Wednesday, February 21, 2018

Not Black Panther

“Amiable With Big Teeth – A Novel of the Love Affair Between the Communists and the Poor Black Sheep of Harlem,” by Claude McKay, 2017

Yeah, that is a weird title.  This newly found and complete novel by Claude McKay, written in 1941 but never published until now, was found in the papers of another writer in 2009.  McKay was one of the leading black writers of the Harlem Renaissance.  Born in Jamaica, he lived outside the U.S. for many years in London, Paris and Tangiers.  He attended the 4thCongress of the Communist International in 1922 with Max Eastman, meeting Trotsky, Zinoviev and Bukharin.  He moved back to Harlem in the 1934, penniless.
Haile Selassie of Ethiopia, who kept lions, not panthers

The novel centers on the movement among black people to defend Ethiopia after Italy’s Mussolini invaded it in October 1935, and ended in May 1936 when fascist forces entered Addis Ababa.  The subtext, as you might guess, is the role of mostly white “popular frontists’ in New York who attempt to take control of the movement from prominent black citizens of Harlem.  At the time, the USSR was one of the only countries correctly opposing the Italian invasion in the League of Nations, while at the same time still selling oil and other products to Italy.  As pointed out by black nationalists, no weapons or aid was sent to Haile Selassie by the USSR.  This was unlike what happened in Spain during the 1936-1939 Civil War, when the USSR supplied the Popular Front government with supplies and volunteers.  Roosevelt’s position on the invasion of Ethiopia (and Spain) was to do nothing, so the U.S. government was even more pathetic than the USSR in the face of fascism.

The black community in the U.S. normally did not pay attention to international events.  But in this case it embraced Ethiopia as a comrade country, and turned out in the many thousands for rallies against the invasion by white Italy.  It reminded black people of their own position in the U.S. as an oppressed national group, now mirrored in a vicious conquest of an old African kingdom by a European power.

McKay’s book is invaluable in presenting a picture of the cultural, social and political currents in New York and Harlem at the time.  There are the “Senegambians’ who celebrate African culture.  There are the preachers and the prominent ‘talented 10th’ some of whom who could ‘pass.’  There is party-going and bar-hopping and bad romance.  There are early Muslim converts who crusade against white or Jewish businesses.  Black nationalism, cultural nationalism, stunted forms of ‘class analysis,’ 2nd International socialists and high-society hedonism all gambol in the soup.  There is also a taste of Rastafarianism, as it too was based on the adulation of Haile Selassie and Ethiopia starting in the 1930s.

The more elite elements of Harlem society, led by a businessman Pablo Piexota, a former numbers runner, band together with a representative of the Ethiopian government, Lij Alamaya, to raise funds and consciousness.  At the same time, a mostly white group downtown, run by the Communist Party (CP), comes into competition.  They insist that there should be only one group, and it should have both black and white members.  The Harlem group disagrees, as they fear the splitting activities of the CP as well as the suspect role of white people, even ‘progressive’ white people.

These are familiar topics today, as a real united front between black and white and Latino workers is almost non-existent except in unions and very small efforts by socialist groups.  Groups like “Black Lives Matter” are run by black people, while white people go to BLM events and play a small role.  The existence of the ‘front group’ continues as well. There are sometimes actual ‘united fronts’ that last for one event or over time, and are not dominated by one political tendency to the exclusion of others.  Then there is the sectarian version of the front group, which tries to exclude anyone who is from another tendency.  In this book, the downtown group repeatedly denounces some of the members of the Harlem group as ‘Hitler-Mussolini-Trotskyite” fascists.  (Yeah, an actual, real slogan…) Even though these members had been elected to their positions and had support in the black community.

The lead ‘villain’ is a CP member, Maxim Tasan, who spearheads the effort for a CP-dominated front against the invasion.  Tasan says many things that make sense, but then displays his own disdain for ‘Aframericans,’ as McKay calls black people in the U.S.  McKay shows liberal white people making bigoted suggestions, or applauding a black artist who shows black people in crude negative caricatures.  The downtown CP eventually defeats the Harlem group in the political battle through various shenanigans, but an odd revenge is successful.

McKay’s intense animus towards the CP is the central plot pivot of the book.  Some of the made-up exaggerations do not help convince the reader, and would have been more effective if they were more subtle or more realistic.  But McKay wanted to make it overly obvious how deceitful the CP leadership was.  Given the coming Hitler-Stalin peace pact in 1940, there is a bit of historical foreshadowing regarding betrayal here.  McKay later moved to Chicago and became a Catholic in 1944.   He died in 1948. This was his last book.

And I got it at the library!

Red Frog
Athens, GA

February 19, 2018

Saturday, February 17, 2018

Vote on This!

“Two Days, One Night,” film by the Dardenne Brothers, 2014

Even Belgium has proletarian filmmakers.  This quiet movie, starring Marion Cotillard, focuses on a small group of solar workers facing an ethical choice – whether to take a 1,100 bonus and lay a woman off, or refuse the bonus and keep her employed.    Cotillard plays Sandra Bya, who suffers from depression and took a leave of absence because of it, but now is able to work again. 

Union Meeting - Where Work Democracy Happens
After a vote, only 2 of 16 workers want to part with their bonus.  But the vote was swayed by a foreman who threatened that if she was kept on, others would be laid-off.  So the owner-manager said another vote could be held.  As a result, Sandra has to lobby her co-workers for two days and one night before the second vote on Monday to convince them that she should stay.

The first thing that strikes you is that, barring work at a co-op, no worker is ever asked to vote on anything by a boss at a U.S. company.  The closest U.S. workers get to actual democracy related to their job is if they have a union.  Then they can attend meetings, vote on issues and combine with their co-workers in various ways.  Without a union, workers are the subject of a lenient dictatorship or a harsh one, partly subject to labor laws, the kind of laws occasionally enforced.

Do workers in Belgium have more rights on the job?  While I could find no legal requirement for managers to ‘consult’ with employees on issues this small, it is quite possible that it could happen.  Labor is socially and legally stronger in Belgium than in the U.S., even in small towns like Seraing, near Liege. These workers had been working 3 hours a week extra to make up for the missing worker, and not all workers love overtime.  So it is quite reasonable that the boss left this difficult choice to his workforce. 

Sandra gets the addresses or phone numbers of each co-worker and visits or calls them over the course of the weekend.  And this voyage through the streets, shops, houses and apartments of Seraing reveals the lives of her co-workers.  Some agree, some cannot.  They for the most part politely discuss the issue with her, as all of them could be in her position, even if they don’t agree.  Only once is she assaulted by a young contract worker, who knocks over his own father in anger, then drives off in his tricked-out car.  Another female co-worker is roughly grabbed by her husband for even discussing the issue, and she resolves to leave him after that.  He wanted the money to fix their new pool wall.  You get to peek into the small lives of everyone – African, Arab, white – with their small children, cramped quarters and side jobs. 

Sandra still suffers from the after-affects of depression, so getting out of bed and begging for a job, even with the constant encouragement of her husband, a greasy spoon cook, is daunting.  But she makes it to the last person on the list late Sunday night.

Does she get rehired?  Well, in a U.S. film, she probably would have, but this is reality, not Norma Rae.  Nevertheless what the film shows is that fighting back and relying on your co-workers is not a losing strategy.  “Solidarity’ is a word and practice barely ever used anymore, as the labor movement is under assault everywhere in the world.  Sticking your neck out for a fellow worker is frowned upon in the new hard-edged coldness of a neo-liberal world.  But people still do it.

The Dardenne brothers have made non-commercial films for years, using hand-held cameras and real light, starting with documentaries.  They use mostly non-professional or unknown actors and friends as technical staff, keeping their town as their only shooting location.  They have an exclusive focus on proletarians, immigrants, the unemployed and the homeless.  The choice of Cotillard is rare.  She was nominated for an Academy Award for best actress in this absolutely realistic performance – a first for a Dardenne film. 

Athens, GA
Red Frog
February 17, 2018

Wednesday, February 14, 2018

Who Rules the World?

“The City – London and the Global Power of Finance,” by Tony Norfield, 2016

Norfield spent 20 years working at various London-based banks and financial companies and has used that experience to write an anti-capitalist book, dry as it is.  Working from London, he dealt with financial issues in dozens of countries, as London is the center of the most international banking.  His secondary point is to sketch the powerful role of British finance, but really his main focus is how the world is controlled by modern imperialism, following Lenin’s identification of it in 1916 in “Imperialism, the Highest Stage of Capitalism.

To Protect and Serve
He calls the U.K. not a ‘poodle’ but the leading junior partner (they are ‘binary planets’…) with the U.S., playing the role as the intermediary between the EU and the U.S.  The City in London is the leading international financial center in the world. The British trade deficit is essentially financed by The City’s financial services.  Even Britain’s tax havens would alone rank #7 in the world just behind Germany.  How this will change with Brexit is to be seen and he doesn’t track that. 

Imperialism is not mere military conquest.  It is not political control.  It is not another name for colonialism.   As Samir Amin notes, it is a form of world-wide financial ‘rent’ – specifically ‘imperialist rent.’  According to Norfield it is a matrix of 5 factors – gross domestic product (GDP); foreign direct investment in other countries (FDI); Bank of International Settlements (BIS) tracking the international assets & liabilities of nationally-based banks; the strength of a country’s currency and lastly, its military (state) prowess.  Each of these powers allows the host country and corporations to remit profits and interest back to the imperial center.  He concludes that only 20 countries in this world actually have any power in the world imperial system based on these parameters, and the top 6 have the most, with the U.S. at their head.  Great Britain is in 2nd place, with China, Japan, Germany & France next.  

Whether a country uses their military or not (and in the case of China…not) or is fully capitalist or not (China is not) still weighs in the scales of international power.  Norfield understands that even the money in the financial system ultimately is based on surplus value sucked out of workers by the ‘vampire squid’ of capital.

Monopoly (or more correctly, oligopoly) is the final stage of the world economy and has been since Lenin identified it during WWI.  Norfield has a great 2007 chart which indicates the role of interlocking financial control worldwide, similar to Domhoff’s 1967 “Who Rules America.”  (Domhoff constantly updates his classic…) It shows that less than .5% of companies controlled 40% of the world’s corporations, with Barclays PLC at the top. Capital concentrates, not just in the upper classes or geographically in large cities, but in corporate ownership too.  This is obvious for all to see.

Norfield constantly points out that modern ‘finance’ capital and ‘industrial’ capital are actually closely interlocked.  This perspective undermines the reformist idea that regulation will somehow tame the ‘finance’ beast, and instead exposes capital in all its guises – financial, industrial and governmental – as one worldwide, inseparable, unified system.

Norfield addresses the fantasy that the economy is only stratified by the ‘1% v. 99%.’ He shows there is a large worldwide spread of stock and bond ownership to a wider group.  In 2014 there were 14 million U.S. residents who had over a $1M in assets.  If you multiply this by 3 persons in each family, that is 44M people in millionaire households, which is a bit more than 10% of the population.  84% of the top 10% own securities and 93% of millionaires own financial securities.  Now tell me these people are going to rock the boat against the 1% or Wall Street!  Taking into account retirement accounts adds to the figures of people with a financial interest in the stock markets, and no doubt a material source of neo-liberal / neo-conservative ideology even farther down the class ladder.

The Old Days Are Back!
Norfield distinguishes between ‘money-dealing’ capital and ‘interest-dealing’ capital.  The former is part of Marx’s early ‘circulation of capital’ into productive enterprise while the latter is based on thin-air credit creation and parasitic interest collecting.  Norfield points out that the former is actually a ‘very small’ part of their overall financial activity.  Norfield thinks that Marxists have not adequately understood how banking capital actually works, especially in the present.  For instance, the U.S. ranks 1st and the UK 2nd in providing world-wide ‘financial services’ that bring in dealing revenues, something that was not on the radar even 30 years ago. Norfield twice takes on Marxist Rudolf Hilferding’s 1910 analysis of banking capital, which insisted that the ‘rate of return’ (profits) in industrial and financial capital are about equal.  Norfield shows that no such thing happens.  Among other things, banks do not produce profits based on their buildings, et al. i.e. ‘fixed capital,’ as does a productive concern (financial firms ‘fixed capital’ is very small anyway), nor do industrial concerns ‘create credit.’ Surplus value is only the realm of the former.

A typical bank balance sheet for a UK bank according to Norfield is made up of:  1. currencies, 2. loans, 3. equity shares, 4. short term money market, 5. medium and long-term bonds and 6. derivatives, with derivatives the largest sector in 2011(!)  So this is not your small town bank.  Only 15% of UK bank loans were actually to businesses, while the rest is to other banks or for mortgages. These figures confirm that banking’s role in ‘productive’ capital is now very small, far outweighed by their own financial dealings.

Norfield supports Marx’s idea that there is a tendency over the long term for industrial profit-rates to fall due to increases in fixed capital costs.  He thinks finding data for dropping or rising profits to be very difficult to impossible, but deals with a chart from the U.S. as an example which he considers flawed.  Norfield cites cheaper labor at the ‘center’ and even cheaper labor abroad, as well as lower interest rates and the huge government rescue of the banking system in 2008, as boons to profitability.  According to the chart, profits upticked in the U.S. from their low point in 1983. Capital in the late 1970s and early 1980s started moving more heavily into financial speculation, which promised better returns, though at the cost of vastly increased debts.  So the timing is correct.

Norfield explores how the dollar allows the U.S. to dominate world trade, including oil.  It enables it to cheaply finance deficits, avoid exposure to other nations currency devaluations, benefit U.S. firm's merger and acquisition plans through dollar stock pricing and increases the power of the U.S. Federal Reserve.  87% of global currency deals are in the dollar, which shows why any country trying to avoid the dollar or which displeases the U.S. will be threatened with dollar sanctions, bombing or invasion.  Welcome to imperialist privilege!

Other reviews on this topic:  Amin’s “Law of Worldwide Value,” and “The Implosion of Contemporary Capitalism,” Hudson’s “F is for Fraud Economics,” Foster’s “The Endless Crisis,” and “The Great Financial Crisis,” Ho’s “Liquidated,” and reviews of books by Michael Lewis. 

And I bought it at Mayday Books!
Red Frog
February 14, 2018

Friday, February 9, 2018

The Correction to the Correction

Retirement and Wall Street or 'Fictitious Capital Becomes Even More Fictitious'

Retirement in the U.S. has already been partially privatized.  Half of workers have access to 401Ks at work through large employers (14%), but only 40% of that group contributes. 10% of workers have a ‘defined benefit’ pension. But those pension funds are invested in ‘non-defined’ securities!  More working-class money is invested in IRAs than 401Ks.  In 2012 38% of workers had an IRA, though many don’t contribute each year.  Many state pension plans are also chest-deep in the ‘big muddy’ and will result in tax issues if they fall short due to market losses.  Remember the stability of CDs?
The DOW in January-February 2018...so far

Just as education is now being partially privatized through the charter school movement, the finance sector has grabbed billions of dollars in individual retirement funds through pensions, IRAs and 401Ks/403Bs.  We see the result, as losses accumulate to retirement accounts and ‘defined pension plans’ through the finance arbitrage of Wall Street this week.  Every single market took huge losses in ‘the correction’ ... not a Jonathan Franzen novel this time. Two DOW drops of over a 1,000 points in one week is a record.  But then when workers get raises (as reported in January), the investor class gets the sweats.

One sector that collapsed on Monday was the VIX, a derivatives market based on volatility.  It was funded on bets about market fluctuations!   Another related sector of Exchange Traded funds – ETFs – based on bank loans, also is vulnerable, as they are not liquid.  Other losses were in ‘junk’ bonds (high yield corporate bonds) which finance highly indebted corporations.  Stock buybacks from corporations were part of the rout, as they created a false sense of stability.  And credit default swaps are back, as they are being bought at high rates to ‘insure’ against losses. Even collaterized debt obligations, which played a role in 2008, continue in this market.  FINRA and the SEC have turned a blind eye to these absurd derivative ‘products,’ and are merely enablers at this point.

It might be good that more workers are not putting hard-earned dollars into this racket, as 401Ks and IRAs are both not living up to their hype for ‘protecting’ retirement for the working class as a whole.  And to think at one point both parties were moving towards privatizing social security, the only thing between millions of retirees and poverty! Of course, their plans have not ended, as they will continue to try to whittle down Social Security and Medicare/Medicaid because of 'deficits.'  Contributions to IRAs and 401Ks are down across the board over the years, reflecting the debt load so many workers are feeling.   This is the reality of privatization.  Privatizing 'retirement' is no better than privatized health care.

The markets are how the rich get richer ‘in their sleep’ and certainly, anyone with a 401K or IRA in the years since the 2008 market collapse has seen earnings rise to ridiculous levels.  Unfortunately, this is one way the upper level of the working class has to try to stay ahead in the ‘American game.’  This bubble was further blown up by Trump’s tax giveaway to the rich in January, which seemed to usher in a period of jubilation for corporate America.  Instead the ‘ticking time bombs’ (Businessweek’s phrase) in the market exploded.   Trillions have been wiped off the books worldwide.

The next shoe to drop is what corporations or finance companies will go bankrupt as their leverage disappears and they have to pay up.  The 3 Chinese stock markets have taken even heavier losses, which should put a deserved dent in the power of upcoming Chinese capitalists.

At the same time the Republicans and a small group of Democrats are unwinding the wimpy ‘Frank-Dodd’ act related to bank stress tests, capital requirements and trading restrictions.  Frank-Dodd never addressed several roots of the real problem, especially the repeal of Glass-Steagall and failing to repeal the Clinton-era 2000 CMFA act that gave free rein to derivatives.  All of this will lead to an even bigger financial collapse in the future, based on inability to pay for losses that will make 2008 look like a dress rehearsal.

But the real issue is that capital (and its two parties) cannot return to the past.  It cannot ‘reinstate’ Glass Steagall or repeal CMFA because its whole economic functioning globally would be in danger.  Until capital itself is dethroned from power, its “Iron” throne will require no restrictions on capital whatsoever.  The past is not coming back…

So the outlook for ‘retirement’ of workers is unstable.  Postponing retirement, working a part time job – all impact younger workers trying to earn a living too.   Capitalism is not interested in security. It is constantly in turmoil, at faster and faster speeds. Even the program trading / artificial intelligence algorithms driving this down market reflect that. This problem is because of its own internal contradictions, which cannot be overcome in the present ‘market’ economy.  And by 'market' I mean the aggregate opinion of many capitalists.

Prior review:  Lewis' "Flash Boys."
Red Frog

February 9, 2018

Monday, February 5, 2018

Wall Street - BAD AND BOUJEE

“J is for Junk Economics – A Guide to Reality in the Age of Deception,” by Michael Hudson, 2017

Many people drive cars or live in houses and have no idea how they work or how to fix them when they break.   Even growing food is a mystery. Yet without a house or some form of transport – even a bicycle – they would be homeless or walking all the time.  In an emergency, not knowing how to grow food might be damaging too.  Similarly, in a society dominated by capital, many people do not actually know how the society works.  And subsequently, have no idea, or false ideas, about how to fix it.  Understanding the profit system is essential to anyone looking at the system itself.  I.E. dealing with the ‘engine compartment’ or the ‘furnace’ or the ‘soil’ of capital’s social life, not just fiddling with the radio buttons.  At bottom this is a material world, not just one of ideas.
I Don't Have Cash - Can I Use My Credit Card?

Hudson is a left-economist who got so tired of reading gobbledygook by today’s corporate economic shills that he decided to create a virtual dictionary of terms and what they actually mean.  In separate sections he also describes the main capitalist myths promoted by the business media, a section on 'economics as fraud' and later asks if ‘economics’ deserves a Nobel prize.   The listed myths mainly restate what is in the definitions.  The fraud section undermines the idea that ‘logical consistency’ replaces an analysis of economic reality.  (Which strangely duplicates purely mathematical theories about the origin of the universe…) Hudson knows, along with many other leftists, that economics is not a ‘science,’ it is political to the extreme.

Classical Economics

Hudson’s main thrust is that original classical economists – Adam Smith, J.S. Mill, Ricardo et al. – were hostile to ‘rentier’ and non-production-based forms of earning, while the present system is once again dominated by these various forms of ‘financial capital’ centered on Wall Street.  “Rentier” income includes various kinds of rents, including mineral rights; interest charges, unequal exchange, monopoly and oligopoly, crime, fees and privatization, which are all not ‘products’ but are instead the result of ownership alone.  They are merely ‘transfers’ from the worker’s pocket to the capitalist’s or landlord’s pocket.  The rentiers are not producers, but parasites.

To Hudson finance capital cannot claim classical economists as ‘forerunners,’ but as enemies, just as they abhor Karl Marx.  Classical economics believed in the ‘labor theory of value’ along with Marx, while modern capitalist economists do not.  This was because in the 1800s industrial capital was battling with landlordism, a vestige of feudalism, and classical economics originated promoting the new industrial capital.  Hudson, a person with some initial Marxist influences, but who you might call a Minskyite or ‘post-Keynesian’, focuses strongly on this issue to highlight its prominence in today’s economy.  As part of this, he supports a ‘mixed economy’ based on industrial capital and government working together, ostensibly against financial capital.

Here is a choice quote from Adam Smith you probably have never read:

“The proposal of any new law or regulation of commerce which comes from [business] ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention.  It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public…”

This explains why the present has a whiff of economic neo-feudalism about it, as present capitalistic societies are backpedaling furiously into the past.  The Lords of Finance dominate the governments of nearly all countries, their central banks and the international agencies like the World Bank, IMF, ECB and WTO.  The health of the stock markets is the key barometer of ostensible world economic strength. But as Hudson points out, the dialectical effect of rentier profits is increasing debt, to the point where stagnation and crashes are inevitable.  The bigger the debt, whether corporate, government or individual, the bigger the resulting inequality, economic imbalances and depressions.  Hudson uses a calculation that shows that if 5% debt service payments outstrip smaller wage gains or growth (‘GDP’ and “NIPA” is what he uses, though both are full of deceptions), then debt slowly eats away at the whole economy, which he calls ‘debt deflation.’  Marx first pointed to this interplay of debt and growth in ‘Capital, Vol. III.'

So, in a way, this book is timely, given today’s bubble markets inflated by government policies like ‘quantitative easing,’ which gave $4.3 trillion to the FIRE sector.  I.E. that phrase is impenetrable jargon for ‘free money’ created on a computer screen and transferred to the bankers.   However, in the last few days, the bubble has apparently started bursting.  The greatest one-day fall in the DOW in its history took place today.

Issues in Paradise:

Hudson seems to be an anti-capitalist, but his focus on the glories of industrial production raises a question as to whether he just favors industrial economies, ignoring the exploitation of labor even there. This bifurcation ignores the intimate relationship between industrial and financial capital, as industrial firms go to the big bank's capital markets to raise money, or become financial giants themselves, like GE and GM. He sometimes ignores things he could go into, like the false figures in the ‘consumer price index.’   Or a laughably short section on ‘derivatives.’  He completely avoids a real definition of ‘middle class.’  Hudson dwells on the 1% v. 99%, which is a non-political formulation that ignores the supporting role of the approximately 9% for the 1%.  He also contends that the capitalists are against property taxes, which makes sense given they are large landowners.  Until you consider the present trend to reduce income and capital gains taxes, but not property taxes on homeowners and renters.  He now envisions the main class struggle as between creditors and debtors, not capitalists and workers.

One question he doesn’t answer is whether tax monies going to the rich or corporations or the military, etc. aren’t also partially ‘rent seeking’ behaviors?  General taxes are used as direct or indirect transfer payments to corporations or the rich, not just for the majority.  For instance, he says Southern states overtaxed black sharecroppers in the 1960s so they would not be able to get out of debt peonage.

Details, Details…

This is an entertaining book on many levels, as Hudson makes fun of many bogus concepts, going back as far back as Mesopotamia to prove his points.  It is chock full of information, large and small.  Such as how business can use depreciation and ‘business operating costs’ to reduce their taxes, while individuals cannot.  Or how landlords and real estate interests use public infrastructure projects to make money, first pointed out by Thorstein Veblen. Lets say they put in a light-rail line paid for by general taxes.  Builders rush to erect apartment buildings around stations and brag about how close they are to light rail transport, which enables them to sell or rent the apartments at a premium.  The public never sees that profit.  Or a myth peddled by shills like Paul Krugman, who insists that all bank loans are just the reverse side of deposits.

Jesus’s first sermon in the book of Mark was to demand a debt ‘Jubilee’ according to Hudson.  But if you read the fine-print about ‘debt jubilees’ (also mentioned by Graeber) Hudson said they were because the sovereign needed the peasants and citizens to fight in his army or to work on large building projects.  So debts had to be forgiven or there would be a revolt.  Neither of these conditions exists anymore, as there is a ‘volunteer’ army and mass projects are built by construction workers or debt slaves (as in the Gulf states), not ‘volunteers.’  Hence the only ‘jubilee’ anyone will get in modern times is through the ‘jubilee of revolution.’

Prior reviews on similar subjects:  Graeber’s “Debt,”The Invisible Handcuffs of Capitalism,” “Slavery by Another Name,”Zombie Capitalism,” “MMF,” and reviews of Piketty’s “Capital in the 21st Century.”  Commentaries on current debt and modern slavery below.

And I bought it at May Day Books!

February 5, 2018

Red Frog

Thursday, February 1, 2018

Thatcherism Lives!

“I, Daniel Blake,” by Ken Loach, 2016

Ken Loach is probably one of the leading proletarian film maker of modern times, along with Mike Leigh.  This film follows a man trapped in Theresa May Thatcher’s England on the unemployment / disability line.  Through no fault of his own, Blake has a heart attack after 40 years work as a carpenter, and is declared by his doctor to be unable to work until he recovers.  The English work office (Newcastle on Tyne) thinks otherwise, and denies his disability  benefits.  A dodgy government ‘health professional’ of some kind says he is able to work.  So he applies for the British version of unemployment (the dole!) and looks for work by walking through the streets of town asking people about jobs.  But once offered a job, he declines it, as he has been told he cannot work by his doctor. Yet to get benefits you must look.
Catch 22! 
You Don't Want to Be Here
We follow Blake through his tribulations with the British state bureaucracy, which micro-manage his life, unlike what they do to hedge fund managers from the City.  He does not know how to use a computer.  He gets tired of answering questions which have nothing to do with his case.  He sympathizes with a young woman denied benefits, much as he has. Finally losing it, he spray-paints his protest on the stone walls of the office and draws cheers, is arrested and let go.  He ultimately gets an appeal date. 

In the process we see him helping the young woman and her children with mechanical tasks around her run-down apartment.  He yells at, then enjoys the company of his young black neighbor, who is importing shoes from China directly from a factory worker.  He visits a food bank, hilariously learns a bit about computers, is put on hold for hours, sells his furniture, is humiliated by state workers and helped by one. He gets to go to a resume (CV) class where he is told to 'stand out' when he points out there are more people than jobs. He is a blunt, older, somewhat excitable fellow shut out of the ‘new Britain.’ The denouement is not unpredictable. 

For anyone that has been on unemployment or welfare or disability, this film strikes a chord.  May you not spend hours on hold or in line!

Prior Ken Loach film reviewed: "Jimmy's Hall."  Prior Leigh films reviewed:  High Hopes,” “Mr. Turner.”  Use blog search box, upper left.

Red Frog
February 1, 2018

Sunday, January 28, 2018

Hungary and Neo-Stalinism

“The Ghost of Stalin,” by Jean-Paul Sartre, 1956-1957

This book is a long, dense essay on the Hungarian revolt in 1956, written as it was happening.  Sartre, located as he was in France with its large Communist Party and on the European continent close to events, developed a nuanced view of the rebellion in Budapest.  He took neither a simplistic 'Trotskyist' position or a rigid Stalinist position, but something that was based on the facts of the various stages of the rebellion. He at all times calls himself a Marxist and comes out against the intervention by Zhukov’s Soviet tanks. Essentially, the rebellion first moved from a progressive ‘national communist’ phase that could have been solved by the promotion of Nagy and other CP co-thinkers, and the recognition of certain democratic and national needs.  But then it devolved into a right-wing nationalist and anti-communist phase, principally because of a reaction to the two Soviet Army interventions.  To Sartre, the dating of events is absolutely critical.  On October 23, 1956 the Soviet army first entered Budapest.  On November 4, 1956 it entered again.  Sartre contends that the armed response was a huge error.

After this, Hungary became the 'happiest barracks'
Most defenders of the hard-line in the Hungarian bureaucracy – Gero and Rakosi, even Kadar – saw the intervention as necessary to save the Hungarian worker’s state – principally the socialized property in industry and agriculture.  Sartre points out that most self-identified Trotskyists at the time did not distinguish between the pro-socialist and the pro-capitalist elements of the rebellion.  As such, they had a completely positive view of all events.  The problem with that line is that not everyone in Hungary wanted pro-socialist ‘workers councils.’ 

The Small-holders Party based on rural elements wanted to regain small landholdings.  Sartre thinks this would have been an acceptable temporary compromise to make, a sort of rural NEP, as forced collectivization had not worked.  

But there were according to Sartre, as even exist now, nationalist and fascist forces that wanted a complete break with socialism and a desire to rejoin western Europe.  Victor Orban, the present right-wing nationalist president of Hungary, is a product of those forces.  He first came to prominence in the collapse of the Hungarian workers state in 1989 – the ultimate coda to 1956.  The ‘shift to the right’ in 1956 came out in response to the Soviet Army actions and the failure of the Hungarian CP to fashion a democratic compromise.  Sartre points out that when workers are complaining of poverty, hunger and overwork, it is best not to look away...

U.S. propaganda had hinted that ‘aid’ of some kind would come if there was a rebellion, and many Hungarians resented the fact that this was a lie.  Sartre found no evidence of any material or military support by the West, as falsely claimed by ‘L’Humanite,’ the French CP paper.

To background the Hungarian situation, Sartre has a long section explaining the genesis and development of Russian Stalinism as a product of the rural backwardness and isolation of the USSR.  He in a way justifies it.  He does not see the bureaucracy as a new class and shows how the Stalinists instead created their own technocratic gravediggers after WWII.  Sartre calls Stalinism a ‘relic.’  Sartre shows how the Russian principles of bureaucracy, ‘socialism in one country,’ forced collectivization and heavy industrialization were imposed on the central European ‘people’s democracies’ by Soviet planners, and this was a huge mistake.  These were societies which, except for Yugoslavia, did not have organic workers revolutions, and where socialization and expropriation were imported by the Red Army. 

For example, Tito tried to get Stalin to agree to a ‘common market’ for Yugoslavia, Albania, East Germany, Poland, Czechoslovakia, Hungary, Bulgaria and Romania, but Stalin turned it down.   This common market would have allowed the various states to trade for products instead of following a duplicative industrialization. Instead individual state autarky was the USSR’s response to the West’s lucrative ‘Marshall Plan.’  Sartre points out that the relationship with the USSR was never one of being an ‘economic colony’ but it was one of political oppression.  Hostility by the USSR to ‘national communists’ was the result, which helped lead to the ultimately disastrous reactions in Hungary and Czechoslovakia, in Berlin, in Pozan.

Oddly Sartre, in spite of his being a long-time ‘fellow-traveler’ of the French CP, comes out in this situation for various points in the 4th International’s transitional program – workers democracy, the independence of the trade unions, a united front from below with the Socialist Party workers, the usefulness of allowing tendencies in the French CP.  Even understanding the bureaucracy not to be a class is consistent with the 4th International. He ultimately calls Khrushchev’s intervention ‘neo-Stalinism” (the ghost of Stalin…) and in response calls for de-Stalinizing the French CP.

In hindsight, the 1956 insurrection led to a long period of ‘goulash communism’ in Hungary, which was less politically and culturally restrictive, allowed more travel and included more consumer goods for the working classes than the harsher conditions in East Germany for instance.  This was its real and positive effect, as the bureaucracy realized they could not be as repressive.  Sartre points out that the Hungarian intervention and massacre was an immediate disaster for the Soviet Union on international, political terms.  The suppression by the USSR’s army undermined Communist claims to represent the working class and also its claims for ‘peace.’  As the Russian Czar found out in 1905 in Russia, massacring your own population has long-term consequences.  

British capitalism at the same time in October 1956 was ordering military action, via Israel, against Egypt's decision to take over the Suez Canal from Britain. Nasser was the leader of Egypt at the time.  But since capitalist war-making is so common, no one thinks capitalism is criminal and disqualified as a system, no matter how many times they invade, bomb or make war.  In Hungary and the Suez, we see an imperialist double-standard in the reactions to each.

Presently in the remaining workers’ states, such as China and Cuba, there will be both progressive and reactionary impulses to break the stranglehold of the political bureaucracies, both by proletarians and by capitalist or pro-capitalist elements.  And there will be responses that only exacerbate the problem or responses that will solve it.  Marxists must be able to tell one from another in order to move forward.

Prior posts on present-day Hungary, below.  Use blog search box, upper left.

And I got it at the library!
Red Frog
January 28, 2018

Friday, January 26, 2018

Victimology, Version XXIV

“Detroit,” film directed by Kathryn Bigelow, written by Mark Boal, 2017
This is another hard film to watch.  There are a plethora of films about the Holocaust, slavery and Jim Crow, which are easy (and deserved) political targets.  Most of the films portray black people or Jews as extreme victims, and that particular view is beloved of mostly white liberals.  This film breaks the mold a bit by moving the scene from the U.S. South or Germany to Detroit, Michigan.  But the central event, the ‘Algiers Motel incident’ as it is known, becomes the exclusive focus of the film.  And this again features terrorized black men, along with two terrorized white women.
Festival of Looting

Given the director and writer also collaborated on “Zero Dark 30” and “The Hurt Locker” – both pro-war or pro-torture films – it seems odd that they chose this topic.  But there is a connection.

The crimes at the Algiers were carried out by 3 racist and hysterical Detroit police and one Michigan Guardsman, passively watched by a black security guard.  3 innocent black men were executed, with a knife planted next to one man’s body by a cop.  The remaining victims were beaten, terrorized and threatened with death in order to get them to ‘talk.’  All this because of a missing starter pistol.  As is to be expected, no policeman is convicted of these crimes, after a trial handled by an incompetent prosecutor.  A $5,000 civil penalty was ultimately paid by one cop.

A familiar story, and one repeated every day in the U.S. to this day, as hundreds of mostly minority people are killed by police every year, with no accountability.

The recent rebellions in Ferguson MO, and later Baltimore, MD against police violence echo back to Detroit and many other rebellions in the 1960s, and even the Rodney King rebellion in Los Angeles in 1992.

So what is wrong with this picture?  If you are tired of politically easy victim films, then looking at the 1967 Detroit rebellion itself might give you a real topic for a film.  Because the issues are far broader than the Algiers crimes. In this film we see Detroit police roughly raid an after-hours club full of black people, including returning servicemen from Vietnam, because they do not have a liquor license.  They arrest everyone.  This example of over-zealous policing against black people infuriates the folks on 12th Street, and the police begin to be attacked.  Later Democratic Party politician John Conyers attempts to quiet the crowd from atop a car, and they will have none of it.  Eventually Michigan Governor George Romney calls in National Guard  and the Michigan State police, both full of white country boys.  From there the film stops looking at the larger story.
Lyndon Johnson then sent in the 82nd and 101st Airborne as part of the 1807 ‘insurrection act.’  Tanks and machine guns were deployed, but the experienced and integreated soldiers were far less violent than the cops and Guard.
Map of Detroit Uprising

The 1967 Detroit Rebellion (which the bourgeois press calls a ‘riot’) was essentially a 5-day confrontation between parts of the Detroit black community and the police. It was spread out in various parts of the city.  It was one of 159 rebellions in black communities that year.   White people also took part in the looting of the predatory businesses located in these neighborhoods.  43 were killed, over a 1,000 injured and thousands arrested, all overwhelmingly black.  Fires burned 2,000 structures.  Basically snipers started shooting at police and later, fireman.   Detroit police broke into many homes and brutalized arrestees and conducted uncontrolled shooting.  Women were molested. Two dozen other cities had simultaneous rebellions that grew out of the Detroit uprising.

Members of various left groups like the Black Panthers, SNCC, Uhuru and the League of Revolutionary Black Workers played a role in the Detroit rebellion, and were strengthened by it.  Even the White Panthers were influenced, as they had their own problems with the police.  This was not some ‘chaotic’ unpredictable event but in fact the logical result of years of oppression of the black working class in Detroit.  Given it spread beyond Detroit, it was clear it was a national problem.  In essence, “Detroit” should have been about far more than the Algiers motel savagery.  The film fails to address that, but instead gives us black people as victims – again.  And individual racists (bad apples) - again.

Odd that even film critics at the NYT get it:

A. O. Scott in The New York Times wrote, "It is curious that a movie set against a backdrop of black resistance and rebellion—however inchoate and self-destructive its expression may have been—should become a tale of black helplessness and passivity. The white men, the decent ones as much as the brutes, have the answers, the power, the agency."  Another NYT critic called it a ‘moral failure.'

It is time that both black directors and white directors finally made actual ‘emancipatory’ films, especially located in the present, instead of deceptive progressive fare placed long ago and far away.  The real target is not individual evil men, but a whole system.  It is not nostalgia that will help us, but the 'now.'
Review of "Zero Dark 30," below


Red Frog

January 26, 2018

Thursday, January 25, 2018

Sorry, China is Not Capitalist ... yet.

Two sea changes in world political economy…

April 30 2015
Originally published in Political Affairs

The class struggle is essentially over control of the surplus. At no time is this more evident than during periods of capitalist crisis.

Peoples Bank of China - Not Wall Street
A socialist revolution transfers control over the surplus from the capitalist class to the working class, even though the latter may not rule directly. In Russia, the transfer occurred in November 1917 (and reversed in 1991); in northern Vietnam the transfer took place in August 1945; in northern Korea, in May 1948; in China in October 1949; in Cuba, in the fall of 1960; in Laos, in December 1975. It has also occurred in several others states, including Albania, Yugoslavia, the GDR - states that later fell to counter-revolution, like the USSR. The struggle for power is difficult enough, governing afterwards is even more challenging.

However, following the transfer of power, the new state - backed by its army - can allocate and reallocate the surplus both to address needs of the new social system and to keep unavoidable economic imbalances from ballooning into crises. That ability to reallocate surplus is why economies formed by socialist revolutions are not cyclical, in distinct contrast with boom-bust capitalist economies. But the non-cyclical economies are part of a single world economy; they cannot evade comprehensive challenges -- economic, political, environmental, military, value and others -- until capitalism is no longer a significant force in the world.

Capitalist economies, on the other hand, are regulated by the boom-bust laws of commodity production and exchange elucidated by Marx. The capitalist class and its state do not control a capitalist economy, but the class does appropriate what surplus is generated. The capitalists' one goal in life is their personal enrichment, and maintaining their power and ability to exploit.

The exploiters view their system's periodic busts as crises of 'overproduction' - more commodities have been produced than they can sell profitably. Workers and oppressed experience the same crises as rising unemployment, misery and conflicts.

As mentioned earlier, at no time is the contrast between the two social systems more visible than in periods of crisis. The Soviet Union, for example, grew at a 9% rate through the Great Depression years, while capitalist economies tumbled from crisis to crisis-and to war, including on the Soviet Union.

The first sea change since 2008
The difference between the two systems has led to two sea changes since September 15, 2008. This was when the general crisis of capitalism - which is still unfolding -- openly hit the imperialist center. Although the Chinese state is a product of a socialist revolution, it was not immune to the crisis. Some 24 million Chinese workers producing for export lost their jobs in a few weeks after the bankruptcy of Lehman Brothers, Merrill Lynch, AIG and other Wall Street stalwarts. This was because demand from capitalist countries suddenly collapsed.

 The Chinese state responded with a genuine stimulus program, based on its existing five-year plan. It accelerated several state-controlled projects, including development of rural infrastructure; launched the construction of millions of homes;  the expansion of mass transit in cities all across China; and the development of a remarkable high-speed rail network. (The bullet-train network grew from zero miles at the start of 2008 to a remarkable 10,000 miles today; the trains currently average over 200 miles an hour, with 300mph trains in development.)

China's leadership also mandated that banks direct nearly all loans to projects consistent with the five-year plan and the corresponding stimulus. This meant lending primarily to state-owned and state-controlled enterprises, and cutting loans to private businesses.  (A 'shadow banking' system arose to lend to private businesses, albeit with limited funds and high interest rates.) In just five months after Lehman collapsed, nearly all 24 million workers in China had regained their jobs, and the economy was soon growing at a 9% annual rate.  Unemployment did not skyrocket, and has actually dropped since the end of 2008.

The first sea-change then is the significant relative strengthening of the state sector in China since 2008, and consequently the relative weakening of the private sector.  Inevitably, this has led to heightened resistance from domestic and international exploiters and their representatives.

A second sea change since 2008
After the crisis, tens of millions of workers in capitalist countries also lost their jobs. But the ruling class and its states directed their resources to cover the capitalists' losses and bad debts, not to address unemployment or meet human needs.  In sharp contrast with China, there was a near-halt in productive investment in capitalist countries -understandably, since from the exploiters' point of view, the problem was massive "over-investment" (as in the auto industry), and the resulting losses.  For the capitalists, charity starts at their home - and ends there.

Industrial production plummeted in capitalist countries after September 2008, while unemployment skyrocketed. By March 2009, industrial production in Japan was down 34.2% compared to a year earlier; in the euro zone, it was down 20.2%; in Britain, it was down 12.4%; in the USA, it was down 12.5%. (In China it rose 7.3% in the same period.) Real unemployment in most capitalist countries remains higher today than in 2008. Most jobs that have opened since then are temporary, part-time, low-paying or 'informal'.  Oppressed nationalities, women, youth, unionized, migrant and older workers have been hit especially hard.  Capitalist states' "stimulus" efforts, such as the US Federal Reserve banks' "quantitative easing" programs, have been directed primarily to cover the ruling class's losses and bad debts.

In the US, it has been estimated that the state apparatus (mainly the Fed and the Treasury) has transferred some 18 trillion dollars since 2008 to the ruling class's main properties, especially its banks and insurance companies.

Five years after the crisis of 2008, industrial production had not recovered in most imperialist countries. In 2013, Japan's industrial production was down 17.1% from its 2007 level. (Japan is now in its third consecutive 'lost decade'.)  Industrial production in Europe fell 9.3% between 2007 and 2013. In the USA, industrial production was down 1.2% in the same period. (Production in the US has now slightly exceeded its 2007 level, partially thanks to the enforced destruction of production in Japan, Europe, Iran, Iraq, Libya, and other countries.) Furthermore, without China and Vietnam's rapid growth in purchases (imports) from capitalist countries, there is reason to believe that the entire capitalist world would now be in all-out crisis.

The contrast between the US and China since 2008 is remarkable. In 2007, the UN estimated industrial production in China at 62% of that of the US. Four years later, in 2011, China's industrial production had risen to 120% of the US level. (It now almost certainly exceeds 150% the US level; furthermore, UN calculations ignore unequal exchange, which skews estimates of US industrial production upwards.)

On three basic measures of industrial activity -- steel , copper and cement - China's production or consumption nearly equals or exceeds that of of all capitalist countries combined. Even more important, the number of regularly-employed industrial workers in China now appears to exceed that in all capitalist countries combined. (This is in part because informal and self-employment has become pervasive in capitalist industry - construction, even mining and manufacturing.) The large concentrations of industrial workers in China is unparalleled.

The second sea change since 2008, then, points to the significant relative strengthening of the international working class through the five states where it holds power; and the significant relative objective weakening of the world bourgeoisie.  As Lenin predicted, far from reconciling themselves to the superiority of working-class rule, the accomplishments of China, Vietnam, Laos, etc., the exploiters' resistance has only multiplied.

 The question now is how these relative gains in the objective strength of the international working class are used. They can be mobilized to complete humanity's transition from capitalism to socialism, or to maintain the status quo. The latter course will lead humanity to catastrophe.

Why the future of humanity will be written in China
It was once said that the future of humanity would be written in the USA. The two main reasons were the size of 'manifest destiny' America, from sea to Gulf to shining sea, and the superior productivity of labor in the US.  Things have changed.

Today, the overall productivity of labor in manufacturing in China appears consistently higher than anywhere in the capitalist world, rich or poor. (Agricultural productivity remains a major weakness.)  One reflection of this is that China's share of world exports has continued to grow after 2008, even though hourly wages have climbed, and are now eleven times those of Bangladesh, for example and four times those in India.

China's productivity in manufacturing has been achieved thanks to planning; its superior educational system; its unparalleled infrastructure; and its social system's capacity to maintain domestic demand, in sharp contrast with the boom-bust cycles and deepening poverty in capitalist countries.  (The Soviet Union unfortunately did not achieve capitalist levels of productivity.) This, then, is a first reason why the future of humanity will be written in China.

A second reason is that size matters. China's population is over four times that of the US.

A third reason is China's social system, formed by its 1949 socialist revolution, which permits it to plan and allocate and reallocate the surplus to address imbalances and social needs.

The fourth reason, still emerging, is the considerable recent strengthening of Marxism in China. This is reflected in its English-language Marxist journals, such as Marxist Studies in China, the World Review of Political Economy and International Critical Thought, published by organs of the Chinese state or the Communist Party of China; and even more so in the boom in Chinese-language work devoted to advancing Marxism and its application. Marxism inexorably points to the need to complete humanity's historic transition, through comprehensive strengthening of the domestic and international working class, and its conscious unity.

… Guest post by W. Halabi, Communist Party Economic Commission

The rest of the article concerns the key problem of organization and the role of the Communist Parties worldwide. The full article can be found at:  http://www.politicalaffairs.net/two-sea-changes-and-the-most-difficult-problem-in-working-class-political-economy/

P.S. - The most humorous article today in Bloomberg is by Michael Shuman, who titled his commentary:  “What if China is Exempt from the Laws of Economics?”  The title itself (and following commentary) is so self-unaware as to be an example of bourgeois blockheadness.  As if ‘economics’ was not actually political.  As if it was some kind of science and the Chinese are exempt from the laws of this ‘science.’  Almost like gravity.  Capitalist neo-liberal economics is an ideology, not a science.  https://www.bloomberg.com/news/articles/2018-01-24/what-if-china-is-exempt-from-the-laws-of-economics

Red Frog
January 25, 2018

Monday, January 22, 2018

The Revolutionary Implications of Fiat Money

Modern Monetary Theory - MMT

I don't usually provide links to other articles, but this is not to be missed.  While a bit long and confusing, it essentially points out that our notion of the 'household' as a model for how government spending works is completely ass-backwards.  From this model, it follows that our notion of 'paying' for education or single payer or social security or any other social program through tax revenues is absolutely backwards too.  No household can print money, but the U.S. government, through the private, bank-run Federal Reserve does.  Unless you have a printing press in your basement churning out counterfeit notes, the similarity is non-existent.  The 1971 move to go off the gold standard - 47 years ago - ended that.  Fiscal and monetary policy are actually separate.  Fiat money undermines the whole notion of government debt and 'austerity.'  Private banks also create credit out of 'thin air' onto a computer screen, so there is no reason why a State Bank cannot do the same thing for citizens.

Marxists can use MMT to undermine austerity-minded politicians and the world-wide banking industry...

The Purpose of Taxes Is Not What You Think...

 https://www.counterpunch.org/2018/01/22/behind-the-money-curtain-a-left-take-on-taxes-spending-and-modern-monetary-theory/

By Jim Kavanagh, Counter-Punch 

And I found it on the internet!
Red Frog
January 22, 2017