economic stability – much less grow and distribute wealth. We would have to choose between the internal market and the external. Either we accepted the unforgiving imperatives of the globalised economy or we would be condemned to fatal isolation.

Over the past six years, we have destroyed those myths. We have grown and enjoyed economic stability. Our growth has been accompanied by the inclusion of tens of millions of Brazilian people in the consumer market. We have distributed wealth to more than 40m who lived below the poverty line. We have ensured that the national minimum wage has risen always above the rate of inflation. We have democratised access to credit. We have created more than 10m jobs. We have pushed forward with land reform. The expansion of our domestic market has not happened at the expense of exports – they have tripled in six years. We have attracted enormous volumes of foreign investment with no loss of sovereignty.

All this has enabled us to accumulate $207bn (€164bn, £150bn) in foreign reserves and thereby protect ourselves from the worst effects of a financial crisis that, born at the centre of capitalism, threatens the entire structure of the global economy.

Nobody dares to predict today what will be the future of capitalism.

As the governor of a great economy described as “emerging”, what I can say is what sort of society I hope will emerge from this crisis. It will reward production and not speculation. The function of the financial sector will be to stimulate productive activity – and it will be the object of rigorous controls, both national and international, by means of serious and representative organisations. International trade will be free of the protectionism that shows dangerous signs of intensifying. The reformed multilateral organisations will operate programmes to support poor and emerging economies with the aim of reducing the imbalances that scar the world today. There will be a new and democratic system of global governance. New energy policies, reform of systems of production and of patterns of consumption will ensure the survival of a planet threatened today by global warming.

But, above all, I hope for a world free of the economic dogmas that invaded the thinking of many and were presented as absolute truths. Anti-cyclical policies must not be adopted only when a crisis is under way. Applied in advance – as they have been in Brazil – they can be the guarantors of a more just and democratic society.

As I said at the outset, I do not give much importance to abstract concepts.

I am not worried about the name to be given to the economic and social order that will come after the crisis, so long as its central concern is with human beings.

The writer is president of Brazil. Join the debate at www.ft.com/capitalismblog

Monday, March 9, 2009

China, and What to Do With All Those Factories (Rob) by Rob L

In an effort to review the underling conditions and causes of the present crisis, it seems that the following converging factors are true:

Real wages have been stagnant or declining vs. inflation for three decades and have reached a critical point of stress.

Neoliberal foreign policy has deteriorated domestic industry, transferring instead to developing nations.

Excessive military spending has starved the U.S. budget from maintaining domestic necessities like healthcare and education.

Like in 1991, oil interests, responding to aggressive foreign policy in the Middle East, drove up oil prices, causing domestic strife and a slowdown in global trade.

Deregulation of financial markets allowed and caused the market collapse that tipped the hand on the diseased domestic and global economy.

The world financial system was so heavily invested in the SP Mortgage schemes that no country will escape this depression.

The above points have been expounded upon by various interests and spatter a significant portion of even the lauded pages distributed by the New York Post. Here on these pages, views have come from unexpected sources, traffic has increased dramatically, and new perspectives come from brothers and sisters far away, working on their own causes. This brings us to a certain level of understanding, an even footing from which new conclusions may be approached.

A good deal of attention has been paid to the role of information technology in this crisis and the future of democracy. This is important work, since a more informed understanding of the next few years forms a structure upon which achievable plans can be erected and sculpted into reality. Is it possible, however, that technology is not yet the most powerful force in society?

There has been much said about debtor resistance to financial capital. Again, a truly massive democratic movement can not sustain itself without achievable, universal goals to rally the people. Here, there is a good deal of work left to do, especially at the ground level. Can those strategies ever mean anything more than temporary solutions to a transitory economic state?

Stand on those questions for a time. Be assured they will remain while something else takes the stage. What has been said above all comes from an informed conception of the present world. Unreality has always been a much more attractive way to look at this world, however. It might even prove elucidating to take an unwarranted perspective on weighty issues. Science Fiction has served a role in this type of analysis since its first development under the weight of a rapidly nationalizing, ceaselessly industrializing community of intellectuals. Through their visions of electric life, and mechanical wonders, these first futurists were expanding upon the ethics of their own time. The steam powered future was a safe place to explore human values, politics, and dangers without upsetting a paranoid ruling class.

With that in mind, the trends in contemporary science fiction prove useful in highlighting the present situation that is not simple enough to understand as a whole. Is it any wonder that cyberpunk enthralled readers and speculators alike in the midst of the neoliberal revolution? From Blade Runner, to 5th Element, to Firefly, deeply sensitive humanists extrapolated a world where corporate power could not be restrained from its inexorable rise to primacy. The Star Trek crew battled Russians in space, where The Next Generation brought down the wall. Enterprise instead related how the small minded creatures with a never quit attitude learned to walk the stars as humans aught to.

Cyberpunk heralded a world where humanity was lost somewhere between the net, machine implants, and corporate greed. This period of fiction predated the mystical optimism of the singularists, so machine parts on a human frame meant a sort of death of the soul and the internet was just one more tool of global control. One more consistent trait to the genre was that it was universally a Japanese world. Decades of stellar growth and a conversely floundering American business community prompted an undeniable pattern forming around a preeminent Japan, or rather, her corporation’s eventual dissolution of state power. When Japan’s economy collapsed, however, the prophecies of a world that lived under its dominance ceased to be published or even thought about.

Futurist fiction drifted to other things for a time, without quite finding a center. In fact, despite several market fads, a new school of science fiction can’t truly be pinned down just yet. It seems Vernor Vinge’s singularity is an insurmountable wall past which authors feel unqualified to climb. In the absence of a discernable future to extrapolate, steampunk and fantasy literature has experienced a remarkable rise.

A few die hard writers haven’t given up their rockets and hyper drives just yet. While no new themes have emerged, one striking consistency has emerged, the primacy of China. Joss Whedon's Firefly universe stands as the most popular image of this as a network series where all the characters regularly blurt un-translated mandarin and are surrounded by Chinese culture and writing. If China has replaced Japan as the default post-American power of choice, what does that say about what is happening now?

China is expected to post 8% growth to GDP for 2008 - once again, the largest gain out of all countries. In the wake of Neoliberal trade agreements, western heavy industry has coalesced there and in other Asian countries. The jobless recovery of the previous recession is slated to repeat on a wider scale during this depression due to the continued emigration of industry and service jobs. If it is true that domestic recovery will depend upon a return to manufacturing and infrastructure, and we folded that hand long ago, which player is going to win the pot?

Watching the Asian markets will be essential to understanding the world on the other side of this depression. China is presently investing their $600 billion stimulus package into retooling and modernizing their factories on a massive scale. While they can’t help but be carried along in the wake of the crisis, they stand a good chance of staying afloat in general. Since they presently hold $2 trillion in US currency, they also find themselves well funded to outlast the deeply indebted western nations.

There are some trials to overcome, however. The region’s inflation driven economy survives on a significant trade surplus which is drying up. China’s present plan is to readjust their target markets to developing nations, for instance, by producing low cost clothing lines that could supply African and South American states’ rapidly growing urban populations. More peripheral, but not insignificant countries like Brazil are already recovering from the crisis and this play could be a winner.

The Asian markets are holding the cards, the developed, maintained, and growing infrastructure to produce their way out of recession. The West, however, will be forced to rebuild and radically modernize what they have ignored or sold off. It is difficult to pierce the veil over Chinese politics, but with their recent adoption of the 3G wireless standard, internet access will continue to expand, a process that will result in more connection and communication. Coupled with a consistently rising standard of living and real wages, it is time to watch China for a return to democratization and
inclusive reform.

Now, place this along current discussions surrounding technology and debtor resistance. Are we prepared to enter the world of tomorrow, when we lack the tools today? Resisting oppressive debt will free potential revolutionaries from burdens no person should bear, forced on the people by powers that have less and less basis in material reality. Technology and the careful adoption of new practices will ensure that these oppressed today are active and connected tomorrow, because networking is a better lever to pull on society's hinges. Put all this in context with a world balance of power that may just be shifting to another sphere. In a world past capitalism, there shouldn't be spheres of power, and we'll get there if we live long enough to get anywhere at all. A refocus of power to the Asian markets, however, could radically change to path to change.

Friday, March 6, 2009

Crisis in the Real Economy (Posted by Asher) by Keith

This is an analysis of economic data published in the Financial Times last weekend by friends at Radical Perspectives on the Economic Crisis

Evualuating the Numbers

The Financial Times produced some shocking numbers this weekend.  Japanese exports have collapsed by an astounding 45.7%, the largest such decline since 1957.  Stock Markets have collapsed to new low for this crisis--so low that markets are at their 1997 levels.  The budget deficit in the US is expected to reach $1,750 bn, the highest it has been since the Second World War. 

Japan's stunning 'free-fall' is indicative of a broader phenomenon, the rapid decline in global trade and demand for finished goods.  Japan's banking system, having been relatively insulated from the toxic assets and exotic debt instruments that poisoned so many western banks, is still afloat. The crisis in the world's second largest economy is further proof of a crisis of the economy proper; i.e., not a crisis of finance.  For those economists, journalists and politicians who believed this crisis to be essentially financial (there really are very few left) Japan's erosion should provide good reason to stop calling it the financial crisis and start calling it what it is: an economic crisis

A few notes on the implications of the data on Japanese exports:

The Yen has been appreciating rapidly since the crisis began. Investors pulling money out of other markets poured their financial wealth into the seemingly safe Japanese currency (this was accompanied by a similar but less extreme process forcing appreciation of the dollar). Since the collapse of Lehman Brothers, the higher the level of fear in the markets1, the higher the Yen. This relationship has broken down of late due to fears that the Yen is now grossly over-valued and fears associated with export and industrial output data. We can expect depreciation of the Yen. This will likely lighten the gloomy data on exports but the extent to which any relative recovery in exports takes place will be a good indicator on the strength and prospects of the global economy. Positive change in exports is unlikely although a reduction in the rate of decline should be expected. It is looking grim.

Accordingly, this gloomy economic outlook combined with the seemingly divided and insufficient global response to the crisis has sent stock markets to new lows. Commentators spoke of a possible rally given the low prices of stocks. Others opined about a theoretical floor for stock prices. The floor has fallen out from under the prices and waiting for a rally seems a fools errand. The corporate sector will be subjected to serious stress because of the mounting uncertainty in markets which has made it very difficult to attract investors. Markets are telling us that we should not hold our breath for a fast and painless recovery.

In other news, the world's savings is still pouring into the US market. Our public deficit will reach $1,750 bn this year. Leaving aside the debate about whether the stimulus/bailout will be enough to pull the US out of recession and prevent employment from plummeting, the budget defect will have an enormous effect on overall private investment in the US. Orthodox economics talks about a phenomenon called 'crowding out.' That is when an entity, in this case the state, is sucking up so much of the world's liquidity that there is very little left to lend to other actors. Lets clarify this phenomenon. US public debt (what the Gov borrows) is considered to be risk-free. Put simply, this is because investors assume that as long as the US exists, debts will be repaid. Because US national debt is risk-free it is also very cheep. Riskier borrowers must offer higher interest rates to lenders to attract liquidity. With the US asking for so much money from the private sector and from abroad, other more risky borrowers will find that there is less money floating around to be loaned to them and thus will be obligated to compete against other borrowers by raising interest rates. Some will get loans some won't. What's more is that a firm can only offer an interest rate as high the expected returns on their investments; i.e., profits must be sufficient to service (make payments on) that loan. That means firms will be forced out of the private debt market. Access to state financing will become very important. The final bit to mention about crowding out is that it is not only private sector firms that are crowded out of the market. Small states can be crowded out of the market as well. Look forward to more desperate demands for sovereign loans out of the developing world2.

   
 Deficits and the global imbalances:

In the Financial Times on Jan. 2, it was revealed that US Treasury Secretary Hank Paulson sees "global imbalances" as the root cause of the present crisis.  That is to say, the blame for this crisis was neither dishonesty or poor regulation but rather the underlying instability resulting from international trade--the massive inequality in rates of accumulation between exporting nations (China, Germany, Japan, Gulf States etc...) and debtor nations (US, UK, Spain etc...). The mechanisms that helped to propel the growth of such enormous bubbles in commodities and housing lie in the huge savings of the surplus nations. Those savings needed a place to go so they were put into financial markets in search of high rates of return (relative to the perceived risk of said investments). Those savings found their way into the pockets and homes of Americans and other OECDers. Savings also flowed, in a speculative fashion into commodities driving prices up3
    The planned stimulus to the US economy will exacerbate the current global imbalances. Unless the result of the stimulus is to depreciate the dollar and boost exports (a short term boost in exports is unlikely given the state of the global economy...) there will be little long-term economic benefits. To the extent that a large part of the stimulus could go to public goods (unemployment benefits, health care, infrastructure and education) the stimulus should be welcomed on basic human grounds but lets not be too optimistic about some sort of 'jump-start' to the economy as that is highly unlikely. 
    We should look out for international outcry about American spending and borrowing. In the long run we might expect the American policy to be a measured devaluation of the dollar. This might be the only way out of the crisis but it would spell one of the most monumental shifts in the post-war world and would thus be accompanied by major institutional and structural changes in the political-economic landscape4.  

Footnotes:

1. Corresponding to VIX. A common measure of market volatility.

2. There is a strong historical relationship between private sector investment, employment and growth in capitalist economies. 

3. This is not the whole story of the crisis. It is simply one level of it. A deeper understanding of the crisis must examine structural changes in production and exchange that gave rise to the imbalances but that is beyond the scope of my morning/afternoon.

4. What might be the fate Sino-American relations after a devaluation given the mass of dollars they have willingly accumulated? Could the dollar maintain its place as the worlds reserve currency? 

Thursday, March 5, 2009

The Post-Scarcity Economy (Posted by Jim) by der Augenblick

There's a fascinating article in the Spring 2009 issues of h+ Magazine (link takes you to the online version—the article starts on page 37).

The author, Jason Stoddard, claims the current financial crisis is the first step on the way toward a post-scarcity economy in which our notion of value is overturned.
But what if advances in manufacturing efficiencies make it possible to live well, simply by interacting with friends and going about your life? What if below-replacement-level birth rates and advances in biotechnology meant you could check out of the system by claiming a piece of unused desert and planting a house? This surveillance economy might be a very easy place to live.
Stoddard is raising a possibility I raised in my earlier post on automation and capitalism, namely that advances in our current social networking technologies, combined with the seamless interface between computing and reality that will come with the internet of things (listen to this talk for more information), will revolutionize the way we both produce and distribute surplus-value. This will happen before we reach a post-scarcity economy.

The possibilities once we reach a post-scarcity economy (through nanotechnology or something else) are almost limitless. What few people are saying—Stoddard stops short of saying this, too—is that capitalism is unintelligible under such circumstances. If necessary labor consists in—to put it bluntly—screwing around with your friends and having a good time, if that's the way we acquire our means of subsistence, then there effectively is no barrier between ourselves and social wealth. If one can take the current emerging paradigm of decentralization emerging now and extrapolate it a decade or two into the future, a paradigm of radical democracy and effortless participation takes shape. It would be a self-sustaining, self-growing, undirected, democratic and organic communist system.

Wednesday, March 4, 2009

Obama's agenda and the conservative response (posted by Keith) by Keith

This was in todays Financial Times.


An epic battle looms over Obama's big push

By Roger Altman

Published: March 4 2009 02:00 | Last updated: March 4 2009 02:00

If leadership is measured by seizing big opportunities that others do not see, then Barack Obama is already proving himself a leader. His 2007 decision to run for president was audacious but shrewd. He saw the opening. Now, he has judged that the severe economic crisis, his own soaring popularity and Republican disarray provide a rare chance to revolutionise US domestic policy. And he is going for it right now.

His new budget calls for breathtaking change in one big step. In the modern era, only Lyndon Johnson in 1965 and Ronald Reagan in 1981 have sought and achieved comparable change. Johnson's Great Society sharply expanded the government's role. Reagan rolled that back. Now, Mr Obama is proposing a new era of progressive government, centred on expanded federal roles in energy, health and education.

This level of federal activism is anathema to Republicans. It attacks their core principles of lower taxes and limited government. If implemented, the new progressivism may rule indefinitely. The era of Reagan conservatism lasted nearly 30 years. Republicans, as Newt Gingrich, former House speaker, and Rush Limbaugh, the radio host, have urged, have no choice but to wage all-out war against it. We are about to witness an epic congressional fight - the political equivalent of the Battle of Antietam in the American Civil War.

The key fight will not occur over the spending amounts in the budget. Republicans cannot defeat those. Congressional roles require only a simple majority to approve budgets, and the ample Democratic majorities will prevail. Budgets also just allocate amounts and sources of financing for programmes. The latter must be voted on separately and later. This is where the battle will focus - on the expansion of the government role in energy, healthcare and education.

First, on energy conservation, Mr Obama's cap-and-trade proposal represents a sharp expansion of regulation and an indirect and large tax increase on industry. Caps on permissible emissions would apply to all polluting industries and tighten gradually. Those unable to comply would buy emissions credits and incur the associated costs. These credits would be auctioned by the government, raising $65bn a year. Some would finance alternative energy but most would pay for tax cuts on middle-income Americans. In other words, industry would underwrite the shift to a more progressive tax system.

Second, on healthcare the goal is universal health insurance for all Americans. The methods are likely to involve a federal requirement that all adults receive coverage from their employers or buy it for themselves. The budget projects $1,000bn of additional federal costs over 10 years to deliver universal coverage. To finance this partially, it will begin raising a $630bn "reserve fund" from tax rises on higher earners and limiting Medicare reimbursements to healthcare providers.

Finally, responsibility for financing education has always resided at the state and local level in the US. Mr Obama has proposed to double the federal role in early childhood education. Further, he has proposed expanding the grant for low-income college tuition assistance and converting it into an entitlement - the first in decades.

These proposals would dramatically expand the federal role. Moreover, the financing for this would create a substantially more progressive tax system. This is why Republican and conservative opposition will be so fierce.

The risk for Mr Obama does not lie in these proposals, but in the growing possibility that the recovery is much weaker than envisioned in his budget. It forecasts real gross domestic product growth rebounding 3.2 per cent in 2010 and over 4 per cent for the subsequent three years. On that basis, the deficit still approximates $1,000bn through 2011. But this is a rare balance-sheet recession. The asset bubble collapse caused US households to lose 25 per cent of their net worth and financial sector balance sheets to collapse. It is practically impossible for these damaged balance sheets to support a return to normal consumer spending (72 per cent of GDP) and financial lending for three to four years. The recovery, therefore, will be subnormal. This not only means even bigger deficits than the scary ones projected, but it also could weaken public support for these sweeping policy changes.

Can Mr Obama implement this audacious agenda? His current momentum and extraordinary gifts suggest that he can. We may see a generation of change telescoped into one year.

The writer is chairman of Evercore Partners and was deputy Treasury secretary under President Bill Clinton

Tuesday, March 3, 2009

Timeline for Accelerating Political/Social Change (Jim) by der Augenblick

It's a lot of fun reading timelines for things like the technological singularity or even just the implementation of robots in our economy. But have you ever wondered what a political/economic/social timeline would look like? I decided to put a short one together, just for fun.

2010 - We show signs of emerging from the recession we're currently in, but the rate of job growth is less than what it was at the beginning of the recession, i.e., another "jobless recovery".

2013 - We begin to enter another recession, deeper and longer than the one we're currently in. Tremendous job loss forces the federal government to take larger role in ensuring people have necessities, though relative weakness of the government compared with social democracies makes this difficult and somewhat inefficient. Still, we get by.

2017 - Again we recover from the recession, but recovery is again less than it was last time. This is owing to the vast number of jobs that have been automated. New jobs in the information technology sector are not sufficient to make up for it.

2019 - The economy enters recession again. Unprecedented job losses seizing the entire world. Unprecedented interventions from world governments manage to keep the economy going, though they are incredibly inefficient compared with the market forces they are attempting to replace.

2020 - Period of perpetual economic crisis begins. Permanent recession. Internet 3.0, the "internet of things", is ubiquitous. Production processes increasingly automated but also democratized through the next generation of social/material networking technologies.

Mid 20s - Capitalism is in severe crisis. It can't prop itself up anymore by means of market forces alone. The state can no longer prop it up in a way that is profitable. This is not localized either but is global. Growing demand for the basic necessities of life, but a smaller and smaller role left for the state. Needs are increasingly met through an organized though decentralized process which takes place over the "internet".

2025-2030 - Drastic fall in the cost of means of subsistence. Large portions of the means of subsistence are removed from the value-form all together. By the 30s food, housing, and medicine are free due to the ease with which they're produced by automated labor. Due to exponential increases in information technology and robot design, work becomes obsolete. "Unemployment" nearing 85% of the global population makes the category almost meaningless.

2030 - Though there are perhaps isolated markets, capitalism as a world system no longer exists. Neither markets nor state control of production even approached the efficiency with which the fully automated, open source economy operates. The state still exists, though it is more and more restricted to policing information, protecting against identity theft, etc.

2040 and beyond - There is no longer any state or economy as we understand them now. Society is fully "online", though the distinction between the internet and the world (and indeed machine and person) no longer exists. Flow of information and personal identity completely impossible to protect or regulate from the outside. World intelligence system totally self-regulating and communistic.

Obviously I'm just making this up—even Marshall Brain doesn't think we'd have that much automation that early. But I really haven't seen a lot of timelines like this alongside the technological ones. People seem to assume that capitalism will coexist indefinitely with this kind of explosion, and that just seems preposterous to me. But I think this is something we need to start thinking about. We need to extrapolate political, social, and economic change into the future just like we do with technology.

What's your timeline look like? Post it here.

Student Debt & The Obama Budget (Chloe) by Chloë

For many of us that are still students, we are semi-isolated from the financial crisis. We are though very familiar with the financial aid process that causes major head aches around this time of the year. Obama's new budget may change that.

The president is proposing an overhaul of the financial aid program, including nationalizing the lending process. Not surprisingly this will have a negative impact on lending institutions like Sallie Mae, but the plan is estimated to save the federal government 4 billion dollars. Along with saving the federal government money, the president is increasing the number of grants available to low income students and expanding eligibility to the federal loan program.

This though is a small step in terms of getting affordable education and many students will still be left with mounds of debt. It though signifies greater federal government involvement in higher education, letting us hope that free higher education will someday be a reality in the United States.

Automation and the End of Capitalism (Jim) by der Augenblick

I wanted to write a quick addendum to Rob's post on Marshall Brain's talk about robotics and employment.

At the end of his talk Brain says the only logical plan of action given the inevitability of the massive unemployment (50 million people) and concentration of wealth that will result from full automation of labor in the next decade is to "restructure the economy" or "redesign society". Brain summarizes the way we should redesign society in four points:
  • Spread the benefits of productivity increases to everyone


  • Break the concentration of wealth


  • Increase pay


  • Reduce the work week
Brain doesn't provide a lot of details for what these actions would involve, though of the last one, reducing the work week, he says we should reduce it from 40 hrs to 30 hrs to three days to two days—until we are all "perpetually on vacation".

To put the point bluntly, Brain describes communism. Notwithstanding some of the particularities given by various thinkers—Marx even remarks at one point that we will enjoy work under communism—communism has always involved two things: (1) the distribution of labor and the distribution of the product of labor is planned and not determined by the market, and (2) we are freed of the compulsory aspect of labor. The struggle against capitalism is a struggle against the imposition of labor. It is in most cases a struggle to get more use-values for less exchange-value or to get use-values without any exchange-value attached to them.

Same thing without the jargon: communism means everyone gets as much as possible by working as little as possible.

Clearly this was impossible under conditions of scarcity. Yet technologists, engineers, scientists, and inventors all seem to agree that we are fast approaching the point where scarcity will end—if we're not there already. The question is whether the scarcity we experience now and will experience in the future is the result of nature or whether it is the result of the unplanned system we live in. Brain argues that if we continue down the current path—letting market forces stand in for conscious decisions—this technology will hurt humanity, not benefit it. But if we make conscious, rational choices about how society as a whole ought to proceed with the implementation of this technology, it can benefit everyone. In fact, it is the only way it can benefit everyone and not hurt them. That is the first way in which Brain's solution negates the fundamentals of capitalism: he says we ought to bypass the market and make conscious, direct choices about the distribution of labor and the distribution of the fruits of labor in our society.

What he does not mention—and what I would emphasize—is that the ubiquity and growth of social networking technologies lays the foundation for total, conscious, decentralized, and democratic planning of the production process and the democratic distribution of the surplus-product. Communist planning in a technologically advanced world will neither resemble "administered", Soviet-style economies, nor will it reflect market forces. The current trajectory of the development of the productive forces makes this both possible and necessary.

The second way in which he bypasses capitalism is by raising the demand that we be "perpetually on vacation". He claims the only solution to the looming crisis—a crisis which we see now only in miniature—is to demand an end to the condition of forced labor. While it may appear as though capitalism is a system in which workers individually and voluntarily contract out their labor in exchange for a wage, the fact of the matter is that the working class as a whole is enslaved by the capitalist class as a whole. Every product of labor takes the commodity form. Unlike past civilizations, we do not even keep the means of subsistence. Therefore, in order to acquire access to the means of subsistence, we must work in exchange for a wage, and we exchange that wage for the means of subsistence. Money stands as the barrier between us and what we create. It is an indirect, abstract form of slavery, but it is a form of slavery nevertheless. We are not enslaved to any one particular individual; however, we are enslaved to the value-form itself. We cannot live except by working for another person, and our share of the product of labor is determined by unconscious, unplanned market forces.

But the demand for communism is the demand that we workers as a whole, rather than having to access the product of our labor only to the extent that the non-workers want us to, instead collectively have direct control over the product of our labor. This means that, as a society, we give of ourselves what we consent to give, and we take what it is reasonable to take. Given the inevitable conditions of superabundance of products approaching, the extent to which we can take approaches infinity. Given the inevitable, exponential rise in the productivity of labor, the amount of our labor we can consent to give approaches a value of zero.

We are fast approaching the point where if we do not meet anti-capitalist demands, the vast part of humanity will sink into misery. Brain demonstrates this in his talk. Yet we are approaching a point—just behind the first point—where the conditions that make capitalism possible will no longer exist. Moreover, we are creating the point where access to social wealth is necessarily decoupled from exertion. We are making necessary a transition from a liberal democratic society to a revolutionary democratic one.

Monday, March 2, 2009

How the Crash will Reshape America (Chloe) by Chloë

I've been neglecting to post this and during that time the Daily Kos picked up the article.

The original article can be found here. Definately worth a read if you are interested in how the economic crash will reshape the economic geography of the United States.

I will post some thoughts from Rob L in the comments.

Banks to Card Debtors: Pay up now!!...Please??? (Brian) by Winston

The credit card biz used to love people with "a taste for credit" -- folks who kept high balances and more often than not paid barely above the minimum. But alas, the party is over. As the economy circles the toilet, credit card banks are reversing course -- offering incentives to pay off balances quickly so your debt balance is off their books like so many other "toxic assets." It's an interesting reversal of a long-standing policy that your balance was a good thing (I wrote about that policy a bit more indirectly here on this blog).

So why do we care? Well, they're in a panic. The banks don't know which way is up. A few weeks ago, the message was, "Buy stuff!!" Now it's, "OK - How can we make you go away?" It is times like these that a re-orientation of our relationship to debt and banks, like a debtors' union or a "bank strike," becomes more viable. The "cultural space" for (the popularization of) resistance is growing, if you will.

PS - By the way, as you might have figured out, "You are not your credit score!" rings truer because you can't even trust the accuracy of that score to begin with.

Thanks, capitalism - enjoy retirement.

Partial Peace, Looming War (By Tom Hayden) by Keith

This essay by Tom Hayden was published in  The Nation this week. His analysis of Obama's relationship to the military establishment is interesing. I ahev soem thoughts about what he says about the anti-war movement that I posted as a comment. 

========================

Partial Peace, Looming War. 

By Tom Hayden

President Obama has surprised the national security establishment, and not a few in the peace movement, with his Friday commitment to pull all American troops out of Iraq by 2011. 
The Washington Post's Thomas Ricks predicted in his recent authoritative history, The Gamble, that Obama would keep 25,000 to 50,000 troops in Iraq as a "residual" force indefinitely. Ricks reports that generals like David Petraeus and Raymond Odierno were expecting at least that many troops, and predicts that the fighting will continue for decades. Obama's announced new policy must shock Ricks and the military leaders he extensively interviewed. Obama's official stance comes after many months of appearing to support the notion of residual forces, which many in the peace movement correctly believed could lead to low-visibility counterinsurgency and a permanent military occupation. Obama said nothing to dissuade the critics until Friday's speech at Camp Lejeune, North Carolina
In debates within the Obama camp, only John Podesta, transition adviser and head of the Center for American Progress (CAP) was publicly advocating that all troops, including trainers and advisers, be withdrawn within one year. 
Ricks' book is wrong on another related matter, the role of the antiwar movement in this process. Ricks celebrates Petraeus for having pacified Iraq in the face of considerable Democratic doubt, and for winning the political war at home in 2007-2008. Petraeus's stated goal was to speed up the Iraqi clock (the surge) while slowing down the American one (the electoral calendar). Ricks says he pulled it off. After Petraeus's appearance before Congress in September 2007, Rick says, domestic criticism faded away. News coverage of Iraq sharply declined, as networks began to withdraw from Iraq. The March 2008 antiwar demonstrations were "tiny," he writes, with fewer than 1,000 in Washington and 500 in San Francisco
Ricks is partly right. Democratic party leaders and big donors pulled back from the issue of Iraq after Petraeus's testimony, and after a MoveOn advertisement accusing the general of betrayal. The resulting crisis in the DC hub of antiwar advocates was never resolved, but the grassroots peace bloc in the Democratic primaries mushroomed anyway, giving Obama a needed edge in Iowa and a string of wins against Hillary Clinton. 
When there was a choice between supporting Barack Obama and attending rallies organized by various Maoists, Trotskyists and neo-anarchists opposed to Obama and electoral politics, the grassroots peace movement headed for the precincts by the thousands. What appeared to Ricks to be a failed antiwar rally in Washington was only evidence that the movement was moving on, becoming a voting force in and around the Obama campaign. 
That turned out to be the right strategy for the peace movement when John McCain was defeated in November, but many continued to wonder--with good reason--whether Obama was promising nothing more than partial peace under a new form of military occupation. Now it is clear that somewhere along the way Obama became persuaded that it made little sense to leave 50,000 troops in Iraq when the Pentagon couldn't win with 150,000, the American economy was collapsing and his hands were full in Afghanistan and Pakistan
In Iraq the situation remains unpredictable. A brutal nationalist and authoritarian state, with sectarian police and thousands of detainees, looms as the result of a seven-year war. Under Odierno's command, according to Ricks, tens of thousands of military-aged Sunni males (called MAMs) were held in preventive detention. Bob Woodward's recent book goes further, crediting a top-secret US program of extrajudicial killings for imposing a peace of the dead in Baghdad. The Sunni insurgency decided in 2007 that an alliance with the Americans would thwart their Al Qaeda rivals while providing protection against the Shi'a majority. They were right, and 100,000 of the so-called Sons of Iraq were paid $20 million per month not to shoot at Americans. On the other hand, the Shi'a who already were installed in power by the Americans had no reason to fight their sponsors, especially when even the militias loyal to Moktada al-Sadr chose to take a political path to power, at least for the moment. The Iranians will be pleased to see the US troops depart on any schedule, and enjoy good relations with whichever Shi'a party prevails in Iraq. The festering Kurdish crisis could boil over, but is localized. Things could change, but most Iraqis have an interest in seeing the Americans implement the "withdrawal agreement." Who knows, they may even throw flowers to the retreating troops instead of shoes. 
The greater danger from Iraq for Obama may lie at home politically if Republicans and the generals, echoed by the mainstream media, protest Obama's withdrawal plan as naïve or worse. In Ricks's analysis, Obama would not want to risk a confrontation with the military early in his presidency: 
"Like Clinton, Obama would also face the prospect of a de facto alliance between the military and congressional Republicans to stop him from making any major changes. " 
Since Ricks was wrong about Obama's fortitude, he may be wrong on the danger of a backlash as well. The American people are in no mood for a "forever war" in Iraq, whatever the malcontents believe in Washington think tanks. 
That leaves Afghanistan and Pakistan, both in flames. In those places, the politics are reversed, with Obama having promised to defeat Al Qaeda by using Predators in Pakistan and more ground troops in Afghanistan. So far he is keeping his campaign pledges, while still proceeding cautiously in developing an overall plan. Neither the neoconservatives nor the generals are fully happy with Obama's early approach, which they see as pointed towards a diplomatic settlement instead of "winning" militarily. On this point, Secretary Gates seems to have the president's back, repeatedly warning that no military solution is possible. 
Nevertheless, Obama is beginning an escalation with 17,000 troops bringing the American total in Afghanistan to over 50,000. Except for its political rationale, this is a puzzling military gesture. By comparison: 
• In South Vietnam, the US deployed 500,000 troops on a battlefield of 67,000 square miles containing 19 million people
•n Iraq, we deployed 160,000 troops on a battlefield of 168,745 square miles, with 26 million people 
•n Afghanistan, Obama plans to deploy some 60,000 US troops on a battlefield of 250,001 sqare miles with 30 million people 
• And in Pakistan he has 100 special ops on the ground, with $400 million allocated for 85,000 tribal paramilitaries. 
The geography and demographics are staggering. Obama cannot possibly be considering a military solution while deploying fewer American troops on larger and larger battlefields. It is hard to imagine that he plans a Vietnam-style escalation either. At the current rate of Afghanistan spending, the costs will reach over $1 trillion by the end of Obama's first term, while he risks his presidency on economic recovery. 
Until a brave few in Congress begin to catch up, the critics of Afghanistan policy will have to launch a passionate and substantive debate over the "long war" ahead, oppose the 17,000 new troops as simply 17,000 more targets for the Taliban, sketch in the content of a diplomatic settlement and propose an exit strategy. The first arena for debate, recalling the 1965 Vietnam teach-ins on campuses, will be the blogosphere. The second will be Congressional hearings, with critics at the table. And the third phase is likely to be direct dialogue and engagement in the 2010 elections, district by district. At this point, however, the movement will have to engage MoveOn and many liberal Democrats who are mired in the lingering belief that Afghanistan is the "good war." (We might ask, what does that make Pakistan?) 
There are still more battlefields in the long war. Obama will have to be persuaded to say no to an Israeli strike on Iran while he tries to engage Tehran on stability in Iraq and Afghanistan. Ultimately, Obama will also find ways to increase support for Palestinian aspirations, as the most effective approach to lessening Arab and Islamic support for jihad. It's a long way down the road, but his choices of George Mitchell as an envoy along with Charles Freeman to a high intelligence post are the most progressive and independent Middle East appointments in a generation.