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On Hayek, Part I

Fredrich von Hayek warned us that any government intervention in the economy will lead to a ‘Road to Serfdom’. However, as history has shown us, government interviention in the economy does not inevitably lead to totalitarianism. For example, Sweden has one the biggest state-sectors in the world and still retains an ultra-liberal society. In addition, socially-just government internvention in the economy does not reduce economic efficency; as Jeffery Sachs puts it: “Von Hayek was wrong. In strong and vibrant democracies, a generous social-welfare state is not a road to serfdom but rather to fairness, economic equality and international competitiveness“.  Historically speaking, the opposite is true; protecting capital from the masses, more often than not, leads to totalitarianism and authoritarianism and economic stagnation—Nazi Germany, Fascist Italy, Bureaucratic Authoritarianism in Latin America, etc. What is more disturbing is that Hayek himself was part and parcel, an ‘organic intellectual’, of one of the most repressive authoritarian regimes of the 20th century: Pinochet’s Chile. In order to understand this paradox, we have to understand what Hayek meant by ‘freedom’ and ‘liberty’.

To Hayek the market system is freedom, and any interuption in that system is totalitarian. However, Hayek goes further by arguing that only in the market system can reason emerge, as Frank Cunningham points out:

Yet another argument connecting catallaxy and neoliberalism proceeds by an historical, evolutionary argument of Hayek’s that links market competition and rationality. On the story he sketches, the few people who are skillful at taking appropriate means to achieve their given ends (that is, skilful at rational thought) will make gains in competition thus obliging others to ‘emulate them in order to prevail’ so that ‘rational methods will progressively be developed and spread by imitation’: it is not ‘rationality which is required to make competition work, but competition....which will produce rational behaviour.

Of course, this ignores that what counts as ‘success’ is determined by the hegemonic ideology and values embedded in the system; ergo, what Hayek is essentially saying is that ‘profit’ is reason, as if 'profit' is the only definition of reason. However, as we have seen with the current crisis, at the micro-level, profitability and the herd-mentality of the markets leads to a risky game where one can lose it all and indeed, banks would have lost it all, if it wasn’t for the public baling them out; and secondly, it leads to irrational macro-economic and social crises that undermine the future expansion of “rationality”/profit, contradicting Hayek’s thesis--Keynes and Marx's critique of neoclassical economics over-emphasis on the micro-level. Nevertheless, to Hayek, any intrusion on the market system, as defined by microeconomics, is an attempt to stop human reason from flourishing.

In addition, democracy is not—to Hayek or neoliberals—an inherently positive thing; it exists in order for the machinery of government to change hands peacefully and to prevent any one government from turning into an authoritarian government by subjecting them to popular referendums. In addition, Hayek is also a strong constitutionalist, arguing that the constitution is essential to preventing a authoritarian regime from emerging and also, as a check against the ‘tyranny of the majority’—problematically for this line of argumentation is that the inverse is also true; those who draft the constitution, since it does not come from God, impose a tyranny of the minorty on the majority.

The fundamental fear that all liberals share is that democracy has the potential to create a subjectivity that seeks greater and greater democraticization of life and equalization of power. Democracy, deprived of its liberal baggage within a class divided society was unacceptable for capital and liberals, as C.B. Macpherson writes: “Democracy originally meant rule by the common people, the plebians. It was very much a class affair: it meant the sway of the lowest and largest class” (The Real World of Democracy 5). What they, liberals, want to prevent, at the very least, is a ‘radical demoracy’, as elucidated by Mouffe and Laclau, who argue that “the moment when the democratic discourse becomes available to articulate the different forms of resistence to subordination that the conditions will exist to make possible the struggle against different tpes of inequality” (Hegemony and Socialist Strategy, 154). Therefore, what must be created first place is the liberal state, then democratization. As Macpherson argues, “In our Western societies the democratic franchaise was not installed until after the liberal society and the liberal state were firmly established. Democracy came as a top dressing...It was the liberal state that was democratized, and in the process, democracy was liberalized” (Real World of Democracy 5).

Hayek sought a means to protect liberalism from the encroachment of democratic subjectivity that was certainty in the ascendency during most of the twentieth century. The logic for equalization, via democratic subjectivity, was simple; as pointed out by de Tocqueville, “It is impossible to believe that equality will not finally penetrate as much into the political world as into other domains. It is not possible to conceive of men as eternally unequal among themselves on one point, and equal on others; at a certain moment, hey will come to be equal on all points”.  As the twentieth century lagged on, new and increasginly more complex demands were being exacted on the state from the popular classes that had, in Gramscian terms, had become an ‘integral state’—welfare state—that increasingly took on the responsibilities for correcting social and economic ills.

However, within a capitalist system, capital cannot create what Gramsci calls an ‘expansive hegemony’, where the hegemonic bloc is able to articulate and represent the interests of all into a “genuine ‘national-popular will’ ” (Mouffe); it relies on a ‘passive revolution’, or ‘transformism’ of demands into the system, which Mouffe describes as. “...a bastard form of hegemony and the consensus obtained with these methods was merely a ‘passive consensus’. In fact, the process whereby power was taken was termed a ‘passive revolution’ by Gramsci, since the masses were integrated through a system of absorption and neutralization of their interests in such a way as to prevent them from opposing those of the hegemonic class” (Mouffe).

By mid-century, especially the 1960s and 1970s, demands were beginig to surpass the ability of the state to ‘transform’, or institutionalize demands, because they were beginning to radically challenge the class and ideological hegemony of the system, by taking the ‘democratic revolution’ seriously. As David Harvey argues,

Discontent was widespread and the conjoining of labour and urban social movements throughout much of the advanced capitalist world appeared to point towards the emergence of a socialist alternative to the social compromise between capital and l abour that had grounded capital accumulation so successfully in the post-war period. Communist and socialist parties were gaining ground, if not taking power, across much of Europe and even in the United States popular forces were agitating for widespread reforms and state interventions. There was, in this, a clear political threat to economic elites and ruling classes everywhere, both in the advanced capitalist countries (such as Italy, France, Spain, and Portugal) and in many developing countries (such as Chile, Mexico, and Argentina). In Sweden, for example, what was known as the Rehn–Meidner plan literally offered to gradually buy out the owners’ share in their own businesses and turn the country into a worker/share-owner democracy. But, beyond this, the economic threat to the position of ruling elites and classes was now becoming palpable...The upper classes had to move decisively if they were to protect themselves from political and economic annihilation.

To be continued...


On climate change, Part II

            Climate change, however, is not the godsend that the left may think it is. There are three major issues that the left must face if it is to continue on its climate change crusade: first, the science is still being contested by some scientists—legitimately or not—, which enables capital and its organic intellectuals to articulate climate change as a plot of the left or, at best, as mistaken science; the second concerns the more intellectually honest right’s ability to accept climate science as it is, but articulate that the answer is more capitalism, not less; the last issue is the question of global development and the inherent injustice of allowing the developed world to pollute indiscriminately during its phase of industrialization, while forcing currently developing countries to curb their output or potential output during their phases of industrialization, essentially paying for the sins of the West. Therefore, climate change is also being articulated in the Global South as the West’s rouse to undermine development in the South.

            The question of whether or not warming has been occurring in accordance with human action should be questioned, as all science should be; however, at a certain point, a scientific judgment must be rendered hegemonic in order to do something. The theory of climate change has become hegemonic—like Darwinian evolution—and now we must take this premise and work with it; certainly this does not discount that all science cannot be turned on its head, a la Kuhn. However, unlike the social sciences, where one can clearly make the case that all is contestable and self-evidently ideological, with the natural sciences the case is much harder to make, since the units of analysis are empirical and can be tested and measured again and again with consistency in outcome.

           Nevertheless, the contestability of climate science is causing serious political problems, particularly in the United States. A perfect example of this is Pat Buchanan on Chris Matthew’s, Hardball:

Pat’s discourse is the type of discourse that we, on the left, should be the most worried about. It represents the height of the destructive logic of selfishness and individualism, which leads humanity to damnation under capitalist subjectivity; indeed, all of the negatives associated with capitalist subjectivity and history are embedded in his arguments, the type of ‘human nature’ that Cohen has given up fighting. For example, he doesn’t want money to go to Third-World countries, and with Buchanan you know race is involved, and believes that every country should look out for itself. Like microeconomists, they don’t understand that the environment does not end at borders and that what make sense at the ‘micro’ level, is counter-balanced at the macro-level. A perfect example is Matthew’s argument about the deforestation of Brazil’s rainforest. The discourse is good enough to quote:

Matthews: Do you challenge that it’s better not to have them [the rainforests] raped and torn down, do you want everything developed?

Buchanan: No I don’t, I would tell Brazil stop burning down the rainforest, I wouldn’t have to bribe them.

         Let us stop there for a moment, Buchanan, the arch-capitalist, is appealing to non-capitalist methods of motivation. To a capitalist, only market incentives work to incentivize people to do something, thus, is Buchanan no longer a conservative-capitalist ideologue, by appealing to higher moral sentiments, therefore, ideology? Therefore, denying the validity of instrumentalist/rational choice perspective of politics that the right depends on?  Buchanan forgets that the rainforests are being burnt down for profit—or, reason in instrumentalist political science terms; thus, is profit, ergo, capitalist instrumentalism bad in some circumstances? If profit is bad in some circumstances based on an “unknowable” notion of public good, a la Hayek, then what is left of the right? Interestingly, he claims that he doesn’t want to “bribe” them to change their behaviour —it is important to note that ‘bribe’ is, ironically, the market mechanisms of buying parts of the rainforest to compensate developing countries for the opportunity cost of not developing their rich natural resources, which are being proposed by the negotiations at Copenhagen. One wonders, what is the alternative in Buchanan’s world? Non-market mechanisms of ‘coercion’, as liberals like to call it, i.e. regulation in favour of the public good over individual good? Moving on:

Matthews: Well suppose they [Brazil] won’t do it.

Buchanan: Well if they don’t do it, they’re responsible for it.

Matthews: ...are we on this planet together, or is it every man for himself? 

Buchanan: It is every country for itself.

Matthews: It is!?!

Buchanan: It sure is.

            The same illogic pervades in microeconomics, an overly simplistic abstract world-view looking at what is in the interest of the individual firm, or in this case, a country and somehow the ‘invisible hand’ will make sure that this will translate into a public good. That for some reason what happens outside the firm, or the country, won’t affect the firm or country; therefore, denying the very existence of society. Indeed, we should not forget Thatcher’s infamous, “there is no such things as society, only individual men and women”. The very notion of the social is totally obfuscated and the separation of economics from society, or in this case country A’s climate from the global climate, is part of liberalism’s never ending reification of knowledge. This act that renders us defenseless and increasingly in danger of collective suicide masked as individual prosperity. However, we know it doesn’t happen that way and this has always been a fundamental critique of the left.

            As Henry Veltmeyer states: “non-dialectical, non-Marxist [liberal] thinking is unable to grasp reality in its vigorous dimensions as a totality. It tends to decompose reality into various parts and fragments, reifying them as if they had an independent existence—the economy, politics, society, culture—each viewed from a distinct angle, with its own domain and intellectual apparatus...abstract in form without substance (513). This is best summarized by Slavoj Zizek, as usual. He argues:

...if one wants to establish civil peace and tolerance [under a liberal hegemonic order], the first condition is to get rid of "moral temptation": politics should be thoroughly purged of moral ideals and rendered "realistic," taking people as they are, counting on their true nature, not on moral exhortations. Market is here exemplary: human nature is egotistic, there is no way to change it - what is needed is a mechanism that would make private vices work for common good (the "Cunning of Reason"). One should follow this line to its conclusion: a fully self-conscious liberal should intentionally limit his altruistic readiness to sacrifice his own good for the others' Good, aware that the most efficient way to act for the common good is to follow one's private egotism. The inevitable obverse of the Cunning of Reason motto "private vices, common good" is: "private goodness, common disaster. (The Market Mechanism for the Race of Devils)


Elecciones en Chile, 2009. ¿Que Paso?

On the streets of Santiago, supporters of the arch-neoliberal candidacy of multi-billionaire Sebastián Piñera were celebrating the electoral victory of the right wing coalition against the once hegemonic ‘left-wing’ Concertación party. The Concertación, a left-wing coalition of Socialists and Christian Democrats, ruled Chile, uninterruptedly, since the return to democracy in 1989. They fielded former President Eduardo Frei (1993-1999), who left office with an approval rating of only 28 percent—imagine fielding George W. Bush for the presidency again and you get a feeling of how ‘unwise’ the decision was.

Unsurprisingly, the Concertación was only able to receive a mere 29.6 percent of the vote, largely in line with Frei’s popularity back in 1999. The Concertación was unable to get the message that voters wanted ‘real change’ and it nominated a former President who instituted much of the neoliberal reforms that Chilenos today are itching against. However, many commentators are making egregious mistakes in deciphering what is happening in Chile. They assume that the defeat of the Concertación is a defeat of the left and the ascendency of the right in Chile; if one were to actually look at the results the opposite is true.

To some commentators, Piñera’s ‘victory’ proves that the change Chilenos want is more neoliberalism, more of the same policies that have engendered the same pessimism and hopelessness that millions of Chilenos voted against. If one were to take the time to look back at the trends electorally we can see that the right-wing parties in this round actually got a smaller share of the vote than previous elections, post-1989:

RN+UDI, as a percentage of the total vote

1989: 44.83
1993: 40.84
1999 (1): 47.51
2000: 48.69
2006 (1): 48.64
2006: 46.50
2009 (1): 44.05

One can clearly see that for all the hype, the right in Chile has actually lost a lot of ground and has been reduced to generally the same constituency that it had in 1989; thus, it also obvious that the left in Chile has increased in strength, but not in cohesiveness. Chilenos do not want to have a more neoliberal government, what Chilenos want is another alternative. The Concertación is unable to offer that alternative, because it was the same party that legitimized and institutionalized neoliberalism structurally and democratically; however, it would be unfair to state that the Concertación was not forced to enact these policies, since Pinochet and Pinochetismo were potent forces politically after 1989. The Partido Communista, with the baggage of the Allende era, also is unable to offer a viable alternative, that being said, the party has increased its voting share from 5.4 percent in the 2006 election to 6.21 percent in 2009.

Enter Marco Enríquez-Ominami, popularly known as MEO. He protrudes an Obama/Clintonesqe style and offers not only a more progressive economic platform, but also a socially progressive platform as well. He was part of the Socialist Party wing within the Concertación party, but left the party raising objections to the candidacy of Frei. MEO did not have a clear platform, nor did he have an actual party organization behind him, but he was arguing for a new Chile, who has claimed to have sympathies to Chavez. I do not believe that MEO offered anything of real substance other than to become an ‘empty signifier’ for a nascent populist movement seeking change that no other party was able to give.

It is obvious that the Chilean ‘third way’, neoliberal state is reaching its limits of co-optation and demands are beginning to go beyond what the neoliberal ideology and state is able to concede. The second round will determine whether or not Piñera can articulate his vision of Chile as one of ‘change’, I do not think he will succeed, because the trend is to the left.


On climate change, Part I

Climate change has become the rallying point for the left in the aftermath of the ‘end of history’ in 1989. Apparently, it seems, humans aren’t good agents to overthrow capitalism and save society from the ever-encroaching tyranny that is ‘privatization’, as defended by liberals. This defeatism is best manifested by J.A. Cohen in his work, If you’re an Egalitarian, how come you’re so Rich?:

I remain skeptical of the human-nature premise of the selfishness defense of inequality, for something like the old reasons. But I am no longer so skeptical of the sociological premise...if people are by now irreversibly selfish (not by nature but) as a result of capitalist history, then, so I now think, structure alone could not suffice to deliver equality, in the face of selfishness. Even on reasonably sunny views about the limits of human nature itself, capitalist history would have thrown us into a cul-de-sac from which we could not exit and regain the road to socialism. (119-120).

The aforementioned quote is truly a concession to Fukuyama’s ‘the end of history’, and I think that most people of the ‘left’ agree with Cohen. Since the left has given up fighting this ‘human nature’ element of liberal-capitalism—even if it admitted as a sociological construction of capitalism—, it has thus conceded defeat to the forces of reaction and regression. The best that we can do is admit defeat, via Giddens ‘Third Way’ liberal-democracy, which seeks to ameliorate capitalist exploitation of Polanyi’s ‘fictitious commodities’—land, labour, and capital—, by exporting the worst elements of capitalism to the Third World and living in our debt-fueled, post-modern, ‘creative economy’. Since human beings cannot be the agents of change, a new agent of change is needed, one whose internal mechanisms can be predicted and act as a deus ex machina to save us from ourselves—no longer is the social-system that is capitalism the enemy, but rather our own inferior ‘human nature’. However, to admit such a fundamental and definitional defeat is not manageable by the left, because it would render the left irrelevant; the left needs a “fetish” in order for it to live with its apparent defeat: enter the environment.

The logic is as follows: the environment is a non-negotiable element in our collective space that has its own laws of regulation that transcend human manipulation and articulation, viz., that cannot be hegemonized. However, due to man’s uncontrolled exploitation of the Earth’s resources, primarily fossil fuels, the self-correcting mechanisms of the planet are no longer functioning properly and leading us towards the apocalypse. One of the effects, that affect every human regardless of class position, is climate change. Climate change, as agreed by most scientists, is a result of human action, linked to the industrial revolution; however, what is obfuscated is that this is fueled by the unending accumulation of capital in private hands as its motivation. Thus, climate change is like a semi-religious condemnation of capitalism from the abstract planet. Therefore, we must either conform to nature, or suffer the consequences of its wrath. What we are unwiling to do is actually conform, we are trying everything in our power to prevent the dirty truth of capitalism from exposing itself, with greater and greater unpaid debts, a la Wallerstein, accumulating in the future. 

For the left this is the perfect agent of change, it has all the power of God and cannot be re-articulated. Nature, not man, has become the Jacobian agent of unrelenting, blind terror that delivers justice on a massive scale with no sense of hesitation. Of course, we all know that this is scientifically true and we, as a species, rich or poor, deserve this wrath. Why? Because we, as a species, have alternatives to this system that could help stop things from getting worse. First, the left has to fight the fundamental battle, which Cohen has given up, that human nature is not set in stone, but rather is a result of hegemonic articulation and was and can be changed. If we accept the liberal/neoclassical notion of human nature, of homo economicus, then the capitalist ‘free market’ is the only way that we can organize society and that means ‘the end of history’, literally. Secondly, assuming we have transcended capitalist subjectivity, we could democratically organize our societies in such a way to live within our means and socialize the means of production to take away the incentives that exist to ‘cheat’. Thirdly, we could strive for a more cosmopolitan world, something that can only be realized under socialism, rearticulating our sense of identity from our ‘nations’ to humanity in general, thereby allowing for a global distribution of resources.

I am not foolish enough to think that this is possible within the time frame given to us by an increasing number of climatologists, before we are essentially doomed. The recent climate change conference in Copenhagen will not result in substantive change, because real change means a post-capitalist society and those who are negotiating at the conference tables cannot even imagine such a reality. As Zizek once wrote, paraphrasing, ‘it is easier to imagine the end of the world, than the end of capitalism’. The movie 2012, which I saw in theaters here in Uruguay, is a perfect testament to that axiom. The main characters looked at who was being allowed on the ‘arcs’, the rich who paid $1 billion  for a "ticket", and knew that those who merited survival—like the Indian scientist who discovered the tectonic shifts in the first place—were left to die. The interesting thing about this is that the main characters knew it was wrong, yet did nothing and worse, could not even articulate what was going on: capitalism. As Marx wrote about ideology, “they do not know it, but they are doing it”.


Michael Moore's 'Capitalism: A Love Story', Review-Part II

Ironically, the argument that the government could not do anything was proven time again by Republican mismanagement of the economy, the budget, national emergencies, etc. Indeed, it was to be expected, if you believe that government cannot do things right and you are in charge of government the result will be bad government. Thus, in their quest to reduce the size of government, the right and eventually the left increasingly privatized more and more of governments responsibilities leading to perverse incentives and bad outcomes; something that Moore showed effectively with the ‘PA Child Care’ example. Arguably, the Republican’s purposefully engaged in mass deficit spending so that the next government would have to cut spending, ergo, cut off the remaining remnants of the ‘New Deal’, which would then have the effect of further lowering taxes on the rich. The greatest effort was Bush’s effort to privatize social security, FDR’s greatest achievement, so that Wall St. could get trillions of dollars of new money to move around, unproductively. Since raising taxes in the United States was increasingly not an option for Republicans or Democrats, the only option--politically--was to cut spending. Herein lies the another defeat of the left in the United States. It occurred when the left, via Bill Clinton’s triangulation, accepted the meaning of the ‘government’ as defined by the right; as Slavoj Žižek argues: “The true victory...occurs when the enemy talks your language. In this sense, a true victory is a victory in defeat: it occurs when one's specific message is accepted as a universal ground, even by the enemy” (Žižek 2007).

This is where Moore’s movie really makes a difference, it finally puts ‘capitalism’ into contention in the American political arena. This is crucially important, because it creates the conditions for real change. The right created those conditions in the 1970s and 1980s by making the term ‘government’ contentious, or what Ernesto Laclau calls a ‘floating signifier’; meaning that the content of the term is contested between different antagonistic camps in a hegemonic battle that structures the political. Throughout the movie Moore parodies and attacks the very idea that capitalism is a benevolent system that it is still somehow presented as being the same system, as imagined by Adam Smith of small firms that cannot influence prices, sentiments and are constrained by competition--premises effectively destroyed by Marx, Veblen, Sraffa, Harvey, Nitzan, etc. Moore then makes the case that capitalism proper is a system in which greed, avarice and anti-social behaviour ‘cannot be regulated’, because capitalism is what nurtures those sentiments in teh first place--it ‘retroactively’ creates its own presuppositions.

However, the weakness in Moore’s movie is that he is actually not asking for the destruction of the capitalist system, while at the same time seeking to destroy it--it reminds one of the eternal crisis of Social Democrats during the interwar period. In reality, Moore’s message is reformist, Moore wants to bring about a social democracy in the United States. Indeed, Moore used FDR’s rousing speech on the ‘Second Bill of Rights’, where FDR emphasized the importance of having positive rights along with negative rights, using FDR’s speech as a rallying point of his movement. FDR was a reformer that greatly improved the lives of millions of Americans, but he was still a capitalist--meaning he supported the essential social system of exploitation based on private property and private appropriation of the social surplus; the market system, as the superior means by which one allocates resources; and the existence of inequality and exploitation and domination of labour by the bourgeois, albeit certainly not to the same morally unacceptable extent that currently exists. Moore points to Italy, Germany and Japan’s constitutions where elements of FDR’s ideas were incorporated and uses them as examples of how society should look like, but they are still capitalist states themselves.

The thrust of Moore’s movie is, in reality, an argument against neoliberalism, against the concentration of society’s productive assets into fewer and fewer hands through the process of what David Harvey calls ‘accumulation by dispossession’ and ‘spatio-temporal fixes’--best exemplified by Flint, Michigan. In addition, it is an argument against the justificatory discourse of neoliberalism that ‘greed is good’, there is no ‘we’ just ‘I’, and that profit motive--code for bourgeois income--is the be-all-end-all of our socio-economic existence; indeed, the best parody in the movie was Moore using Jesus Christ as a hack for the profit motive. Neoliberalism enabled this to occur by eroding the regulations, particularly financial regulations, and the social compact that enabled the stabilization of capitalism during the ‘golden era’. Moore’s compelling case is that capitalists depended on the exploitation of labour, land and capital in a certain place at a certain time to become rich and once that particular social arraignment no longer serves their interests they destroy that very socio-economic infrastructure, leaving those who created that wealth with nothing but misery, unemployment, debt and eventually abject poverty. Thus, what Moore is pointing to is that there is a unpaid ‘social debt’ that if left unpaid, could create a serious backlash against the system. Something even Citibank in its ‘plutonomy’ article noted:

Furthermore, the rising wealth gap between the rich and poor will probably at some point lead to a political backlash. Whilst the rich are getting a greater share of the wealth, and the poor a lesser share, political enfrachisement remains as was – one person, one vote (in the plutonomies). At some point it is likely that labor will fight back against the rising profit share of the rich and there will be a political backlash against the rising wealth of the rich. This could be felt through higher taxation (on the rich or indirectly though higher corporate taxes/regulation) or through trying to protect indigenous laborers, in a push-back on globalization – either anti-immigration, or protectionism. We don’t see this happening yet, though there are signs of rising political tensions. However we are keeping a close eye on developments (10).

Implicit in this quote, one can sense an agitation and apprehension with “political enfranchisement”, a recognition of the incommensurability between democracy and neoliberalism. This does not bode well for the future of our democracy if the rich are unwilling to compromise as social antagonism will certainly increase and both sides of this social antagonism may harden their absolutist positions. Not only that, the advances made by the American working class during the New Deal era have eroded as inequality has gone back up to pre-depression levels through the gradual erosion of the welfare state. The left has failed because it has accepted the socially-constructed pressures of globalization as truth--the ‘Third Way’--, as inevitable conditions of capitalism. Materially, the destruction of the union movement through deindustrialization and regressive tax policies have eroded the institutional means that labour was able to defend its interests against capital.

However, Moore at the same time raises the important question about capitalism proper. The real question embedded in Moore’s polemic is, can this socio-economic crisis be avoided within capitalism? Certainly, the immutable laws of capitalism, accumulation, lead it endemic crises of overaccumulation and underconsumption. Thus, the economic part of the socio-economic equation leaves me with no doubt that, no we cannot avoid crisis within capitalism. However, that alone is not enough to create the sort of systemic crisis that could undermine capitalism as a system. A truly revolutionary and/or hegemonic moment occurs when capitalism is unable to absorb, or ‘transform’ demands within the political system. A well functioning liberal-democratic state was able to ward off the crisis of the Great Depression, because it was able to absorb the demands stemming form the population before those demands manifested into something entirely different. This is Gramscian notion of ‘transformism’ is termed as ‘democratic demands’ by Laclau. What Moore is advocating is for this sort of welfarist, liberal-democracy that can deal with particular demands within a capitalist system, with the added element of worker-democracy. Thus, Moore is ironically trying to save capital from it own avarice and greed and if capital had any vested interest in its long-term existence, it should listen to Moore instead of dismissing him.

If we want to be truly anti-capitalist, then we have to stop believing in it:

While capitalism is resolutely "materialistic" (what ultimately matters is wealth, real power, pleasures, all other things are just "noble lies," chimerae covering up this hard truth), this cynical wisdom itself has to rely on a vast network of belief: the whole capitalist system functions only insofar as one plays the game and "believes" in money, takes it seriously, and practices a fundamental trust in others who are also supposed to participate in the game. Capital markets, now valued at an estimated $83 trillion, exist within a system based purely on self-interest, in which herd behavior, often based on rumors, can inflate or destroy the value of companies —or whole economies —in a matter of hours. (Zizek 303)


Comrade Glenn Beck...well, in another dimension sure

Glenn Beck, the latest media superstar in the United States, represents to liberals a racist, jingoist, parochial, sexist and ignorant person. He—along with his female counterpart, Sarah Palin—have become the personification, a caricature of everything wrong with the right-wing and American politics in general. Glenn’s rants against Obama as a ‘socialist’, ‘Nazi’, ‘fascist’, ‘racist’, etc., sound like the ramblings of a mad-man more than anything, appealing to the very bottom fringes of the American body politic. Beck freely admits that he is a clown, a self-taught man, who merely seeks to ask questions against ‘power’. However, I would not be surprised if given another set of historical circumstances, Glenn Beck would have been a communist, the same type of person he so derides.

First, before we delve into that, what is Beck actually trying to say? The criticism that Beck elucidates is anger against a lost, puritan notion of America, a righteous America that has been taken away from ‘real Americans’—WASPS—and given to undeserving poor, minority, illegal immigrant others. Beck, by necessity, has an essentialist—meaning non-debatable—notion of what America is, and who is a ‘real American’. This is why Beck is a conservative, because he sees the fundamental antagonism in society as an external one. This antagonism comes from outside the totality of what he considers ‘America’, these individuals and ideas are ‘invaders’ into America, seeking to weaken it, these include: blacks; Latinos; homosexuals; feminists; and liberals, generally whites who he considers to be traitors and no longer American. This is not unlike the vision of the Jews in Germany, who were legally German, but simultaneously not ‘German’, or the socialists/communists in Nazi Germany. Thus, when Beck and the 9.12 protesters call Obama a ‘fascist’, a ‘Nazi’, etc., it is clearly a case of projection.

Ironically, in order to prove his point, Beck used television commercials from the 1950s-1970s to remind Americans of a simpler time; importantly, it is what he obfuscated from that ‘simpler time’ that is telling, that was the heavy state and union involvement in the economy and the hegemony of FDR’s liberalist-modernist project rejecting the very thin critiques that Beck uses against the state and Obama. Indeed, it was a simpler time because the state was more wiling to manage and regulate capital in such a way to alleviate the boom and bust cycle of capitalism that we have gotten used to in the post-Reagan era and to redistribute income in a way that enabled a positive feed-back loop of increasing consumption coupled with increased real incomes for all sectors. Yet, it is Obama who is threatening to undermine the capitalist economy by trying to rebalance the economy. Capital itself is victim in all this according to the corporate apologist Beck who ignores capital’s own dynamics of under-consumption and speculative excess under the guise of the ‘free market’; what is also obfuscated is Bush’s creation of large, unpaid wars in Iraq and Afghanistan, Medicaid expansion and his regressive multi-trillion dollar tax-cuts that are being paid for with debt. Beck goes further and suggests that Obama is also trying to undermine the Constitution—how exactly, no one knows—, even though Bush did more than any president in history to do that, i.e. the Patriot Act, domestic wiretapping/surveillance of ordinary people, torture, etc.

Beck, taking a cue from Ron Paul—le nuveau Goldwater—blames the government for all the ills that America faces today, from economic depression to social and moral decay. The free market, competition, the ‘American Way’ has not been tried since Reagan and that is why the United States is a proverbial ship without a sail, it has lost its moral compass and is adrift in the sea of Marxist-relativism. American democracy, as it currently exists, is a sham, because ACORN, Marxists, certain un-liked corporations have captured it; the real loser here are the ‘real Americans’ and the tradition of the ‘founders’.

The solution? More capitalism, not less; more exclusion, not less; more war, not less. We have to go back to the ideals expressed in the ‘Constitution’, assuming that the content of the constitution is fixed and is not itself a ‘floating signifier’. However, like in Eastern Europe, who is facing its own disillusionment with capitalism—as per my previous post—the right’s critique is totally misguided. As Zizek argues in an article for the New York Times on the 20th anniversary of the fall of the Berlin Wall:

The new anti-Communism provides a simple answer to the question: “If capitalism is really so much better than Socialism, why are our lives still miserable?” It is because, many believe, we are not really in capitalism: we do not yet have true democracy but only its deceiving mask, the same dark forces still pull the threads of power, a narrow sect of former Communists disguised as new owners and managers — nothing’s really changed so we need another purge, the revolution has to be repeated ... What these belated anti Communists fail to realize is that the image they provide of their society comes uncannily close to the most abused traditional leftist image of capitalism: a society in which formal democracy merely conceals the reign of a wealthy minority. In other words, the newly born anti-Communists don’t get that what they are denouncing as perverted pseudo-capitalism simply is capitalism.

This is why I say Beck, at a different historical moment, could have actually been a communist. The critique that Beck offers, stripped of all its reactionary nonsense, is essentially a critique of capitalism itself and the façade of liberal-democracy in its neoliberal, ‘consensual’ frame of the post-political Presidency of Barack Obama—Obama is NOT a leftist. The problem is that discourse in the Untied States, in large part due to the surrender of the left during the Cold War to the universal language of the right, viz., socialism is evil, and in much of the world today, rejects the left alternative a priori. The result is Glenn Beck and the 9.12 movement, the Fox News network and Paulista’s, many of whom are actually from the left.

The importance of Beck can be summarized in thie quote from Zizek’s book, In Defence of Lost Causes: “What the new populist Right and the Left share is just one thing; the awareness that politics proper is still alive”. The problem is, there is no more left—although, that is not an inevitable condition, it can be reversed—, thus, the solution is either right-wing proto-fascism or what we have now, consensual politics of ever-encroaching corporate power and domination.


On Capitalism's impossibility....

Slavoj Zizek is a very important influence on my thinking and academic work, because he takes it step further, viz., by not compromising with liberal-democracy, than most critical theorists are wiling to go today. One of his  ingenious insights is on how capitalism's own impossibility and inherent contradiction, its own lack of totality is, simultaneously, it's structuring condition. The following passage is a quote from his book and will certainly influence my academic work:

  • Recall the classical Marxist account of the overcoming of capitalism: capitalism unleashed the breathtaking dynamics of self-enhancing productivity—in capitalism, "all that is solid melts into air," capitalism is the greatest revolutionizer in the history of humanity; on the other hand, this capitalist dynamic is propelled by its own inner obstacle or antagonism—the ultimate limit of capitalism (of capitalist self-propelling productivity) is Capital itself, that is, capitalism's incessant development and revolutionizing of its own material conditions, the mad dance of its unconditional spiral of productivity, is ultimately nothing but a desperate fuite en avant to escape its own debilitating inherent contradictions . . . Marx's fundamental mistake was here to conclude, from these insights, that a new, higher social order (communism) was possible, an order that would not only maintain, but even raise to a higher degree and fully release the potential of the upward spiral of productivity without it being thwarted by socially destructive economic crises. In short, what Marx overlooked is that, to put it in standard Derridean terms, this inherent obstacle/antagonism as the "condition of impossibility" of the full deployment of the productive forces is simultaneously its "condition of possibility": if we abolish the obstacle, the inherent contradiction of capitalism, we do not get the fully unleashed drive finally freed from its shackles, but rather we lose precisely this very productivity that seemed to be simultaneously generated and stifled by capitalism, for it simply dissipates . . . And it is as if this logic of the "obstacle as a positive condition" which underlay the failure of socialist attempts to overcome capitalism, is now returning with a vengeance in capitalism itself: capitalism can fully thrive not in the unencumbered reign of the market, but only when an obstacle (from minimal welfare-state intervention, up to and including the direct political rule of the Communist Party, as in the case of China) constrains its unimpeded rampage (190).


1989: Twenty-years on, history thrives!

    A recent poll done by Pew Research on the attitudes of Eastern Europeans after two decades of liberal-capitalist reforms suggests that the shine is off the market-utopia.  Indeed, the poll goes much further than I even expected; in it most E.Europeans actually expressed their belief that their economic situation was better under bureaucratic-socialism than under neoliberal capitalism. This flies in the face of all conventional--ideological--wisdom that is propagated here in the West about the inherent superiority of our system.  Here is the actual quote:


Majorities or pluralities in six of the eight Eastern European countries surveyed say the     economic situation of most people in their country is worse today than it was under     communism. Hungarians offer the most negative assessments – 72% say most in their     country are worse off today. Majorities in Bulgaria and Ukraine share that view (62%     each), as do about half of Lithuanians and Slovaks (48% each) and 45% of Russians. (40)

    This is actually very telling considering that all these countries, with the exception of the Ukraine, have far surpassed their 1988-89 per capita peak.  Therefore, this suggests that the problem with the capitalist economies is that the gains of that growth have not trickled down, but upwards. This puts into question the very importance of economic growth without equity, indeed, what is the purpose of growth if the people do not benefit. This measure is a very large indictment against the capitalist system, because the persons are saying that they are actually worse off.

    Although, to be fair, the condemnation of the capitalist system is not equal, as the burdens do not fall equally within the capitalist system. There are differences among the generations and sexes. According to the poll:


As is the case with opinions about the move from a state-controlled economy to a market economy, women, those who did not attend college and those who are 65 or older are     generally more negative in their assessments of whether most people in their country are     better off or worse off today than they were under communism. The views of those in     urban or rural areas vary slightly, if at all.  (Ibid)

The part about women is instructive, women in the socialist bloc were certainly more free than women in the capitalist West. The socialist states facing severe labour shortages needed women to participate and the state created institutions that allowed women to become ‘breadwinners’, with child-care being largely done by the state, free of charge. Never-mind the large state funded youth-organizations that further enabled women to pursue careers and have more free-time, a luxury that most women in the West do not have. The importance of these organizations were so important that even the East German currency highlighted the importance of family and the state’s provision of child-care as a defining characteristic of its system (

As the ‘wall fell’ in 1989, those institutions were privatized or simply eliminated. Women did not simultaneously lose their responsibilities as ‘breadwinners’, instead they now had to juggle family and work like their counterparts in the West. The Pew poll goes on to note about the gender gap:


As was the case in 1991, women are generally less enthusiastic about the move from a     state-controlled to a market economy. For example, 52% of Hungarian men approve and 38% disapprove of the economic changes that have taken place in their     country since 1989. Hungarian women express more negative views – 41% approve and 45% disapprove of the changes. In Ukraine, just 30% of women approve of their country’s     move to a market economy, while a majority (52%) disapproves; Ukrainian men are nearly     evenly split (44% approve and 41% disapprove).  In Russia, however, the gender gap on     views about economic changes since the collapse of communism has evaporated. In 1991,     Russian men and women were more divided than men and women in any other country     surveyed – 64% of men approved of the changes, compared with 46% of women. Today,     about half of men (49%) and women (50%) express positive views of Russia’s move to a     market economy (38-39).

    Another interesting, although not entirely surprising conclusion, is the rise of nationalism and ethno-centrism in the former socialist bloc. With the erosion of the ideal of socialist-internationalism, the ‘other’, instead of being an ally in the struggle for emancipation, became the competitor for scarce resources. What is interesting is how the Pew poll measures this. They asked Russians if ‘Russia is a naturally imperialistic nation’ in 1991 and today, the results are frightening:

As for the Russians themselves, there has been an upsurge in nationalist sentiment since the     early 1990s. A majority of Russians (54%) agree with the statement “Russia should be for     Russians”; just 26% agreed with that statement in 1991. Moreover, even as they embrace     free market capitalism, fully 58% of Russians agree that “it is a great misfortune that the     Soviet Union no longer exists.” And nearly half (47%) say “it is natural for Russia to have     an empire [up from 37 percent in 1991]” 

    The collapse of a viable, uncompromising left-alternative throughout the world in the last quarter of the twentieth-century saw the emergence of a reactionary, rightist discourse that re-articulated what it means to be anti-systemic: from anti-capital, for capital; and in a typically fascist twist, obfuscated and denied class by appealing to ethno-centrism. This is the esssence of the left-right distinction put forward by Zizek:

They [the Leftist and Rightist] not only occupy different places within the political space;     each of them perceives the very disposition of the political space differently--a Leftist as     the field that is inherently split by some fundamental antagonism; a Rightist as the organic     unity of a Community disturbed only by foreign intruders (Zizek, 113). 

Anti-establishment can be articulated in both senses, although, only one is truly anti-establishment, the left--that is not to suggest that the left will reach the positive utopian space communism, but it certainly is a progressive force fighting for more not less equality and liberty. However, appealing to the racialized other as the enemy is the time-honoured tradition of the reactionary wing of politics. This aspect of post-modern politics is not limited to the former Soviet bloc, even in the United States, the anti-'illegal immigrant’ mania of CNN’s Lou Dobbs, among others is indicative of this regressive political trend with the collapse of the left--this anti-illegal immigrant position is ironic on many levels, including, but not limited to: the pilgrims were, essentially, ‘illegal’ colonizers; the United States, like Russia, illegally colonized, dispossessed and appropriated the lands that were occupied by the now ‘illegals’. Indeed, the left should be articulating the aforementioned ironies, or founding sins of history, to get over the reactionary logic's of the right and to build bridges between peoples, viz. cosmopolitanism. This can only be accomplished by a left that is unafraid of being a left, that does not accept the terrain of the enemy, for to accept it is to lose the battle before it has even begun.

    If we want a more just society, the left must not be so polite as to assume that antagonism is over and we can have, what Chantal Mouffe calls ‘consensus politics’. All politics, where I agree with Ernesto Laclau, is based on antagonism and, essentially, populism. If we want to build a cosmopolitan era, we must still have an antagonism and that antagonism must within not without, and that antagonism must be capital and all it symbolizes. As the polls from  Russia show, socialist-internationalism was well entrenched in 1991; today, with the logics of liberal-nationalism, we have seen a great regression back into the abyss of reactionary subjectivities.


Michael Moore's 'Capitalism: A Love Story', Review-Part I

The latest movie from Michael Moore, Capitalism: A Love Story, is an enthralling expose into the current structure of American capitalism. The movie pulls at the heart-strings of the viewers by showcasing working and middle class Americans being evicted from their homes after taking loans from predatory lenders. It shows how their loved ones, without their knowledge, have life insurance policies taken out on them by corporate America in what they call ‘dead peasant’ policies, to make millions off the death of their employees. Corporate America then leaves the families with the debt of healthcare and burial without offering any financial support from the death they profited from. The movie also, effectively, targets those individuals who exploit the foreclosure crisis, otherwise the poverty and desperation of others, as ‘vultures’--a term that the ‘vultures’ have proudly coined themselves.

It also brings to light the reactionary logic of capitalism’s 'organic intellectuals', like Stephen Moore’s--editor at The Wall Street Journal--rant against democracy as a obstacle to the true ‘freedom’ of the market. Lastly, it uncovers the elite’s self-laudatory proclamation of a ‘plutonomy’ in a leaked Citibank memo to their top-investors. The memo tells them that, due to the gross inequality of income in the ‘plutonomies’--United States, United Kingdom, Canada, Australia, New Zealand--, the problems that affect the ‘average’ worker, i.e. high oil prices, rising food costs, lower wages, etc., will not seriously undermine the economy; thus, since much of the country’s effective demand now emanates form the top 1-20%, it negates the need to structurally change the economy in a way to make the lives of millions better, so the paper argued. However, it is an assumption that has proven false in the current economic crisis. Why? Because the top 20%, and especially the top 1% depend on rentier income, basically redistribution from workers to themselves, via the debt mechanism. Since workers no longer could afford to pay back their loans, the contradictory logic of the 'plutonomy' exposed itself leading to a virtual implosion, an implosion that was stopped by another massive regressive redistribution of income, via tax-payer bailouts.

    Moore goes to contrast this sad, socially regressive state of affairs to the boom-time of the ‘golden age’ of capitalism, when the gains of the ‘New Deal’ were starting to bear fruit. These fruits included the increasing standard of living for virtually everyone in the society, the emergence of the civil rights movement and the socialization of large parts of the economy for the benefit of the ‘social good’, e.g. healthcare, education, the highway system, etc. All of this was possible due  in large measure, to the taxes levied on the rich--the marginal income tax rate in the 1950s was ninety percent--to pay for the necessary social infrastructures like schools, hospitals, highways that engender greater economic growth through greater productivity and innovation, while at the same time retaining effective demand among the mass of the population creating a virtuous cycle of economic growth. It was also possible due to the ideological legitimization of having the state play an important role in our lives economically and socially, in an egalitarian way--otherwise termed as 'modernism'--embodied in Keynesianism. Arguably, it was during this time when the greatest innovations in our history took place, largely within the non-profit, public sector, i.e. artificial and human space flight,  particularly the innovations brought about by the landing on the moon; telecommunications, particularly fibre optics and satellite communications; computers; the internet; polio and small pox vaccines, which saved tens of millions, etc. Many of these publicly funded advances were later privatized to benefit dominant capital, even-though they invested little or nothing in the creation of these technologies; starving the state of possible revenues from providing these services.

    The importance of high progressive rates of taxation cannot be understated: when capital retains most of its income it tends to go, rationally, to where it can make the most income (profit) and within a capitalist system that tends to be the financial markets, especially when they are deregulated as they were during the neoliberal era. It is no coincidence that as the income and corporate tax rates in the United States have fallen, gross fixed investment--not even counting net fixed investment--has fallen; while, financial investments--the capitalization of the stock markets--has increased. Finance went from being a means--the allocation of capital to productive and sound investments--to an end unto itself, to the detriment of employment. When the state had control over much of the capital's income, that capital was invested in productive and democratically demanded social programs that actually smoothed capitalism's vicious cycles of crisis, both economically and socially. It is no conicindence that East Asia's, particularly China's, massive economic growth is due to the state's control of  the financial sector in the allocation of resources to strategic industries.

    However, Moore makes a false distinction that the current era of capitalism is not some idealized ‘real capitalism’, but a perverted form of capitalism nearer to bureaucratic-corporatism. The reality is that the particular period of capitalist development that Moore idealizes, the ‘golden era’, was a result of decades of struggle from labour and other progressive social forces that coalesced around the populist movement around FDR in 1932; thus, it was not a natural state of capitalism--an argument that Moore and other progressives make, but it is a position that is actually impossible to conceptually grasp, since capitalism is a social system based on relations of power and not on 'natural' laws--and the current capitalist reality is a ‘perverted’ form of capitalism proper.  With progressive forces accepting that capitalism is actually functional on its own, in some idealized neoclassical form, legitimizes the libertarian, Haykeian argument that less government and more market is needed; even-though as Gramsci argues:

"Thus it is asserted that economic activity belongs to civil society, and that the State must not intervene to regulate it. But since in actual reality civil society and State are one and the same, it must be made clear that laissez-faire too is a form of State "regulation", introduced and maintained by legislative and coercive means. It is a deliberate policy, conscious of its own ends, and not the spontaneous, automatic expression of economic facts. Consequently, laissez-faire liberalism is a political programme, designed to change-in so far as it is victorious-a State's leading personnel, and to change the economic programme of the State itself-in other words the distribution of the national income" (Prison Notebooks 160).  

This is the confusing part of Moore's discourse and according to David Cheal, arguably this is due to 'contradictory consciousness' among the working masses--this should not be confused with 'false consciousness'. Moore is right to question capitalism proper and seek its destruction, but Moore then contradicts himself with the aforementioned arguments that capitalism can be saved by becoming MORE capitalist. What we must realize is that the only thing in capitalism cannot change, at pain of death, is accumulation. The means by which accumulation occurs--Keynesianism, neoliberalism, etc.--is not set in stone. Marx's axiom that capitalism is a system that ‘turns all that is solid into air’ holds true today more-so than it did even when he wrote it 160 years ago.


Just a basic observation...

I am writing my dissertation on the divergent macroeconomic policies that Uruguay and Argentina took in the aftermath of the 2001 economic crisis. One of my hypothesis is that neoliberal reform in Uruguay was stunted from being completely hegemonic in Uruguay as it was in Argentina. I argue that was not that Uruguayan political system did not want radical neoliberal reform to happen as it did in Argentina; indeed, much of the same constellation of forces was forcing Uruguay to pass reform: the IMF, domestic capital, international capital.
However, it can be argued, that one of the key forces was absent in Uruguay that was present in Argentina under Menem was the successful articulation or interpellation of popular identities of dissatisfaction with the statist-developmentalist model. The reason I say 'successful articulation' by Menem is because Menem was elected in 1989 not as a neoliberal reformer, but as a committed Peronista--statist; ergo, the statist-developmentalist model  wanted to be compounded by the majority of the citizenry in 1989, in part, due to the failed incipent neoliberal reforms under Alfonsin. Since Uruguay avoided the hyperinflationary crisis of 1989 that buffeted Argentina's economy and society, there was not the necessary crisis to delegitimize and articulate an anti-statist discourse in the 1990s. Therefore, appeals to neoliberalism took on a much less populistic and more technocratic character that certainly was not convincing to the citizenry.
When President Lacalle was in power (1990-1994) he attempted to pass legislation through the legislature by using the IMF as the stick to discipline his own party and the opposition. Lacalle was successful in his attempt to force the legislation through, as the Uruguayan legislature passed legislation allowing for the privatization of SOEs, principally ANTEL, the national telephone company. The impediment to that reform was Uruguay's deeply embedded popular-democratic, i.e. illiberal, system of referenda. The attempted privatization of Uruguay's SOEs failed because the citizenry did not see the need for it, as the firms were generally regarded as relatively efficient and also they had symbolic value for Uruguay's sense of nationalism. The political forces at play that wanted the radical reform to pass, arguably, could not convincingly make a case to privatize these firms as they could in Argentina since Uruguay, in 1989, avoided the serious economic crisis that impacted Argentina body politic so heavily.
This is not to suggest, of course, that Uruguay did not experience neoliberal reforms; it certainly did experience privatization, deindustrialization, financialization, etc. However, the depth of that reform  and the effects were stunted by the active intervention by the citizenry, in a fashion unique in Latin America. I wanted to see if this can be empirically proven. So I went to the Fraser Institute to get actual statistics over the size of government owned businesses and investment as a percentage of GDP, and then I did a moving average to smooth the lines so that one can see the trends of privatization.

What this graph shows is that the intensity, or the 'shock' as Naomi Klein terms it, was noticeable in Argentina but, not in Uruguay. The reason, I argue, is that the popular-democratic institutions helped to temper the reform efforts to avoid the worst of the reforms from occurring. The IMF/WB were more than aware of the power of referendums to prevent its reforms from being passed in Uruguay. As Gordan Crawford notes:

[I]f any challenge to neo-liberal economic orthodoxy emerges, the ‘soft glove’ of participation slips off to reveal the ‘hard fist’ of coercion, as shown by the Bank’s opposition to Uruguay’s system of referenda...It comes as no surprise that the Ban is in fact hostile to such a democratic mechanism [direct democracy], given that it  has  held  back neo-liberal economic reforms. Such direct democracy is considered as an impediment, a problem of ‘institutional design’, implying the need for constitutional reform in order    to ‘rule out’ the possibility of future popular control over economy policy-making” (134-135).

Crawford then goes to make a convincing case that this notion of limited, i.e. liberal governance, ideologically, was legitimized by Hayekian notions of the state that were hegemonic within the governing International Financial Institutions (IFIs). Nevertheless, the referenda proved to be essential to the prevention of the so-called 'shock doctrine', which used crisis and lack of democratic oversight to pass radical reforms. Ergo, the greater the democratic input, the higher the chances are that pro-market reforms will not get passed tout court. Counterintuitively, it was the very prevention of neoliberalism from becoming totally hegemonic, due to popular intervention, which engendered its legitimization in the post-2001 era in Uruguay, or so I will argue. While, in Argentina the opposite occurred, and in the post-2001 era we saw the neo-structuralist/populist shift under Kirchner. Certainly, this is only one aspect, but I believe it to be the core aspect in my studies.


Capitalism: A Love Story

Graphing exploitation

I am going to attempt to contextualize the movie from my perspective on the current crisis:

The graph shows the difference between what we make for capital (productivity) and what we get paid (wages) in real terms (adjusted for inflation). The differential between the two is profit, which is income that goes to shareholders, executives. This excess capital is, in large part, reinvested into what Keynes called the 'casino' of finance capitalism. With the progressive deregulation of finance over the past 30 years, culminating in the elimination of Glass-Steagall Act in 1999, the stock market increasingly became the locus of business for global capital. The returns that could be made  by 'beating the average' speculation on the markets was far in excess of what could be made in investing in productive investment. Therefore, the amount of capital invested in 'fixed investment'--investment that creates physical capital, and therefore employment--as a percentage of GDP has progressively gone down since the 1980s. Indeed, since the year 2000, the amount of jobs in the United States has not increased, but the amount of people who went onto the market increased by 12 million, which helped to depress wages further and helps explain why 'real unemployment' in the US is reaching 16 percent! Thus, the gap represents the income that goes to the top 1% of our society, which helps explain why inequality in the US is at the highest level since the 1920s, poverty is at alarmingly high levels, wages as a share of GDP is at near historic lows and where so much money came from to inflate the financial markets. The historic 'social compact' of capitalism, that the rich would be frugal and invest for the employment of the workers has obviously broken down. As Paul Krugman states: "Neither the administration, nor our political system in general, is ready to face up to the fact that we’ve become a society in which the big bucks go to bad actors, a society that lavishly rewards those who make us poorer."

Contrary to the explanations of neoclassical economists and other apologetics for neoliberal capitalism, this situation is a choice, a creation of political struggle between financial capital and labour not a 'natural' outcome of the 'free market'. The attack against the union movement in the 1980s by neoliberal governments like Thatcher (breaking the coal miners strike, 1983) and Reagan (breaking the air traffic controllers strike); and with the opening up of capital markets worldwide through free trade agreements and IMF enforced Structural Adjustment Policies (SAPS) that forced developing countries to adopt neoliberal policies at the pain of insolvency; workers in the West could no longer demand higher wages due to the internationalization of capital and the effective expansion of the labour market. What the graph shows is that the neoclassical defense of capitalism, that workers wages reflect their productivity is patently false. Workers get pay commensurate with their productivity by FIGHTING for it, there is nothing 'natural' about the market system.

The myth that 'increasing your skills' will lead to higher wages is to engage in an endless game of chasing your own tail. The fact is that, thanks to IT, skills are increasingly cheap and easy to acquire. This means that more and more people will acquire the skills internationally, undermining the position of a 'skilled' worker unless he goes onto to an even higher level of skills that eventually will not be sufficient, as persons in the Third-World can undercut his labour costs with the same skill set. The only way for workers to have wages to rise in line with their productivity is to threaten capital with strikes and stoppages, to support pro-labour governments, and to make transnational unions that make it increasingly difficult for capital to play one set of workers against other workers.

However, the top 1% have other ways of getting our money apart from pure exploitation. For instance, they have 401k accounts. The 401k is essentially a big swindle as most investors have the faintest idea of what they are investing in and with all those trillions of retirement funds sloshing around the markets, the losses of the average worker's retirement account is a gain for hedge funds and other 'insiders'. These elite group of investors and banks have the institutional power to determine where the markets go, the 'free market' at work. As Peter Gowan argues:

"the New Wall Street System was dominated by just five investment banks, holding over $4 trillion of assets, and able to call upon or move literally trillions more dollars from the institutions behind them, such as the commercial banks, the money-market funds, pension funds, and so on. The system was a far cry from the decentralized market with thousands of players, all slavish price-takers, depicted by neo-classical economics."

Thankfully, Bush's plan to privatize social security--a multi-trillion entitlement--was stopped. Bush's plan amounted to a taxpayer subsidy for the speculative players on the market, essentially the privatization of taxpayers. But, just imagine if it had been privatized; with the implosion of the stock market in the past years, millions of seniors would have been forced to work, or worse.

Another way that workers are being swindled is credit. This crisis is essentially a crisis of underconsumption, meaning that what is being produced is unable to bought by those who produce it. The graph is a visual representation of that crisis; however, this crisis of underconsumption had, until now, been avoided for three decades due to an ever expanding line of credit to consumers to the point where you could buy a house without having to present a name or income: the infamous NINJA loan. However, with the increase in interest rates in 2007, consumers were no longer able to afford the payments and the entire financial system was thrown under the bus. The banks, in order to lend more and reduce individual risk collateralized the debt, throwing good debt with bad into CDOs and other financial 'innovation'--the justification for the 'liberalization' of financial markets was so that 'innovation' would lead to greater access to credit and lower cost to consumers. In so doing, the financial industry essentially reduced individual risk and lower costs for consumers, but massively increased systemic risk, which in the end was the immediate cause of the crisis. The inability to determine the value of the financial asset, due to the mixing of good and bad debt, lead to the de facto insolvency of the banks. Therefore, the real cost to the average consumer is in the trillions,largely in the form of interest bearing debt that will have to be paid by future generations, due to the bank and shareholder bailouts.

Here is the problem that Michael Moore will probably deal with, that the bailouts did not come with any real strings. The result is that the financial industry is making profits again, but in the same way they made them before. As Paul Krugman stated in a recent op-ed;

"The American economy remains in dire straits, with one worker in six unemployed or underemployed. Yet Goldman Sachs just reported record quarterly profits — and it’s preparing to hand out huge bonuses, comparable to what it was paying before the crisis. What does this contrast tell us? shows that Wall Street’s bad habits — above all, the system of compensation that helped cause the financial crisis — have not gone shows that by rescuing the financial system without reforming it, Washington has done nothing to protect us from a new crisis, and, in fact, has made another crisis more likely...What’s clear is that Wall Street in general, Goldman very much included, benefited hugely from the government’s provision of a financial backstop — an assurance that it will rescue major financial players whenever things go wrong...You can argue that such rescues are necessary if we’re to avoid a replay of the Great Depression. In fact, I agree. But the result is that the financial system’s liabilities are now backed by an implicit government guarantee.If these lobbying efforts succeed, we’ll have set the stage for an even bigger financial disaster a few years down the road. The next crisis could look something like the savings-and-loan mess of the 1980s, in which deregulated banks gambled with, or in some cases stole, taxpayers’ money — except that it would involve the financial industry as a whole."

Back to consumer credit. Credit amounts to another way that income is filtered back to the top 1%. The logic is simple, you are paid insufficient wages, therefore you require credit to maintain a decent standard of living. The payments you make go to who? The banks and credit card companies and those profits go to the owners of the institutions. But it gets even more perverse, banks and other financial institutions are increasingly making more and more of their profits BECAUSE workers are broke, as Jon Stewart said recently on The Daily Show, "they are making BECAUSE the customers are broke". They are making much of their profits on overdraft fees and other fees based on people's inability to pay!

How does one get trapped into the credit crunch? The credit is given to you at attractive rates, we all get those 'limited time offers' to induce you to get into the trap of debt. This has a historical parallel with the beginnings of capitalism with the 'wage advance'. As Stephen A. Marglin argues, "Wage advances were to the capitalist what free samples of heroin are to the pusher; a means of creating dependence...Wage advances legally bound the worker to his master" (79); and credit legally binds the consumer to finance capital in a embrace that can only be broken through self-imposed poverty--since, as we have seen, wages are insufficient to cover more than the most basic of costs--, bankruptcy or the accumulation of even more debt to pay off the older debt. A friend of mine who works for a credit card company once told me what her boss stated, and I paraphrase "we want them pay until they die". The intention is for an individual to basically only pay the interest and the fees, because if someone actually pays their principle, then they don't make money.

Peter Gowan puts it best:

"The stock-market bubble of the 1990s raised the paper value of the private pensions of the mass of Americans, thus giving them a sense that they were becoming richer and could spend (and indebt themselves) more. The housing bubble had a double effect: it not only made American consumers feel confident that the value of their house was rising, enabling them to spend more; it was reinforced by a strong campaign from the banks, as we have seen, urging them to take out second mortgages and use the new money for consumption spending...This Anglo-Saxon model was based upon the accumulation of consumer debt: it was growth today, paid for by hoped-for growth tomorrow. It was not based upon strengthening the means of value-generation in the economies concerned. In short, it was a bluff, buttressed by some creative national accounting practices which exaggerated the extent of the American boom and productivity gains in the us economy.36"

Trickle-up economics continues...


The Subversion of Democracy: Uruguay, 1971

Very interesting interview about the plans of the Brazilian military, with American support, to invade Uruguay if the left-wing Frente Amplio or if Blanco candidate, Wilson Ferreira were to win the 1971 election. The invasion was to supposed to occur only if the electoral fraud against Ferreira failed, as the FA was not a serious contender for the presidency at that point in time. In line with the reactionary movement of the dominant classes at the time. The once hegemonic liberal-Battlismo that structured the popular interpellations of 'the people' and democracy was undermined by the more populist Ferreira and of the FA into a more socialist, or nationalist interpellation that directly threatened American interests and the efficacy of the anti-communist/populist crusade of the reactionary powers internal to Latin American and external to it. As the author notes:

"Leicht explicó que, entre 1964 y 1971, el Ejército de Brasil apostó tropas en la frontera con Uruguay, y que, además, con la iniciativa del embajador argentino en Brasil, Osiris Villegas, se elaboró el "Plan 30 horas", para invadir el territorio uruguayo en caso de que ganaran las elecciones o el Frente Amplio o el Partido Nacional, de la mano de Wilson Ferreira Aldunate. "Brasil y los Estados Unidos no iban a permitir un nuevo gobierno de izquierda. Estaba la experiencia de Chile y Perú, y no podían dejar que en otro país más triunfara la izquierda. Y no se trataba sólo del Frente Amplio: Wilson era muy resistido en su discurso, no era agradable para los intereses de los Estados Unidos".


Fact is that the electoral fraud was successful, as the final results of the 1971 election show:

Partido Colorado: 40.96
Partido Nacional: 40.19
Frente Amplio: 18.28

The election results show that at least 59 percent of the Uruguayan population wanted greater government control over the economy, tending towards socialization. This is, arguably, the end result of democraticization and popular incorporation. The only way to stop this was to literally coerce society to accept capitalist dominance. As Laclau argues about Latin America at the critical juncture of the 1970s, "the Latin American masses have developed the antagonism inherent in democratic interpellations to a point where it is very difficult for any faction of the bourgeoisie to absorb and neutralise them. This has led, in turn, to a consolidation of the power blocs and an accentuation of their repressive policies towards the dominated classes' (Laclau 194). Brazil was the nexus of the reactionary movement in the continent as its 1964 coup d'etat against populist Goulart started a twenty-year program of dominance and repression by increasingly alienated dominant classes from the democratic system, unencumbered with the pretense of hegemony and whose primary goal was depoliticalization and establishing a Hayekian, 'technical democracy' where substantive issues of capitalist hegemony would be forever be closed.


Obama is pissing me off, so I need to rant!

The recent cover of Newsweek magazine shows a blue ballon with a title saying that the recession is over, not so fast. The "green-shoots" in the economy, like those that Obama is talking about, higher stock market valuations, higher house prices, etc., suggest, at least superficially that the recssion is over; however, it is not. The recession is not solved because the fundamental problem underlying the recession has not been solved, primarily that workers are not making enough to consume what they consume. The problem is summed up by liberal economist Nouriel Roubini:

"Monetary and fiscal stimulus in most countries has done little to slow down the rate of job losses. As a result, total labor income – the product of jobs times hours worked times average hourly wages – has fallen dramatically...falling labor income implies falling consumption for households, which have already been hard hit by a massive loss of wealth (as the value of equities and homes has fallen) and a sharp rise in their debt ratios. With consumption accounting for 70% of US GDP in the US, and a similarly high percent in other advanced economies, this implies that the recession will last longer, and that economic recovery next year will be anemic (less than 1% growth in the US and even lower growth rates in Europe and Japan)."

The problem then, as Roubini sees it will be how the government will manage to contain the crisis of underconsumption, with rapidly deteriorating fiscal accounts and high debt loads the government will be under pressure from capital for higher interest rates that will choke off any recovery. As Roubini states:

"the higher the unemployment rate goes, the wider budget deficits will become, as automatic stabilizers reduce revenue and increase spending (for example, on unemployment benefits). Thus, an already unsustainable US fiscal path, with budget deficits above 10% of GDP and public debt expected to double as a share of GDP by 2014, becomes even worse."

However, Roubini sees the problem yet ignores it at the same time. As Louis Althusser states about any "theory", particularly in reference to economics:

"They [e.g. exploitation, surplus, class, etc] are invisible because they are rejected in principle, repressed from the field of the visible: and that is why their fleeting presence in the field when it does occur (in very peculiar and symptomatic circumstances) goes unperceived, and becomes literally an undivulgeable absence -- since the whole function of the field is not to see them, to forbid any sighting of them"

The crux of the problem--something that Roubini refuses to see or is unable to see because his theoretical lens denies that visibility of the problem--is that workers are not being compensated in accordance with their productivity and the implications that holds. Therefore, we have an imbalance in the economy, where the surplus is going disproportionately to the rich and finance; this led to the speculation that lead us to this crisis in first place. This is known as "financialization" of the economy and this has been happening since the 1980s when the collapse of the labour movement and globalization led to a structural readjustment of incomes to the rich. Globalization did not just emerge, it is a consequence of the strengthening of the labour movement in teh West during the Keynesian era. As Giovanni Arrighi notes,

"For what could more effectively restore company profit margins, lowered by the unruliness of the labour force, than the decentralization of production?...a company can only re-establish the internal hierarchial order so necessary for its functioning by organizing its productive and distributive operations at a work order to escape the decline of the rate of profit in teh 'mother-country' " (Geometry of Imeperialism, 144).

The objective, therefore, was to undermine high-income labour that was undermining accumulation in the West. This was not hidden by politicians or economists, it was proclaimed with pride as "supply-side economics"--neoliberalism. The new saviours of the economy were the rich. The logic went, give the money to those who invest, cut their taxes and let the free market flourish. We now are living with the consequences of that logic, the 'rich' have not invested more than before Reagan in fixed investment (productive investment); indeed, they have invested less, ergo less employment and lower incomes. The money that they have retained through the tax cuts have increasingly gone to the stock market, bond markets, etc., where speculation and higher profits reign. Employment has, in turn, become increasingly service based with low wages and precariousness as the rule.

What has been occurring in the US is that workers are making less in real terms than they were 30 years ago and the share of national income going to wages is at near, if not, historic lows. Workers are being "exploited" more than they were since at least the 1920s. Ergo, we have a crisis of under-consumption, although this crisis took a while to materialize and as a result the crisis is embedded very deep into the heart of the economy. The consumption of workers has been propped up through the credit mechanism and for 30 years it has worked at preventing the crisis from occurring, as long as the credit loop remained stable, but it was not going to and it set up, from the very beginning its own demise. This is how:

Workers are paid less, more money goes into profits and therefore investment in financial instruments. Finance capital gives back to the workers incomes through the debt mechanism, with interest, sucking more income out of the working classes. Finance gave consumers increasing larger and larger amounts of credit with lower and lower standards as the limits of the system began to show, e.g. NINJA loans. Then finance bundled these debts as securities selling them off for profit. This reduced individual risk for the firm, leading to riskier and riskier loans, but this increased systemic risk. Since the credit agencies were paid by the banks, they made these inherently unstable securities Triple-A, the highest rating you can get. The assumption was that workers would do everything in their power not to default on their homes and other assets. Eventually, workers could no longer sustain the debt payments as interest rates went up in 2007, the bet of the financial industry failed. Defaults occurred, especially with 'sub-prime' mortgages leading to the foreclosure crisis and erasing hundreds of billions worth of wealth and due to the downward pressure on house prices, home owners could no longer depend on their houses to pay for their consumption. Eventually, those Tripe-A securities became junk and the system almost collapsed; because no one knew the actual value of those securities, the assets of firms were under scrutiny and therefore the firms became insolvent. The government stepped in to re-capitalize the firms and take the "bad assets" off the books to make the firms solvent again.

Therefore, what Obama sees as green shoots signaling a revival of the economy is really just the rehashing of the old economy. As Paul Krugman states about the recent mega-profits of Goldman Sachs:

"The American economy remains in dire straits, with one worker in six unemployed or underemployed. Yet Goldman Sachs just reported record quarterly profits — and it’s preparing to hand out huge bonuses, comparable to what it was paying before the crisis. What does this contrast tell us? shows that Wall Street’s bad habits — above all, the system of compensation that helped cause the financial crisis — have not gone shows that by rescuing the financial system without reforming it, Washington has done nothing to protect us from a new crisis, and, in fact, has made another crisis more likely...What’s clear is that Wall Street in general, Goldman very much included, benefited hugely from the government’s provision of a financial backstop — an assurance that it will rescue major financial players whenever things go wrong...You can argue that such rescues are necessary if we’re to avoid a replay of the Great Depression. In fact, I agree. But the result is that the financial system’s liabilities are now backed by an implicit government guarantee.If these lobbying efforts succeed, we’ll have set the stage for an even bigger financial disaster a few years down the road. The next crisis could look something like the savings-and-loan mess of the 1980s, in which deregulated banks gambled with, or in some cases stole, taxpayers’ money — except that it would involve the financial industry as a whole."

Firstly, what this crisis amounts to then is the effective privatization of state coffers by finance capital. The thing is now that the banks are now, as Krugman states, are implicitly covered by the tax payer. This is akin to what happened in Argentina when the state was captured by finance capital and socialized private debt--otherwise known as 'right-wing populism'.

So what Obama is bleating on about is not a recovery, but the stage for a even greater crisis in the future. Obama has NOT fundamentally changed the structural problem at the heart of the American economy, instead he has PRESERVED the same system that got us into the crisis in the first place. Ultimately, workers are not being paid enough. The solution is to emphasize consumption, to redistribute wealth to workers, to increase government spending on social programs and to tax the rich to pay for it; otherwise that excess income will go into speculation and we have this problem all over again. Indeed, the crisis that Roubini talks about, that the country is on the precipice of a financial collapse is true if you assume that tax rates are immutable. Its time to come to grip with reality, the rich have not lived up to their share of the social contract and have caused immense damage to the general economy for their own parochial interests. There has to be a strengthened union movement to reverse the 'taproot' of the problem, which is underconsumption. Otherwise, we will be in the same boat again very soon. As Roubini warns:

"The irrational exuberance that drove a three-month bear-market rally in the spring is now giving way to a sober realization among investors that the global recession will not be over until year end, that the recovery will be weak and well below trend, and that the risks of a double-dip W-shaped recession are rising."

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