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Monday, February 23, 2015

Unemployment: A Report Card for Capitalism


Marx suggests in his articles for the Neue Rheinische Zeitung collected as Class Struggles in France, 1848-1850 that the first order of business for the working class is to secure jobs, “but behind the right to work stands the power over capital; behind the power over capital, the appropriation of the means of production, their subjection to the associated working class and, therefore, the abolition of wage labour, of capital and of their mutual relations." It is through the struggle for a place in the capitalist system-- however lowly-- that the means for survival are won and the conditions are met for further challenges to the dominance of capital and even the very system of capitalism. But in a system of private appropriation and with labor as a commodity, life for those without capital begins with securing employment.
Because labor is a commodity, because labor must be a commodity in order for an economic formation to be capitalist, the right to a job cannot be enshrined in a capitalist constitution. Only socialist countries have or can endow everyone with the right to a job. That is why the right to a job is not included in the Universal Declaration of Human Rights. A weak “right to work” (participate in the labor market), a right to “free choice of employment” (compete in the labor market), and a right “to protection against unemployment” (vague, nonspecific prophylaxes or amelioration) are there instead (Article 23). Without recognizing the right to a job, the Universal Declaration effectively turns a blind eye to the ravages of unemployment and the indignities and injustices of the buying and selling of human productive effort.
That is one reason that the USSR and other socialist countries abstained from ratifying the Declaration in 1948.
Without unemployment, the capitalist system would suffer persistent pressure on the rate of profit. When the commodity-- labor power-- becomes scarce, capitalists must pay more to secure it, as they would for any other commodity. And since labor remains the largest cost component of most productive capitalist enterprises, labor-cost inflation erodes capitalist profits. Capitalism and the system's beneficiaries will not, therefore, tolerate full employment. This is the nasty little truth that apologists and media windbags dare not speak.
Economists hide this truth by euphemistically coining terms like “marginal” or “frictional” unemployment or inventing obscurantist concepts like the “Non-Accelerating Inflation Rate of Unemployment” that set an increasingly low standard for “full” employment. By linguistic sleight-of-hand, the economics establishment offers cover for capitalist accumulation by ordaining an “acceptable” level of unemployment.
At the same time, this same establishment understands that unemployment is the greatest challenge to the stability of the capitalist system. The frequent sharp rises in unemployment brought on by dislocations, the business cycle, or systemic crisis dramatically increase the levels of social discontent and raise voices that question the system. For those who hold the reins of power, for those whose job is to contain dissatisfaction with capitalism, managing unemployment is essential.
From that perspective, the unemployment rate is arguably the best barometer of the health and viability of the capitalist system. Consequently reports of unemployment rates and trends are politically charged and subject to great differences in interpretation.
The official unemployment rate... amounts to a Big Lie.”
Recently, the political manipulation of the unemployment rate came under attack from an unlikely source. Jim Clifton, chairman and CEO of Gallup, the polling organization, challenged the notion that the “official” rate of unemployment bore any relation to the realities of unemployment. Indeed, he called the rate a “Big Lie.” It's worth examining his argument closely:
None of them will tell you this: If you, a family member or anyone is unemployed and has subsequently given up on finding a job -- if you are so hopelessly out of work that you've stopped looking over the past four weeks -- the Department of Labor doesn't count you as unemployed. That's right. While you are as unemployed as one can possibly be, and tragically may never find work again, you are not counted in the figure we see relentlessly in the news -- currently 5.6%. Right now, as many as 30 million Americans are either out of work or severely underemployed. Trust me, the vast majority of them aren't throwing parties to toast "falling" unemployment.
There's another reason why the official rate is misleading. Say you're an out-of-work engineer or healthcare worker or construction worker or retail manager: If you perform a minimum of one hour of work in a week and are paid at least $20 -- maybe someone pays you to mow their lawn -- you're not officially counted as unemployed in the much-reported 5.6%. Few Americans know this.
Yet another figure of importance that doesn't get much press: those working part time but wanting full-time work. If you have a degree in chemistry or math and are working 10 hours part time because it is all you can find -- in other words, you are severely underemployed -- the government doesn't count you in the 5.6%. Few Americans know this.
There's no other way to say this. The official unemployment rate, which cruelly overlooks the suffering of the long-term and often permanently unemployed as well as the depressingly underemployed, amounts to a Big Lie.
Though Clifton invokes the always suspect “Great American Dream” in his polemic, he fully appreciates the challenge unemployment mounts to the system's legitimacy:
And it's a lie that has consequences, because the great American dream is to have a good job, and in recent years, America has failed to deliver that dream more than it has at any time in recent memory. A good job is an individual's primary identity, their very self-worth, their dignity -- it establishes the relationship they have with their friends, community and country. When we fail to deliver a good job that fits a citizen's talents, training and experience, we are failing the great American dream.
We owe Clifton a thanks for speaking a rare and uncomfortable truth. And we must admire his bitter remonstrations against those who hide, distort, or slant capitalism's bad performance:
When the media, talking heads, the White House and Wall Street start reporting the truth -- the percent of Americans in good jobs; jobs that are full time and real -- then we will quit wondering why Americans aren't "feeling" something that doesn't remotely reflect the reality in their lives.
Capitalism's Report Card
Many liberal economists would agree with Clifton that the official rate understates unemployment. Like Clifton, some will concede that those marginally attached to the work force or discouraged from the work force should be counted along with those who have looked for work in the four weeks prior to the survey. The Bureau of Labor Statistics (BLS) extends the survey period to the prior twelve months to capture those unemployment figures. Using those numbers and the numbers of those working part-time for economic reasons, the unemployment rate rises to over 11%.
But it is worth questioning how the BLS defines the labor force. They simply count those as employed who work at some time in their survey period and count as unemployed those who show in their records as looking for work. They add the two up to constitute the labor force. They make no effort in this survey to determine the relationship to employment of the tens of millions of people in the US population not counted as in the labor force because they are neither somewhat employed nor present in the unemployment roles.
Have those left aside given up looking because they could find no job in the years prior to the last twelve months? Are they forced out because they can no longer afford child care or must care for relatives? Does neglected health due to lack of insurance preclude working? Are they victims of racial, gender, or age discrimination?
BLS does not ask and we do not know.
We do know, however, that the labor participation rate, relatively stable for two decades, has dropped precipitously since the 2007-2008 crisis. Roughly five to six million fewer people now count as engaged in the work force at any given time today than did eight years ago. Such a sharp drop in such a short time cannot be explained simply by changes in retirement patterns or work-force entry. Thus, it is not unreasonable to view this shift away from gainful employment negatively in our score card for capitalism.
If we were to count this loss in the labor force with the other sources of unemployment, US unemployment (and underemployment) would move to the vicinity of 15%.
But we can take a longer, deeper view. We can ask pointed questions about those engaged in certain categories of socially useless, even destructive forms of employment as well as those completely isolated from the conventional labor force.
For example, the million-and-a-half military personnel and the three-quarters of a million Defense Department employees constitute unproductive workers whose absorption would present a hurdle to the private sector. High youth unemployment and the expense of education have driven thousands of less advantaged youth to the military as an alternative to unemployment, thus serving as a safety valve to the social volatility of idleness.
Homeland Security and other security agencies have enjoyed bursts of employment thanks to the bogus war on terror. These agencies, too, constitute unneeded public-sector job creation that masks potential unemployment.
And of course there is the weapons industry, a massive private-profit-generating behemoth that engorges itself on public funds, stands apart from market forces and risks, and belches death-dealing instruments. Spawned by a desperate, but post-war fear of economic depression, US ruling elites embraced this perverse form of public-sector Keynesian demand-creation as a companion to Cold War hysteria. Military production drives and is driven by US jingoism. US imperialism and the military-industrial complex constitute a dialectical unity. While millions are employed by this juggernaut, capitalism would struggle to find work for them in a peace-friendly economy.
Undoubtedly the most insidious technique of hiding unemployment is the unfettered, soulless operation of the criminal justice system. Even the English workhouse answer to unemployment in the early eighteenth century was arguably more humane than the US judicial-penal complex,  complex. Inmates in state and federal punitive facilities (not including county and local jails) grew from 329,821 to 1,406,519 from 1980 to 2001! In the same period, the crime rate was relatively stable or declining. In 2010 the number of adults warehoused in so-called correctional facilities totaled almost 2,300,000.
The 2013 incarceration rate was six times the rate of 1925. Given the absence of virtually any social services or welfare, the high incidence of poverty, and the squalor of US urban areas in 1925, it is difficult to explain the explosion of incarceration in our era of relatively tame criminality without searching for political expediencies.
Half a million guards and administrators shepherd this population; another half a million churn the gears of questionable justice; and a million police harvest the inmates from the streets. Like the military-industrial complex, the police-judicial-prison industry removes millions from productive activity and warehouses hundreds of thousands of those potentially counted as unemployed. Whether the inmates turn to crime because they have no jobs or not, they effectively are dropped from the labor force. Moreover, nearly 5,000,000 US citizens are on parole or probation, a circumstance that lowers the prospect for employment dramatically. Certainly thousands, if not millions, of these people fall into that statistically ignored area beyond the BLS labor-force boundary. They, too, must be counted as part of the hidden unemployed.
Understanding that unemployment is the Achilles’s heel of the capitalist system, it is not surprising that the official rate is so highly politicized. But it is misleading to accept the official rate or even the useful corrections without also exposing the concealed institutional places where employment is linked to destructive, anti-social activities or where potential workers are forcibly excluded from the work force.
When carefully studied, capitalism's score on providing jobs is abysmal. Reformers who envision a capitalism divorced from militarism and its institutions, but robust with useful jobs, are naïve. The struggle against militarism, in the end, must take the road of a struggle against imperialism and its parent, capitalism --- a revolutionary and not reformist path. Only with socialism will alternative jobs be guaranteed.
Similarly, caging those who have been ill-equipped to fit into a savagely competitive employment scramble only foretells a similar fate for those who pose other challenges to the system. Liberals and reformers miss this point entirely. Nor do they have a plan to incorporate those warehoused by the judicial-penal system into the private capitalist economy.
As Marx anticipated, the quest for a decent job marks the first step in the journey to socialism.

Zoltan Zigedy

Tuesday, January 27, 2015

Empire Follies


Remember Saddam Hussein? Muammar Gaddafi? They were, like others before them, labeled international pariahs, thanks to Western officialdom's demonization and an unrelenting media campaign painting them as evil incarnate. A careful observer may have noticed the contradictory shifts in elite opinion about these characters coincident with US and European interests. When Hussein was killing Iraqi Communists he wore a white hat. Similarly, when Gaddafi cooperated with Western oil interests, like the Italian Eni company, he wasn't such a bad chap.
After making the top of the US/NATO wanted posters, both were summarily executed, one quasi-legally and the other butchered by “freedom-loving” bandits.
The curious thing about the demise of these tyrants, supposedly hated by their own people, is that their respective countries collapsed into sectarianism, death, and despair as a result of the Western campaigns. What were once among the most secular and socially and economically advanced countries in the Middle East and Africa are now failed states, with violence, inadequate health and welfare services, and deteriorating living conditions touching almost every life. Of course no Western humanitarian democrat will take any responsibility for this catastrophe. It's a pity they can't blame Saddam or Gaddafi.
Today, the top wanted poster, the top name on the hit list is owned by Kim Jong-un, the current leader of the Democratic People's Republic of Korea (DPRK). Kim, the grandson of Kim Il-sung, the founder of the DPRK and a figure revered as a resistance leader against the Japanese occupiers, is the third generation of a family holding the leading post. Western opinion-makers invariably mock this penchant for hereditary secession, while conveniently overlooking over 80 years of hereditary rule in trusted ally, Saudi Arabia. The other Husseins, the family that has ruled Jordan since its independence, are never derided by the Western press, either. They, too, have been compliant friends of US and European leaders.
The DPRK has long followed a self-reliant, go-it-alone path that its leaders call Juche.
During the Soviet era, the DPRK maintained formal, but distant relations with the socialist community, insisting on blazing its own path. Many sympathetic observers saw this approach to Marxism-Leninism as excessively voluntarist, that is, overly confident in men and women's ability to master objective conditions, material impediments.
That said, the foreign policy of the DPRK has been a consistent application of Juche philosophy.
At the same time, DPRK posture toward other countries has been shaped profoundly by the experiences of the mid-century Korean War. The near total destruction of the northern part of the Korean peninsula by the US's air power and scorched earth policy left the DPRK with a determination to find a deterrent to a repeat of that catastrophe. They found that deterrent in the crash development of a nuclear-weapon capacity. Given the US and NATO's attempt to reorder the world in the Western image since the demise of Soviet power that decision seems, in retrospect, to be both wise and effective.
Despite the fact that the DPRK has remained at peace for over sixty years, the US government and its servile, spineless media have maintained an unrelenting campaign of slander and bellicosity.
Not unlike the fear-mongering and fantasies concocted against socialist Cuba, the DPRK has been depicted as a land of prisons and deprivation. Much of the hysterical imagery comes from defectors, in particular, Shin Dong-hyuk. Shin's story was compiled in a book by Washington Post writer, Blaine Harden, with the ominous title: Escape from Camp 14: One Man's Remarkable Odyssey From North Korea to Freedom in the West. The book was favorably reviewed by nearly every major journal. A member of the United Nations' first commission of inquiry into human rights abuses of North Korea reportedly cited Shin as the world's "single strongest voice" on the atrocities inside North Korean camps.
DPRK officials answered by releasing a video of Shin's father and family members denouncing him as a falsifier, a fugitive from a rape charge.
Of course NO ONE in the toady capitalist media placed any credibility in this claim. Nor did any Western journalists seriously listen to the other defectors who challenged details claimed by Shin. The story is too good, too spectacular to question.
Unfortunately, it isn't. And unfortunately, nothing short of a confession would convince the shabby Western media, the UN, or the predisposed human rights groups. They got that confession on January 16 when Shin reported that portions of his harrowing tale were fiction. Sheepishly, he withdrew from further public comment, anticipating that further exposure would come forth.
The UK Independent reported: “Human rights activists said this could significantly set back the campaign to indict Kim for crimes against humanity.” One would hope so! One would hope that the fact that the primary source for demonizing Kim admitted to lying might encourage human rights groups to actually rethink the campaign. Could it be that some human rights groups are as corrupted as the major Western media that foisted the Shin farce on the public?
With scant evidence, the US and European commentariat constantly reminds us that the DPRK is a bleak, gloomy landscape populated by starving, freedom-hungry people. A Singapore commercial photographer, Aram Pan, had read and heard these harsh judgments. As reported by the conservative UK Daily Mail last May:
When a man from Singapore had his wish to visit North Korea granted, he braced himself for the scenes of 'barren lands' and 'really, really sad people' that he had seen via a BBC Panorama documentary.
But what he found blew his mind - for all the right reasons.
Inside the communist enclave in 2013, photographer Aram Pan witnessed bustling markets, men and women enjoying themselves at a Western looking water park and miles and miles of crops ready for harvest, shattering all of his illusions about what a holiday to North Korea would entail.
Though expecting to find it difficult to get into the supposedly secretive state, Mr Pan explained: “I sent several mails and faxes to multiple North Korean contacts, all of which are easily available online if you do a search. Then one day someone actually replied and I met their representative. It was a lot easier than I expected.”
After two visits, the incongruity of official and media accounts and what he actually saw troubled Mr. Pan:
Coming back from my second trip, many things still puzzle me. I've travelled from Pyongyang to Hyangsan to Wonsan to Kumgangsan, to Kaesong and back. The things I've seen and photographed tell me that the situation isn't as bad as I thought.
People seem to go about their daily lives and everything looks so incredibly normal. Some of my friends tell me that everything I've seen must be fake and all that I've photographed are a massive mock up.
But the more I think about that logic, the more it doesn't make any sense… would anyone mock up miles and miles of crops as far as my eyes can see and orchestrate thousands of people to seemingly go about their daily lives?
Mr. Pan's pictures can be seen here.
In another shining example of a US ally's firm grip on human rights and democratic principles, the Republic of Korea (ROK), the DPRK's capitalist neighbor to the south, was deporting Korean-American Shin Eun-Mi for “praising” the DPRK in lectures in Seoul. According to Deutsche Welle in an article last week, Ms. Shin, a California native and no relation to Shin Dong-hyuk, “... angered the South Korean authorities when she said a number of North Koreans living in South Korea would prefer to return to their home country because of the frustration with their lives in the South. She also said that many North Koreans were hopeful the communist nation's young leader Kim Jong-Un would improve the quality of life in the hermit state.”
The writer also praised North Korean beer, which she said was better than the South's ‘tasteless’ brews.”
Apparently, preferring the DPRK beer could put you in ROK prison for up to seven years.
Earlier, in December, Ms Shin was attacked by a high school student who threw a home-made explosive devise at her in protest of her speech. You can see the attack here. A conservative journalist immediately raised $17,000 for the terrorist's defense. Local police held Ms. Shin for questioning regarding her speeches, according to the Wall Street Journal. I suppose that's how US allies honor human rights.
Not surprisingly, these counter-narratives, accounts at odds with officialdom, are absent or buried in the back pages of Western media. But in the forefront is the flap over the hacking of entertainment giant Sony's internal data. After the bottom-feeding media squeezed all the scandal and gossip from the now-public data, a wave of indignation swept through the US. Through a tenuous link with another stupid, vulgar movie about to be released by Sony, officials and opinion-makers pointed an angry finger at the DPRK. They hacked Sony, President Obama proclaimed, and the government had the evidence.
Leading internet security companies, normally beholden to a prominent customer like the US government, insisted that the US government was mistaken. They cited many discrepancies that not only made it unlikely that the DPRK was involved, but that it could not have been the perpetrator. An inside job was indicated.
With its usual flippancy, the government countered that they knew differently, but they could not reveal how they knew without jeopardizing national security.
Later, government officials claimed that they had penetrated the DPRK's internet some time ago and to such an extent that the evidence was irrefutable. Oddly, the penetration was not sufficient to warn Sony in advance.
In a fit of pique worthy of a school-yard bully, the US government shut down the DPRK internet for a day or two, while refusing to admit or deny their action. Other sanctions ensued.
By contrast, DPRK officials, often charged with irrational bellicosity, calmly suggested that the two countries establish a joint commission to explore the DPRK's alleged role in the Sony hack. The suggestion was ignored.
An idiotic Sony film, The Interview, was pushed center stage in this dust up. Sony adroitly retired the film which depicts the gory assassination of Kim Jong-un supposedly out of fear that the DPRK would retaliate. Sony executives who travel in the same fantasy-movie world as former President Ronald Reagan sought to gin up the hysterical xenophobic madness of Hollywood's earlier Red Scare abominations: Invasion of the Body Snatchers, Red Dawn 1, and Red Dawn 2. In fact, you would have to reference Red Dawn 2 to conjure even the remotest idea of an improbable DPRK retaliation. Following the script of Red Dawn 2, Sony's bosses undoubtedly foresaw fanatical paratroopers descending upon their studios to punish them for the virtual assassination.
Media mavens swallowed the Sony bait. A campaign emerged to release the vulgar, inane movie and urge attendance as an act of defiance against the DPRK. It was as though we were being asked to tell fart jokes to demonstrate our devotion to freedom of speech.
Everyone involved in this travesty should be embarrassed.
Demeaning the DPRK is a diplomatic obsession. But the DPRK does not take slights or insults lightly. Nonetheless, they have offered to unconditionally repatriate US citizens charged or imprisoned for various illegal acts (Evangelical proselytizers are a frequent violator, determined to bring Christianity to the heathens. Like the missionaries of earlier empires, they serve both masters-- God and imperialism-- to tame the heathens). They have only asked in the past that the US send high ranking officials to facilitate the repatriation. To anyone attuned to diplomatic niceties, this is a gesture designed to bring parties together without either party suffering the appearance of submissiveness. Clearly, the DPRK sought to open conversation or negotiation. In every case, the US has used the occasion to ignore or rebuff the offer. Sometimes a powerless public figure would attend the repatriation. Other times, they would send a lowly government figure.
In November of last tear, the DPRK sought to release the last two remaining US citizens-- a provocateur and a religious zealot. They again asked for a cabinet-level official to receive the prisoners. Instead, the US sent James Clapper, the US national intelligence director. In an interview with the Wall Street Journal, Clapper made clear that the DPRK officials wanted to discuss serious matters: “The North Koreans seemed disappointed when he arrived without a broader peace overture in hand, he said. At the same time, they didn’t ask for anything specific in return for the prisoners’ release.” But Clapper had nothing. In his words: “They were expecting some big breakthrough. I was going to offer some big deal, I don’t know, a recognition, a peace treaty, whatever. Of course, I wasn’t there to do that, so they were disappointed, I’ll put it that way.”
After a three-hour dinner that followed his arrival, Mr. Clapper presented the officials with a curt letter from the US President written in English greeting the release of the prisoners as “a positive gesture.” “Gen. Kim Young Chol appeared to be taken aback when handed the letter, Mr. Clapper said.”
Is it any surprise that DPRK officials struggle to understand US motives? Are US administrators blunderers or unalterably committed to overthrowing the DRPK government? Decades of hostility would suggest the later.

Zoltan Zigedy




For three very good recent articles on the DPRK, please see:
(on The Interview) http://www.huffingtonpost.com/dan-kovalik/the-problem-with-the-inte_b_6456322.html
and Framing the DPRK: the US Still Cannot be Rational, forthcoming in Marxism-Leninism Today
(on the DPRK economy) http://mltoday.com/western-media-get-north-korean-economy-wrong

Friday, December 26, 2014

Some End-of-the-Year Thoughts


Congratulations to the Cuban patriots (the Cuban Five), the remaining three of whom were finally released from US jails for the “crime” of making the world a safer place from US imperialism (How extensive and racially and economically selective must a prison system be before we can refer to the installations as concentration camps?) All fair-minded people should rejoice at the moving reunion of these internationalists with their families and their countrymen and women!
Before we are overwhelmed by adulation for President Obama's role in the release of the remaining Cuban Five, a fawning process that has begun in earnest, we should remind the adulators that it is bad form to praise someone for doing what he or she should have done long before. Nothing has really happened to precipitate a change in US-Cuban relations at this moment except the passing of Obama's final national election cycle-- a fact that suggests that Obama's welcome moves are more political expediency than any serious change of heart. Those who sense faux-liberal stroking in anticipation of the forthcoming election season are probably on solid ground. The U-turn regarding policy towards Cuba demonstrated recently on the editorial pages of the New York Times also point to a strategic shift in the thinking of key elements of the US ruling class.
John Pilger, by way of Michael Munk's always interesting blog, lastmarx, asks what became of Malaysian flight MH17, which crashed in the Eastern Ukraine. After the July disaster, the Western media proceeded to blame Eastern Ukrainian resistance fighters and Russia without a shred of hard evidence beyond “unnamed” Western intelligence “sources” (How do journalists acquire access to intelligence sources yet remain uncompromised?).
Despite recovering black boxes, debris and bodies, the Western investigators have been strangely silent since August. No evidence has come forth apart from Russian sources. No indictments from the notorious International Court of Justice (from which the US refused to honor its jurisdiction in 1986 despite having a permanent judge and frequently imposing jurisdiction on others). Compare this to the Western-induced hysteria surrounding earlier incidents like Korean Airlines 007, a media frenzy that demonized the Soviets for years. Even the crazed General Breedlove-- Pilger calls him NATO's “Dr. Strangelove”-- has remained relatively silent. Could it be that the facts are pointing the wrong way?
The 2014 Brazen Hypocrisy award goes to President Barack Obama for his two-faced appeal to the right of self defense. Esteemed Cuban blogger Manuel A. Yepe lauds research by Brandon Turbeville that recovers a statement from November 2012 by the self-righteous Peace Prize Winner. President Obama, in defense of Israeli aggression, argued: “... there is no country on Earth that would tolerate missiles raining down on its citizens from outside its borders.” Of course this is unabashed hypocrisy for a leader who daily signs off on drone, cruise missile, and bomb attacks on Iraq, Syria, Pakistan, Somalia, or Yemen, a glaring contradiction that Yepe credits Turbeville for exposing.
Certainly there are plenty of candidates for the Hypocrisy Award, most of whom nest in US seats of power: the recent sanctions imposed by a serial human rights violator (the US) against Venezuela for imaginary “human rights” violations count as first degree hypocrisy. Imagine a government that spies on ALL of its citizens, tortures foreigners, and allows militarized police forces to kill unarmed citizens punishing Venezuela and lecturing the rest of the world about good behavior.
Or consider the hypocrisy of ferreting out other countries deficient in democracy-- a favorite activity of US media pundits-- while never mentioning Japan, a country ruled by one party, the Liberal Democratic Party, since 1955 with less than four years of respite. Many of those dubbed “dictators” would be jealous.
And then there's the shameless Henry Blodget, the blue-blood, consummate Wall Street insider, who has been banned for life from the securities industry for fraud. Addicted to the celebrity spotlight, Blodget regarded the claim that the Democratic Peoples Republic of Korea hacked a US entertainment company as a sufficient basis for declaring the alleged  hack “effectively an act of war….” Blodget's panic arises from his concerns that the DPRK might “get into the money”: “'It’s not just they get some credit card numbers which we’ve been seeing forever. But they actually get into the money' at large corporations and banks” (Yahoo Finance, 12-19-14).
Truly, we swim in a sea of hypocrisy.
But hypocrisy is only tolerated because we refuse to hold public figures and the media accountable for their statements; as Gore Vidal put it, we reside in the “United States of Amnesia.” He drew attention to an adult population narcotized by shallow entertainments and denied any sense of history or continuity. Actually, Martha Gellhorn said it much earlier (1953) when she noted the “consensual amnesia” rampant in the US.
It is wrong, however, to blame the US people for the cowardice and lack of accountability of the media and academia. We cannot blame collective ignorance on the victims when it is the product of the massive, suffocating machinery of capitalist disinformation and vulgar culture.
Imagine if we could hold all of the opinion makers and policy pundits accountable for their slavish promotion of the unprovoked invasion of Iraq and the subsequent destabilization of the entire Middle East. Imagine if we could exile them to write for the Metropolis Daily Planet until they reclaimed their integrity. Soon, we would forget the names Friedman, Krauthammer, and the other cheerleaders of imperialism, maybe even the loudmouth, Cheney. Exactly what journalistic crimes must they commit, what disasters must they endorse before their bosses and colleagues turn them out?
Similarly, the economic collapse of 2007-2008, unpredicted and unsolved by the “wise men” of the economics profession, has spawned no new thinking or rejection of the old.
Sadly, most of our public intellectuals have become courtiers and not truth seekers.
We must not ignore the amnesia of the US left. Forgotten is the mass euphoria over the election of Barack Obama in 2008. Virtually all of the liberal and soft left was swept away by the overwhelming Democratic Party victory, affording a two-year window to pass a whole laundry list of legislation benefiting labor, minorities, women, the elderly, undocumented and other components of the Democratic Party coalition. Except for a health care initiative that has failed to live up to anyone's expectations other than insurance companies, none of these promises came to fruition, even to serious consideration. As the Democrats gin up for another Presidential campaign behind Hillary (after she disposes of the Quixote-like campaign of Elizabeth Warren), this miserable performance will be forgotten. With the Obama well running dry, liberal and the moderate left will drill a new Clinton well of hope. Memories are short.
While the signs of mass militancy are positive, most recently from the anger and activism springing from criminal police behavior, the left seems to find diversions and distractions that create speed bumps, if not detours, from clarity and united action.
The energy of the Occupy movement was welcome, but the embrace of the organizing principles of disorganization proved-- once again-- a damper on movement building. Seemingly, every generation must champion group therapy as an antidote to “hierarchies” and “leadership,” alleged features of the “old left,” “the establishment,” “elites” or other evils imagined by self-anointed ideological gurus.
The New Left of the sixties pioneered this posture, shattering enormous mass movements against racism and war into a thousand pieces. The shallow and idealistic emotions conjured by the words “participatory democracy” arise again and again with the same result.
The latest obstacle to ideological clarity and effective action is the amorphous and ideologically confounding “Sharing” Economy movement. The “New” or “Sharing” economy projects occupy two distinct poles.
At one pole are the liberal/left activists who have been shocked by the human carnage of economic crisis, but are afraid of or disillusioned with the socialist option. While many may see capitalism's flaws, they are cowed by the enormous task of defeating and replacing it. Rather than joining Marxists, who are confident and determined to revive the fight for a world without exploitation and without rule by the rich and powerful, they propose that we simply drop out of the global economy, that we live and work outside of it. In collectively owned cooperatives, they propose an alternative to capitalism. But is it really an alternative?
Certainly there is nothing, in principle, wrong with cooperatives. Indeed, they are sometimes an answer for small-holders to improve their destiny against large capitalist enterprises. That is, they can postpone, but rarely derail the laws of capitalist development, the tendency for the large to devour the small.
But it is silly to believe that cooperatives in any way challenge capitalism as we know it today. State-monopoly capitalism-- the merger of the power of the state with the largest, most economically dominant corporations-- will not shudder in the face of the cooperative movement. Nor should it. If cooperatives posed any kind of threat, the mega-corporations would swat them like flies.
Instead, the New Economy (cooperative) movement does offer an alternative-- an alternative to small businesses. Cooperatives, where they exist, compete against small businesses. They mesh a small-business mentality with an immature social consciousness, a program that only succeeds at the expense of those businesses marginally able to survive while leaving the rich and powerful untouched.
At best, the cooperative movement offers a safe haven for the few to hone their entrepreneurial skills in commercial combat against some of our potential allies in the anti-monopoly movement, the under-capitalized, marginal small business owner.
The other pole, however, is more insidious. The “sharing” economy, as exemplified by Uber and other creatively named Google-era projects, does not pretend to be anti-capitalist. While “sharing” poses as a kinder, gentler, freer capitalism, it really counts as a way for a new generation of entrepreneurs to pry open markets long dominated by well ensconced services. At the same time, this well-educated, supremely self-confident cabal have seduced many into believing that predation on these service industries is somehow “progressive.”
In fact, Uber and the sharing model are a step back to proto-capitalism, a return to the putting-out"system, where providing the labor and resources is the responsibility of others and not the capitalist. Uber, for example, uses the human capital (drivers) and fixed capital (their cars) of its “employees” to undermine services that are capital intensive (taxis, insurance, benefits, maintenance, fuel, etc) and available to even the most disadvantaged (subsidized public transportation). Like charter schools and package-delivery services, they cherry-pick the most profitable, least risky, or least costly niches of a service and leave the rest for someone else (most often, the public sector). In that way, they most resemble the hyper-exploitative cottage industries of the pre-industrial era. Like those industries, they rely upon sweated labor and forgo all worker protections.
Of course not all those embracing the sharing model begin as predators. Many see the internet as creating new opportunities for matching people and services. But centuries of capitalism teach us that every entrepreneur afforded the opportunity of matching people with services has leaped at the opportunity to commercialize it. Elite universities and business schools have not purged that tendency from their students.
Whether it is cooperatives or the “sharing” model of entrepreneurship, those looking for answers to the rapaciousness and vulgarity of our society must look elsewhere.
We will come no closer to achieving social justice and democracy until we understand the malignancy of capitalism. There are no other diagnoses.
Zoltan Zigedy

Tuesday, December 2, 2014

Is There Life After Social Democracy?


Labour's problems aren't very different from those of other Western social democratic parties... In this sense we are experiencing not merely a crisis of the British state but also a general crisis of social democracy” (Labour Vanishes, Ross McKibbin, London Review of Books, November 20, 2014).
McKibbin's summary assessment of social democracy is both keen and cogent. Social democracy, the political expression of twentieth-century anti-Communist reformism, has arrived at a juncture that challenges its vision as well as its political vitality. In McKibbin's words: “Over the last twenty or thirty years the great social democratic parties of Germany, Austria, Scandinavia, Australia and New Zealand (and now France) have bled support...” One could add, though in a less dramatic way, the ersatz US social democratic party, the Democratic Party.
In a real sense, social democracy drew its energy from its posture as an alternative to Communism. For various reasons-- fear of change, anti-Communist demonology, ignorance, imagined self-interest-- many of those disadvantaged by capitalism took refuge in the tame, gradualist, and militantly anti-Communist parties claiming space on the left. By advocating an easy parliamentary approach, charting a cautious, non-confrontational road, and enveloping the effort with civility, social democratic thinkers believe they can win popularity and smooth the sharp edges of capitalism.
After the founding of the Soviet Union and the birth of international Communist parties-- many of them mass parties-- the old Socialist International hewed to a reformist line that separated it from Communism while posing as advocates on the side of the workers and for socialism. Parliamentary successes followed from the adoption of moderation and the condemnation of Communism, a lesson learned only too well by practical leaders.
The model for social democracy after the Bolshevik revolution was undoubtedly the Social Democratic Party of Germany (SPD). Assuming power after the abdication of the Kaiser, the SPD swiftly suppressed the revolutionary zeal of the masses and established a parliamentary regime. By suppressing Communism, the SPD sought to accommodate the hysterical fears of the bourgeoisie and the petty bourgeoisie, a tactic destined to permeate social democratic thinking to this day. Despite being the largest party bloc in the Reichstag until July of 1932, neither appeasement of the right nor “responsibly” overseeing a capitalist economy under great duress would rescue the SPD and Germany from the rise of Nazism. Social democrats are fond of blaming the SPD's failure on the militant left or right-wing extremism, but they willfully ignore the blatant fact-- equally true today-- that people turn away from centrist parties when they fail to keep their promises. Ruling Germany became more the goal of the SPD than ruling it well and in the interest of Germany's working people.
With Communists' resistance to fascism earning the respect and trust of the people, as it did throughout most of Europe, social democracy fared poorly after the War. It is well established today that where European social democratic parties were prepared to distance themselves loudly and forcefully from collaborating with Communists, “friends” in the US were only too happy to give them covert and overt aid. The CIA and the host of other acronymic entities created by the US government to subvert anti-capitalist and pro-labor activities worldwide found willing collaborators in social democratic parties, especially among those who clearly identified Communist success with social democratic failure. It was not long before the opportunism of anti-Communism infected the entire social democratic movement: In 1951, the Socialist International formally dissociated itself from Communism, characterizing it as terrorist, bureaucratic, imperialistic, and freedom-destroying. Articles 7, 8, 9, and 10 of the Frankfort Declaration excommunicate Communism, condemning it to the netherworld with all of the fervor of the Inquisition.
But opportunism begets opportunism. By 1959 any pretense of socialism was erased from the grandfather of social democratic parties, the SPD. With the Godesberg program, the SPD effectively renounced a commitment to socialism, replacing it with vague notions of social justice and allusions to democratic advances. German social democracy thus made its peace with capitalism, under the banner of anti-Communism, and would, henceforth, pledge to never stray from the path of reform.
Nearly all other socialist and social democratic parties followed suit. In place of socialism, the doctrine of social welfare emerged as a tepid surrogate for eliminating exploitation from social and economic relations. Social democracy created an artificial, divisive wall between marginally well-off working people-- the so-called “middle class”-- and their more destitute class brothers and sisters. Instead of expropriating the expropriators, social democracy insists that the burden of pacifying the poor should be borne socially, with much of that burden falling on working class families.
Class, like socialism, was relegated to the dustbin. In its place was the concept of civil society with markets determining social status, compensation, and the distribution of goods and services. Those who lacked the physical or mental assets to compete for the “opportunities” afforded by markets were supposed to be protected by a metaphorical societal “safety net,” a set of programs designed to guarantee a marginal life for those alleged to be lacking competitive skills or spirit. Thus, the cry of “Liberté, Égalité, Fraternité,” so inspirational in the French Revolution, was diluted centuries later to the liberty of markets, the equality of the jungle, and the selfishness of individualism. The only vestige of eighteenth-century humanism remaining in social democratic theory is a shabby, porous net that guarantees that “losers” in the game of life will remain losers.
For decades, the supposed shining star in the social democratic firmament was Sweden. The myth of Swedish “socialism” sustained the few claims to social justice remaining intact with the soft left's assumption of the role of capitalism's handmaiden. Whatever credibility this view might have enjoyed was devastatingly punctured by an article written by Peter Cohen in the July-August 1994 issue of Monthly Review (Sweden: The Model that Never Was). Taking two Pollyanna articles from the previous year to task, Cohen, a long-time resident of Sweden, states emphatically: “Like all European Social Democratic Parties, the SAP [Social Democratic Workers Party] not only accepts capitalism but defends it against any attempt at change. The party has always argued that what is good for Swedish corporations is good for the Swedish working class.”
Cohen presages the fate of the US and European working classes when he explains that the SAP has always accepted that class collaboration “requires the working class to accept cutbacks-- of all types-- when corporate profits decline, and even when they don't.” Cohen outlines the virulent anti-Communism in the SAP that led it to support internment of Communists in WWII and work hand-in-glove with US Cold Warriors, citing its support for Pinochet's government and hostility to Portugal's revolution.
The SAP instituted the so-called “solidarity wage policy,” a cynical leveling of workers' wages within the total wage package. Cohen explains: “The “solidarity wage” does not affect the imbalance of income between workers and capitalists. It only redistributes wages between different groups of workers. It also makes the SAP look like a dedicated defender of the workers' interests.”
Cohen documents the role of the SAP in introducing private schools into the Swedish education system, in pro-capitalist tax “reform,” and in weakening Swedish social insurance (the “safety net”).
He cites the SAP's call (now ubiquitous in all capitalist countries) to retard workers' compensation in the interests of “competitiveness.”
Cohen's remarkable article is uncannily prescient of the evolution of social democracy over the two decades to follow his article, an evolution of closer and closer class collaboration. In his words: “The table manners shown by the strong in the course of their meal may be more attractive in countries with Social Democratic governments, but the digestive process is the same.”
It is tempting to see this development as a mutation of the social democratic ideal, as a departure.
It is not.
Instead, it is the trajectory of social democracy in a world where the specter of Communism has ebbed. Without pressure from the left, social democratic parties shed all pretense of representing the working class against capital and political power. Today, social democratic parties-- like the US Democratic Party-- function under the illusion that Europe and North America are classless societies, while acknowledging the problem of poverty plaguing the so-called “underclass.” Absent an aggressive commitment to resource redistribution, the 2007-2008 economic crisis has caught the moderate left in the vise of either imposing additional burdens on the majority to help the poor or ignoring their increasing desperation. To a great extent, they have chosen to ignore growing poverty while aiding capital in its effort to extract itself from the mire of global crisis. In essence, social democrats believe that capitalism can be steered out of the crisis without seriously modifying the existing relationship between capital and workers.
For workers seduced by social democracy, the romance has proven truly tragic. A partnership with capital combined with a commitment to buffering capital's “excesses” proves to be an extravagant self-deception; capital accepts no such concession. Rather than delivering capitalism with a human face, the architects of anti-Communist reformism have delivered division, concession, austerity, hardship, and imperial aggression.
But even more tragically, the failure of the social democratic project drives far too many people, including disillusioned workers, toward the extreme right, fascism, and neo-Nazism. Throughout Europe and the US, working people thirsting for answers have been betrayed by reformism. Unfortunately, they far too often turn to the right, a turn that conjures eerie images of the rise of fascism between the Wars.
Workers deserve a better option.
Zoltan Zigedy

Friday, November 7, 2014

Where the Money Leads




'Traditionally in American history, politics is like a seesaw: When one side is up the other side is down,” said Peter Wehner, a former aide to President George W. Bush. “Now it's as if the seesaw is broken; the public is distrustful of both parties.” Wall Street Journal (11-04-14)

Follow the money” is a seemingly simple, but telling popular prescription for discerning people's motives, a slogan made popular by literature and movies.

But it is more than that. It is also a useful key to unlocking the mysteries of social processes and institutions. In a society that affixes a monetary worth on everything, including opinions, ideas, and personal values, tracking dollars and cents becomes one of the best guides to our understanding of events unfolding around us.

Take elections, for example.

Every high school Civics class teaches that elections are the highest expression of democratic practices. Apart from the direct democracy of legend-- the New England town meeting or the Swiss canton assemblies-- organized secret-ballot-style elections count as the democratic ideal deeply embedded in every US school-age child's mind.

Let's put aside the arrogant high hypocrisy of US and European politicians and pundits who deride secret ballots when they result in the election of a Chavez, Morales, Maduro, or Correa. That will make for a juicy topic on another occasion.

Instead, let's examine what the flow of money tells us about the gold standard of democracy as celebrated in Europe and the US.

Surely, no one would deny that money has a profound effect upon election outcomes. That comes as old news. Even before the dominance of party politics, even before the evolution of party politics into two-party politics, money played a critical factor in advantaging issues, campaigns, and candidates.

To the extent that mass engagement-- rallies, outreach, canvassing, etc.-- could match or even trump both the corrupting and opinion-changing power of money, electoral democracy maintained an aura of legitimacy. To be sure, buying elections seems a nasty business, but as long as elections remained highly contested extravaganzas drawing interest and engagement, credibility remains intact.

New and changing technologies cast a lengthening shadow over the electoral process. News and entertainment media, like radio, were only too happy to take advertising dollars to promote electoral campaigns. At the same time, these technologies eroded the efficacy of traditional campaigns reliant upon campaign workers' sweat and shoe leather.
With television and now the internet, the power of media and media dollars has grown exponentially. It has hardly gone unnoticed that these shifts have amplified the power of money and diminished the traditional get-out-the-vote efforts of unions, civil rights, and other people's organizations.

Most recently, the Supreme Court's Citizens United decision has opened the spigot of unregulated cash into elections, further overwhelming any counter forces to the outright purchase of candidates and election results.

Readers may find nothing new here. The sordid story of money's corrupting and deflecting influence has certainly been told before, as has the pat remedy offered by reformers. To return to the halcyon days of US electoral democracy is simply a matter of establishing financial limits on campaigns and campaign contributions. By leveling and limiting the electoral playing field, we can restore the legitimacy tainted by money.

Unfortunately, this idealistic solution will itself be overpowered by the power of money. The traditional forces in US politics are not unhappy with buying and selling political power, except insofar as their own money is not put at a disadvantage.

But the reformist panacea would not work even if it were implemented. Advocates of campaign financial reform fail to see that capitalism and informed, independent, and authentically democratic electoral processes are incompatible. Capitalism, unerringly and universally, erodes and smothers democracy. Eliminating, even significantly, reducing the power of money in politics under a capitalist system is an impossibility. The historical trajectory goes the other way.

A Broken System

Since the New Deal era, political partisanship and the accompanying flow of money was linked to Party politics. Corporations and the wealthy gave generously to opponents of the New Deal, the Republican Party. To a great extent, the people power (and significant independent money) of unions and other progressive organizations served as an adequate counterweight to the resources of the rich and powerful. The Democratic Party enjoyed the benefits of this practice.

The television and money-driven election of JF Kennedy in 1960 marked a watershed in both the diminution of issue relevancy and the maturation of political marketing. Money and the advertising and marketing attention that money bought moved to center stage. Key chains, buttons and inscribed pens were replaced by multimillion dollar television advertisements in the buying of election outcomes.

In 1964, the organic link between the money of wealth and power and the Republican Party began to stretch with the campaign of Barry Goldwater. So called “liberal Republicans” of the East Coast establishment recoiled from what they perceived as extremism, leaving Goldwater's campaign treasuries to be filled by the extreme right's wealthy godfathers in the Southwestern and Western US (The looney right rebounded to Goldwater's loss by investing heavily in rallying and expanding the 26 million Goldwater voter base and by buying a broader, louder, but less shrill voice in the media; that project paid off handsomely by 1980).

While it is understandable that donors would spend to their interests-- support candidates of shared ideology-- things began to change with the Democratic Party's retreat from New Deal economic thinking, the general decline of traditional Party politics, and the rise of the politics of celebrity and personality. With advertising and marketing domination of electoral campaigns, constructing an attractive personal narrative replaced issues and accomplishments-- contrived image replaced content.

Today, the two-party system holds electoral politics in its tight grip. And issue-driven politics has been replaced by the politics of flag pins, winning smiles and a “wholesome” family.

Undoubtedly, the decline of substance in politics further encouraged the activity of sleazy lobbyists and influence peddling. Politicians are not faced with the conflict of principles against powerful interests because electoral politics have turned away from principles.

We see the cynicism of principle in the Republican Party's rejection of its ideological zealots. So called “Tea Party” radicals sat well with the Republican corporate leaders when they were energizing electoral campaigns, but the zealots were challenged after setbacks in 2012. Today, the Republican corporate god fathers are making every effort to temper party radicalism in order to insure the only important principle: electability.

The Democratic Party, on the other hand, simply ignores its left wing, treating it alternately as an embarrassment or a stepchild. It is this trivialization of principle and ideology that channels the flow of money today.

Barren Politics


This election cycle has revealed something new: Democrats are raising more money from corporate interests for their campaigns than the traditionally dominant Republicans. This process began before the 2006 elections, accelerated sharply in the Presidential elections, strengthened in the early primaries and continued into 2008. In March, 2008, McCain gained somewhat on his Democratic rivals, but still fell well below the total raised by the two Democrats.

Within the Democratic camp, Clinton dominated most corporate contributions until 2008, when Obama enjoyed big gains, pushing ahead through March especially in the key industries of finance, lawyers/lobbyists, communications and health.

Wall Street has strongly supported the Democratic candidates over the Republicans. Through the end of 2007, seven of the big 8 financial firms (Goldman Sachs, Citigroup, Morgan Stanley, Lehman Brothers, JP Morgan Chase, UBS, and Credit Suisse) showed a decided preference towards the Democrats. Only Merrill Lynch gave more to Republicans, though they gave the single most to Clinton.
The Wall Street Journal (2-3/4-08), while noting that Obama receives a notable number of contributions from small donors, pointed out that “…even for Sen. Obama, the finance industry was still the richest source of cash overall…”

Through February, Obama led the other candidates in contributions from the pharmaceutical industry and was in a virtual dead heat with Clinton with respect to the energy sector.

These numbers strongly suggest that candidates, especially Democratic Party candidates, are unlikely to challenge their corporate sponsors in any meaningful way.

Clearly, Corporate America was not afraid that Obama or Clinton would step on their toes or even stand in their way. While the Republican message and program were more overtly and adamantly pro-business, big business was not trying to swing the election their way. While they may have differed on social and even foreign policy questions, wealth and power understood that the Democrats would not challenge them on any matters relevant to their business agenda. Six years after, they appear to have been right.

Another way to illustrate the uncoupling of corporate money from party ideology is through the trend in corporate PACs to shovel money to incumbents of either party: In 1978 corporate PACs gave 40% of their contributions to House incumbents; in 2014, that number had leaped to 74%.

Corporations are not trying to deliver a message; they are outright buying all of the candidates.

With respect to this year's November 4 interim election, corporate PACs have shifted their support-- sometimes dramatically-- from Democrats in key races to Republicans over the last 18 months (WSJ, 10-29-14). Obviously, neither the corporations nor the candidates have changed their agendas greatly. So it's not about issues, but electability.


It should be transparent that two-party politics in the age of extreme concentrations of wealth and media influence is far from a rousing example of democratic process. Consequently, we should surely not expect the results of the tainted process to be democratic. Like the commercialization of commodities, the commercialization of politics results eventually in the domination of the market by a few products (parties, candidates) and the minimizing of their differences. We no more pick our leaders than we pick the products offered in the showroom. Corporate America picks them both.

Zoltan Zigedy
zoltanzigedy@gmail.com



Sunday, October 26, 2014

Why are They Afraid of Thomas Piketty?


When I first wrote about Thomas Piketty and his book-- a month before the publication of the English language edition of Capital in the Twenty-first Century-- I felt confident that he, and it, would have a large impact even beyond the academic community. For sure, I never expected it to be a best-seller, but I thought I saw the book filling a particular, urgent need for one segment of the political spectrum. While others noted the book's timely appearance in the wake of the 2007-2008 economic catastrophe and arrival concurrent with attention to revealed trends in inequality, my sense was that the book would be received as a godsend by liberals and social democrats.
Though the crisis cast a long ideological shadow over neo-classical economics and its associated policies, the widely expected return to the Keynesianism of the post-war era never materialized. Despite the best efforts of high-exposure, acclaimed economists like Joseph Stiglitz and Paul Krugman, New Deal-like policy prescriptions failed to gain popular traction or political support. The dashed high hopes invested in center-left governments in the UK, the US and, most recently, France, further disappointed reform-minded forces in North America and Europe. Accordingly, hopes of turning away from the conservative, free-market paradigm of the last thirty-five years were at a low ebb before Piketty's book.
It was my view that the Piketty book would be enthusiastically welcomed outside of the conservative consensus. His exposure of historical patterns of inequality demonstrates the tendency of capitalism to generate inequality, a condition seeming to cry out for a remedy. In Piketty's research and his theoretical claims, liberals and social democrats might find a new foundation for reforms, even a grand assault on conservative hegemony. Indeed, some economists have likened the anticipated impact of Piketty's book to the much earlier publication of Keynes's General Theory of Employment, Interest, and Money.
Indeed, the Piketty phenomenon continues to draw interest. My Google alerts on “Piketty” show fewer entries, but continue unabated. Yet liberal and social democratic ideologues and policy makers are not nearly as enthusiastic as I expected. The initial euphoria has been tempered as Piketty's ideas are digested and their implications carefully examined.
A recent issue of Real World Economics Review demonstrates the widespread and growing hesitancy to accept Piketty as the messiah of reform. Friends in the Communist Party of Ireland brought attention to the Review's Special Issue on Piketty's Capital in which 17 economists of liberal and social democratic persuasion reflect on the popular book.
The “Respectable” Left Sours on Piketty
The participants in the RWER forum are established social scientists sincerely troubled by persistence of inequality and poverty. Some-- Yanis Varoufakis, Ann Pettifor, Richard Parker, Michael Hudson, James K. Galbraith, and Dean Baker-- are prominent commentators in liberal and left circles. All express admiration for Piketty's success in drawing attention to inequality. Yet nearly all are uncomfortable with his research results and theoretical claims. Some challenge his “fundamental laws of capitalism,” others his “determinism.” In the end, the stone in the shoe of these liberal or social democratic thinkers is Piketty's notion that, ceteris parebis, capitalism systemically produces and reproduces inequality. Dean Baker confirms this when he states: “It is the adoption of policies that were friendly to these business interests that led to the increase in profit shares in recent years, not any inherent dynamic of capitalism, as some may read Piketty as saying.” (My italics)
It is the “inherent dynamic of capitalism” that troubles liberals and social democrats. If capitalism necessarily generates inequality, if inequality follows from the laws of capitalist development, then reforms will never satisfactorily conquer social inequality. Should it be true that inequality is a systemic product of capitalism, then a basket of reforms, as advocated by nearly all of the RWER commentators (and Piketty), will, at best, only slow or retard the growth of inequality.
It is this question that separates capitalist reformers from socialists, and social democrats from Marxists. Marxists embrace Piketty's claim that inequality is the capitalist norm, that periods of diminishing inequality are the exceptions. Moreover, the very logic of capitalism, with exploitation at its core, promises to increase inequality. For capitalism to continue, capital must accumulate-- not in social consumption, but in investment targeted to more accumulation. Efforts to resist, reform or regulate will only retard that process.
For sure, progressive governments may enact reforms to redistribute wealth, but eventually this inhibits accumulation and results in a capital strike or capital flight. Capitalism is not an equality-generating mechanism. Nor is it equality tolerant.
Labor may fight for a larger share of wealth, but only to be trumped by capitalist threats of plant closure or mass unemployment. Today's collaborative labor leaders are caught in the compromised position of being both an agent for corporate profitability and an advocate for working class living standards. Surely no advance against inequality is possible in the face of this dilemma.
The RWER writers would prefer to address the decades since Reagan and Thatcher rather than the centuries studied by Piketty. Where Piketty finds a long-term tendency for capitalism to generate growing and extreme inequality, they prefer to ignore that elephantine fact and debate the causes of growing inequality since the nineteen seventies.
They are intent upon ignoring centuries of enduring inequality because accepting that reality would cast doubt on the possibility that equality and capitalism are compatible, that the capitalist system can be reformed. Piketty's long-term data and theoretical argument challenge that possibility.
Rather than accept the implications of capitalism's long-term tendency, its centuries-old trajectory, liberals and social democrats point to the historically brief respite from income inequality after World War II (in the US and parts of Europe) along with the post-war expansion of the welfare state as a kind of golden age for social democracy. They see the abrupt turn away from the moderation of inequality-- occurring only some twenty-five years later-- not as a return to the normal course of capitalism, but as a political coup against tamed and tempered capitalism. With little more than nostalgia to support this view, reformists cling to the illusion that an egalitarian, humane capitalism is in the cards. Liberals and social democrats refuse to see the maintenance and growth of inequality as systemic; rather they want to believe that growing inequality is merely a matter of political choices. Thus, they rail against the ideology of “neo-liberalism,” as though the explosion of inequality in North America and Europe over the last 30-40 years was the result of a right-wing confidence game and not driven by the logic of capitalism. “Defeating neo-liberalism” has become a convenient mantra for those ill-disposed to fighting for a new socio-economic order: socialism.
Writing for the RWER forum, Claude Hillinger bluntly states his opposition to Piketty and his allergy to capitalism as inequality's father: “By treating inequality as an economic problem, Piketty diverts attention away from what it really is–a political problem.”
A “political problem” that has proven intractable for hundreds of years under capitalism? A “political problem” better solved under twentieth-century socialism than by any and all twentieth-century bourgeois politicians? A “political problem” only if we choose to slight or ignore Piketty's data.
It is an unpleasant, unstated truth that liberals and social democrats are much more comfortable addressing the concept of poverty rather than inequality. Under capitalism, alleviating the pain of those at the very bottom of the economic hierarchy appears to be much easier and more desirable than tackling the economic hierarchy in its entirety. Not surprisingly, many well-compensated academics are impressed with their own merit and, thus, find a ready defense of the hierarchy of inequality.
RWER contributor V.A. Beker gently attempts to move the spotlight on to poverty: “Let me now ask an awkward question. Should reduction of inequality or reduction of poverty be our main concern?” Certainly by reducing the target to poverty, the question of inequality's relationship to capitalism can be evaded.
Another evasion is to interpret “egalitarianism” as “procedural egalitarianism,” as does YanisVaroufakis in the EWER forum. While taking a gratuitous, but well-deserved pot shot at John Rawls's liberal theory of distributive justice, Varoufakis cavalierly dismisses all distributive egalitarianism in favor of procedural justice, a lofty euphemism for “equal opportunity.” Proponents of “procedural egalitarianism” claim victory for equality when the rules of life apply equally to everyone. Outcomes are irrelevant if no one violates the shared mutually agreeable procedures, standards, or rules of participation. Everyone has the same opportunity-- the “created equal...” of the US Declaration of Independence.
Thus, nine innings of baseball, played according to the rules, constitute an example of procedural justice. And while the outcome might be lopsided, the game would be played consistent with procedural egalitarianism.
What the advocates of procedural justice dare not address is the case of a Little League team playing the Chicago Cubs. While the rules of that game may be assiduously observed, the outcome is certainly not fair, just, or egalitarian. I doubt if any political philosophers would show enough confidence in procedural justice to bet on the Little League team.
Should the advocates of procedural justice modify the rules of baseball to disallow the inequality of resources or skills enjoyed by the Cubs, they must also recognize that outside of the world of games, differential resources and skills always affect fairness, justice, and equality. Accordingly, “procedural” egalitarianism can be no answer to inequality, unless it comes to grips with the inequality of resources, skills, and power ever present in capitalism. But addressing questions of asset distribution returns us to distributive justice and, ultimately, how capitalism distributes these assets.
Try as they may, liberals and social democrats are faced with an impossible task in imagining a capitalist world that evades or transcends the inequalities of the system's past. Inequality is inherent in capitalism, deeply embedded in its genetic code.
Piketty's conclusions from studying “la longue durée” of inequality-- its trajectory over centuries-- stands as an obstacle to those who believe the myth of capitalism without inequality. Or put another way, the results stymy those who want equality without socialism.
Zoltan Zigedy