Unpacking the Lies About the Global Economic Crisis

The only way I know to make sense of the global economic crisis is to assume, until proven otherwise, that everything Obama, Wall Street and the corporate media tell us is a lie. The economy Obama, US Treasury Secretary Tim Geithner and Federal Reserve Chairman Ben Bernanke talk about is a fairy tale economy that bears no relation whatsoever to the real world. Obama, like most western leaders, makes out that the only way to “solve” the debt crisis is to tighten our belts and destroy the middle class via wage, benefit and social service cuts. Thanks to Occupy Wall Street, a new narrative about the global economic crisis is beginning to emerge. And guess what? Once people get a clear view of what’s really happening, they come up with some fairly straightforward and painless solutions.

Debunking the Fairy Tale:

1. When is a recession not a recession? When it’s really a deflationary spiral.

Obama, Geithner and Bernanke keep telling us the current economic crisis is a recession. It’s not. It’s really a deflationary spiral. Deflation occurs when the economy shrinks. The US economy is clearly shrinking, just as Japan’s economy has been doing for the last two decades. The US economy lost 10-20% of its real wealth in 2008 and has been slowly shrinking ever since. Consumer buying power continues to decrease, as Americans deplete their savings and experience wage and benefit cuts. Because people have less money to purchase goods and services, many businesses have quit producing them. This, in turn, causes more workers to be laid off.

2. The $15 trillion debt taxpayers owe Goldman Sachs represents money that never existed.

Contrary to popular misconception, the government doesn’t issue money. Nearly all new money is created by private banks when they generate new loans. On average, most banks have only 7% of a new loan on deposit. The rest is generated out of thin air. This system started in 1694 when the Bank of England was created.

The federal government came by most of the $15 trillion debt by assuming – through bailouts and other means – the toxic debts of Goldman and other major investment banks that were technically bankrupt. They were bankrupt either because they created trillions of dollars of toxic debt (out of thin air) for subprime mortgages for over-valued real estate that could never be repaid or because they bought this toxic debt from other banks.

The other thing Obama doesn’t tell us is that there are still billions of dollars of toxic debt (again created out of thin air) that have yet to be “written down” (i.e. “written off” and subtracted from banks’ balance sheets). In 2008, trillions of dollars of toxic debt that wasn’t transferred to government balance sheets was hidden by transferring it from weak banks to strong ones.

Any business other than a bank would be required to deduct these bad debts from their earnings in their annual report, when they declare their profits, dividends and CEO bonuses. Yet to protect the stock prices of bank prices, Obama colludes with Wall Street to keep this information secret.

3. The true unemployment figure.

Obama et al tell us the US unemployment rate is 9%. It’s not. According to the Department of Labor’s own numbers, it’s really about 16% – or one out of every six Americans.

4. The US economy is in recovery – NOT!

For more than a year Obama and the corporate media assured us we were in recovery. They seem to have backed away from that claim in the last few months. There has been no improvement whatsoever in the unemployment numbers, and bankruptcies and foreclosures continue to increase.

5. The difference between $700 billion and $12.5 trillion.

The figure we were giving for bank and corporate bail-outs was $700 billion. The true number, as Senator Bernie Saunders exposed last December, was $12.5 trillion. The Federal Reserve (using taxpayer money from the US Treasury) also issued billions of dollars in bail-out loans to foreign banks and car makers and individuals (including my New Zealand bank Westpac – thanks for that). All this was done unconstitutionally without Congressional knowledge or approval. In fact, the Obama administration filed suit in federal court to prevent the release of these records and lost.

6. The US economy is shrinking, rather than growing.

Obama et al tell us that the US economy has started growing again, by a little under 1% per year. It hasn’t. According to John Williams at www.shadowstats.com, it actually shrank by 1% in 2010

7. It will be easy to repay global debt once growth returns to pre-2007 levels. Yeah right.

Repaying the $100 trillion debt (total of all government, household, bank and business debt) when total global wealth is $60 trillion is mathematically impossible, even with global growth levels of 3%.

Global growth (even with the help of China and India) will never return to pre-2007 levels because of fossil fuel scarcity and the skyrocketing cost of energy. The availability of cheap fossil fuels has allowed mankind a century of undreamed of scientific and technological innovation. All the cheap oil and natural gas is gone now. It’s clear from Obama’s energy policy, which promotes and supports risky high cost extraction techniques (deep sea oil drilling, fracking and tar sand extraction), that the President knows this. He just chooses not to share this information with the American public.

8. Guess who’s printing money?

Obama et al tell us that “monetization,” in which the federal government prints new money to pay for jobs and infrastructure programs, is out of the question because all “monetization” does is create hyperinflation. This is actually two lies rolled into one. Not only does “monetization” not create hyperinflation, but the Federal Reserve has been secretly “monetizing” the US debt since 2009. As of last week the Federal Reserve (using newly created US Treasury dollars), not China, is the biggest holder of US debt. See http://cnsnews.com/news/article/fed-now-largest-owner-us-gov-t-debt-surpassing-china

To be continued.

It’s extremely heartening to see Americans’ fascination with the popular uprisings in the Middle East, as well as speculation across the blogosphere about the potential to replicate them in the US. Massive turnout in Madison and other state capitals is very promising, as American workers realize that they are being punished for the Wall Street greed and criminality that caused the 2008 economic collapse. Many are beginning to believe, as I do, that Wall Street and their friends in government are deliberately using the “economic crisis” to justify a massive attack on the working class.

Wisconsin Protests

It seems a logical conclusion, given the soaring profits and stock prices of Wall Street banks and corporations, especially as they are the result of major cost cutting in the form of mass lay-offs and wage cuts. American workers would have to be pretty gullible not to question why they are being told to tighten their belts, while the banksters responsible for the collapse are rewarded with a $12.5 trillion secret bailout (see http://stuartbramhall.aegauthorblogs.com/2011/02/13/bernie-sanders-filibuster-and-the-secret-12-5-trillion-bailout/), billions of dollars of CEO bonuses and tax cuts. In addition to facing the likelihood that some of us (including many young people under 24) are now permanently unemployed and/or homeless, the rest of us face another round of lay-offs and home foreclosures, wage freezes/cuts, longer work hours, increased workloads, Social Security and Medicare cuts, a likely increase in the retirement age to 70 – and even more cuts in critical public services, including school, library and clinic closures; police and teacher lay-offs; and cutbacks in street lighting and road and bridge repairs.

The Way Forward

As we have seen in Europe, the Middle East and Europe, the only effective way to challenge these relentless attacks against working people is by banding together to fight them through industrial action and mass mobilization. As individuals waiting for politicians to do the right thing, we are relatively powerless. However, as we have seen in Egypt, Tunisia and elsewhere, when we join together in unions and grassroots organizations, we have the ability to bring society to a standstill.

Over the past three decades, such collective action has been rare in the US. Americans from all walks of life seem much more reluctant than their foreign counterparts to join any community groups or organizations, much less unions or political causes. This, I believe, relates mainly to constant bombardment (mainly via the media) with highly sophisticated political messaging prompting Americans to see themselves as “consumers” rather than engaged citizens in a participatory democracy. Wall Street has created an entire industry – the public relations industry – around creating such messages. Ironically, as the late Alex Carey describes in Taking the Risk Out of Democracy (http://www.hartford-hwp.com/archives/25/006.html), the original purpose of “pubic relations” was to discredit union organizing and strikes and simultaneously undermine strong pro-worker sentiment among the American public.

Below are five of the most paralyzing anti-organizing messages Americans are bombarded with on a daily basis:

1. Being labeled or associated with “workers,” “working class,” or “unions” equates with low social status. In the US, everyone with a full time job is automatically “middle class.” Because class differences have been abolished in the US, there is no need to join or form unions or to protest and/or strike.
2. The US and Americans are distinctly different (better) than the rest of the world. Living standards are (and will always be) much better for American workers than for their foreign counterparts.
3. The proper role of workers under fifty is supporting and/or looking after their families. If they strike or protest, their children will suffer.
4. There is no alternative – corporations, corporate controlled government and the corporate controlled media are all too powerful for ordinary people to bring about change. Organizing is pointless because we are helpless to change anything.
5. Politics and economics are too complicated for ordinary people to understand. We can only make things better by going shopping and taking care of our families while we wait for honest, wise political leaders to get us out of this mess.

To be continued.

It took moving overseas for it to sink in that Americans owe their high standard of living to US military domination of third world resources. I have always understood the theory of “economic imperialism” – that the US maintains a monopoly on cheap third world labor and resources via military support of puppet dictators (such a Mubarek), CIA destabilization campaigns, and Wall Street and IMF/World Bank loan, debt and currency manipulation. As a progressive, I placed the entire blame for the bloated US military budget on the US military-industrial complex and the immense power defense contractors wield via their campaign contributions and ownership of US media outlets. I didn’t fully understand the financial consequences of world military domination for ordinary Americans – mainly a lower price for for most consumer goods. It took the physical reality of living in a smaller, poorer, non military nation and paying a lot more for gasoline, books, meat, fish and other products – on a much lower income.

Americans Love Cheap Gasoline, Coffee and Sugar

I think the American public, for the most part, is profoundly ambivalent about the concept of empire. In public opinion polls, Americans consistently oppose foreign wars, except where “US interests” are at stake. However policy makers and the mainstream media are deliberately vague in defining “US interests.” Prior to 1980, a threat to American interests meant a clear threat to America’s democratic system of government or the lives of individual Americans. When Ronald Reagan invaded Grenada in 1984, the official pretext was to evacuate American students at the medical school at St George University (the real reason was to oust pro-Cuban prime minister Bernard Coard).

Protecting US Interests in Grenada

With the current wars in Afghanistan, Iraq and Pakistan, “US interests” have clearly expanded to include the billions of gallons of cheap foreign oil required for the health of the American economy. Americans love their cheap gasoline, coffee, sugar and chocolate. And most aren’t consciously aware that they owe these cheap luxuries to US military conquests in the third world. If pollsters actually posed the question “Would you give up cheap imported consumer goods to end foreign military aggression?” – I believe the percentage supporting war would rise significantly.

What Americans Sacrifice for Military Empire

I like to think I would be willing to make the sacrifice. In essence I have, by moving to a much smaller, poorer country where tax dollars are used to fund universal health care, subsidized child care and housing and long term unemployment benefits -  because New Zealanders don’t feel compelled to invade and occupy other countries.

Prior to 1980, the US also had fairly generous social services for low income Americans. I somehow lost sight of this, as well. Until I came to work in a country that still provides a generous safety net for unemployed, disabled and elderly Kiwis.

Prior to the Reagan presidency and the ballooning of American military expenditures, I could rely on federally funded jobs, vocational rehabilitation and subsidized housing programs to get clients recovering from major mental illness back on their feet. The systematic dismantling of the American safety net began under Reagan and Bush – as they redirected our tax dollars toward military priorities – a phenomenally expensive missile defense system (aka Star Wars) and military interventions in El Salvador, Nicaragua, Guatemala, Grenada, Panama, the Philippines, Somalia and Iraq.

Instead of restoring the social safety net programs his Republican predecessors abolished, Bill Clinton continued the trend by ending the welfare entitlement for single mothers Franklyn Roosevelt enacted in 1935 – to finance a war against Serbia, as well as continued funding for Reagan’s Strategic Defense Initiative (SDI).

Star Wars SDI

To be continued.

South Africa has now been formally accepted into the BRIC (Brazil, Russia, India, China) economic alliance. The term BRIC was coined by Goldman Sachs in 2001 to describe the growing influence of large resource-rich emerging economies, which between 2000 and 2008 have accounted for half of global economic growth. The BRIC countries are not formally linked but have held summits and taken steps to boost financial cooperation and investment opportunities among them. There seems to be an unstated agenda of building a strong economic alliance to counterbalance the economic strength of the US and the European Union. Especially given the Americans’ belligerent approach to resource acquisition (via military domination), as we enter a period of relative resource scarcity.

According to China’s state news agency Xinhua, BRIC has accepted South Africa as a full member of the group. South African President Jacob Zuma was informed in a letter from Chinese President Hu Jintao in a letter of invitation to attend the third BRIC leaders’ summit, to be held in April 2011 in Beijing.

BRIC Ignored by Mainstream Media

BRIC receives very little attention in the mainstream media – except for the discussion they had at their summit in 2009 about launching their own currency to compete with the dollar and the euro. All four BRIC countries have fairly large US currency reserves (oil can only be purchased in US dollars). All are very keen to diversity these holdings, owing to continuing US debt problems, which have caused the US dollar to lose 30% of its value related to other currencies over the last decade. China has now publicly announced its willingness to back the euro by buying debt (i.e. making loans) to financially troubled EU countries, such as Greece, Spain and Italy, who are unable to afford the high interest rates Goldman Sachs and other bond holders want to charge them.

The S&P BRIC-40 Stock Index

BRIC receives much more attention in the financial press. In fact there is a Standard and Poor BRIC-40 stock index (see http://www2.standardandpoors.com/spf/pdf/index/BRIC40_faq.pdf). The BRIC-40 index is a “basket” of stocks of the 40 largest and “most liquid” companies in Brazil, Russian, India, and China. All companies are expected to exhibit substantial growth in the coming decade, in parallel with economic growth in their parent countries.

Many financial analysts are “bullish” on the BRIC-40, in contrast to Wall Street stocks, despite enormous Wall Street profits this year. Most companies achieved these profits by laying off workers and reducing their labor costs. However instead of investing the profits in expansion and future growth, many have used it to buy back shares to inflate their stock price (see (see http://www.washingtonpost.com/wp-dyn/content/article/2010/10/06/AR2010100606772.html). This lack of future orientation has serious implications for future profits – as there is little scope to lay off even more workers in coming years.

Wall Street analysts are scratching their heads why BRIC would want to invite South Africa to join them. The South African economy is less than ¼ the size of the economy of Russia, BRIC’s smallest partner. I think they seriously underestimate the political influence, as the most developed African country, over the rest of the continent.

List of BRIC Resources By Country:

Brazil: aluminum, gold, iron ore, manganese (ingredient in steel, nickel, rock phosphate (essential in agriculture and increasingly scarce), platinum (essential in catalytic converters, neurosurgical and dental equipment, computers and cancer drugs), tin, uranium, petroleum, timber, diamonds.

Russia: has the world’s largest mineral and energy supply and is known as an “energy superpower”, containing 22% of the world’s oil, 16% of the world’s coal, and 40% of the world’s natural gas. Other resources include timber, iron ore, nickel, potassium (essential for agriculture), lead, petroleum, zinc, aluminum, tin, platinum, titanium, copper, tungsten phosphates and mercury are the most popular natural resources that Russia provides. Russia has the largest reserves of fresh water in the world.

India: coal (third-largest reserves in the world), iron ore, manganese, mica, aluminum, titanium, chromite, natural gas, diamonds, petroleum, limestone and thorium.

China: the largest producer of gold and one of the largest producers of rare minerals, such as antimony, zinc and tungsten, in the whole world. Also coal, iron ore, magnetite, petroleum, aluminum, natural gas, mercury, tin, lead, manganese, molybdenum, vanadium and uranium.

South Africa: gold, chromium, antimony, coal, iron ore, manganese, nickel, phosphates, tin, uranium, gem diamonds, platinum, copper, vanadium, salt, and natural gas.

Taxpayers sold one third of their holdings in General Motors on November 18^th, when GM became a publicly traded company (on Wall Street) again. I’m sorry to report that we lost money on the deal. We only got $33 a share on our stock, and to break even we would have needed to make $44 a share. There’s still a possibility we could break even when we sell our remaining shares, if the stock value miraculously reaches $53 a share (which will happen if GM gets back to its all time high value of $56 billion – which it achieved in 2000). Thursday the stock price closed up $1.19 at $34.19, which is much lower than the major price spike that occurs with most IPOs (Initial Public Offerings).

The GM Bail-Out

Just to refresh everyone’s memory, US taxpayers bought 61% of GM for $40 billion in June, 2009 when the company declared bankruptcy. Existing shareholders (many of them GM employees, retirees, and dealers) and bondholders were essentially wiped out in the bankruptcy. The value of existing shares became worthless. GM bonds are now trading at one third their face value. However once the bankruptcy proceedings finish in three to six months, bondholders will divide up 10% of the preferred stock – based on the total face value of the bonds they hold.

Once Bitten Twice Shy

The 700,000 GM workers, retirees and dealers were offered the first chance to buy 800 shares at the initial price of $33. According to NPR, most of them weren’t very enthusiastic – especially the ones that got wiped out in June, 2009 (see http://www.npr.org/2010/11/17/131392809/gm-faces-mixed-reviews-over-public-stock-offering). GM sees no reason why people wouldn’t want to buy their shares because they have been a profitable company for the last three quarters. They were able to earn this profit by wiping out a lot of their debt (including their debt to their bondholders) in the bankruptcy, significantly reducing their workforce, forcing their remaining workers to accept lower wages and benefit cuts, and of, course, reducing the benefits they had promised their retirees.

Does It Make Sense to Invest in Auto Stocks?

I personally would be more excited about an IPO if a company owed its profitability to innovation, rather than screwing over its workers and creditors. The only innovation they can point to currently is their electric car, the Chevy Volt, which retails for $41,000.

The Volt

In my mind a $41,000 automobile qualifies as a luxury car. I honestly can’t imagine who would buy stock in an auto company whose future depends on a rapidly shrinking sector of the population who can still afford luxuries. I don’t own a car myself, and none of my friends have bought a new gas-powered car in years – a person would have to be crazy to take on that kind of debt in an economy overshadowed by extreme job insecurity. My friends who can afford the cost of a second hand vehicle can’t afford to drive it much with gasoline at $3 a gallon – a price that will only go up now that oil companies themselves finally admit that Peak Oil is real.

Ironically a $41,000 electric vehicle may also prove quite expensive to run, given that the cost of electricity is also rapidly increasing – and will skyrocket when the federal government enacts a carbon tax on coal and gas fired power plants (which we all know is inevitable – the US is no longer strong enough economically to be the odd one out when the rest of the world agrees on a climate treaty).

Investing in Public Transportation and Carbon Fiber Cars

The people I talk to who are buying transportation stocks are investing in companies that manufacture bicycles, motorcycles, motorbikes, busses and trains. Let’s face it – by 2020 the vast majority of Americans will be getting around by foot, bicycle, motorcycle and public transportation – because the fuel to run an automobile will be way too expensive.

If I were investing in an auto company, I would put my money in Tata Motors in India. In 2013 they expect to release a composite carbon fiber car that will sell for $2,200 (US dollars) and get 90 miles to the gallon (see http://zambianchronicle.com/?p=164).

The Tata-Indigo-Marina

There is a really interesting article in the Miami Herald (http://www.miamiherald.com/2010/11/20/1934630/gm-stock-deal-smells-like-a-lemon.html) by Michelle Singletary, who seems to agree with me that GM stock is going nowhere. She observes that a number of Internet trading sites are already “pumping up” GM stock, as they did with the stocks of other bankrupt companies, such as K-Mart and WorldCom. She says they do so in the hope less-informed investors will buy them. “In the end,” she says, “it’s only the pumpers who make a profit.”

It’s extremely hard to get good information about the present massive labor unrest in France.  US media coverage of the month of rolling strikes is full of half-truths and distortions.  Many progressives feel this relates to the specific focus of the strikes – the efforts by the French government to increase the retirement age – and efforts by Wall Street, the Obama administration and the mainstream media to soften up the American public for an increase in the age at which Americans qualify for Social Security.

The first critical point that the US media fails to make clear is that French President Nicholas Sarcozy is a conservative. The mainstream media likes to call his party, l’Union pour le Mouvement Populaire,  a “center-right party.” However the only French party to the right of Sarcozy is the National Front fascists. Sarcozy, a dyed in the wool neoliberal like Ronald Reagan, Margaret Thatcher, and the Bush family, has always supported tax cuts for the wealthy (both the super rich and the 20% of the population who live very comfortably propping up France’s increasingly neoliberal political system) and social service cuts for everyone else.

Below are other fallacies and false assumptions by the US media on the reason French workers are in the street:

Fallacy 1: The French unions are wasting their time because the law increasing the minimum pension age has already been passed by the French legislature.

Fact:  The law has passed the National Assembly, and the French senate has approved both key planks. However the final senate vote doesn’t occur till October 20^th.

Fallacy 2: The minimum age at which French workers can receive government retirement benefits must be increased because the program operates at a deficit and French debt levels must be reduced. If the French fail to reduce their national debt, they will lose their AAA credit rating. Which means Goldman Sachs and other global financial institutions will charge them a higher rate of interest on the money they borrow to run the government. (In other words, to quote neoliberal queen Margaret Thatcher:  “There is no alternative.”)

Fact: France actually has a number of alternatives to increasing the retirement age – the simplest, in the short term, would be to raise taxes to cover the deficit (duh!). Another, long term, alternative would be to withdraw from the Euro.

• Raising tax rates:

At present France’s graduate income tax rates end at 40% on annual income of 70,000 Euros. Historically the US has dealt with economic crises by increasing the marginal tax rate – in other words, extending the tax rate incrementally on earners above a comfortable. For example, during World War I, the marginal tax rate on the wealthy increased incrementally (by 1-2% every $10,000-$25,000) to the point that people making over $1 million paid 77% income tax. In World War II, the upper tax rate was 75% on people earning over $5 million and in 1954 (under a Republican president just after the Korean War), the upper tax rate was 91% on people earning over $700,000.

The US enacted these higher marginal tax rates on the assumption that rich people felt as strongly as poor people about meeting domestic needs during war time  – the need for a strong, robust economy with quality education (in France there is also strong public support for government guaranteed universal health care), good infrastructure maintenance and vibrant, safe communities – not only for themselves, but for their children and grandchildren.

Now all western democracies operate under the neoliberal assumption that all rich people are selfish, greedy bastards that don’t give a damn about their communities or their children and grandchildren. I frankly don’t believe this is true.

• Withdrawing from the Euro:

The whole assumption that the only way to finance government operations is to borrow money from private financial institutions is a neoliberal scam. The creation of the Euro (removing the ability of European central banks to issue money or set their own interest rates – and forcing governments to cut debt and social services) is also a neoliberal scam. Moreover there is increasing evidence that the move – beginning in the 1980s – to shift control of national currencies and monetary supply away from democratic government control to private financial institutions was one of the major causes of the global financial collapse.

Fallacy 3: People are living longer, and French workers who object to increasing the retirement age from age 60-62 are just slackers.

Fact:  The proposed law would increase the age, from 60 to 62, at which workers can retire early and receive a reduced (lifetime) benefit. It also sets a minimum of 41 years of full time employment before French workers can retire with a full pension. Which means students who don’t begin full time work till they complete university and tradesmen required to do an apprenticeship – who often start full time work in their mid to late twenties – may be working until 68 or 69 before they qualify for a pension.

Fact:  Working past age 60 may be okay for an office worker who sits at a computer all day. The reality is that as many as 1/3 of workers age 55 and over (the percent is estimated to be somewhat higher in France) perform physically demanding jobs, involving lifting, stooping, kneeling, crouching, extended standing, and close to 50% of them suffer from arthritis. Thirty percent of people between 55 and60 have chronic pain on job. The New York Times recently reviewed an important study of the medical problems of workers over 55 who perform manual labor (see http://www.nytimes.com/2010/09/13/us/13aging.html?_r=1)

Ironically manual workers typically pay more into social security (starting at age 18, rather than age 25-30, like their more educated counterparts) than white collar workers.

The mainstream media makes out like the economic collapse is just something that happened to us. Some greedy banksters gambled with trillions of dollars of our money and in the process, also committed embezzlement, fraud and theft. Now the money is gone, and we just have to live with it. Millions of Americans lose their jobs, homes, savings and pensions. But instead of sending the banksters responsible to jail, the government gives Wall Street trillions of dollars of TARP bail-outs and the CEOs responsible get billions of dollars in golden parachutes and pensions.

Then the government turns around and tells working people they have to tighten their belts – in addition to paying more sales tax, they have to accept pay cuts, longer working hours, loss of public services (such as teachers, libraries, police, street lighting, road and bridge repair, and health clinics). Because there’s no money left to keep the economy going. That’s just how it is.

Now, in the last week, they’re feeding us a new line about a so-called “double dip” recession. In other words, over the next few months we should expect things to get even worse – there will be even more job losses and wage and social service cuts. We might even need to cut Social Security and Medicare. Meanwhile corporate America is once again making out like bandits. Corporate profits are shooting up again, and CEO bonuses are growing handsomely.

The “Economic Crisis” is Really an Attack on American Workers

I just don’t buy it. Any of it. In fact, I believe there is overwhelming evidence that Wall Street and Washington are simply using the global economic crisis to justify a massive attack on the working class. I think there is a clear agenda to cut labor costs by reducing US workers to Third World status in terms of wages, working conditions and social services. Obviously this is much more expedient than continually closing down factories and moving them to Mexico and Asia.

Fighting Back

Fortunately I am no longer alone in seeing the “economic crisis” for what it is: an attack on working Americans.  It’s also gratifying to see workers beginning to organize to fight back – and to acknowledge the need for intensive cross-class, cross-gender, cross-cultural organizing not seen in the US since the 1930s recession (which, in many ways, was also a systematic attack on workers).

Specific examples of 1930s style organizing include:

1. The employed and unemployed are recognizing they have a common enemy (Wall Street corporations) and are organizing together. The Unemployed Union launched by the International Association of Machinists in January is taking off in a big way. You don’t have to be a former union member or even like unions to join. If you are one of 31 million Americans without a paid job, this website is for you:

http://www.unionofunemployed.com/

2. People who still have homes are organizing to support people who are being foreclosed on. This is mainly happening in Florida but definitely needs to spread to other states. The majority of working people in the US are living pay check to pay check. If you organize to stop your neighbour from being evicted, there will be organized resistance to help you if you lose your job and can’t pay your own rent or mortgage.

3. The fundamental role of the “welfare committee” in progressive organizing is being revived. Building organized resistance requires some of us to focus full time on movement building. The powerful grassroots organizing that built the progressive and union movement at the beginning of the twentieth century didn’t rely on “foundation” funding to pay their organizers. (See my page at www.stuartbramhall.com about the role of left “gatekeeper” foundations in ensuring that grassroots organizations don’t become too radical – also my July 26 post “Who Did Obama Work For in Chicago?”).  In the thirties, unions and community groups formed their own “welfare committees” to look after the basic needs of organizers and their families.

***

The Most Revolutionary Act on radio:

Gorilla Radio – Chris Cook, Victoria British Columbia

(click on link)

Chris and I discuss how I was first targeted, following my decision to support the occupation (of an abandoned school)  that led to the formation of Seattle’s first African American Heritage Museum – as an alternative to the crack cocaine epidemic among the city’s African American teenagers. We also talk about my research into HIV AIDS, my hospitalization and the Veterans Administration psychologist I worked with who also helped GIs illegally stationed in Cambodia in the sixties and seventies (and terrorized into keeping quiet about it).

XZone Interview with Rob McConnell

(click on link  – show is syndicated – fast forward the music to hear interview)

Rob and I discuss the phone harassment, break-ins, attempts to run me down – and my psychiatric hospitalization. We also talk about the political activities that seemed to lead the government to target me – including my research into HIV AIDS – and my inability to get help from the Seattle police. Then we cover the whole area of conspiracies in general, which are more accurately called State Crimes Against Democracy (SCADS)

Contemporary Solutions

In The ABCs of the Economic Crisis, contemporary Marxists Magdoff and Yates also express the view that capitalism is on its last legs. They, like Strachey, propose “socialism” as the solution to a failed capitalist system. However they are even less prescriptive than he is as to what this should look like and exactly how it ought to come about.

At the end their book they simply suggest that Americans come together to decide if our current system is worth fighting for (which is after all why we are at war in the Middle East). They then itemize some of the human costs of our current way of life:

• increasing exploitation at work (all the lay-offs mean workers who remain are doing the work of 1.5 – 2 people)
• increased stress accompanied by poorer health
• rising consumption that has polluted our planet and filled our homes with junk, impelling us to move into ever bigger houses, fuelling the growth of suburbs and exurbs that waste gasoline, power and water and destroy our natural habitat

They then offer some alternative priorities that are worth fighting for: adequate food, decent housing, full employment, quality education, adequate income in old age for everyone; true universal health care, enhanced public transportation, a commitment to a sustainable environment, progressive taxation which reverses the process of taxing the middle class and poor to enrich a wealthy elite, a non-imperialist government and labor- and environment- friendly trade.

End of Capitalism Theory

In laying out End of Capitalism Theory on his website www.endofcapitalism.com, Alex Knight is the most specific of the doomsayers in describing what the alternative to capitalism should look like. He also stresses the need to begin working to build this new form of social organization now – and gives examples (in my view the most exciting section of his website) of hundreds of community efforts around the US that have already begun.

Knight lists five guideposts he considers essential to bringing about real change: freedom, democracy, justice, sustainability and love. The essence of his vision lies in how he defines these terms.

• Freedom – in the sense of self-determination, ordinary people controlling their own destinies instead of huge corporations and corrupt politicians. He advocates strongly for local communities to guarantee their residents access to land and food security and indicates some have begun to do so.
• Democracy – in the sense of “participatory democracy.” At present this takes the form of non-violent civil disobedience – taking back rights we should have but don’t. Knight gives the example of Taking Back the Land, which supports the homeless in squatting in foreclosed homes in Miami.
• Justice – eliminating systems of oppression that benefit one group, like whites, at the expense of another group and guaranteeing everyone access to resources like food, housing, education, health care, transportation, clean water and air, and a decent livelihood.
• Sustainability – learning to meet human needs without sacrificing the ecosystem. Knight indicates this is where the most progress has been made, with the boom in organic agriculture, permaculture and the renewal energy industry.
• Love – learning to value life over profit and money, recognizing the immense emotional isolation the current system has imposed on all of us and the healing (learning to love ourselves) that must occur. Knight stresses that capitalism, after all is system founded on and centered in abuse – and war.

Implications for the Future

In general, Marxists believe the economic laws that govern capitalism make it inherently flawed – dooming it to eventual failure. They also see a grave risk that the collapse of capitalism will bring down civilization with it. Which is why they argue for workers to hasten its demise and prepare to replace it with some other form of social organization.

Many of the predictions John Strachey made in 1933 in The Coming Struggle for Power have come to pass: the consolidation of multinational corporations into ever bigger monopolies; the merging of banking and productive monopolies; the export of jobs to the Third World; the growth of fascism, and our current perpetual state over world resources.

Obviously his prediction that capitalism would collapse by 1950 didn’t come to pass. However I think Strachey can be forgiven for his inability to anticipate the immense boost World War II would give the global economy; the rise of Communist China; the end of the Soviet Union or the massive financialization of the US (and ultimately the global) economy.

How Workers Take Over Society: Strachey’s View

As a Marxist, he understandably advocates for the end of class society – and for workers to run their own government and own the companies where they work. Moreover he makes some general statements how this should come about. Many, I believe, still have relevance in 2010.

First he argues that the workers’ “revolution” cannot be worked out on paper in advance. In his later life, Strachey believed this was the great historical mistake of Marx and Lenin, and ultimately the Soviet experiment. They were too prescriptive in creating an enlightened “vanguard” to work out all the details of the Revolution on behalf of working people. As history shows, this vanguard only served to replace the capitalist elite it overthrew (not only in the USSR, but in China, North Korea and Cuba), producing some of the most despotic totalitarian regimes in history.

Will the Revolution Be Violent?

Secondly Strachey makes it clear that dismantling class society, enabling workers to genuinely take over government and their work sites, is unlikely to be peaceful. As with the great revolutions that made capitalism possible, the violence doesn’t originate with the reformers but with the old elite that refuses to give up power. Like Marx and Lenin, Strachey believes workers’ most powerful tool is their ability to organize and bring society to a standstill by withdrawing their labor (a general strike, like recent ones in Greece and currently in South Africa). However in most capitalist countries (including the US), this is unlikely to be accepted by capitalist elites without violent retaliation. In other words, it’s very likely to get leaders and many workers who participate in these actions killed or imprisoned.

Thirdly Strachey also stresses that any violence associated with workers taking over society is unlikely to kill as many people as the continual unremitting violence capitalism imposes on the world. In the last decade our current capitalistic system has caused millions of deaths in the Middle East alone – in Iraq, Afghanistan, Pakistan and Palestine – to say nothing of the other counterinsurgency wars (employing US troops, CIA mercenaries or the troops of proxy dictatorships that we fund) in Columbia, the Philippines, Latin American and Africa. Or the millions that have died from floods, droughts, famines and other climate change related extreme weather events.

To be continued, with predictions from contemporary Marxists and End of Capitalism Theory

Fascism

In The Coming Struggle for Power, Strachey also writes about the important role of fascism associated with end stage capitalism. He explains how declining profits and growth will result in reduced wages, poorer working conditions and a claw back of social welfare benefits enacted during more productive periods. This, in turn, leads to more conflict between workers and capitalists, at the same time that capitalist controlled governments are experiencing increasing conflict with foreign capitalist controlled governments.

According to Strachey, ensuring that production continues during a period of heavy stagnation necessitates the rise of fascism – in which the capitalists themselves organize workers to install governments which enact laws unfavorable to working people.

Where Did the Tea Party Come From?

The Astroturf (fake grassroots) origin of the reactionary Tea Party is an excellent example of corporate elites organizing working people around a right wing political agenda harmful to their own economic interests (for example, that opposes minimum wage increases, extensions of unemployment benefits and regulations enforcing workplace health and safety). I did several blogs in June exploring why blue collar workers are susceptible to this type of psychological manipulation. See my posts on The Mass Psychology of Fascism at http://tinyurl.com/2vftjrh

Paul Krugman explores the origin of the Tea Party in the April 12, 2009 New York Times. He points out that the public was deceived by the media spin that early Tea Party events occurred as were spontaneous popular uprisings. They were actually organized and paid for by Freedom Works, a group organized by former Republican majority leader Richard Armey, with generous support from right wing billionaires. (See http://www.nytimes.com/2009/04/13/opinion/13krugman.html).

In The Coming Struggle for Power, Strachey shows how these so-called “populist” mass organizations are used to justify a stricter, more totalitarian government regime that suppresses worker freedoms and dissent (for example, authorizing warrantless searches, covert break-ins, wiretaps and electronic eavesdropping and suppressing habeas corpus and freedom of the press – sound familiar?). In his view fascism is always a transitional state, as right wing popular movements are unpredictable and difficult to manage. He asserts that reactionary forces either use fascism to create totalitarian dictatorships (as occurred in Nazi Germany), or the fascist movement dissolves as economic conditions improve.

What is Fascism?

There is a lot of disagreement over the precise definition of fascism. The Italian fascist dictator Mussolini defined it as a merging of corporate and government power. Strachey defines it as a political environment where workers no longer sell their labor as free agents – but are physically (as opposed to economically) compelled to work.

I’m not totally comfortable with Strachey’s definition. I question whether it’s humanly possible to force someone to work. I’m aware that third world dictators sometimes “terrorize” people into working by assassinating and disappearing union leaders and workers who complain about wages and working conditions. However, especially in the case of skilled work, it’s virtually impossible to get someone to put out high quality work at satisfactory rate – if he or she is determined not to do so.

In fact I believe innate stubbornness, a nearly universal human trait, may be the root cause of the collapse of the totalitarian Soviet regime. “Free market” capitalism and state capitalism (which Marx and Lenin view as a necessary transition between free market capitalism and true communism) only operate effectively if workers are satisfied that two basic requirements are met: 1) that working will enable them to meet their families’ fundamental needs and 2) that their government might skim a little off the top but will ultimately act in their best interest.

Otherwise people have absolutely no reason to go to turn up everyday to a job they hate that pays them a little less than they need to live on.

In the 1980s the Soviet people lost faith, deciding they were prepared to risk their jobs and live out of garbage cans, rather than continuing to put out for political system that was totally indifferent to their needs and promised no future for themselves and their families. Productivity (quantity and quality of work) dropped to the point the Soviet economy ceased to be sustainable, leading to the collapse of the entire political infrastructure.