Tuesday, February 19, 2013

Protest and Survive

 Because of the crisis people are actually questioning capitalism, because they’re being forced to. Capitalist "truths" are being  delegitimatised by experience on the ground. People  are educating themselves but because of the nature of the economic crisis seen as a breakdown in Wall St they have become fixated on banking and finance capitalists. To paraphrase Marx; ’It is not enough that theory seeks people, people need to seek theory‘.  People need to use that education intelligently. If they do not become part of the solution, they may become part of the problem. So-called ‘experts’ offer solutions to  the economic woes of capitalism. But many of the remedies and supposed cures are throw-backs to earlier populist movements during previous depressions.

Liberals and Leftists alike argue that the economic crisis was caused by a lack of state regulation over the banks and financial markets. Consequently, they conclude that we just need new regulation to keep the financial sector in line. There's a confusion about what a capitalist state is. A capitalist state responds to and sponsors and facilitates markets. The notion that it's there to restrain markets, to restrain capitalism, that if only it would do that it would remove the contradictions of capitalism is simply a topsy-turvy way of seeing the world.
Protests against Wall Street have inspired many people to move their money from big banks to smaller banks and credit unions and encourage others to do the same. Many of the big banks wouldn't be too sad to see some of these customers go. One of the reasons that the  banks are imposing or threatening to impose account fees is that they're not dependent upon the small client. They lose money on them and are happy to see them go. If the balances and transactions are small, then they're just not worth the bother. So its not going to cause a lot of consternation.

If credit unions get an influx of smaller accounts they're also going to be expensive and cause the credit unions problems to deal with.  Nor do they have enough places to plough their money into locally or for the benefit of their members, so they buy bonds and securities. It is the same with the small community banks or the call for individual states to own a bank like Bank of North Dakota, America's first and only state bank created in 1919 as a way to help its citizens assert control over their economic lives. The Bank of North Dakota gave farmers access to a local source of credit at relatively low interest rates, while investing tax dollars in projects that benefited the local economy. It has provided more than $555 million in profits to North Dakota's general fund since 1945. On the web it will be difficult not to come across Ellen Brown and others who are particularly enamoured by it. They take advantage of the current Occupy criticism of Wall St and the Big Banks to promote public owned banks as the alternative. At least 17 states are considering bills to create a state-owned bank or give banking powers to existing state government agencies according to American Banker.
 If people want to make a consumer preference decision and move their money into a smaller bank or credit union because the fees are lower or they like the service, that's one thing. But it is not really doing anything that is in anyway revolutionary. It's definitely not challenging capitalism and property ownership. It is not questioning the parasitic relationship of capitalist production which is all about money -- money expanding into more money, the accumulation of capital.

But what it does do is hide the fact that the productive sector is all about that as well. Industrial capitalism does produce goods and services that make it easier for us to live our lives but at the cost of exploitation and environmental destruction. Businesses makes its money by paying workers less than the value of what they produce. Although production may look virtuous compared with the finance sector it is nevertheless the same. The productive sector only engages in production because they make money from it. If they can't make money , they're not going to produce. Finance by its nature is speculative and it is about trying to make money by trading on money. Very little production takes place without the provision of credit. And finance has been crucial to the dynamics of expanded production. You simply couldn’t have global production with out the role that finance plays. It's an illusion to imagine that finance is out there in some greedy Gordon Gecko world and that is “bad capitalism,” rather than what General Motors does which is somehow “good capitalism” and why GM was verging on bankruptcy was because of the Geckos of this world.  Not at all. This is capitalism and both productive capital, in the sense of industrial corporations or retail firms like Wal-Mart, and the big banks are part of the totality and we need to understand them in terms of the way they link with one another.  The role of finance is to discipline and restructure the so-called real economy. It's been fundamental to that, imposing discipline on every factory to be more competitive or finance will go somewhere else, to reallocate capital across several sectors, venture capital, but much more generally. So finance has been fundamental to that.

The whole system is about the expansion of money, not about the production of goods and services to satisfy peoples' needs. The stocks and shares in a corporation are certificates of ownership. The shareholders are the legal owners of the corporation; they are the beneficiaries ultimately of its profitable production. They're completely useless people who contribute very little but who extract lots of money out of the corporations' exploitation of its workers, to speculate even more or to consume in their luxury hobbies. Firms make their money by paying workers less than the value that they produce. That's true even with a small business -- often the working conditions of small businesses are worse than in bigger enterprises: wages tend to be lower, insecurity of employment higher, less health and safety oversight making the work riskier, the pollution moreworse. There's no virtue in being a small business. But there exists a lot of populist thinking and lot of the anti-corporate rhetoric. Many who were involved in Occupy Wall Street were of  that tradition of hating bigness without really having analysis of the class structure of the capitalist system of production. Whether they know it or not, they held a nostalgia for an  America of the 19th century in which the economy was dominated  by individual proprietorships or small partnerships. The protesters were against big business but in favor of small business very often. There's little understanding of capitalism or of class.

Many "radical thinkers" advocate community local currency that people can use for various local transactions has been raised by some , with the idea of keeping money within a community but there is the problem of scale and scope. The local currency might be appropriate for buying locally produced baked goods, but what about the flour, what about the wheat, what about the milling equipment to produce the flour?  It may be appropriate for haircuts, but what about scissors and the steel that makes the scissors?  Money isn't just a substitute for barter. Money is like a system of social organization. It's a way of organizing production on a large scale. And I don't see how creating little community currencies can solve that problem. It can maybe mitigate things in a crisis, when there is a shortage of money, but as a principle of large-scale organization, it's just not up to the task.

The late 19th century was a time of repeated economic panic and crisis. Farmers hated the bankers in the big cities and saw the city-slickers as parasites. They were  suffering from the economic environment of the time. The price levels were relentlessly declining. It was a period of the gold standard and of monetary austerity which was hell on the farmers. The price of grain was in a long-term decline. But part of the problem was that they were enormously productive, there was such a surplus of grain. Farmers were trying desperately to prop up prices. This did not make them enormously popular with workers in the cities who were not too enthralled by the idea of  higher food prices when their wages were not so great either. So there was a real problem of solidarity between the rural populists and the urban working class.

The gold standard imposed a tremendous austerity and a general decline in the price level. Which is great if you're a bondholder because it means the value of your bonds is secure. But if you're a worker, that kind of austerity can be brutal. And especially true if you're a farmer or working in a commodity-producing industry, that can be deeply brutal. Today's right-wing libertarians like Ron Paul wants to abolish the Federal Reserve to replace it with the gold standard. Libertarians love the gold standard because it's a stateless form of money but also because the supply of gold grows at less than 2% a year.  That means that the supply of money could only grow only about  2% a year.

The Federal Reserve was created to do to be more flexible in a crisis and if need be expand the money supply in times of crisis. The Federal Reserve is not a  shadowy international conspiracy of bankers created by small elite at a meeting on an island off Georgia, as you see in some of the conspiracy theories. It was a project that emerged after many decades by the modern American ruling class: it was inseparable from the creation of the corporate form and complicated financial markets as a result of the intense instability of the late 19th century economy, which went through crazy boom and bust cycles, and had many, many deep panics and depressions, and the central bank was supposed to be a force for stabilizing that. It's the institution of a ruling class, there's no doubt about it.

During the 1900-1916 period,” according to political scientist Michael Parenti, “federal price and market regulations in meat packing, food and drugs, banking, timber, and mining were initiated at the insistence of the strongest companies within these industries. The overall effect was to raise profits for the larger producers, tighten their control over markets, and weed out smaller competitors.” It arose from the corporations’ “natural” need to have the government do for them what they were unable to do for themselves. The private sector therefore demanded government intervention to limit competition and bring harmony to the chaos of conflicting regulations passed by dozens of state governments. With business yearning for stable competition and a predictable national market, even the likes of J. P. Morgan partner Henry P. Davison repudiated laissez-faire in no uncertain terms: “I would rather have regulation and control than free competition.”

What did big business want? An absolute priority was the Open Shop (no unions), which would guarantee that conditions for labor remained poor and workers subordinate. Employers’ associations were not shy about asserting their authoritarian vision, perfecting the Open Shop by boycotting union goods, providing financial and other help to businesses trying to ban unions, furnishing strikebreakers, boycotting unfriendly newspapers, bribing union officials, blacklisting union workers, hiring labor spies, forcing workers to sign oaths renouncing union associations, spreading anti-union propaganda, using police, militia, and private goon squads to break strikes, petitioning the courts to cripple unions, and organizing business lobbies to strangle labor legislation. All this proved to be quite effective in subduing workers. In 1914, labor’s purchasing power was less than it had been in the 1890s, and according to government statistics, two million children were in the marketplace simply to help their families survive. Millions of workers toiled 12 to 14 hours a day for six or seven days a week, without being able to keep their families fed. At the same time, 35,000 a year were killed on the job and another 700,000 were victims of injury, illness, blindness or other work-related afflictions. Such is the price of "personal liberty" under capitalism.

There have been a few suggestions recently by so-called economic experts that the government should not just print more money and give it to the banks, but give every adult a few hundred dollars to spend. The suggestion includes conditions which should be placed upon it; to be spent on sensible commodity items and within a set period of time – for example one or two months. The idea is that people will spend the money, shops will take on more staff, sell their stocks and re-order from manufacturers who will take on more staff and increase production. Whilst it ‘appears’ on the surface to make sense and have its attractions, economically it is a nonsense proposal for the following reasons.

Let us assume, for example, that the government gives out $200 to 40 million adults (a total handout of $8 billion) with the above conditions stipulated. In the first months shops are busy, take on temporary staff, have a bonanza and order more goods. The manufacturers, increase production, through overtime and/or temporary staff. Are new factories going to be built? No! Are high levels of permanent jobs going to appear? No! After the months are over, trade drops back at least to previous levels, shops order less, manufacturers cut-back production again. Temporary staff are laid off and the situation is back to its previous condition.

Or is it? Of course not – for at least these reasons! 1. Forty million people do not have to buy the things they have just purchased. 2. Retails capitalists have gained a share of the $8 billion. 3.Manufacturing capitalists have got a share. 4. The government is now $8 billion further in debt. And so in the months after, the economic level may go further down than before and the government must raise taxes or cut expenditure. And all the above is assuming the very best scenario, for it is by no means certain that all the retail shops will increase the orders from domestic based manufacturers. It is more likely the case that they will find ways to purchase cheaper supplies from the global market.

It only sounds a good idea if you don’t stop to think about it, but now more than ever we need to stop to think about things the elite are suggesting. This is not to suggest that giving people some of the money back which the capitalists and government have previously extracted from their labour, is not a good thing in itself, but it is not a cure (or even a partial cure) for the massive contradictions within the capitalist mode of production. And of course as a policy objective it would act as a distraction. A similar process would occur with any country which adopted such a suggestion and that is exactly why it is unlikely to be adopted anywhere.

Another allied scheme for saving the system by boosting spending, is the idea of payment of a ‘living-wage’. The idea that a certain level of wage is necessary to live and that the government-set minimum-wage is insufficient, pre-supposes wage-slavery and the continuation of capitalism. Of course a higher-wage, whilst the system persists is something to campaign for, but the idea of certain local authorities and private companies paying a ‘living-wage’, on a voluntary basis, leaves out of consideration those who are not so employed and those who are unemployed. Since under austerity, the former are getting less numerous and the latter more so, this will do nothing to seriously stimulate the economic activities of a country or region. Nor will it solve the problem of a satisfactory existence for the bulk of society – those who will not get a ‘living-wage‘.

Others seek to save capitalism by increased taxation. Taxation, is revenue extracted from wages, salaries, profits and sales of commodities. Under capitalism wages and salaries come from the payment for two main types of labour – productive-labour and unproductive-labour. Productive-labour is that which is employed by capital and preserves value as well as creating surplus-value. This value and surplus-value is the source of money-capital from which, wages, profits, rents, interest and those taxes collected from these sources, is paid. In other words surplus-value is the source of direct tax revenue for governments. Even the taxes paid on consumption  also comes out of the wages and salaries of workers which have their origins in surplus-value. Government taxation is thus the primary source of the wages and salaries of the states employees. Increasing taxation or improved tax-collection, will therefore lessen the government debt, but by how much? Even during previous periods of full-employment and high taxation it was insufficient to keep all the welfare services and the combined armed services (Army, Navy and Air-force) without extensive borrowing. The rate of taxation would have to be set at an incredibly high rate and tax-dodging completely prevented for taxation to even dent the present levels of sovereign debt. Nor would it underwrite all the present levels of government and state employees along with modern weapon-supplied armed forces.

The trend for capitalism in the past, present and future is to base their productive activities in low wage and low tax countries and so avoid paying wages which attract taxation and avoid company taxation in the advanced countries. So capitalist investment strategies are to outsource production and thus further reduce wages, and taxes in all advanced countries. The rate of removal of taxable profits, wages and interest is far faster than any rate at which tax-dodging could be restrained. Additionally, taxation, particularly indirect taxation (on goods and services) on the poor and low-paid, is already outlandishly high and could scarcely be increased further without repercussions in health and social order.

Increasing taxation on the rich and attempts at preventing elite tax-dodging by the rich ought to be pursued by any capitalist political system with even a modicum of moral integrity – which at present it hasn’t got. But even correcting this will not be – on its own – structurally effective. As long as there are loop-holes through which they can manoeuvre, the rich and their accountants will continue to do so. A sufficiently alert and active tax-fraud regime under the capitalist system would also increase the non-productive salary bill considerably for the state. It would therefore add to the sovereign debt without necessarily covering the extra costs by the extra taxation gained.

Common within the "anti-capitalist" movement are demands for  more and better regulation. Many  have suggested that the current crisis in the financial sector has occurred either because of a lack of regulation or insufficient means of enforcing existing regulation. There is a little bit of truth in this proposition, but it does not explain why these tendencies are there in the first place to need stopping. The logic of capitalist production is the preservation of the capital invested and the creation of surplus-value – the origin of profits. This is a logic which is fundamental and cannot be suspended, without suspending the capitalist system. The surplus-value produced by modern industry is so prolific that each new aggregation of surplus-value into new tranches of capital must seek a profitable source of investment. If there is already sufficient capital investment in the production process in which it arose, then an alternative must be sought – and is sought – by any means!

This logic of preservation and accumulation of capital, in all its forms, acts with considerable pressure which like a viscous fluid will find its way through, under, over or around any regulatory obstacle. And again as with the issue of effective taxation collection and regulation, only extremely large numbers of highly trained regulators across the entire range of financial services, could have any chance of slowing this seepage down – never mind preventing it. And the costs of this size of regulatory regime would also be prohibitive or destructive. No amount of regulation can prevent the opportunities for unethical or illegal transactions occurring and nor the rewards for getting away with it. Hierarchical and wealth extracting societies are fundamentally corrupt and corruption is a corrosive cultural force which renders regulation surmountable.

Competition is a fact of life for the capitalist mode of production. It has destructive effects upon the lives of working people. However, competition is also frequently destructive to capital. It is so destructive that large capitalists try to eliminate competition by buying up competitors, ruining them in various ways or forming ‘agreements‘ such as cartels and monopolies. The idea that one countries competitiveness will produce economic well-being for workers in the home country and hard-luck for those workers in countries not as competitiveness, is an utter nonsense. For one country to be competitive means having a higher productivity, lower labour-costs and lower infrastructure and taxation costs than another country.

But capitalism is now more than ever a global system of production. As noted above, capital looks for places where production can be set up with low wages, low taxation, low levels of regulation and few restrictions on pollution. To be such a competitive location for capital investment – on any serious scale – would require that advanced capitalist countries such as those in Europe and North America will have to lower wages, taxation, regulation, welfare provision and pollution regulations to a standard level or below the current average available in Asia, India, Eastern Europe and South America. Or increase productivity to such a high level that massive levels of relative over-production would occur and increase pollution and resource destruction. And this would not solve, but only exacerbate the fundamental contradictions of the capitalist mode of production. This is because in general, competition at the global level requires mass-production and mass-production is now conducted with fewer and fewer workers, with more and more relative-over-production of commodities, waste materials, pollution and ecological destruction. And if each country adopts this path – a competitive race to the bottom of welfare standards will ensue. So increased competition will lower wages, lower environmental standards, lead to more exhaustion of raw material resources and more crises down the competitive road of economic growth.

Under capitalism most economic growth is determined by an upward surge in profitability or potential profitability. Economic growth under capitalism, requires the investment of money-capital with the intention of producing sufficient value to return the initial investment plus sufficient surplus-value to leave a satisfactory profit after taxation and other deductions. In short the capitalist mode of production is motivated by the accumulation of capital. The first condition of accumulation is that the capitalist/s must have contrived to sell a majority of his, her or their, commodities, and to reconvert into capital the greater part of the money so received. This requires sufficient market demand, for failure to sell in sufficient quantities and in sufficient time, causes a break in production and a crisis of re-production.

Indeed, the immediate post-2nd World War period saw an unprecedented growth in economic activity and the increasing globalisation of production and consumption. Throughout the mid to late 20th century, the application of new technologies in all spheres of activity, (agricultural, industrial, commercial and financial) enabled the scale of primary and secondary production to be increased exponentially. There became so much growth in the European economies that the primary food producers had mountains and lakes of commodities which could not be sold. The extension of personal forms of credit was able to take up a great deal of this relative over-production – but only for a period of time and only as long as the credit bubble did not burst. The personal credit bubble has burst and most capitalist economies are in a period of economic shrinkage. A further associated problem for imagining that economic growth is possible and could solve any of the problems we face, is the nature of the above noted new technologies. Modern capitalist production methods are less labour-intensive, than previous periods. Factories with thousands of workers producing vast numbers of products using basic machinery and tools, is a thing of the past. Large factories are still being built but they are more often than not filled with modern automated and computer-driven machine tools and have fewer workers. There is thus no foundation, internationally or nationally or globally for sustained economic growth.

 Money is only borrowed by the economic elite for two purposes. The first is to invest in financial instruments and the second is to invest directly or indirectly in businesses for development or expansion purposes. Investment for business expansion, however, will in general only be undertaken during buoyant market conditions.

Capitalist finance-capital and industrial-capital has sought some degree of refuge in buying-out former public service industries as ‘investments’ for restless capital-seeking outlets of profitability. This project via the IMF and the World bank was a strategy introduced throughout the world. It was one of the financial tentacles of the 20th century neo-liberal agenda. Yet this did not save capitalism even though it provided a temporary diversion, from certain immediate investment problems for finance capital. However, in the longer term it exacerbated the contradictions already at play. The crisis we have today has occurred despite massive programmes of privatisation. For it raised the costs of essential services to consumers, who consequently had to cut-back on purchases of other forms of capitalist production thereby exacerbating the crisis. One of the new targets for privatisation will be roads. These, like the railways, telephones, gas, electricity and bus services, previously privatised, are ideal purchases for finance-capital, for two reasons. First because the major expense has already been outlaid by money provided from taxation. The capital investment in infrastructure and foundations have already been laid. New investment will only be required to improve some minor aspects and erect toll-booths. Second because, in some cases, the ones most likely to be privatised will undoubtedly be almost monopolies. If this goes ahead the most potentially profitable road routes will become subject to toll-booths and drivers will have to pay to travel upon them.

While such additional privatisations will benefit some sections of the finance capitalists it will adversely effect the costs for every other capitalist who uses the roads for transport and of course it will adversely effect workers who need to take journeys along these roads. Furthermore, it will adversely effect other roads as those who do not wish to pay the toll will find alternative routes and thus create extra congestion and extra wear to the road surfaces for which already cash-strapped local governments are responsible. This will engender extra expense for the local authorities for repairs and of course, extra pollution upon these alternative routes.

Other targets for this attempt to save capitalism by privatisation have already begun to be explored. Health, education and social services are already in the sights of the finance-capital world and are making their first inroads with government approval from all political persuasions, left, right and centre. However, as with the other examples considered, privatisations of these spheres of activity will undoubtedly result in increased costs to the consumers, many of their employees will be ‘let go’ as profit orientated managers replace bureaucratic orientated managers. A two-tier system of welfare with those who can still afford it getting a better level of service or more of the service than those who can’t. As now occurs with heating, lighting, water, communications and transport. But as with the other ‘remedies’ it won’t solve the fundamental problems of capitalism.

Capitalism cannot be saved by such remedies nor if they were introduced would they help the bulk of ordinary people. The task will begin again (after the practical failures of the 20th century) to imagine and construct a post-capitalist alternative out of the useful remnants of present and past economic and social activity. This will entail casting aside all the counter-productive economic, political and social relations based upon hierarchy and greed.

For socialists it is largely the question of whether we can begin engaging the union movement, the social movements, and radicals in challenging capitalism. We have to be able to argue that capitalism is bad even when its working well, that capitalism is now a barrier to human development.  We need to recognize that we're fighting capitalism. What socialists have to offer is making connections between people across workplaces, bringing in a class analysis so they seem it’s not just them. They can never win if it’s just a few of them against the state. They have to see there’s actually a class involved here. Giving them some alternatives, you know, giving them some historical memory, so they see how workers did this—in fact in more difficult circumstances in the past. Giving them some comparative analysis of what’s going on in Greece and elsewhere—how did people organize. So the left can play that role, in terms of bringing a class perspective, resources, memory into the picture. It is to be a bridge—responding to practical and immediate things, but putting them in that kind of a larger context. Because without that kind of larger context we’re losing and we’re going to continue to lose. What’s really abstract is pretending that these kinds of questions don’t matter.

Unions are still important defensive institutions but we have to go beyond their sectionalism where they represent their members or they represent workers at a particular company when people are voting on the basis of “does this help me in particular, even if it screws other workers?,” with no sense of if you’re screwing other workers how that might come back to bite you in the longer term. We should be talking bout a new type of trade unionism,  a much broader class organization. Those who are trying to defend unions by saying “they’re okay, don’t attack them, just carry on ” are actually doing the unions any favor. There’s a perception in the broad public that unions are mostly interested in themselves. It seems that the union leadership thinks it has a product to sell. That product is a contract and certain privileges in wages and benefits. That seems to foster a perception among the broad public that unions just don’t care about the working class as a whole.  It means they have to develop a class perspective and  be driven by that class perspective. A new form of working-class organization, that would see workers as joining them, linking them across unions. Having networks of activists across unions, so it isn’t just a union with a sectional interest, but it’s workers joining something because they see it as a class interest, and that it also expresses all the other dimensions of their lives. So it’s linked to the community. Not as a political party but an organisation facing more than a particular employer. That would a revolution inside unions—a massive cultural change. Unions didn’t come out of people sitting down and practically saying, “what are the rules, what are the constraints, and how do we operate within them?” They figured out how you actually have to break rules, how you have to change them, how you have to mobilize broadly. When you look at these problems in very small ways, like workers saying, “If I just walk out of my workplace, I’ll be fired”—yeah, you will be fired, so you shouldn’t do that. It does mean saying that if you want to change things, these are the kind of risks you have to take. If you accept the status quo then the thing you have to remember is that you’re not just protecting yourself right now. You’re sending a signal to them that they can keep doing it to you.

 Humanity, needs to be freed from the machinations and control of powerful economic and political elites, (who pursue policies in their own elite interests) and create a society which produce for need and welfare of the majority along with ensuring an ecological balance for the planet.  The social revolution is a simple thing: It is the devolution of all power into the hands of the toiling class. It is bottom-up, industrial democracy, with decision-making power being exclusively the prerogative of workers in thir work-places and communities, confederated one to another in such ways as they see fit. The social revolution is the full and final emancipation of labour, all labour. Revolution, real revolution, is effected by the workers themselves.

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