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Casino Capitalism: Neoliberalism in Western countries

"When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done"

John Maynard Keynes

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Financialization is a process whereby financial markets, financial institutions, and financial elites gain greater influence over economic policy and economic outcomes. Financialization transforms the functioning of economic systems at both the macro and micro levels.

Its principal impacts are to (1) elevate the significance of the financial sector relative to the real sector, (2) transfer income from the real sector to the financial sector, and (3) increase income inequality and contribute to wage stagnation. Additionally, there are reasons to believe that financialization may put the economy at risk of debt deflation and prolonged recession.

Financialization operates through three different conduits: changes in the structure and operation of financial markets, changes in the behavior of nonfinancial corporations, and changes in economic policy.

Countering financialization calls for a multifaceted agenda that (1) restores policy control over financial markets, (2) challenges the neoliberal economic policy paradigm encouraged by financialization, (3) makes corporations responsive to interests of stakeholders other than just financial markets, and (4) reforms the political process so as to diminish the influence of corporations and wealthy elites.

Thomas Palley, See http://www.levyinstitute.org/pubs/wp_525.pdf

Speculation and gambling were always a part of Wall Street but since the 1930’s they were just a side-show, now they are the show.

Comment to Matt Taibbi article Fannie, Freddie, and the New Red and Blue t


Introduction

“The sense of responsibility in the financial community
for the community as a whole is not small. It is nearly nil.”

-- John Kenneth Galbraith, The Great Crash of 1929

The term Casino Capitalism as a specific phase of neoliberal transformation of capitalism. Politically it was slow motion corporate coup d'état, which started in 70th and is now accomplished in the USA and other Western countries which buries social-democratic (New Deal style) model of capitalism.  It hypertrophied police functions of state (in the form of national-security state)  while completely avoiding economic sphere in ways other then enforcement of laws (with a notable exclusion from this top 1% -- Masters of the Universe). In this sense it is the opposite of communism (i.e. an entirely state-planned economy) and presupposed a deregulated economy (in a sense of the "law of jungle" as a business environment) , but with extremely strong militarized state, suppressing all the attempts to challenge the new "nomenklatura" (much like was the case in the USSR).  It is also called economic liberalism or neoliberalism

“Liberalism” can refer to political, economic, or even religious ideas. In the U.S. political liberalism has been a strategy to prevent social conflict. It is presented to poor and working people as progressive compared to conservative or Right wing. Economic liberalism is different. Conservative politicians who say they hate “liberals” — meaning the political type — have no real problem with economic liberalism, including neoliberalism.

In other words this is a variant of neoliberal model of corporatism used in wealthy Western countries during the period of "cheap hydrocarbons".  The period that is probably near the end and which by some estimate can last only another 50 years or so.  The major crisis of casino capitalism in 2008 was connected both with financial excesses (caused by moving to semi-criminal ways of extracting return on capital, typical for casino capitalism),  but also with the rise of the price of oil and decrease of  Energy returned on energy invested (EROEI)In this sense the current low oil price period that started in late 2014 can be viewed as the "last hurrah" of the casino capitalism.

In understanding neoliberal transformation of the society since early 80th it is important to understanding of the key role of financialization in this process. When major services are privatized (education, healthcare, pension plans) financial institution insert themselves as intermediaries in this arrangement and make it the main source of their profits.  Also contrary to neoliberal propaganda this process is aided and abetted by state. State is used by neoliberalism as a tool of enforcing market relations even where they are not useless or even harmful (education). All this talk about irresolvable controversy between market and state is for gullible fools. In reality, being Trotskyism for rich, neoliberalism uses power of the state to enforce market relations  by force on reluctant population even in areas where this can do no good. That make really it close to Soviet Communism. As Marx noted "History repeats itself, first as tragedy, second as farce."

A very good discussion of the role of Financialisation in entrenchment of neoliberalism in modern societies can be found in the book by Costas Lapavitsas. Some highlights are provided inhis Guardian article Finance's hold on our everyday life must be broken

This extraordinary public largesse towards private banks was matched by austerity and wage reductions for workers and households. As for restructuring finance, nothing fundamental has taken place. The behemoths that continue to dominate the global financial system operate in the knowledge that they enjoy an unspoken public guarantee. The unpalatable reality is that financialisation will persist, despite its costs for society.

Financialisation represents a historic and deep-seated transformation of mature capitalism. Big businesses have become "financialised" as they have ample profits to finance investment, rely less on banks for loans and play financial games with available funds. Big banks, in turn, have become more distant from big businesses, turning to profits from trading in open financial markets and from lending to households. Households have become "financialised" too, as public provision in housing, education, health, pensions and other vital areas has been partly replaced by private provision, access to which is mediated by the financial system. Not surprisingly, households have accumulated a tremendous volume of financial assets and liabilities over the past four decades.

The penetration of finance into the everyday life of households has not only created a range of dependencies on financial services, but also changed the outlook, mentality and even morality of daily life. Financial calculation evaluates everything in pennies and pounds, transforming the most basic goods – above all, housing – into "investments". Its logic has affected even the young, who have traditionally been idealistic and scornful of pecuniary calculation. Fertile ground has been created for neoliberal ideology to preach the putative merits of the market.

Financialisation has also created new forms of profit associated with financial markets and transactions. Financial profit can be made out of any income, or any sum of money that comes into contact with the financial sphere. Households, for example, generate profits for finance as debtors (mostly by paying interest on mortgages) but also as creditors (mostly by paying fees and charges on pension funds and insurance). Finance is not particular about how and where it makes its profits, and certainly does not limit itself to the sphere of production. It ranges far and wide, transforming every aspect of social life into a profit-making opportunity.

The traditional image of the person earning financial profits is the "rentier", the individual who invests funds in secure financial assets. In the contemporary financialised universe, however, those who earn vast returns are very different. They are often located within a financial institution, presumably work to provide financial services, and receive vast sums in the form of wages, or more often bonuses. Modern financial elites are prominent at the top of the income distribution, set trends in conspicuous consumption, shape the expensive end of the housing market, and transform the core of urban centres according to their own tastes.

Financialised capitalism is, thus, a deeply unequal system, prone to bubbles and crises – none greater than that of 2007-09. What can be done about it? The most important point in this respect is that financialisation does not represent an advance for humanity, and very little of it ought to be preserved. Financial markets are, for instance, able to mobilise advanced technology employing some of the best-trained physicists in the world to rebalance prices across the globe in milliseconds. This "progress" allows financiers to earn vast profits; but where is the commensurate benefit to society from committing such expensive resources to these tasks?

The term "casino capitalism" was coined by Susan Strange who used it as a title of her book Casino Capitalism published in 1986. She was one of the first who realized that

  1. "The roots of the world's economic disorder are monetary and financial";
  2. "The disorder has not come about by accident, but has in fact been nurtured and encouraged by a series of government decisions." (p. 60). In other words its was a counter-revolution of the part of ruling elite which lost its influence in 30th (dismantling New Deal from above in the USA (Reaganomics) or Thatcherism in the GB).

According to Susan Strange transformation of industrial capitalism into neoliberal capitalism ("casino capitalism") involved five trends. All of them increased the systemic instability of the system and the level of political corruption:

  1. Innovations in the way in which financial markets work due to introduction of computers;
  2. The sheer size of markets; (with the introduction of 401K the size of stock market multiplied, etc)
  3. Commercial banks turned into investment banks;
  4. The emergence of Asian nations as large players;
  5. The shift to self-regulation by banks (pp.9-10).

Now it is pretty much established fact that the conversion from "industrial capitalism" to neoliberal, completely financialialized "casino capitalism" is the natural logic of development of capitalism. In early and incomplete matter this trend was noticed at early 1990th by many thinkers. This is just the second iteration of the same trend which was interrupted by the Great Depression and subsequent WWII. So, in a way, replacement of industrial capitalism with financial capitalism in a natural tendency within the capitalism itself and corruption was contributing, but not decisive factor.  The same is true about globalization, especially about globalization of financial flows, typical for casino capitalism.

Also this conversion did not happen due to lack of oversight or as a folly. It was a couscous choice made by the US and GB elite, both of which faced deterioration of rates of return on capital. Also unlike "industrial capitalism" which was more-or-less stable system, able to outcompete the neo-theocratic system of the USSR, the financial capitalism is unstable in the same sense as radioactive elements are unstable.  And this instability tend to increase with time. So there is probably natural half-life period for neoliberalism as a social system. It might be already reached in 2008.  In we assume that global victory of neoliberalism happened in 1990. It is just 18 years.  If we think that it happened in late 60th, then it is closer to 50 years.

The global crisis of neoliberal capitalism which started from bursting the USA subprime housing bubble in 2008 undermined ideological legitimacy of its central claim that "free markets" lead to faster and more uniform economic development of all countries. While the peak of its "ideological" power might be over (much like the peak of attractiveness of "command socialism" was over after WWII), it will exist in a zombie state for a long time due to economic and military power of the USA and G7.  And as we know from Hollywood films, zombies can be especially bloodthirsty. It probably will remain the dominant force for at least the next two decades pursuing the same policy of "forceful" opening of energy rich  and resource countries for western multinationals intact using color revolutions and local wars.  But as Napoleon quipped "You can do anything with bayonets, you just can't sit on them".

Conversion to neoliberal capitalism was a reaction on stagnation of industrial production and as such it was nurtured and encouraged by a series of government decisions for the last 50 years. Stagnation of industrial production made expansion of financial sector of paramount importance for the ruling elite and by extension for Congress which represents this elite. House vote 377:4 for Commodity Futures Modernization Act of 2000 is pretty telling in this respect.

There were also at least two important parallel developments.

Most respectable authors like Henry Giroux in his article in Counterpunch generally consider the term "casino capitalism" to be an equivalent to the term Neoliberalism. Here is a relevant quote from Henry Giroux's Authoritarian Politics in the Age of Casino Capitalism :

There is more at work here than simply a ramped up version of social Darwinism with its savagely cruel ethic of “reward the rich, penalize the poor, [and] let everyone fend for themselves,” [ii] there is also a full scale attack on the social contract, the welfare state, economic equality, and any viable vestige of moral and social responsibility. The Romney-Ryan appropriation of Ayn Rand’s ode to selfishness and self-interest is of particular importance because it offers a glimpse of a ruthless form of extreme capitalism in which the poor are considered “moochers,” viewed with contempt, and singled out to be punished. But this theocratic economic fundamentalist ideology does more. It destroys any viable notion of the and civic virtue in which the social contract and common good provide the basis for creating meaningful social bonds and instilling in citizens a sense of social and civic responsibility. The idea of public service is viewed with disdain just as the work of individuals, social groups, and institutions that benefit the citizenry at large are held in contempt.

As George Lakoff and Glenn W. Smith point out, casino capitalism creates a culture of cruelty: “its horrific effects on individuals-death, illness, suffering, greater poverty, and loss of opportunity, productive lives, and money.”[iii]

But it does more by crushing any viable notion of the common good and public life by destroying “the bonds that hold us together.”[iv] Under casino capitalism, the spaces, institutions, and values that constitute the public are now surrendered to powerful financial forces and viewed simply as another market to be commodified, privatized and surrendered to the demands of capital. With religious and market-driven zealots in charge, politics becomes an extension of war; greed and self-interest trump any concern for the well-being of others; reason is trumped by emotions rooted in absolutist certainty and militaristic aggression; and skepticism and dissent are viewed as the work of Satan.

If the Republican candidacy race of 2012 is any indication, then political discourse in the United States has not only moved to the right—it has been introducing totalitarian values and ideals into the mainstream of public life. Religious fanaticism, consumer culture, and the warfare state work in tandem with neoliberal economic forces to encourage privatization, corporate tax breaks, growing income and wealth inequality, and the further merging of the financial and military spheres in ways that diminish the authority and power of democratic governance.[v] Neoliberal interests in freeing markets from social constraints, fueling competitiveness, destroying education systems, producing atomized subjects, and loosening individuals from any sense of social responsibility prepare the populace for a slow embrace of social Darwinism, state terrorism, and the mentality of war — not least of all by destroying communal bonds, dehumanizing the other, and pitting individuals against the communities they inhabit.

Totalitarian temptations now saturate the media and larger culture in the language of austerity as political and economic orthodoxy. What we are witnessing in the United States is the normalization of a politics that exterminates not only the welfare state, and the truth, but all those others who bear the sins of the Enlightenment — that is, those who refuse a life free from doubt. Reason and freedom have become enemies not merely to be mocked, but to be destroyed. And this is a war whose totalitarian tendencies are evident in the assault on science, immigrants, women, the elderly, the poor, people of color, and youth.

What too often goes unsaid, particularly with the media’s focus on inflammatory rhetoric, is that those who dominate politics and policymaking, whether Democrats or Republicans, do so largely because of their disproportionate control of the nation’s income and wealth. Increasingly, it appears these political elite choose to act in ways that sustain their dominance through the systemic reproduction of an iniquitous social order. In other words, big money and corporate power rule while electoral politics are rigged. The secrecy of the voting booth becomes the ultimate expression of democracy, reducing politics to an individualized purchase—a crude form of economic action. Any form of politics willing to invest in such ritualistic pageantry only adds to the current dysfunctional nature of our social order, while reinforcing a profound failure of political imagination. The issue should no longer be how to work within the current electoral system, but how to dismantle it and construct a new political landscape that is capable of making a claim on equity, justice, and democracy for all of its inhabitants. Obama’s once inspiring call for hope has degenerated into a flight from responsibility.

The Obama administration has worked to extend the policies of the George W. Bush administration by legitimating a range of foreign and domestic policies that have shredded civil liberties, expanded the permanent warfare state, and increased the domestic reach of the punitive surveillance state. And if Romney and his ideological cohorts, now viewed as the most extremists faction of the Republican Party, come to power, surely the existing totalitarian and anti-democratic tendencies at work in the United States will be dangerously intensified.

History

Alternatively, we could have spent more time studying the work of Hyman Minsky. We could also have considered the possibility that, just as Keynes’s ideas were tested to destruction in the 1950s, 1960s and 1970s, Milton Friedman’s ideas might suffer a similar fate in the 1980s, 1990s and 2000s. All gods fail, if one believes too much. Keynes said, of course, that "practical men … are usually the slaves of some defunct economist". So, of course, are economists, even if the defunct economists are sometimes still alive.

Martin Wolf

 


 

 

Casino capitalism  is a nickname for nailibelism. Probably more properly nickname would be  financial corporatism. While the key idea of corporatism: that political actors are not individual people, but some associations and first of all corporations (which are officially considered to be "persons" and have rights as well as trade unions and some other associations) remains intact, financial corporatism is different from classic corporatism in several major ways:

Historically corporatism in various modifications became dominant social system after WWII and defeated "command socialism" as was implemented in the USSR. Here is an instructive review of corporatism history (The Economic System of Corporatism):

In the last half of the 19th century people of the working class in Europe were beginning to show interest in the ideas of socialism and syndicalism. Some members of the intelligentsia, particularly the Catholic intelligentsia, decided to formulate an alternative to socialism which would emphasize social justice without the radical solution of the abolition of private property. The result was called Corporatism. The name had nothing to do with the notion of a business corporation except that both words are derived from the Latin word for body, corpus.

The basic idea of corporatism is that the society and economy of a country should be organized into major interest groups (sometimes called corporations) and representatives of those interest groups settle any problems through negotiation and joint agreement. In contrast to a market economy which operates through competition a corporate economic works through collective bargaining. The American president Lyndon Johnson had a favorite phrase that reflected the spirit of corporatism. He would gather the parties to some dispute and say, "Let us reason together."

Under corporatism the labor force and management in an industry belong to an industrial organization. The representatives of labor and management settle wage issues through collective negotiation. While this was the theory in practice the corporatist states were largely ruled according to the dictates of the supreme leader.

One early and important theorist of corporatism was Adam Müller, an advisor to Prince Metternich in what is now eastern Germany and Austria. Müller propounded his views as an antidote to the twin dangers of the egalitarianism of the French Revolution and the laissez faire economics of Adam Smith. In Germany and elsewhere there was a distinct aversion among rulers to allow markets to function without direction or control by the state. The general culture heritage of Europe from the medieval era was opposed to individual self-interest and the free operation of markets. Markets and private property were acceptable only as long as social regulation took precedence over such sinful motivations as greed.

Coupled with the anti-market sentiments of the medieval culture there was the notion that the rulers of the state had a vital role in promoting social justice. Thus corporatism was formulated as a system that emphasized the positive role of the state in guaranteeing social justice and suppressing the moral and social chaos of the population pursuing their own individual self-interests. And above all else, as a political economic philosophy corporatism was flexible. It could tolerate private enterprise within limits and justify major projects of the state. Corporatism has sometimes been labeled as a Third Way or a mixed economy, a synthesis of capitalism and socialism, but it is in fact a separate, distinctive political economic system.

Although rulers have probably operated according to the principles of corporatism from time immemorial it was only in the early twentieth century that regimes began to identify themselves as corporatist. The table below gives some of those explicitly corporatist regimes.

Corporatist Regimes of the Early Twentieth Century
System Name Country Period Leader
National Corporatism Italy 1922-1945 Benito Mussolini
Country, Religion, Monarchy Spain 1923-1930 Miguel Primo de Rivera
National Socialism Germany 1933-1945 Adolph Hitler
National Syndicalism Spain 1936-1973 Francisco Franco
New State Portugal 1932-1968 Antonio Salazar
New State Brazil 1933-1945 Getulio Vargas
New Deal United States 1933-1945 Franklin Roosevelt
Third Hellenic Civilization Greece 1936-1941 Ioannis Metaxas
Justice Party Argentina 1943-1955 Juan Peron

In the above table several of the regimes were brutal, totalitarian dictatorships, usually labeled fascist, but not all the regimes that had a corporatist foundation were fascist. In particular, the Roosevelt New Deal despite its many faults could not be described as fascist. But definitely the New Deal was corporatist. The architect for the initial New Deal program was General Hugh Johnson. Johnson had been the administrator of the military mobilization program for the U.S. under Woodrow Wilson during World War I. It was felt that he did a good job of managing the economy during that period and that is why he was given major responsibility for formulating an economic program to deal with the severe problems of the Depression. But between the end of World War I and 1933 Hugh Johnson had become an admirer of Mussolini's National Corporatist system in Italy and he drew upon the Italian experience in formulating the New Deal.

It should be noted that many elements of the early New Deal were later declared unconstitutional and abandoned, but some elements such as the National Labor Relations Act which promoted unionization of the American labor force are still in effect. One part of the New Deal was the development of the Tennessee River Valley under the public corporation called the Tennessee Valley Authority (TVA). Some of the New Dealer saw TVA as more than a public power enterprise. They hoped to make TVA a model for the creation of regional political units which would replace state governments. Their goal was not realized. The model for TVA was the river development schemes carried out in Spain in the 1920's under the government of Miguel Primo de Rivera. Jose Antonio Primo de Rivera, the son of Miguel Primo de Rivera, was the founder of Franco's National Syndicalism.

Corporatist regime typically promote large governmental projects such as TVA on the basis that they are too large to be funded by private enterprise. In Brazil the Vargas regime created many public enterprises such as in iron and steel production which it felt were needed but private enterprise declined to create. It also created an organized labor movement that came to control those public enterprises and turned them into overstaffed, inefficient drains on the public budget.

Although the above locates the origin of corporatism in 19th century France it roots can be traced much further back in time. Sylvia Ann Hewlett in her book, The Cruel Dilemmas of Development: Twentieth Century Brazil, says,

Corporatism is based on a body of ideas that can be traced through Aristotle, Roman law, medieval social and legal structures, and into contemporary Catholic social philosophy. These ideas are based on the premise that man's nature can only be fulfilled within a political community.
..........
The central core of the corporatist vision is thus not the individual but the political community whose perfection allows the individual members to fulfill themselves and find happiness.
...............
The state in the corporatist tradition is thus clearly interventionist and powerful.

Corporatism is collectivist; it is a different version of collectivism than socialism but it is definitely collectivist. It places some importance on the fact that private property is not nationalized, but the control through regulation is just as real. It is de facto nationalization without being de jure nationalization.

Although Corporatism is not a familiar concept to the general public, most of the economies of the world are corporatist in nature. The categories of socialist and pure market economy are virtually empty. There are only corporatist economies of various flavors.

These flavors of corporatism include the social democratic regimes of Europe and the Americas, but also the East Asian and Islamic fundamentalist regimes such as Taiwan, Singapore and Iran. The Islamic socialist states such as Syria, Libya and Algeria are more corporatist than socialist, as was Iraq under Saddam Hussain. The formerly communist regimes such as Russia and China are now clearly corporatist in economic philosophy although not in name.

The concept of Quite Coup

Sine ira et studio

Tacitus, see Wikipedia

The term "Quiet coup" which means the hijacking of the political power in the USA by financial oligarchy was introduced by Simon H. Johnson, a British-American economist, who currently is the Ronald A. Kurtz Professor of Entrepreneurship at the MIT Sloan School of Management and a senior fellow at the Peterson Institute for International Economics. From March 2007 through the end of August 2008, he was Chief Economist of the International Monetary Fund. The term was introduced in his article in Atlantic magazine, published in May 2009(The Quiet Coup - Simon Johnson - The Atlantic). Which opens with a revealing paragraph:

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government

The wealth of financial sector gave it unprecedented opportunities of simply buying the political power iether directly or indirectly (via revolving door mechanism):

Becoming a Banana Republic

In its depth and suddenness, the U.S. economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets (and only in emerging markets): South Korea (1997), Malaysia (1998), Russia and Argentina (time and again). In each of those cases, global investors, afraid that the country or its financial sector wouldn’t be able to pay off mountainous debt, suddenly stopped lending. And in each case, that fear became self-fulfilling, as banks that couldn’t roll over their debt did, in fact, become unable to pay. This is precisely what drove Lehman Brothers into bankruptcy on September 15, causing all sources of funding to the U.S. financial sector to dry up overnight. Just as in emerging-market crises, the weakness in the banking system has quickly rippled out into the rest of the economy, causing a severe economic contraction and hardship for millions of people.

But there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.

Top investment bankers and government officials like to lay the blame for the current crisis on the lowering of U.S. interest rates after the dotcom bust or, even better—in a “buck stops somewhere else” sort of way—on the flow of savings out of China. Some on the right like to complain about Fannie Mae or Freddie Mac, or even about longer-standing efforts to promote broader homeownership. And, of course, it is axiomatic to everyone that the regulators responsible for “safety and soundness” were fast asleep at the wheel.

But these various policies — lightweight regulation, cheap money, the unwritten Chinese-American economic alliance, the promotion of homeownership—had something in common. Even though some are traditionally associated with Democrats and some with Republicans, they all benefited the financial sector. Policy changes that might have forestalled the crisis but would have limited the financial sector’s profits — such as Brooksley Born’s now-famous attempts to regulate credit-default swaps at the Commodity Futures Trading Commission, in 1998—were ignored or swept aside.

The financial industry has not always enjoyed such favored treatment. But for the past 25 years or so, finance has boomed, becoming ever more powerful. The boom began with the Reagan years, and it only gained strength with the deregulatory policies of the Clinton and George W. Bush administrations. Several other factors helped fuel the financial industry’s ascent. Paul Volcker’s monetary policy in the 1980s, and the increased volatility in interest rates that accompanied it, made bond trading much more lucrative. The invention of securitization, interest-rate swaps, and credit-default swaps greatly increased the volume of transactions that bankers could make money on. And an aging and increasingly wealthy population invested more and more money in securities, helped by the invention of the IRA and the 401(k) plan. Together, these developments vastly increased the profit opportunities in financial services.

Not surprisingly, Wall Street ran with these opportunities. From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent. Pay rose just as dramatically. From 1948 to 1982, average compensation in the financial sector ranged between 99 percent and 108 percent of the average for all domestic private industries. From 1983, it shot upward, reaching 181 percent in 2007.

The great wealth that the financial sector created and concentrated gave bankers enormous political weight — a weight not seen in the U.S. since the era of J.P. Morgan (the man). In that period, the banking panic of 1907 could be stopped only by coordination among private-sector bankers: no government entity was able to offer an effective response. But that first age of banking oligarchs came to an end with the passage of significant banking regulation in response to the Great Depression; the reemergence of an American financial oligarchy is quite recent.

He further researched this theme in his book 2010 book 13 Bankers The Wall Street Takeover and the Next Financial Meltdown  (ISBN 978-0307379054), coauthored with James Kwak. They also founded and regularly contributes to the economics blog The Baseline Scenario. See also History of Casino Capitalism

The net effect of the ideological counter-revolution based on market fundamentalism ideology was that it restored the power of financial oligarchy typical for Gilded Age. As Simon Johnson argues that was partially done by subverting regulators and that oversize institutions always disproportionately influence public policy:

The second problem the U.S. faces—the power of the oligarchy—is just as important as the immediate crisis of lending. And the advice from the IMF on this front would again be simple: break the oligarchy.

Oversize institutions disproportionately influence public policy; the major banks we have today draw much of their power from being too big to fail. Nationalization and re-privatization would not change that; while the replacement of the bank executives who got us into this crisis would be just and sensible, ultimately, the swapping-out of one set of powerful managers for another would change only the names of the oligarchs.

Ideally, big banks should be sold in medium-size pieces, divided regionally or by type of business. Where this proves impractical—since we’ll want to sell the banks quickly—they could be sold whole, but with the requirement of being broken up within a short time. Banks that remain in private hands should also be subject to size limitations.

This may seem like a crude and arbitrary step, but it is the best way to limit the power of individual institutions in a sector that is essential to the economy as a whole. Of course, some people will complain about the "efficiency costs" of a more fragmented banking system, and these costs are real. But so are the costs when a bank that is too big to fail—a financial weapon of mass self-destruction—explodes. Anything that is too big to fail is too big to exist.

To ensure systematic bank breakup, and to prevent the eventual reemergence of dangerous behemoths, we also need to overhaul our antitrust legislation. Laws put in place more than 100years ago to combat industrial monopolies were not designed to address the problem we now face. The problem in the financial sector today is not that a given firm might have enough market share to influence prices; it is that one firm or a small set of interconnected firms, by failing, can bring down the economy. The Obama administration’s fiscal stimulus evokes FDR, but what we need to imitate here is Teddy Roosevelt’s trust-busting.

Caps on executive compensation, while redolent of populism, might help restore the political balance of power and deter the emergence of a new oligarchy. Wall Street’s main attraction—to the people who work there and to the government officials who were only too happy to bask in its reflected glory—has been the astounding amount of money that could be made. Limiting that money would reduce the allure of the financial sector and make it more like any other industry.

Still, outright pay caps are clumsy, especially in the long run. And most money is now made in largely unregulated private hedge funds and private-equity firms, so lowering pay would be complicated. Regulation and taxation should be part of the solution. Over time, though, the largest part may involve more transparency and competition, which would bring financial-industry fees down. To those who say this would drive financial activities to other countries, we can now safely say: fine.

Two Paths

To paraphrase Joseph Schumpeter, the early-20th-century economist, everyone has elites; the important thing is to change them from time to time. If the U.S. were just another country, coming to the IMF with hat in hand, I might be fairly optimistic about its future. Most of the emerging-market crises that I’ve mentioned ended relatively quickly, and gave way, for the most part, to relatively strong recoveries. But this, alas, brings us to the limit of the analogy between the U.S. and emerging markets.

Emerging-market countries have only a precarious hold on wealth, and are weaklings globally. When they get into trouble, they quite literally run out of money—or at least out of foreign currency, without which they cannot survive. They must make difficult decisions; ultimately, aggressive action is baked into the cake. But the U.S., of course, is the world’s most powerful nation, rich beyond measure, and blessed with the exorbitant privilege of paying its foreign debts in its own currency, which it can print. As a result, it could very well stumble along for years—as Japan did during its lost decade—never summoning the courage to do what it needs to do, and never really recovering. A clean break with the past—involving the takeover and cleanup of major banks—hardly looks like a sure thing right now. Certainly no one at the IMF can force it.

In my view, the U.S. faces two plausible scenarios. The first involves complicated bank-by-bank deals and a continual drumbeat of (repeated) bailouts, like the ones we saw in February with Citigroup and AIG. The administration will try to muddle through, and confusion will reign.

Boris Fyodorov, the late finance minister of Russia, struggled for much of the past 20 years against oligarchs, corruption, and abuse of authority in all its forms. He liked to say that confusion and chaos were very much in the interests of the powerful—letting them take things, legally and illegally, with impunity. When inflation is high, who can say what a piece of property is really worth? When the credit system is supported by byzantine government arrangements and backroom deals, how do you know that you aren’t being fleeced?

Our future could be one in which continued tumult feeds the looting of the financial system, and we talk more and more about exactly how our oligarchs became bandits and how the economy just can’t seem to get into gear.

The second scenario begins more bleakly, and might end that way too. But it does provide at least some hope that we’ll be shaken out of our torpor. It goes like this: the global economy continues to deteriorate, the banking system in east-central Europe collapses, and—because eastern Europe’s banks are mostly owned by western European banks—justifiable fears of government insolvency spread throughout the Continent. Creditors take further hits and confidence falls further. The Asian economies that export manufactured goods are devastated, and the commodity producers in Latin America and Africa are not much better off. A dramatic worsening of the global environment forces the U.S. economy, already staggering, down onto both knees. The baseline growth rates used in the administration’s current budget are increasingly seen as unrealistic, and the rosy "stress scenario" that the U.S. Treasury is currently using to evaluate banks’ balance sheets becomes a source of great embarrassment.

Under this kind of pressure, and faced with the prospect of a national and global collapse, minds may become more concentrated.

The conventional wisdom among the elite is still that the current slump "cannot be as bad as the Great Depression." This view is wrong. What we face now could, in fact, be worse than the Great Depression—because the world is now so much more interconnected and because the banking sector is now so big. We face a synchronized downturn in almost all countries, a weakening of confidence among individuals and firms, and major problems for government finances. If our leadership wakes up to the potential consequences, we may yet see dramatic action on the banking system and a breaking of the old elite. Let us hope it is not then too late.

It is pretty interesting to see how financial oligarchy filters information provided to the population to fit their biases. For example, the key facts about repeal of Glass-Steagall law  (BTW Joe Biden voted for it) mostly hidden from the public: 

Commodity Futures Trading Commission — under the leadership of Mr. Gramm’s wife, Wendy — had approved rules in 1989 and 1993 exempting some swaps and derivatives from regulation. In December 2000, the Commodity Futures Modernization Act was passed as part of a larger bill by unanimous consent after Senator Gramm dominated the Senate debate...

"He was the architect, advocate and the most knowledgeable person in Congress on these topics," Mr. Donovan said. "To me, Phil Gramm is the single most important reason for the current financial crisis."

"The virtually unregulated over-the-counter market in credit-default swaps has played a significant role in the credit crisis, including the now $167 billion taxpayer rescue of A.I.G.," Christopher Cox, the chairman of the S.E.C. and a former congressman, said Friday.

But you will never find discussion of flaws and adverse consequences Phil Gram (or Greenspan for a change) initiatives in Heritage Foundation and other right-wing think tanks publications.

Stages of transformation

So what we are experiencing is a the completion of the transformation of one phase of capitalism to another. It happened in stages:

  1. Manufacturing stagnated and can't provide the "decent" rate of growth. Competition from re-built Europe and Asian markets severely stressed the US manufacturing. due to competition return of capital dropped and in several industries became negative.

  2. Computers brought innovations into financial markets. They make possible real time trading of induces like S&P500, complex financial instruments like derivatives, etc. Later they enables superfast trading (HFT). All those instruments dramatically increased the possibilities of extracting the rent by financial institutions from the society.

  3. Globalization kicked in due to new opportunities offered by high speed global communications (Internet). And that is not limited to outsourcing. Due to globalization the sheer size of the financial markets increased to the extent that they started to represent a different, new transnational phenomena allowing new types of redistribution of wealth to be practiced. Integration of Russian elite (oligarchs) is just one example of this process. In case of pro-western oligarchs (fifth column) West went to significant length to protect them and their racket (Mikhail Khodorkovsky - Wikipedia,)

  4. Commercial banks turned into investment banks to exploit this opportunity.

  5. Financial sector completely corrupted academic science converting most economists to pay prostitutes which serve their interests.

  6. Collapse of the USSR provided the financial sector major shoot in the arm and a golden, once in century opportunity to finance new half-billion consumers and stole for a penny on a dollar huge industrial assets and natural resources as well as put most of those countries in the debt (Latin-Americanization of xUSSR space). Harvard Mafia (with some support from London) did the bidding of western banks in xUSSR space. As more becomes known about the laundering of Russian money in Western banks, many in the United States will likely try to hide behind stories of faraway organized crime. But U.S. policy toward Russia has contributed to that country's sorry conditions--with the Harvard Institute for International Development's Russia project (HIID) playing a major role (Harvard's 'Best and Brightest' Aided Russia's Economic Ruin ). Professor Jeffery Sacks provided a bogus idea of "shock therapy" to achieve spectacular for Western banks result. As a result all xUSSR space became new Latin America with typical for Latin America problems like huge level of inequality, prostitution, child poverty, and prominent role of organized crime.

  7. Banks became dominant political force on western societies with no real counterbalance from other parts of the elite. The first president completely subservient to banking elite was elected in the USA in 1992. Bill Clinton regime lasted eight years and along with economic rape of xUSSR space in best colonial powers tradition, it removed what was left of financial regulations after the flurry of deregulation of the early 1980s. And they behaved as an occupying force not only in xUSSR space but in the USA as well. They deprived workers out of their jobs, they abolished the US pension system as it impede playing with population money and replaced in with widely inadequate 401K plans. They deprived municipalities out of their revenues and assets, while municipalities became just a den of bond traders looking for then next mark which give them the ability to put municipalities deeper in debt.

  8. Newly acquired political power of financial elite speeded the shift to bank "self-regulation" created huge shadow banking system which dwarf "official" under the smoke screen of "free-market" propaganda and PR from a coterie of corrupts academics (Chicago Scholl, Harvard Mafia, etc) . It engaged in pursuit of short term profits and self-enrichment of top brass which became new elite by-and-large displacing not only the old one, but also the newly minted IT elite of dot-com boom. Using newly acquired power financial elite remove all regulations that hamper their interests. Glass-Steagall was repealed at the last days of Clinton presidency, financial derivatives became unregulated.

  9. Deindustrialization kicked in. As financial speculation proved to be much more profitable to other activities deindustrialization kicked in the USA as the financial center of the world. Outsourcing which first was limited to manufacturing jobs now extent its reach on IT and decimate previously profitable sector and its export potential.

  10. Externalities can no longer be suppressed and economics became unstable. Growth of inequality, job insecurity, as well as frequency of financial crises were natural consequences of financialization of the economy. They create huge imbalances, like bubble in residential real estate which was blown with the help and full support of the USA government as a way to overcome dot-com crisis consequences.

  11. Debt crisis strikes. Growth of debt became unsustainable and produces the financial crisis of enormous proportions. By their reckless policies and greed financial sector caused huge financial crisis of 2008 and now they are forcing national governments to auction off their cultural heritage to the highest bidder. Everything must go in fire sales at prices rigged by twenty-something largest banks, the most corrupt institutions the world has ever known.

  12. Devastating "local" wars became "new normal". Due to financial crisis, the overconsumption in western economies came under threat. Debt expansion which led to overconsumption within the western economies affected (or infected) by financialization. To sustain the current standard of living financial expansion became the necessity. It took the form of a competition for spheres of influence in the area of energy supplies, which we see in post USSR space, Iraq, Libya and elsewhere. And central banks play critical role in financing wars. After all Banks of England was created with this exact purpose.

I think by 2008 when the second major financial crisis hit the USA, the transformation on the USA economy into casino capitalism, which is essentially implementation of neoliberal doctrine (or more correctly the US brand of corporatism) was by-and-large complete.

In short we are living in a new politico-economic system in which financial capital won victory over both labor and industrial capital. We might not like what we got, but financial elite is now a new ruling class and this fact is difficult to dispute. As a result. instead of the robber barons of the early 20th century (some of whom actually created/consolidated new industries), we have the top executives from investment banks, insurers and mortgage industry who represent a new Rentier class, much like old aristocracy.

They are living off parasitic monopolization of access to any (physical, financial, intellectual, etc.) kind of property and gaining significant amount of profit without contribution to society (see Rentier capitalism which is a very fuzzy term for neoliberal model of capitalism).

Casino Capitalism as a result of stagnation of industrial manufacturing

Stagnation of industrial manufacturing droved up financial speculation as the method to compensate for falling rate on return on capital. This stagnation became prominent during Reagan administration (which started the major shift toward neoliberalism), although signs of it were present from early 60th.

For example Chicago which was a manufacturing center since 1969 lost approximately 400K manufacturing jobs which were replaced mainly by FIRE-related jobs, In 1995 over 22% of those employed by FIRE industries (66K people) were working in executive and managerial positions. Another 17% are in marketing, sales and processional specialty occupations (computer system analysts, PR specialists, writer and editors).

Those changes in the structure of employment had several consequences:

  1. The stagnation of the underlying economy meant that capitalists were increasingly dependent on the growth of finance to preserve and enlarge their money capital.
  2. The financial superstructure of the capitalist economy could not expand independently of its base -- underlying productive economy — hence the bursting of speculative bubbles became a recurrent and growing problem.
  3. Financialization could never overcome stagnation of industrial production. It is just an opium for rich, not a structural adjustment of the stagnation-prone economy. But like addition to narcotics does to human body it does tremendous damage to real economy.
  4. Rapid increase in inequality is necessary to sustain the appetites of the elite in the system with fixed size of the pie. Politico-economic conditions might became even more unfavorable for labor. Stagnation of industrial production mean shrinking pie, which necessitates redistribution of wealth in favor of a new, all-powerful financial Rentier class. This redistribution resulted in partial wipe-out of large swats of middle class. For the past three decades, America has steadily converted itself into a nation of haves (as Bush II quipped "This is an impressive crowd -- the haves and the have mores! Some people call you the elite -- I call you my base". ) and have-nots. The cost of a college education rises rapidly at a time when wages for skilled labor stagnate, so access to college became against discriminated in favor of upper class of the society. Repressive apparatus and ideological brainwashing are too strong to mount effective resistance.

The key to understanding of Casino Capitalism is that it was a series of government decisions (or rather non-decisions) that converted the state into neoliberal model. In other words casino capitalism has distinct "Government property" mark. It was the USA elite, which refused to act responsibly in the face of changing economic conditions resulting from its own actions, and instead chose to try to perpetuate, by whatever means it had at its disposal, the institutional advantages of dollar as a reserve currency which it had vis-ŕ-vis its main economic rivals and grab as large part of the world economic pie as it can. And this power grab was supported first of all by the role of dollar as currency in which oil is traded.

There might be some geo-strategically motives as well as the US elite in late 80th perceived that competitiveness is slipping out of the USA and the danger of deindustrialization is real. Many accuse Reagan with the desire to ride dollar status as a world reserve currency (exorbitant privilege) until the horse is dead. That's what real cowboys do in Hollywood movies... But the collapse of the main rival, the USSR vindicated this strategy and give a strong short in the arm to financialization of the economy. Actually for the next ten years can be called a triumphal ascend of financialization in the USA.

Dominance of FIRE industries clustered up and in recent years reached in the USA quite dramatic proportions. The old Bolsheviks saying "When we say Lenin we mean the Party and when we say the Party we mean Lenin" now can be reworded: "Now it we say US banks, we mean the US government and vise versa if we say US government we mean US banks".

According to the Center for Responsive Politics, the FIRE sector was and is the biggest contributor to federal candidates in Washington. Companies cannot give directly, so they leave it to bundlers to solicit maximum contributions from employees and families. They might have been brought down to earth this year, but they’ve given like Gods: Goldman Sachs, $4.8 million; Citigroup, $3.7 million; J.P. Morgan Chase & Co., $3.6 million; Merrill Lynch, $2.3 million; Lehman Brothers, $2.1 million; Bank of America, $2.1 million. Some think the long-term effect of such contributions to individual candidates was clear in the roll-call votes for the bailout.

Take the controversial first House vote on bailout of major banks on Sept. 29, 2008. According to CRP, the "ayes" had received 53 percent more contributions from FIRE since 1989 than those who voted against the bill, which ultimately failed 228 to 205. The 140 House Democrats who voted for the bill got an average of $188,572 in this election cycle, while the 65 Republicans backing it got an average of $185,461 from FIRE—about 23 percent more than the bill’s opponents received. A tinkered bill was passed four days later, 263 to 171.

According to the article Fire Sale (The American Conservative) half of Obama’s top ten contributors, together giving him nearly $2.2 million, are FIREmen. The $13 million contributed by FIRE executives to Obama campaign is probably an undercount. Democratic committee leaders are also dependent of FIRE contributions. The list includes Sen. Dodd ( please look at Senator Dodd's top donors for 2007-8 on openSecrets.org ) and Sen. Chuck Schumer ($12 million from FIRE since 1989), Rep. Barney Frank ($2.5 million), and Rep. Charlie Rangel ($4 million, the top recipient in the House). All of them have been accused of taking truckloads of contributions while failing to act on the looming mortgage crisis. Dodd finally pushed mortgage reform last year but by then as his hometown paper, The Hartford Courant stated, "the damage was done."

Casino Capitalism and Financial Instability

At the same time rise of financial capital dramatically increased instability. An oversized financial sector produces instability due to multiple positive feedback loops. In this sense we can talk about Financial Sector Induced Systemic Instability of Economy. The whole society became "House of cards", "Giant Enron" and "extension of Las Vegas". Reckless management, greed and out-right stupidity in playing derivatives games was natural consequence of the oversized financial sector, not just a human folly. In a way it was dramatic manifestation of the oversized financial sector negative influence of the economy. And in 2008 it did brought out economy to the brink of destruction. Peak oil added to suffocating effect on the economy of reckless gambling (and related debts) of financial sector producing the economic calamity that rivals Great Depression. Also, like Socialism, Casino Capitalism demands too much of its elite. And in reality, the financial elite much like Bolsheviks elite, is having its own interests above the interests of the society.

As Kevin Phillips noted "In the United States, political correctness, religious fundamentalism, and other inhibitions sometimes dumb down national debate". And the same statement is true for financial elite that became the center of power under the Casino Capitalism. Due to avalanche of greed the society became one giant Enron as money that are made from value addition in the form of manufacturing fade in significance to the volume of the money that is made from shuffling money around. In other was the Wall Street's locked USA in the situation from which there is no easy exit.

Self-reinforcing ‘positive’ feedback loops prevalent in Casino Capitalism trigger an accelerating creation of various debt instruments, interest of which at some point overwhelm the system carrying capacity. Ability to lend against good collateral is quickly exhausted. At some point apparently there is no good collateral against which lending freely was possible, even at high rates. This means that each new stage of financial innovation involves scam and fraud, on increasing scale. In other words Ponzi economy of "saving and loans" is replaced with Madoff economy.

Whether you shift the resulting huge private debt to public to increase confidence or not, the net result is of this development of events is a crisis and a huge debt that society needs to take. Actually the debt bubble in 2008 can only be compared to the debt bubble of 1933. The liquidation of Bear Sterns and Lehman was only a start of consolidation of finances and we need to find something that replace financial sector dominance in the national economy. It would be nice is some technological breakthrough happened which would lift the country out of this deep hole.

See Financial Sector Induced Systemic Instability of Economy for more details.

Neoliberalism as the Ideology of Casino Capitalism

Like Bolshevism was marked by deification of teaching of Marx and Lenin, converting them into pseudo-religious doctrine, the Casino Capitalism has its own deified ideological doctrine. It is the ideology of Neoliberalism. The latter as an ideology and an agenda seeks to topple democratic capitalism and replace it with a de facto unaccountable autocratic government which serves as channel of a wealth transfer from the public to a rentier elite. In a way it is a spectacular example of a successful (in a very negative sense) pseudo-religious doctrine.

Addiction of the societies to disastrous politico-economical doctrines are similar to addictions to alcohol and drugs in individuals. It is not easy to recover and it takes a long, long time and a lot of misery. As dissolution of the USSR aptly demonstrated not all societies can make it. In this case the USSR elite (nomenklatura) simply shed the old ideology as it understood that it will be better off adopting ideology of neoliberal capitalism; so it was revolution from above.  this abrupt switch created chaos in economics (which was applauded by Washington which under Clinton administration adopted the stance the Carnage needs to be destroyed and facilitated the process), criminal privatization of major industries, and pushed into object poverty the 99% of population of those countries. For some period under "drunk Yeltsyn" Russia sees to exist as an independent country and became a vassal of Washington.

This also means that "society at large" did not had effective brakes to the assent of financial plutocracy (aka financial oligarchy).  I would add to this the computer revolution and internet that made many financial transaction qualitatively different and often dramatically cheaper that in previous history. Computers also enabled creation of new financial players like mutual funds (which created a shadow banking system with their bond funds) , hedge funds, exchange-traded funds (ETFs), as well as high-frequency trading and derivatives.

From the historical view Reaganomics also can be considered to be the US flavor of Lysenkoism with economics instead of genetics as a target. Here is how Reaganomics is defined in Wikipedia

Reaganomics (a portmanteau of "Reagan" and "economics") refers to the economic policies promoted by United States President Ronald Reagan. The four pillars of Reagan's economic policy were to:[1]
  1. reduce the growth of government spending,
  2. reduce marginal tax rates on income from labor and capital,
  3. reduce government regulation of the economy,
  4. control the money supply to reduce inflation.

In attempting to cut back on domestic spending while lowering taxes, Reagan's approach was a departure from his immediate predecessors.

Reagan became president during a period of high inflation and unemployment (commonly referred to as stagflation), which had largely abated by the time he left office.

Please not that the Number 1 idea ("reduce government spending") was essentially a scam, a smoke screen designed to attract Rednecks as a powerful voting block. In a way this was a trick similar to one played by Bolsheviks in Russia with its "worker and peasants rule" smokescreen which covered brutal dictatorship. In reality all administrations which preached Reagonomics (including Clinton's) expanded the role of state and government spending. The number two was applied by-and-large to top 1%. The number three means deregulation in the interests of financial oligarchy and dismantling all social program that hamper profit of the latter (including privatizing of Social Security). The number fours is a scam, in the same sense as number one. As soon as financial institutions get in trouble, money are printed as if there is no tomorrow.

While the essence of Reagonomics was financial deregulation, the other important element was restoring the Gilded Age level of power of financial oligarchy which influence was diminished by FDR reforms. In this sense we can say that Reagan revolution was essentially a counter-revolution: an attempt to reverse the New Deal restrictions on financial sector and restore its dominance in the society.

Like it was the case in Bolshevism the ideology was developed and forced upon the society by a very small group of players. The key ideas of Casino Capitalism were formulated and implemented by Reagan administration with some contribution by Nixon (the role of rednecks aka "moral majority", "silent majority" as an important part of republican political base, which can be attracted to detrimental to its economic position policies by the smoke screen of false "moral" promises).

It was supported by each president after Reagan (paradoxically with Clinton having the most accomplished record -- he was the best Republican President in a very perverted way). Like in case of Lysenkoism opponents were purged and economic departments of the country were captured by principless careerists ready to tow the party line for personal enrichment. Like in case of Bolshevism, many of those special breed of careerists rotated from Republican Party into Fed and other government structures. A classic example of compulsive careerists that were used by finance sector to promote its interests was Alan Greenspan.

One of the key ideas of Reaganomics was the rejection of the sound approach that there should be a balance between too much government regulation and too little and that government role is important for smooth functioning of the market. In this area Reagan and its followers can be called Anarchists and their idea of 'free market" is a misnomer that masks the idea of "anarchic market" (corporate welfare to be exact -- as it was implemented). Emergence of corporate welfare Queens such as GS, Citi, AIG, are quite natural consequence of Reaganomics.

Reaganomics was a the US flavor of Lysenkoism with economics instead of generics as a target... It can and should be called Economic Lysenkoism.

The most interesting part of Reaganomics was that the power of this ideology made it possible to conditioned "working class" and middle class to act against their own economic interests. It helped to ensure the stagnation of wages during the whole 25 years period, which is close to what Soviets managed to achieve with working class of the USSR, but with much more resentment. This makes it in many ways very similar to Bolshevism as a whole, not just Lysenkoism (extremes meet or in less flattering way: "history repeats, first as a tragedy, then as farce).

Along with the term Reaganimics which implicitly stresses the deregulation, the other close term "market fundamentalism" is often used. Here is how market fundamentalism is defined (Longview Institute):

Market Fundamentalism is the exaggerated faith that when markets are left to operate on their own, they can solve all economic and social problems. Market Fundamentalism has dominated public policy debates in the United States since the 1980's, serving to justify huge Federal tax cuts, dramatic reductions in government regulatory activity, and continued efforts to downsize the government’s civilian programs.

Some level of government coercion (explicit or implicit ) is necessary for proper labeling of any pseudo-scientific theory with the term Lysenkoism. This holds true for both Market Fundamentalism (after all Reagan revolution was "revolution from above" by financial oligarchy and for financial oligarchy and hired guns from academia just do what powers that be expected) and, especially, Supply side economic. The political genius of those ideas is evident. Supply-side economics transformed Republicans from a minority party into a majority party. It allowed them to promise lower taxes, lower deficits and, in effect, unchanged spending. Why should people not like this combination? Who does not like a free lunch?

In this sense the Republican Party played the role very similar to the Communist Party of the USSR.

For example supply side economics was too bizarre and would never survive without explicit government support. This notion is supported by many influential observers. For example, in the following comment for Krugman article (Was the Great Depression a monetary phenomenon):

Market fundamentalism (neoclassical counter-revolution — to be more academic) was more of a political construct than based on sound economic theory. However, it would take a while before its toxic legacy is purged from the economics departments. Indeed, in some universities this might never happen.

Extreme deregulation and extreme regulation (Brezhnev socialism) logically meets and both represent a variant of extremely corrupt society that cannot be sustained for long (using bayonets as in the case of USSR or using reserve currency and increasing leverage as is the case of the USA). In both cases the societies were economically and ideologically bankrupt at the end.

Actually, elements of market fundamentalism looks more like religious doctrine than political philosophy — and that bonds its even closer to Lysenkoism. In both cases critics were silenced with the help of the state. It is interesting to note that Reaganomics was wiped into frenzy after the dissolution of the USSR, the country which gave birth to the term of Lysenkoism. In a way the last act of the USSR was to stick a knife in the back of the USA. As a side note I would like to stress that contrary to critics the USSR was more of a neo-feudal society with elements of slavery under Stalin. Gulag population were essentially state slaves; paradoxically a somewhat similar status is typical for illegal immigrants in industrialized countries. From this point of view this category of "state slaves" is generally more numerous that gulag inmates. Prison population also can be counted along those lines.

It look like either implicitly or explicitly Reagan's bet was on restoration of gilded Age with its dominance of financial oligarchy, an attempt to convert the USA into new Switzerland on the "exorbitant privilege" of dollar status as the global fiat currency.

Casino Capitalism is characterized by political dominance of FIRE industries (finance, insurance, and real estate) and diminished role of other and first of all manufacturing industries. It was also accompanied by the drastic growth of inequality (New Gilded Age). Its defining feature is "the triumph of the trader in assets over the long-term producer" in Martin Wolf's words.

Voodoo economic theories

Attempts of theoretical justification of Economic Lysenkoism fall into several major categories:

Those can be called pillars, cornerstones of Economic Lysenkoism. Each of the deserves as separate article (see links above).

Historically especially important was Chicago school of market fundamentalism promoted pseudo-scientific theories of Milton Freedman (Chicago School) as well as supply side economics.

Collapse of the USSR as ideological justification of Casino Capitalism superiority

The huge boost of Casino Capitalism was given by the collapse of the USSR in 1991. That gave a second life to Reagan era. Collapse of the USSR was used as a vindication of market fundamentalism. After it New Deal regulations were systematically destroyed. Dumped down variants of Nietzsche philosophy like bastardatized variant promoted by Russian emigrant became fashionable with an individual "creative" entrepreneur as a new Übermensch, which stands above morality.

"The word Übermensch [designates] a type of supreme achievement, as opposed to 'modern' men, 'good' men, Christians, and other nihilists ... When I whispered into the ears of some people that they were better off looking for a Cesare Borgia than a Parsifal, they did not believe their ears."[9] Safranski argues that the combination of ruthless warrior pride and artistic brilliance that defined the Italian Renaissance embodied the sense of the Übermensch for Nietzsche. According to Safranski, Nietzsche intended the ultra-aristocratic figure of the Übermensch to serve as a Machiavellian bogeyman of the modern Western middle class and its pseudo-Christian egalitarian value system.[10]

Brainwashing

The instability and volatility of active markets can devalue the economic base of real lives, or in more macro-scenarios can lead to the collapse of national and regional economies. In a very interesting and grotesque way it also incorporates the key element of Brezhnev Socialism in everyday life: huge manipulation of reality by mass media to the extend that Pravda and the USSR First TV Channel look pretty objective in comparison with Fox news and Fox controlled newspapers. Complete poisoning of public discourse and relying on the most ignorant part of the population as the political base (pretty much reminiscent of how Bolsheviks played "Working Class Dictatorship" anti-intellectualism card; it can be called "Rednecks Dictatorship").

The "heroes" or transformation of US economy to casino capitalism model

While transformation to casino capitalism was an objective development, there were specific individuals who were instrumental in killing New Deal regulations. We would single out the following twelve figures:

  1. Ronald Reagan (although first steps toward casino capitalism were made under Carter).
  2. Milton Friedman
  3. Alan Greenspan
  4. Phil Gramm
  5. Robert Rubin
  6. Larry Summers
  7. Helicopter Ben
  8. Bush II
  9. Bill Clinton
  10. Sandy Weill
  11. Jeffrey Sachs with his "shock therapy" racket
  12. Martin Feldstein

There is no question that Reagan and most of his followers (Greenspan, Rubin, Phil Gramm, etc) were rabid radicals blinded by ideology. But they were radicals of quite different color then FDR with disastrous consequences for society. Here again the analogy with Bolsheviks looms strong. In a way, they can be called financial terrorists inflicting huge damage on the nation and I wonder if RICO can be use to prosecute at least some of them.

In Bailout Nation (Chapter 19) Barry Ritholtz tried to rank major players that led country into the current abyss:

1. Federal Reserve Chairman Alan Greenspan
2. The Federal Reserve (in its role of setting monetary policy)
3. Senator Phil Gramm
4-6. Moody’s Investors Service, Standard & Poor’s, and Fitch Ratings (rating agencies)
7. The Securities and Exchange Commission (SEC)
8-9. Mortgage originators and lending banks
10. Congress
11. The Federal Reserve again (in its role as bank regulator)
12. Borrowers and home buyers
13-17. The five biggest Wall Street firms (Bear Stearns, Lehman Brothers, Merrill Lynch,Morgan Stanley, and Goldman Sachs) and their CEOs
18. President George W. Bush
19. President Bill Clinton
20. President Ronald Reagan
21-22. Treasury Secretary Henry Paulson
23-24. Treasury Secretaries Robert Rubin and Lawrence Summers
25. FOMC Chief Ben Bernanke
26. Mortgage brokers
27. Appraisers (the dishonest ones)
28. Collateralized debt obligation (CDO) managers (who produced the junk)
29. Institutional investors (pensions, insurance firms, banks, etc.) for
buying the junk
30-31. Office of the Comptroller of the Currency (OCC); Office of Thrift
Supervision (OTS)
32. State regulatory agencies
33. Structured investment vehicles (SIVs)/hedge funds for buying the junk

Early Researchers of Casino Capitalism

Hyman Minsky

Hyman Minsky argued that a key mechanism that pushes an economy towards a crisis is the accumulation of debt and the fact the financial system represents a positive feedback loop that tend to destabilize the system, creating ossilations in the form of boom and bust cycles. . He identified 3 types of borrowers that contribute to the accumulation of insolvent debt: Hedge Borrowers; Speculative Borrowers; and Ponzi Borrowers. That corresponds to three stages of Casino Capitalism of increasing fragility:

Growth of debt and increased levarate at some point create predocition of the crash. The stage of business cycle at which those preconditions are met is called "Minsky moment":

A Minsky moment is the point in a credit cycle or business cycle when investors are starting to have cash flow problems due to spiraling debt they have incurred in order to finance speculative or Ponzy investments.

At this point, a major selloff begins due to the fact that no counterparty can be found to bid at the high asking prices previously quoted, leading to a sudden and precipitous collapse in market clearing asset prices and a sharp drop in market liquidity.[1]

After the collapse of the USSR there were a lot of chest thumping of the status of America as a hyper power (American exceptionalism) and the "end of history" where neoliberalism that displaced Brazhvev socialism (and wiped out the socialist camp) was supposed to reign supreme forever.

But this triumphal march of neoliberalism was short lived. The system proved to be self-destructive due to strong positive feedback look from the unregulated financial sector.

But in 2000 the first moment to pay the piper arrives. It was postponed by Iraq war and housing bubble, but reappeared in much more menacing form in 2008. In 2009 the USA experienced a classic Minsky moment with high unemployment rate and economy suppressed by (and taken hostage) by Ponzi finance institutions which threaten the very survival of the capitalist system and way of life. Huge injection freom the state halped to save the economy from disintration, but the price was very high. And  after 2009 the US economy entered the period prologed stagnation, called  the perios of "secular stagnation".

In events preceding 2008 the shift from speculative toward Ponzi finance was speed up by increased corruption of major players.  The drive to redistribute wealth up destroyed any remnants of the rule of the law in the USA. It became a neo-feudal two casts society with "Masters of the Universe" as the upper cast (top 1% ) and "despicables" (lower 80%) as the lower cast. With some comprador strata of professional in between (top 20% or so), who generally support the upper cast.

Loweer cast experienced deterioration of the standard of living, loss of well paying jobs to outsourcing and offshoring and in 2016 revolted electing Trump, who defeated Hillary Clinton, who became a real symbol of the corruption of neoliberal system. 

"As Minsky observed, capitalism is inherently unstable. As each crisis is successfully contained, it encourages greater speculation and risk taking in borrowing and lending. Financial innovation makes it easier to finance various schemes. To a large extent, borrowers and lenders operate on the basis of trial and error. If a behavior is rewarded, it will be repeated. Thus stable periods naturally lead to optimism, to booms, and to increasing fragility.

A financial crisis can lead to asset price deflation and repudiation of debt. A debt deflation, once started, is very difficult to stop. It may not end until balance sheets are largely purged of bad debts, at great loss in financial wealth to the creditors as well as the economy at large."

For more information see

Susan Strange

For Strange the speed at which computerized financial markets work combined with their much larger size and  near-universal pervasiveness is an important qualitative change, that changes the social system into what he called "casino capitalism".  She actually popularized the term "Casino Capitalism" with her important book Casino Capitalism  published in 1997.

One of the side effects of this change is that volatility extends globally. Approximately $1.5 trillion dollars are invested daily as foreign transactions. It is estimated that 98% of these transactions are speculative. In comparison with this casino Las Vegas looks like a aborigine village in comparison with Manhattan.

Notes:

Susan Strange (June 9, 1923 - October 25, 1998) was a British academic who was influential in the field of international political economy. Her most important publications include

For a quarter of a century, Susan Strange was the most influential figure in British international studies. She held a number of key academic posts in Britain, Italy and Japan. From 1978 to 1988, she was Montague Burton Professor of International Relations at the London School of Economics and Political Science (LSE), the first woman to hold this chair and a professorial position in international relations at the LSE. She was a major figure in the professional associations of both Britain and the US: she was an instrumental founding member and first Treasurer of the British International Studies Association (BISA) [1] and the first female President of the International Studies Association (ISA) in 1995.

It was predominantly as a creative scholar and a forceful personality that she exercised her influence. She was almost single-handedly responsible for creating ‘international political economy’ and turning it into one of the two or three central fields within international studies in Britain, and she defended her creation with such robustness, and made such strong claims on its behalf, that her influence was felt—albeit not always welcomed—in most other areas of the discipline. She was one of the earliest and most influential campaigners for the closer integration of the study of international politics and international economics in the English language scholarship.

In the later period of her career, alongside the financial analyses offered in Casino Capitalism (the analysis in which she felt was vindicated by the South-East Asian financial crisis) and Mad Money, Strange's contributions to the field include her characterisation of the four different areas (production, security, finance and knowledge) through which power might be exercised in International Relations. This understanding of what she termed "structural power", formed the basis of her argument against the theory of American Hegemonic Decline in the early eighties.

Her analysis particularly in States and Markets focused on what she called the ‘market-authority nexus’, the see-saw of power between the market and political authority. The overall argument of her work suggested that the global market had gained significant power relative to states since the 1970s.

This led her to dub the Westphalia system Westfailure. She argued that a ‘dangerous gap’ was emerging between territorially-bound nation states and weak or partial intergovernmental cooperation in which markets had a free hand which could be constructive or destructive.

John K. Galbraith

Among important early critiques of casino capitalism was John K. Galbraith. He promoted a pretty novel idea that the major economic function of Governments is to strengthen countervailing powers to achieve some kind of balance between capital and labor.

While unions are far from being perfect and tend to slide into corruption due to "iron law of oligarchy" when thier management stop representing interests of thwe worksers and start to reprreesnt interest of thier own narry strate of fat cats,  there were the only sizable countewailing power that made the New Seal possible.

His prediction proved to be wrong as government actually represent the capitalist class and is not that interested in creating this balance, which was convincingly demonstrated by Thatcher and Reagan.  Both Britain and the USA start sliding into a new form of corporations, called neoliberalism which actually does not allocate any space for uniot at the negotiation table and strive for their complete elimination and "atomization" of work force, when each invididual is up to himself to find employment and group solidarity is suppressed by instilling neoliberal ideology in schools and universitites as well as via MSM (which in the USA surprisingly never were allowed to use the work neoliberlaism, as if it represents some secret Masonic cult)

And it does not look like there is any renewed support of unions right  (including important right to organize) at the  post subprime/derivatives/shadow_banking crisis stage of neoliberalism, when neoliberal ideology became sufficiently discredited to allow rise of populist politicians such as Trump. 

Still John K. Galbraith critique of primitive market fundamentalism of Milton Freedman and the whole pseudoscience of neoclassical economics which like Marxist political economy is one of there pillars of neoliberalism (along with Randism as philosophy and Neoconservatism or "Trotskyism for the rich" in politics), still has its value today. As Joseph Stiglitz noted (CSMonitor, Dec 28, 2006):

...In many ways, Galbraith was a more critical observer of economic reality.

Driven to understand market realities

Galbraith's vivid depictions of the good, bad, and ugly of American capitalism remain a sorely needed reminder that all is not quite as perfect as the perfect market models – with their perfect competition, perfect information, and perfectly rational consumers – upon which so much of Friedman's analysis depended.

Galbraith, who cut his teeth studying agricultural economics, strove to understand the world as it was, with all the problems of unemployment and market power that simplistic models of competitive markets ignore. In those models, unemployment didn't exist. Galbraith knew that made them fatally flawed

... ... ...

In his early research, Galbraith attempted to explain what had brought on the Great Crash of 1929 – including the role of the stock market's speculative greed fed by (what would today be called) irrational exuberance. Friedman ignored speculation and the failure of the labor market as he focused on the failures of the Federal Reserve. To Friedman, government was the problem, not the solution.

What Galbraith understood, and what later researchers (including this author) have proved, is that Adam Smith's "invisible hand" – the notion that the individual pursuit of maximum profit guides capitalist markets to efficiency – is so invisible because, quite often, it's just not there. Unfettered markets often produce too much of some things, such as pollution, and too little of other things, such as basic research. As Bruce Greenwald and I have shown, whenever information is imperfect – that is, always – markets are inefficient; hence the need for government action.

Galbraith reminded us that what made the economy work so well was not an invisible hand but countervailing powers. He had the misfortune of articulating these ideas before the mathematical models of game theory were sufficiently developed to give them expression. The good news is that today, more attention is being devoted to developing models of these bargaining relationships, and to complex, dynamic models of economic fluctuations in which speculation may play a central role.

Government's role

While Friedman never really appreciated the limitations of the market, he was a forceful critic of government. Yet history shows that in every successful country, the government had played an important role. Yes, governments sometimes fail, but unfettered markets are a certain prescription for failure. Galbraith made this case better than most.

Galbraith knew, too, that people aren't just rational economic actors, but consumers, contending with advertising, political persuasion, and social pressures. It was because of his close touch with reality that he had such influence on economic policymaking, especially during the Kennedy-Johnson years.

Galbraith's penetrating insights into the nature of capitalism – as it is lived, not as it is theorized in simplistic models – has enhanced our understanding of the market economy. He has left an intellectual legacy for generations to come. And he has left a gap in our intellectual life: Who will stand up against the economics establishment to articulate an economic vision that is both in touch with reality and comprehensible to ordinary citizens?

Galbraith was vindicated in his belief that the only economics possible is political economics and that government is always an agent of dominant class. As such it always pursue poklitics favorable to this class, just making marginal efforts to prevent the open revolt of lower classes.

In 2008 neoliberal economist such as Krugman and (to a lesse extent) Stiglitz both have eaten humble pie, because according to neoclassical economics the crises should not have happened. Both should now reread Galbraith's The Great Crash: 1929 (see also extracts).  Krugman also need to shred his previous writings with this mathiness execises of using differential equations to justify the dominance of financial oligarchy,  and eat them with borsch ;-)

BTW it is interesting that in 1996 neoliberal stooge Paul Krugman criticized limitations of Galbright vision in the following way:

To be both a liberal and a good economist you must have a certain sense of the tragic--that is, you must understand that not all goals can be attained, that life is a matter of painful tradeoffs. You must want to help the poor, but understand that welfare can encourage dependency. You must want to protect those who lose their jobs, but admit that generous unemployment benefits can raise the long-term rate of unemployment. You must be willing to tax the affluent to help those in need, but accept that too high a rate of taxation can discourage investment and innovation.

To the free-market conservative, these are all arguments for government to do nothing, to accept whatever level of poverty and insecurity the market happens to produce. A serious liberal does not reply to such conservatives by denying that there are any trade-offs at all; he insists, rather, that some trade-offs are worth making, that helping the poor and protecting the unlucky may have costs but will ultimately make for a better society.

The revelation one gets from reading John Kenneth Galbraith's The Good Society is that Galbraith--who is one of the world's most celebrated intellectuals, and whom one would expect to have a deeper appreciation of the complexity of the human condition than a mere technical economist would -- lacks this tragic sense. Galbraith's vision of the economy is one without shadows, in which what is good for social justice always turns out to have no unfavorable side effects. If this vision is typical of liberal intellectuals, the ineffectuality of the tribe is not an accident: It stems from a deep-seated unwillingness to face up to uncomfortable reality.

Similar limited understanding of Galbright is demonstrated in London Times (cited from comment to Economist's View blog) :

Some motifs of Galbraith’s work have entered popular consciousness. Galbraith wrote of private opulence amid public squalor, illustrating it with a memorable metaphor of a family that travels by extravagant private car to picnic by a polluted river.

Yet while arguing for increased public expenditure on welfare, Galbraith gave scant attention to the limits of that approach. His writings perpetuate a debilitating weakness of modern liberalism: a reluctance to acknowledge that resources are scarce.

In Galbraith’s scheme, said Herbert Stein, the former chairman of the Council of Economic Advisers: “The American people were only asked whether they wanted cleaner air and water . . . The answers to such questions seemed obvious — but they were not the right questions.”

Soros contribution to the understanding of growth of financial sector as source of new, global economic instability

This idea of "casino capitalism" as a driver of financial instability was developed further in the book The Crisis of Global Capitalism by prominent financial speculator and staunch neoliberal George Soros (1998), who after Minsky highlights the potential for disequilibrium in the financial system, and the inability of non-market sectors to regulate markets.

the latter is a prominant feature of Casino Capitalism, which can be defined as economic system were financial barons run amok.

Although the insights of the Soros critique of global capitalism are scarcely new, they were articulated with such candor and accuracy that the book made a significant impact. The following is a sampling of Soros' insights.
  1. Unregulated financial markets are inherently unstable. There is nothing new in this statement. It is just a repetition of what Keynes and Minsky said much more eloquently. But Soros made in important observation about the source of constant disequilibrium of markets under neoliberalism, the observation which permitted for him to achieve spectacular success as a financial speculator.  Soros observes that, contrary to conventional economic theory, financial markets are not driven toward a relatively stable and rational price by the objective value assessment of such things as the soundness of a company's management, products, or record of profitability. Rather they are constantly driven away from equilibrium by the momentum of self-fulfilling expectations -- a rising stock price attracts buyers who further raise the price-to the point of collapse. The recent massive inflation and subsequent collapse in the price of the shares of unprofitable dot-com companies illustrates Soros' point.

    Bank lending also contributes to the instability, because the price of real and financial assets is set in part by their collateral value. The higher their market price rises the larger the loans banks are willing to make to their buyers to bid up prices. When the bubble bursts, the value of the assets plummets below the amount of the money borrowed against them. This forces banks to call their loans and cut back on the lending, which depresses asset prices and dries up the money supply. The economy then tanks-until credit worthiness is restored and a new boom phase begins.

  2. Financial markets are amoral by definition. Following Napoleon Bonaparte ("Money has no motherland; financiers are without patriotism and without decency; their sole object is gain. "), Soros stressed that there is no meaningful place for individual moral behavior of financial oligarchy in the context of financial markets, because such behavior has no consequences for them other than to reduce the financial return of  a more  ethical actor.  In other words modern finance is breeding ground for ruthless sociopath, which we really observed during 2008.

    When I bought shares in Lockheed and Northrop after the managements were indicted for bribery, I helped sustain the price of their stocks. When I sold sterling short in 1992, the Bank of England was on the other side of my transactions, and I was in effect taking money out of the pockets of British taxpayers. But if I had tried to take social consequences into account, it would have thrown off my risk-reward calculation, and my profits would have been reduced.

    Soros argues that if he had not bought Lockheed and Northrop, then somebody else would have, and Britain would have devalued sterling no matter what he did. "Bringing my social conscience into the decision-making process would make no difference in the real world; but it may adversely affect my own results." One can challenge the Soros claim that such behavior is amoral rather than immoral, but his basic argument is accurate. His understanding that it is futile to look to individual morality as the solution to the excesses of financial markets is all too accurate.

  3. Corporate employees are duty-bound to serve only corporate financial interests. As such financial institution are closely related to organized crime and top layers of managers are essentially institualized criminals. Soros writes:

    Publicly owned companies are single-purpose organizations-their purpose is to make money. The tougher the competition, the less they can afford to deviate. Those in charge may be well-intentioned and upright citizens, but their room for maneuver is strictly circumscribed by the position they occupy.

     They are duty-bound to uphold the interests of the company. If they think that cigarettes are unhealthy or that fostering civil war to obtain mining concessions is unconscionable, they ought to quit their jobs. Their place will be taken by people who are willing to carry on.

    Though not specifically mentioned by Soros, this is why corporations were in the past (at least partially) excluded from the political processes (although it was never complete and it is well known fact that Crusades and Siege of Constantinople (1204) were financed by Genoese bankers upset by lack of access to the Byzantium markets). But at least formally other parts of the society can define their goals and the rules of the marketplace and suppress excessive appetities of banker, if nessesary by brute force.  Financial oligarchy is incapable of distinguishing between private corporate interests and broader public interests. And that situation became even worse with the the global dominance of corporatism in the form of neoliberalism.

  4. Financial markets are oblivious to externalities and are infected by "short-termism". Specifically the fact that a strategy or policy produces economic returns in the short-term does not mean the long-term results will be beneficial. The focus of financial markets is on short-term individual gain to the exclusion of both social and longer-term consequences. The fact that particular policies and strategies are effective in producing short-term financial returns does not mean they are more generally beneficial or desirable. Soros offers the example that running up a budget or trade deficit "feels good while it lasts, but there can be hell to pay later."

  5. The relationship between the center and the periphery of the capitalist system is profoundly unequal. The powerful countries at the center of the capitalist system are both wealthier and more stable than countries at the periphery because control of the financial system and ownership of productive assets allows them to shape economic and political affairs to their benefit.

    "Foreign ownership of capital deprives peripheral countries of autonomy and often hinders the development of democratic institutions. The international flow of capital is subject to catastrophic interruptions."

    In times of uncertainty financial capital tends to return to its country of origin, thus depriving countries at the periphery of the financial liquidity necessary to the function of monetized economies. "The center's most important feature is that it controls its own economic policies and holds in its hands the economic destinies of periphery countries."

  6. In the capitalist system greed (aka "monetary values") tend to displace social values in sectors where this is destructive to important public interests. Soros writes:

    Monetary values [under neoliberalism] have usurped the role of intrinsic values, and markets have come to dominate spheres of existence where they do not properly belong.

    Law and medicine, politics, education, science, the arts, even personal relations-achievements or qualities that ought to be valued for their own sake are converted into monetary terms; they are judged by the money they fetch rather than their intrinsic value."

    Because financial "capital is free to go where most rewarded, countries vie to attract and retain capital, and if they are to succeed they must give precedence to the requirements of international capital over other social objectives.

Ha-Joon Chang

One notable later researcher of casino capitalism, especially "free market" fundamentalism propaganda Cambridge University researcher Ha-Joon Chang. In 2011 he published a fascinating book 23 Things They Don't Tell You About Capitalism. Here is a Youtube lecture at LSE (23 Things They Don't Tell You About Capitalism  ). We will reproduce  two Amazon reviews that shed some light at the key ideas of the book:

William Podmore

Ha-Joon Chang, Reader in the Political Economy of Development at Cambridge University, has written a fascinating book on capitalism's failings. He also wrote the brilliant Bad Samaritans. Martin Wolf of the Financial Times says he is `probably the world's most effective critic of globalization'.

Chang takes on the free-marketers' dogmas and proposes ideas like

He notes that the USA does not have the world's highest living standard. Norway, Luxemburg, Switzerland, Denmark, Iceland, Ireland, Sweden and the USA, in that order, had the highest incomes per head. On income per hours worked, the USA comes eighth, after Luxemburg, Norway, France, Ireland, Belgium, Austria and the Netherlands. Japan, Switzerland, Singapore, Finland and Sweden have the highest industrial output per person.

Free-market politicians, economists and media have pushed policies of de-regulation and pursuit of short-term profits, causing less growth, more inequality, more job insecurity and more frequent crises. Britain's growth rate in income per person per year was 2.4 per cent in the 1960s-70s and 1.7 per cent 1990-2009. Rich countries grew by 3 per cent in the 1960s-70s and 1.4 per cent 1980-2009. Developing countries grew by 3 per cent in the 1960s-70s and 2.6 per cent 1980-2009. Latin America grew by 3.1 per cent in the 1960s-70s and 1.1 per cent 1980-2009, and Sub-Saharan Africa by 1.6 per cent in the 1960s-70s and 0.2 per cent 1990-2009. The world economy grew by 3.2 per cent in the 1960s-70s and 1.4 per cent 1990-2009.

So, across the world, countries did far better before Thatcher and Reagan's `free-market revolution'. Making the rich richer made the rest of us poorer, cutting economies' growth rates, and investment as a share of national output, in all the G7 countries.

Chang shows how free trade is not the way to grow and points out that the USA was the world's most protectionist country during its phase of ascendancy, from the 1830s to the 1940s, and that Britain was one of world's the most protectionist countries during its rise, from the 1720s to the 1850s.

He shows how immigration controls keep First World wages up; they determine wages more than any other factor. Weakening those controls, as the EU demands, lowers wages.

He challenges the conventional wisdom that we must cut spending to cut the deficit. Instead, we need controls capital, on mergers and acquisitions, and on financial products. We need the welfare state, industrial policy, and huge investment in industry, infrastructure, worker training and R&D.

As Chang points out, "Even though financial investments can drive growth for a while, such growth cannot be sustained, as those investments have to be ultimately backed up by viable long-term investments in real sector activities, as so vividly shown by the 2008 financial crisis."

This book is a commonsense, evidence-based approach to economic life, which we should urge all our friends and colleagues to read.

Loyd E. Eskildson

The 2008 'Great Recession' demands re-examination of prevailing economic thought - the dominant paradigm (post 1970's conservative free-market capitalism) not only failed to predict the crisis, but also said it couldn't occur in today's free markets, thanks to Adam Smith's 'invisible hand.' Ha-Joon Chang provides that re-examination in his "23 Things They Don't Tell You About Capitalism." Turns out that the reason Adam Smith's hand was not visible is that it wasn't there. Chang, economics professor at the University of Cambridge, is no enemy of capitalism, though he contends its current conservative version should be made better. Conventional wisdom tells us that left alone, markets produce the most efficient and just outcomes - 'efficient' because businesses and individuals know best how to utilize their resources, and 'just' because they are rewarded according to their productivity. Following this advice, countries have deregulated businesses, reduced taxes and welfare, and adopted free trade. The results, per Chang, has been the opposite of what was promised - slower growth and rising inequality, often masked by rising credit expansion and increased working hours. Alternatively, developing Asian countries that grew fast did so following a different version of capitalism, though to be fair China's version to-date has also produced much greater inequality. The following summarizes some of Chang's points:

  1. "There is no such thing as a free market" - we already have hygiene standards in restaurants, ban child labor, pollution, narcotics, bribery, and dangerous workplaces, require licenses for professions such as doctors, lawyers, and brokers, and limit immigration. In 2008, the U.S. used at least $700 billion of taxpayers' money to buy up toxic assets, justified by President Bush on the grounds that it was a necessary state intervention consistent with free-market capitalism. Chang's conclusion - free-marketers contending that a certain regulation should not be introduced because it would restrict market freedom are simply expressing political opinions, not economic facts or laws.
  2. "Companies should not be run in the interest of their owners." Shareholders are the most mobile of corporate stakeholders, often holding ownership for but a fraction of a second (high-frequency trading represents 70% of today's trading). Shareholders prefer corporate strategies that maximize short-term profits and dividends, usually at the cost of long-term investments. (This often also includes added leverage and risk, and reliance on socializing risk via 'too big to fail' status, and relying on 'the Greenspan put.') Chang adds that corporate limited liability, while a boon to capital accumulation and technological progress, when combined with professional managers instead of entrepreneurs owning a large chunk (e.g.. Ford, Edison, Carnegie) and public shares with smaller voting rights (typically limited to 10%), allows professional managers to maximize their own prestige via sales growth and prestige projects instead of maximizing profits. Another negative long-term outcome driven by shareholders is increased share buybacks (less than 5% of profits until the early 1980s, 90% in 2007, and 280% in 2008) - one economist estimates that had GM not spent $20.4 billion on buybacks between 1986 and 2002 it could have prevented its 2009 bankruptcy. Short-term stockholder perspectives have also brought large-scale layoffs from off-shoring. Governments of other countries encourage longer-term thinking by holding large shares in key enterprises (China Mobile, Renault, Volkswagen), providing greater worker representation (Germany's supervisory boards), and cross-shareholding among friendly companies (Japan's Toyota and its suppliers).
  3. "Free-market policies rarely make poor countries rich." With a few exceptions, all of today's rich countries, including Britain and the U.S., reached that status through protectionism, subsidies, and other policies that they and their IMF, WTO, and World Bank now advise developing nations not to adopt. Free-market economists usually respond that the U.S. succeeded despite, not because of, protectionism. The problem with that explanation is the number of other nations paralleling the early growth strategy of the U.S. and Britain (Austria, Finland, France, Germany, Japan, Korea, Singapore, Sweden, Taiwan), and the fact that apparent exceptions (Hong Kong, Switzerland, The Netherlands) did so by ignoring foreign patents (a free-market 'no-no'). Chang believes the 'official historians' of capitalism have been very successful re-writing its history, akin to someone trying to 'kick away the ladder' with which they had climbed to the top. He also points out that developing nations that stick to their Ricardian 'comparative advantage,' per the conservatives prescription, condemn themselves to their economic status quo.
  4. "We do not live in a post-industrial age." Most of the fall in manufacturing's share of total output is not due to a fall in the quantity of manufactured goods, but due to the fall in their prices relative to those for services, caused by their faster productivity growth. A small part of deindustrialization is due to outsourcing of some 'manufacturing' activities that used to be provided in-house - e.g.. catering and cleaning. Those advising the newly developing nations to skip manufacturing and go directly to providing services forget that many services mainly serve manufacturing firms (finance, R&D, design), and that since services are harder to export, such an approach will create balance-of-payment problems. (Chang's preceding points directly contradict David Ricardo's law of comparative advantage - a fundamental free market precept. Chang's example of how Korea built Pohang Steel into a strong economic producer, despite lacking experienced managers and natural resources, is another.)
  5. "The U.S. does not have the highest living standard in the world." True, the average U.S. citizen has greater command over goods and services than his counterpart in almost any other country, but this is due to higher immigration, poorer employment conditions, and working longer hours for many vs. their foreign counterparts. The U.S. also has poorer health indicators and worse crime statistics. We do have the world's second highest income per capita - Luxemburg's higher, but measured in terms of purchasing power parity (PPP) the U.S. ranks eighth. (The U.S. doesn't have the fastest growing economy either - China is predicted to pass the U.S. in PPP this coming decade.) Chang's point here is that we should stop assuming the U.S. provides the best economic model. (This is already occurring - the World Bank's chief economist, Justin Lin, comes from China.)
  6. "Governments can pick winners." Chang cites examples of how the Korean government built world-class producers of steel (POSCO), shipbuilding (Hyundai), and electronics (LG), despite lacking raw materials or experience for those sectors. True, major government failures have occurred - Europe's Concorde, Indonesia's aircraft industry, Korea's promotion of aluminum smelting, and Japan's effort to have Nissan take over Honda; industry, however, has also failed - e.g.. the AOL-Time Warner merger, and the Daimler-Chrysler merger. Austria, China, Finland, France, Japan, Norway, Singapore (in numerous other areas), and Taiwan have also done quite well with government-picked winners. Another problem is that business and national interests sometimes clash - e.g.. American firms' massive outsourcing has undermined the national interest of maintaining full employment. (However, greater unbiased U.S. government involvement would be difficult due to the 10,000+ corporate lobbyists and billions in corporate campaign donations - $500 million alone from big oil in 2009-10.) Also interesting to Chang is how conservative free marketing bankers in the U.S. lined up for mammoth low-cost loans from the Federal Reserve at the beginning of the Great Recession. Government planning allows minimizing excess capacity, maximizing learning-curve economies and economies of scale and scope; operational performance is enhanced by also forcing government-owned or supported firms into international competition. Government intervention (loans, tariffs, subsidies, prohibiting exports of needed raw materials, building infrastructure) are necessary for emerging economies to move into more sophisticated sectors.
  7. "Making rich people richer doesn't make the rest of us richer." 'Trickle-down' economics is based on the belief that the poor maximize current consumption, while the rich, left to themselves, mostly invest. However, the years 1950-1973 saw the highest-ever growth rates in the U.S., Canada, Australia, and New Zealand, despite increased taxation of the rich. Before the 'Golden Age,' per capita income grew at 1-1.5%/year; during the Golden Age it grew at 2-3% in the U.S. Since then, tax cuts for the rich and financial deregulation have allowed greater paychecks for top managers and financiers, and between 1979 and 2006 the top 0.1% increased their share of national income from 3.5% to 11.6%. The result - investment as a ratio of national output has fallen in all rich economies and the pace at which the total economic pie grew decreased.
  8. "U.S. managers are over-priced." First, relative to their predecessors (about 10X those in the 1960s; now 300-400X the average worker), despite the latter having run companies more successfully, in relative terms. Second, compared to counterparts in other rich countries - up to 20X. (Third, compared to counterparts in developing nations - e.g.. JPMorgan Chase, world's 4th largest bank, paid its CEO $19.6 million in 2008, vs. the CEO of the Industrial and Commercial Bank of China, the world's largest, being paid $234,700. Read more ›

Willem Buiter and the idea of long term stagnation

Willem Buiter in his FT article After the Crisis Macro Imbalance, Credibility and Reserve-Currency suggested that after financial crisis of 2008 there might be very long a painful deleveraging period aka secular stagnation.  He was right.

In short each financial crisis make recovery longer and longer. That's why the US will most likely face a long period of stagnation: the digestion of huge excessive debt of the private sector might well take a decade:

Since the excess of debt is relative to income and GDP, the lower the rate of growth, the longer the required period of digestion. This explains for the paradox of trying to stimulate consumption when the economy faces a monumental crisis provoked exactly by excessive debt and excessive consumption. A cartoon line best captured the spirit of it: "country addicted to speculative bubbles desperately searches a new bubble to invest in. "

... ... ...

The roots of the crisis are major international macroeconomic imbalances. Despite the fact that the excesses of the financial system were instrumental to lead these imbalances further than otherwise possible, insufficient regulation should not be viewed as the main factor behind the crisis. The expenditure of central countries, spinned by all sort of financial innovations created by a globalized financial system, was the engine of world growth. When debt became clearly excessive in central countries and the debt-financed expenditure cycle came to an end, the ensuing crisis paralyzed the world economy. With the lesson of 1929 well assimilated, American monetary policy became aggressively expansionist. The Fed inundated the economy with money and credit, in the attempt to avoid a deep depression. Even if successful, the economies of the US and the other central countries, given the burden of excessive debt, are likely to remain stagnant under the threat of deflation for the coming years. The assumption of troubled assets by the public sector, in order to avoid the collapse of the financial system, might succeed, but at the cost of a major increase in public debt. Fiscal policy is not efficient to restart the economy when the private sector remains paralyzed by excessive debt. Even if a coordinated effort to increase public expenditure is successful, the central economies will remain stagnant for as long as the excessive indebtedness of the private sector persists. The period of digestion of excess debt will be longer than the usual recessive cycle. Since imports represent a drain in the effort to reanimate domestic demand through public expenditure, while exports, on the contrary, contribute to the recovery of internal demand, the temptation to central economies to also adopt a protectionist stance will be strong.

Willem Buiter also defined ‘cognitive regulatory capture’ which existed during the Greenspan years and when the Fed were just an arm of Wall Street.

This regulatory capture has resulted in an excess sensitivity of the Fed to financial market and financial sector concerns and fears and in an overestimation of the strength of the link between financial market turmoil and financial sector deleveraging and capital losses on the one hand, and the stability and prosperity of the wider economy on the other hand. The paper gives five examples of recent behavior by the Fed that are most readily rationalized with the assumption of regulatory capture. The abstract of the paper follows next. The latest version of the entire enchilada can be found here. Future revisions will also be found there.

Joseph Stiglitz on 5 steps to Casino Capitalism

Stiglitz is very unene and early Striglist was actually defender of neoliberalism (aka casino capitalism). Later he became a critic. In his 2008 Vanity Fair article Capitalist Fools Stiglitz identifies five key steps in transformation of American capitalism to Casino Capitalism (moments of failure as he called them):

No. 1: Reagan Fires Fed Chairman Volcker and Replaces Him With Greenspan in 1987:

Volcker also understood that financial markets need to be regulated. Reagan wanted someone who did not believe any such thing, and he found him in a devotee of the objectivist philosopher and free-market zealot Ayn Rand.

snip

If you appoint an anti-regulator as your enforcer, you know what kind of enforcement you’ll get. A flood of liquidity combined with the failed levees of regulation proved disastrous.

Greenspan presided over not one but two financial bubbles.

  1. Congress repealed the Glass-Steagall Act in 1999 under Bill Clinton (Glass-Steagall was a depression-era reform that separated commercial and investment banks)

I had opposed repeal of Glass-Steagall. The proponents said, in effect, Trust us: we will create Chinese walls to make sure that the problems of the past do not recur. As an economist, I certainly possessed a healthy degree of trust, trust in the power of economic incentives to bend human behavior toward self-interest—toward short-term self-interest, at any rate, rather than Tocqueville’s "self interest rightly understood."

Stiglitz also refers to a 2004 decision by the SEC "to allow big investment banks to increase their debt-to-capital ratio (from 12:1 to 30:1, or higher) so that they could buy more mortgage-backed securities, inflating the housing bubble in the process."

Once more, it was deregulation run amuck, and few even noticed.

  1. The Bush tax cuts, both on income and capital gains

The Bush administration was providing an open invitation to excessive borrowing and lending—not that American consumers needed any more encouragement.

  1. Faking the Numbers

Here he refers to bad accounting, the failure to address problems with stock options, and the incentive structures of ratings agencies like Moodys that led them to give high ratings to toxic assets.

  1. Paulson and the Flawed Bailout

Valuable time was wasted as Paulson pushed his own plan, "cash for trash," buying up the bad assets and putting the risk onto American taxpayers. When he finally abandoned it, providing banks with money they needed, he did it in a way that not only cheated America’s taxpayers but failed to ensure that the banks would use the money to re-start lending. He even allowed the banks to pour out money to their shareholders as taxpayers were pouring money into the banks.

Stiglitz concludes:

The truth is most of the individual mistakes boil down to just one: a belief that markets are self-adjusting and that the role of government should be minimal. Looking back at that belief during hearings this fall on Capitol Hill, Alan Greenspan said out loud, "I have found a flaw." Congressman Henry Waxman pushed him, responding, "In other words, you found that your view of the world, your ideology, was not right; it was not working." "Absolutely, precisely," Greenspan said. The embrace by America—and much of the rest of the world—of this flawed economic philosophy made it inevitable that we would eventually arrive at the place we are today.

The flawed economic philosophy brought by Reagan, and embraced by so many, brought us to this day. Ideas have consequences, especially when we stop empirically testing them. Republican economics have created great pain to America and harmed our national interest.

The flaw that Greenspan found was always there: self-regulation does not work. As Stiglitz said:

As an economist, I certainly possessed a healthy degree of trust, trust in the power of economic incentives to bend human behavior toward self-interest — toward short-term self-interest

Yes, for all their claims to science, the premise conflicts with tendencies of people.

This is the real legacy of Ronald Reagan and Alan Greenspan:

The whole scheme was kick-started under Ronald Reagan. Between his tax cuts for the rich and the Greenspan Commission’s orchestrated Social Security heist, working Americans lost out in a generational wealth transfer shift now exceeding $1 trillion annually from 90 million working class households to for-profit corporations and the richest 1% of the population. It created an unprecedented wealth disparity that continues to grow, shames the nation and is destroying the bedrock middle class without which democracy can’t survive.

Greenspan helped orchestrate it with economist Ravi Batra calling his economics "Greenomics" in his 2005 book "Greenspan’s Fraud." It "turns out to be Greedomics" advocating anti-trust laws, regulations and social services be ended so "nothing....interfere(s) with business greed and the pursuit of profits."

 Conclusions: From Animal Farm To Animal House

Instead of conclusion I will reproduce the post from Sudden Debt (March 17, 2008):

In Orwell's Animal Farm all animals are equal - except that some are more equal than others. All in the spirit of law, order and the proper functioning of society, of course. Fittingly, the animals that have chosen this role by themselves and for themselves, are the pigs.

Cut to US financial markets today. After years of swinish behavior more reminiscent of Animal House than anything else, the pigs are threatening to destroy the entire farm. As if it wasn't enough that they devoured all the "free market" food available and inundated the world with their excreta, they now wish to be put on the public trough. Truly, some businessmen believe they are more equal than others.

But do not blame the pigs; they are expected to act as swine nature dictates. The fault lies entirely with the farmers, those authorities entrusted by the people to oversee the farm because they supposedly knew better. While the pigs were rampaging and tearing the place apart, they were assuring us all that farms function best when animals are free to do as they please, guided solely by invisible hooves. No regulation, no oversight, no common sense. Oh yes, and pigs fly..

So what is to be done now? Two things:

In other words, the focus from now on should be on adding value by means of work and savings (capital formation), instead of inflating assets and borrowing.

Furthermore, we should realize that in a world already inhabited by close to 7 billion people and beset by resource depletion and environmental degradation, defending growth for growth's sake is a losing proposition. The wheels are already wobbling on the Permagrowth model; pumping harder on the accelerator is not going to make it go any faster and will likely result in a fatal crash.

Debt, and finance in general, should be left to re-size downwards to a level that better reflects the carrying capacity of our world. The Fed's current actions are shortsighted and "conservative" in the worst interpretation of the words: they are designed to artificially maintain debt at levels that myopically projects growth as far as the eye can see.

What level of resizing may be necessary? I hope not as much as at Bear Stearns, which got itself bought by Morgan at buzz-saw prices: $2 per share represents a 98% discount from its $84 book value. What scares me, though, is the statement by Morgan's CFO, who said the price reflected the risk the firm was taking, even though he was comfortable with the valuation of assets in Bear's books. It "...gives us the flexibility and margin of error that's appropriate given the speed at which the transaction came together", he said.

If it takes a 98% discount and the explicit guarantee of the Fed for a large portion of assets to buy one of the largest investment banks in the world, where should all other financial firms be trading at? ....Hello? Anyone? Is that a great big silence I hear, or the sound of credit imploding into a vacuum?


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[Dec 16, 2017] Brexit, Trump, and the Dangers of Global 'Jihad' HuffPost by Ben Railton

For 1995 the book Jihad vs. McWorld was really groundbreaking.
Also the concept of "Neoliberal jihad is valid, but it is better to call it Neoliberal World revolution as it was borrowed from Trotskyism
Notable quotes:
"... Jihad vs. McWorld ..."
"... In the two decades since Barber's book, this conflict has seemed to play out along overtly cultural lines: with Islamic extremism representing jihad, in opposition to Western neoliberalism representing McWorld. ..."
"... Linking Brexit and Trump to global right-wing tribal nationalisms doesn't mean conflating them all, of course. ..."
"... Yet at the same time, we can't understand our 21st century world without a recognition of this widespread phenomenon of global, tribal nationalism. ..."
Dec 11, 2017 | www.huffingtonpost.com

In his ground-breaking 1995 book Jihad vs. McWorld , political scientist Benjamin Barber posits that the global conflicts of the early 21st century would be driven by two opposing but equally undemocratic forces: neoliberal corporate globalization (which he dubbed "McWorld") and reactionary tribal nationalisms (which he dubbed "Jihad"). Although distinct in many ways, both of these forces, Barber persuasively argues, succeed by denying the possibilities for democratic consensus and action, and so both must be opposed by civic engagement and activism on a broad scale.

In the two decades since Barber's book, this conflict has seemed to play out along overtly cultural lines: with Islamic extremism representing jihad, in opposition to Western neoliberalism representing McWorld. Case in pitch-perfect point: the Al Qaeda terrorist attacks on the World Trade Center. Yet despite his use of the Arabic word Jihad, Barber is clear that reactionary tribalism is a worldwide phenomenon -- and in 2016 we're seeing particularly striking examples of that tribalism in Western nations such as Great Britain and the United States.

Britain's vote this week in favor of leaving the European Union was driven entirely by such reactionary tribal nationalism. The far-right United Kingdom Independence Party (UKIP) and its leader Nigel Farage led the charge in favor of Leave , as exemplified by a recent UKIP poster featuring a photo of Syrian refugees with the caption " Breaking point: the EU has failed us ." Farage and his allies like to point to demographic statistics about how much the UK has changed in the last few decades , and more exactly how the nation's white majority has been somewhat shifted over that time by the arrival of sizeable African and Asian immigrant communities.

It's impossible not to link the UKIP's emphases on such issues of immigration and demography to the presidential campaign of the one prominent U.S. politician who is cheering for the Brexit vote : presumptive GOP nominee Donald Trump. From his campaign-launching speech about Mexican immigrant "criminals and rapists" to his proposal to ban Muslim immigration and his "Make American Great Again" slogan, Trump has relied on reactionary tribal nationalism at every stage of his campaign, and has received the enthusiastic endorsement of white supremacist and far-right organizations as a result. For such American tribal nationalists, the 1965 Immigration Act is the chief bogeyman, the origin point of continuing demographic shifts that have placed white America in a precarious position.

The only problem with that narrative is that it's entirely inaccurate. What the 1965 Act did was reverse a recent, exclusionary trend in American immigration law and policy, returning the nation to the more inclusive and welcoming stance it had taken throughout the rest of its history. Moreover, while the numbers of Americans from Latin American, Asian, and Muslim cultures have increased in recent decades, all of those communities have been part of o ur national community from its origin points . Which is to say, this right-wing tribal nationalism isn't just opposed to fundamental realities of 21st century American identity -- it also depends on historical and national narratives that are as mythic as they are exclusionary.

Linking Brexit and Trump to global right-wing tribal nationalisms doesn't mean conflating them all, of course. Although Trump rallies have featured troubling instances of violence, and although the murderer of British politican Jo Cox was an avowed white supremacist and Leave supporter, the right-wing Islamic extremism of groups such as Al Qaeda, ISIS, and Boko Haram rely far more consistently and centrally on violence and terrorism in support of their worldview and goals. Such specific contexts and nuances are important and shouldn't be elided.

Yet at the same time, we can't understand our 21st century world without a recognition of this widespread phenomenon of global, tribal nationalism. From ISIS to UKIP, Trump to France's Jean-Marie Le Pen, such reactionary forces have become and remain dominant players across the world, influencing local and international politics, economics, and culture. Benjamin Barber called this trend two decades ago, and we would do well to read and remember his analyses -- as well as his call for civic engagement and activism to resist these forces and fight for democracy.

Ben Railton Professor & public scholar of American Studies, Follow Ben Railton on Twitter: www.twitter.com/AmericanStudier

[Dec 16, 2017] Neoliberalism, the Revolution in Reverse by Chris Lehmann

Notable quotes:
"... In 2008 poorly regulated financial markets yielded a world-historic financial collapse. One generation, weaned on reveries of home ownership as the coveted badge of economic independence and old-fashioned American striving, has been plunged into foreclosure, bankruptcy, and worse. ..."
"... The Good Society ..."
"... The Constitution of Liberty ..."
"... The Road to Serfdom ..."
"... Masters of the Universe ..."
"... The Wealth of Nations ..."
"... Wealth of Nations ..."
"... Wall Street Journal ..."
"... Huffington Post ..."
"... Huffington Post ..."
"... The American Prospect ..."
"... The Darwin Economy ..."
"... American Prospect ..."
"... Washington Post ..."
"... Rich People Things ..."
Jan 01, 2014 | thebaffler.com

By any reasonable measure, the neoliberal dream lies in tatters. In 2008 poorly regulated financial markets yielded a world-historic financial collapse. One generation, weaned on reveries of home ownership as the coveted badge of economic independence and old-fashioned American striving, has been plunged into foreclosure, bankruptcy, and worse. And a successor generation of aspiring college students is now discovering that their equally toxic student-loan dossiers are condemning them to lifetimes of debt. Both before and after 2008, ours has been an economic order that, largely designed to reward paper speculation and penalize work, produces neither significant job growth nor wages that keep pace with productivity. Meanwhile, the only feints at resurrecting our nation's crumbling civic life that have gained any traction are putatively market-based reforms in education, transportation, health care, and environmental policy, which have been, reliably as ever, riddled with corruption, fraud, incompetence, and (at best) inefficiency. The Grand Guignol of deregulation continues apace.

In one dismal week this past spring, for example, a virtually unregulated fertilizer facility immolated several blocks of West, Texas, claiming at least fourteen lives (a number that would have been much higher had the junior high school adjoining the site been in session at the time of the explosion), while a shoddily constructed and militantly unregulated complex of textile factories collapsed in Savar, Bangladesh, with a death toll of more than 1,100 workers.

In the face of all this catastrophism, the placid certainties of neoliberal ideology rattle on as though nothing has happened. Remarkably, our governing elites have decided to greet a moment of existential reckoning for most of their guiding dogmas by incanting with redoubled force the basic catechism of the neoliberal faith: reduced government spending, full privatization of social goods formerly administered by the public sphere, and a socialization of risk for the upper class. When the jobs economy ground to a functional halt, our leadership class first adopted an anemic stimulus plan, and then embarked on a death spiral of austerity-minded bids to decommission government spending at the very moment it was most urgently required -- measures seemingly designed to undo whatever prospective gains the stimulus might have yielded. It's a bit as though the board of directors of the Fukushima nuclear facility in the tsunami-ravaged Japanese interior decided to go on a reactor-building spree on a floodplain, or on the lip of an active volcano.

So now, five years into a crippling economic downturn without even the conceptual framework for a genuine, broad-based, jobs-driven recovery shored up by boosts in federal spending and public services, the public legacy of these times appears to be a long series of metaphoric euphemisms for brain-locked policy inertia: the debt ceiling, the fiscal cliff, the sequestration, the shutdown, the grand bargain. Laid side by side, all these coinages bring to mind the claustrophobic imagery of a kidnapping montage from a noir gangster film -- and it is, indeed, no great exaggeration to say that the imaginative heart of our public life is now hostage to a grinding, miniaturizing agenda of neoliberal market idolatry. As our pundit class has tirelessly flogged the non-dramas surrounding the official government's non-confrontations over the degree and depth of the inevitable brokered deal to bring yet more austerity to the flailing American economy, we civilian observers can be forgiven for suspecting that there is, in fact, no "there" there. For all their sound and fury, these set-tos proceed from the same basic premises on both sides, and produce the same outcome: studied retreat from any sense of official economic accountability for, well, anything.

But the neoliberal flight from public responsibility is actually a tangled, and curiously instructive, tale of strikingly other-than-intended consequences -- something akin to the fables of perverse incentives that neoliberal theorists themselves love to cook up in their never-ending campaign against the prerogatives of the public sphere. The world of neoliberal market consensus that we now inhabit would likely strike many of the movement's founders as a grotesque parody of their own aims and intentions. But because it is a fable of intellectual overreach, as opposed to narrow economic self-interest, the neoliberal saga also bears an oddly hopeful moral. The seemingly impermeable armature of terrible social and economic thought that has bequeathed to us our present state of ruin is really a flimsy and jury-rigged set of market superstitions, and could readily be discarded for sturdier wares.

Open and Shut

To be sure, policy consensus is one of the premier breeding grounds of irony in our time, but the mid-twentieth-century movement that became known to us as the neoliberal rebellion is steeped in the stuff. For starters, the original cohort of neoliberal apostles conceived of themselves as an insulated, elite group of critics who were able to approach the great machinery of government and popular political discourse only at a fastidious remove. They began the project of combining their intellectual labors, oddly enough, out of their shared embrace of The Good Society (1937), a treatise on the limits of state planning by New Republic columnist Walter Lippmann, who, like many of his successors at that "contrarian" journal, advertised his growing disenchantment with New Deal liberalism and the whole endeavor of economic policy-making in the public interest. But Lippmann soon fell afoul of the more doctrinaire members of his new fraternity of mostly European fellow travelers -- notably German economist Wilhelm Röpke and French publisher Louis Rougier, who would later come into bad odor as a fascist collaborator. The group's early association with both Lippmann and Rougier underlined the perils of overexuberant detours into the political arena, and when they made a fresh stab at affiliating as transatlantic defenders of market liberty once the interregnum of the Second World War had passed, their formal alliance, now called the Mont Pelerin Society after a resort in the Swiss Alps, began life as something of a standoffish debating society. The first major irony in the annals of neoliberalism is that a clutch of publicity-averse intellectuals would, within three decades of the group's founding in 1947, end up running a very big chunk of the Anglophone capitalist world.

The neoliberal flight from public responsibility is actually a curiously instructive tale of strikingly other-than-intended consequences.

The Mont Pelerin faithful congregated around the Austrian anti-Keynesian economist F. A. Hayek, an Old World polymath who was eager to integrate his (strictly theoretical) vindication of individual liberty not merely into the heart of the economics discipline, but also into the full sweep of public life, from moral philosophy to scientific research. With the zeal of the ardent émigré, Hayek embraced the skeptical empiricism of conservative British thinkers such as Edmund Burke and David Hume -- and also seconded the broader British reverence for political custom and cultural tradition, which he saw as the outcome of adaptation across the generations. As economic historian Angus Burgin writes, Hayek maintained that "traditions were products of extended processes of competition, and had persisted because in some sense -- which their beneficiaries did not always rationally comprehend -- they worked." The focus here remained, as it did throughout Hayek's career, squarely on the radical limitations on knowledge available to individual human agents. In The Constitution of Liberty , the work he regarded, far more than the bestselling polemic The Road to Serfdom , as the summation of his thought, Hayek wrote that "civilization enables us constantly to profit from knowledge which we individually do not possess" -- and thereby the "freedom and unpredictability of human action" were to be tempered by "rules which experience has shown to serve best on the whole." It speaks volumes about Hayek's own sense of intellectual tradition that he initially proposed the group be called the Acton-Tocqueville Society -- a suggestion overruled on the grounds that these particular avatars of noble European tradition were both too Catholic and too aristocratic for modern tastes.

Like many European intellectuals of the time, Hayek was also haunted by the recent terrors of totalitarianism; both he and his harder-line Austrian colleague, Ludwig von Mises, were exiles from the Nazi regime, and the group of like-minded intellectuals they recruited to form the Mont Pelerin Society shared their sense that market-based liberalism remained the only sure refuge from communism and fascism. It was an obvious corollary of this faith that the philosophic values associated with such liberalism -- skepticism, open inquiry, and historical contingency -- were the most reliable antidotes to totalitarianism. Hayek, for example, argued that the halting and contingent nature of all human knowledge laid bare the conceits of state economic planning and demand management as so much bitter and destructive farce. In a 1936 lecture called "Economics and Knowledge," he sounded an early note of epistemological skepticism in public affairs that was virtually postmodern: "How," he demanded to know, "can the combination of fragments of knowledge existing in different minds bring about results which, if they were to be brought about deliberately, would require a knowledge on the part of the directing mind which no single person can possess?"

Clearly, nothing about such radical skepticism entailed an ironclad commitment to free-market fundamentalism. Any brand of liberalism that forced humans into free market relations would be self-contradictory, as liberal theorists from Adam Smith and John Stuart Mill to John Dewey, all of whom shared Hayek's epistemological stance, understood. Indeed, Karl Popper -- the thinker who inspired Hayek and many other Mont Pelerin founders -- was himself a social democratic defender of the welfare state with decidedly socialist leanings. As Popper explained in a 1994 interview not long before his death, his conception of individual liberty was not antithetical to principles of economic democracy:

In a way one has to have a free market, but I also believe that to make a godhead out of the principle of the free market is nonsense. . . . Traditionally, one of the main tasks of economics was to think of the problem of full employment. Since approximately 1965 economists have given up on that; I find it very wrong.

Clearly, too, the "open society" that Popper famously envisioned permitted ample room for the adoption of egalitarian, even redistributionist, policies. Even as Hayek himself inveighed against the "collectivist" ideology of New Deal economic reforms, he also took pains to distance himself from a devil-take-the-hindmost model of unregulated market competition. The challenge, as Hayek saw it, was not merely to mobilize the resources of the economic policy elite and its intellectual fellow travelers to ratify a complacent, status quo vision of business civilization, but to collaborate on a far more ambitious project. In a 1949 paper called "The Intellectuals and Socialism," Hayek sketched out a visionary, classically liberal mandate that became the animating mission of the Mont Pelerin Society:

We must be able to offer a new liberal program which appeals to the imagination. We must make the building of a free society once more an intellectual adventure, a deed of courage. What we lack is a liberal Utopia, a program which seems neither a mere defense of things as they are nor a diluted kind of socialism, but a truly liberal radicalism which does not spare the susceptibilities of the mighty (including the trade unions), which is not too severely practical, and which does not confine itself to what appears today as politically possible. We need intellectual leaders who are willing to work for an ideal, however small may be the prospects of its early realisation. They must be men who are willing to stick to principles and to fight for their realisation, however remote. The practical compromises they must leave to the politicians.

There is, of course, a contradiction at the heart of Hayek's vision: How is a utopian free society supposed to pursue its own ambitious battery of universalized mandates while remaining ostensibly founded on the radically unknowable nature of all human experience? But the real irony of Hayek's utopian longings is that they were fully realized -- albeit, of course, in nothing like the form he envisioned. As Daniel Stedman Jones argues in his incisive study of the neoliberal rise to power, Masters of the Universe , "it is hard to think of another 'utopia' to have been as fully realized" as Hayek's came to be in the powerful neoliberal regimes taking shape in Reagan's America and Thatcher's Britain: "The free market became the organizing principle for microeconomic reform, especially through the privatization of state assets, nationalized industries, and public services. Trade unions were vanquished and the power of labor was diluted. Exchange controls were abolished. The financial markets were progressively deregulated. Market mechanisms became the models for the operation of health care." While it's true, Stedman Jones notes, that "the purity that Hayek advocated was meant as an optimistic and ideological and intellectual tactic rather than a blueprint," it was to become that and much, much more: neoliberals went on to erect a permanent edifice of postideological assumptions about the natural predominance of markets and the just as rigid limitations of government. "The results," as Stedman Jones sums things up, "have been extraordinary."

Interesting Wishes

In retrospect, Mont Pelerin's guiding spirits probably should have put a lot less stock in Adam Smith's comforting policy-fable of the Invisible Hand and heeded instead the counsel of the old Chinese curse "May all your wishes be granted." That aphorism is also rendered in English as "May you live in interesting times," and both renderings hold with equal force in the neoliberal case. For as the (fairly recondite and academic) proceedings of the Mont Pelerin set were gaining wider traction in the policy world, multiple crackups of the Keynesian model of coordinated economic planning helped to create an opening for the figure who would be the new economic order's zeitgeist on horseback: the diminutive University of Chicago monetarist-for-all-seasons, Milton Friedman.

The robustly entrepreneurial Friedman embraced a masscult platform.

When Paul Volcker -- Jimmy Carter's appointee to chair the Federal Reserve -- adopted a modified version of Friedman's theology of the money supply to tame the two-digit inflation of the late 1970s, Friedman was suddenly the policy visionary who could do no wrong. He soon served as an informal adviser to both the Reagan and Thatcher governments (and, less prestigiously, to the dictatorship of Chilean general Augusto Pinochet). He reached a popular audience via a column in Newsweek , a hit series on PBS, and several bestselling tracts of unalloyed free-market sloganeering. While demure Europeans such as Hayek distrusted the allure of popular renown as a temptation to oversimplify their ideas and pander to the public, the robustly entrepreneurial Friedman embraced a masscult platform -- and for the most part on the very grounds that aroused Hayek's suspicion. When he succeeded Hayek as chairman of the Mont Pelerin group, Friedman brought it, and the broader project of neoliberal thought, into its high propaganda phase. As he cultivated a high media profile, Friedman positioned himself at the nexus of an influential new group of transatlantic conservative think tanks that would go on to supply much of the concrete policy agendas for the Reagan and Thatcher revolutions: the Institute of Economic Affairs in London; the Hoover Institution at Stanford (where he would spend the balance of his career after retiring from the University of Chicago); and the Cato Institute, the Heritage Foundation, and the American Enterprise Institute in Washington.

And as the institutional platforms for Milton Friedman's free-market gospel multiplied, the vaunted intellectual range of neoliberal inquiry vanished into a stagnant pool of confident and absolute assertions of the market's unchallenged sovereignty as the arbiter of all life outcomes. Friedman converted Adam Smith's classical doctrine of the invisible hand -- whereby all self-interested actions mystically possess a benign or munificent social payoff -- into an inverted demonology of the public sphere. There is, he said in an address honoring the two-hundredth anniversary of The Wealth of Nations , "an invisible hand in politics that is the precise reverse of the invisible hand in the market":

In politics, men who intend only to promote the public interest, as they conceive it, are 'led by an invisible hand to promote an end which was no part of their intention.' They become the front-men for special interests they would never knowingly serve. They end up sacrificing the public interest to the special interest, the interest of the consumers to that of producers, of the masses who never go to college to that of those who attend college, of the poor working-class saddled with employment taxes to the middle class who get disproportionate benefits from social security, and so down the line.

It's hard to imagine a purer statement of the founding principles of neoliberalism as we have come wearily to know it in this advanced stage of market collapse. It is pitched, first of all, in a counterintuitive rhetoric of worldly cleverness, a spirit of seminar-room one-upmanship. Not only is Adam Smith right about the hidden virtues of business interests, but the same paradox operates, by a virtually metaphysical law, to transform every action of every individual putatively serving the public interest into a parody of his or her stated intent. Here is a hermeneutics of suspicion that far outstrips the wildest excesses of the death-of-the-author acolytes of high postmodern critical theory. Not only is it the case that public servants will fail to advance the public's interest out of some depressingly common shortcoming of character -- susceptibility to bribery, say, or short-sighted ideological delusion. No, the central idea here is far more radical than that: government, by its very nature, can't serve the public interest, because of the innately condescending and imperious character of the act of governing.

Friedman's claim owed its origins in large part to the work of George Stigler, a colleague at the University of Chicago. Stigler helped pioneer the famous neoliberal doctrine of regulatory capture, which in turn is its own ultra-cynical academic appropriation of what seems, at first glance, like a muckraking Marxist's indictment of the bourgeois state. Stigler and other advocates of the so-called public choice school of economic theory maintained that regulatory agencies inevitably became hostage to the interests of the industries they oversaw. In a 1971 journal article bearing the deceptively wan title "The Theory of Economic Regulation," Stigler airily dismissed reformist complaints about regulatory corruption as "exactly as appropriate as a criticism of the Great Atlantic and Pacific Tea Company for selling groceries, or as a criticism of a politician for currying popular support." Stigler's disdain for pandering political leaders did not, however, prevent him from summarizing his theory in a policy paper for then-president Richard Nixon. And, like most of the leading lights of neoliberal theory, Stigler went on to win a Nobel Prize in Economics.

To be sure, the problem of industry-captive oversight is a common failing of the modern regulatory state, as any cursory glance at the recent track records of, say, the Securities and Exchange Commission or the National Oceanic and Atmospheric Administration will sadly demonstrate. But in promoting regulatory capture as a bedrock law of public-sector enterprise, the neoliberals performed a neat trick; they posited corruption as a permanent condition of the regulatory state. And in so doing, they casually relegated a fistful of traditional Progressive and New Deal reforms -- the cause of good government, upgrades in civil service appointments and public-sector unionizing, the punishment of graft and fraud, and (not least by a long shot) the tighter regulation of corruption in the private sector -- to the dustbin of history. Such measures, they preached, could breed only perverse and self-defeating outcomes, and would indeed grievously multiply double-dealing in the public sector. Only by harnessing the superior explanatory power of "profit-maximizing" in public life, Stigler argued, could the sad pieties of reformism be laid aside in favor of the sterner and more confident guidance of the true masters of realpolitik -- the lords of the economic profession. Because "reformers will be ill-equipped to use the state for their reforms, and victims of the pervasive use of the state's support of special groups will be helpless to protect themselves," Stigler reasoned, "economists should quickly establish the license to practice on the rational theory of political behavior." Thus was born still another pet piety of the neoliberal counter-reformation: the notion that economics is "the imperial science," duly licensed to dispense its market-pleasing wisdom in every sphere of life, from crime prevention and education policy to dating and food preparation.

The notion that the public and private sectors both bear "defects" is elevated to a metaphysical affront to the market's sovereignty.

In the brewing theology of the modern conservative backlash, the moral hazards of the captive regulatory state were entirely the creation of the bad actors in the public sector. The bagmen for the industries seeking to purchase regulatory favors from the agents of the state were, after all, only acting in accord with the sainted Smithian dictates of self-interest. What fault could it be of theirs if the state had provided them with an open market in graft, kickbacks, and influence-peddling? Indeed, Friedman, ever alert to opportunities for rhetorical one-upmanship, floated the proposition that critics of free-market policies were foisting a bad-faith "double standard" on the rightful workings of market self-interest. "A market 'defect,'" Friedman explained in a tribute to Smith's Wealth of Nations , "whether through an absence of competition or external effects (equivalent, as recent literature has made clear, to transaction costs) has been regarded as immediate justification for government intervention. But the political mechanism has its 'defects' too. It is fallacious to compare the actual market with the ideal political structure. One should either compare the real with the real, or the ideal with the ideal."

Got that? The notion that the public and private sectors both bear "defects" -- a completely banal supposition conceded by any Galbraithian on the economic left -- is here elevated to a metaphysical affront to the market's sovereignty. In fact, the double standard that Friedman calls out is nothing of the sort. No progressive-minded supporter of government intervention had staked out the absurd position that the state is morally immaculate, or itself unsusceptible to any constructive outside intervention when its practices are out of line with the public interest. Friedman writes as though Congress had never appointed an inspector general, passed legislation to reform the civil service, and improved regulatory safeguards -- or as though the various federal employees' unions had never pushed for improved hiring practices or better working conditions to upgrade their work product. And that's because, for critics in the neoliberal camp, such external controls on the state's behavior simply cannot exist; the regulatory-capture school of neoliberal theory already ruled out, on principle, the possibility that such interventions could yield anything other than market-distorting outcomes. In other words, Friedman's lament about the mismatched moral standards of state and market is the phony protest of a card cheat seeking mainly to stoke up the theatrical appeal of an already rigged game.

Who'll Stop the Rana?

You'd think that our recent bruising encounters with the devastating fallout from the deregulators' handiwork in the housing market of the early aughts should, by rights, render Friedman's complaints about the public sector's assaults on market virtue the deadest of dead letters. But, if anything, the ritual defense of the market's sovereign prerogative has dug in that much more intractably as its basic coordinates have been discredited. As critics such as Dean Baker routinely point out, the stalled recovery out of the Great Recession is almost exclusively a function of the failure of our neoliberal economic establishment to speak honestly about a collapsed housing bubble that created a yawning shortfall in demand -- a shortfall that, amid the paralysis of credit markets in the same recession, could be jumpstarted only by government stimulus.

All sorts of absurdities have flowed from this magisterial breakdown in comprehension. Since the neoliberal catechism holds that stimulative government spending can never be justified in the long run, much of our debate over the recovery's prospective course has been given over to speculative nonsense. Chief among these talismanic invocations of free-market faith is the great question of how to placate the jittery job creators. At virtually every turn in the course of debate over how steeply to cut government spending in this recession, our sachems of neoliberal orthodoxy have insisted that any revenue-enhancing move the government so much as contemplated would spook business leaders into mothballing plans to expand operations and add jobs. It became the all-purpose worst-case scenario of first resort. If health care reform passed, if federal deficits expanded, or if marginal tax rates were permitted to rise for the vapors-prone investor class, why, then the whole prospect of a broad-based economic recovery was as good as shot. [*]

And since neoliberalism is most notably a global -- or properly speaking, the globalizing -- ideology, such pat distortions of economic reality are no longer confined to the Anglo-American political economy. Nor are they confined to strictly cognitive errors in policymaking. The collapse of the Rana Plaza garment factory in Bangladesh has yielded commentary from neoliberals that might well merit entry into the psychiatric profession's DSM-5 as textbook illustrations of moral aphasia. Here, after all, was a tragedy that would appall even the darkest Victorian imaginings of a Charles Dickens or a Karl Marx: factory workers earning a monthly wage of $38 crowded into a structurally unsound multistory facility built on a foundation of sand above a drained pond. Three stories of the factory had been hastily erected on top of an already unsound existing structure just to house the fresh battalions of underpaid workers demanded by bottom-feeding international textile contractors.

Government inspectors repeatedly demanded that the facility be shuttered on safety grounds, but the plant's proprietors ignored their citations, reckoning that the short-term gains of maintaining peak production outweighed the negligible threat of a fine or safety citation. Nor was there likely to be any pressure from Western bastions of enlightenment and human rights. The ceremonial stream of Astroturf labor-and-safety-inspecting delegations from Western nations made zero note of the cracked and teetering foundations of the Rana Plaza structure. Lorenz Berzau, the managing director of one such industry consortium (the Business Social Compliance Initiative), primly told the Wall Street Journal that the group isn't an engineering concern -- and what's more, "it's very important not to expect too much from the social audit" that his group and other Western overseers conduct on production facilities. And, as Dave Jamieson and Emran Hossain reported in the Huffington Post , labor organizers have long since learned that the auditing groups serve largely as pro forma conduits of impression management for consumer markets in the West. The auditing of manufacturing facilities in the developing world "ends up catering more to the brands involved than the workers toiling on the line," Jamieson and Hossain write.

Yes, factory owners and managers well understand the permissible bounds of discourse in such Potemkin-style inquiries -- and instruct their workforce accordingly. "What to say to the auditors always comes from the owners," a Bangladeshi line worker named Suruj Miah told the two reporters. "The owners in most cases would warn workers not to say negative things about the factories. Workers are left without a choice." Sumi Abedin, one of the survivors of an earlier disaster -- a factory fire in the nearby Tazreen plant that claimed the lives of 112 workers in November 2012 -- told the Huffington Post that on the day of an international audit team's visit, management compelled workers to wear T-shirts designating them as members of a nonexistent fire safety committee, and had them brandishing prop fire-extinguishing equipment that plant managers had procured only for the duration of the audit.

What this disaster ought to have driven through the neoliberal consensus's collective solar plexus is something close to the polar opposite of its cherished, evidence-proof theory of the captive regulator: a largely cosmetic global watchdog effort funded overwhelmingly by private-sector concerns, far from delivering oversight and accountability, has incentivized fraud and negligence. And conveniently enough, it's the race-to-the-bottom competitive forces unleashed by the global workplace that ritually sanctify all of this routine dishonesty. In their malignant neglect of worker safety measures, local factory managers are able to cite the same market pressures to maximize production and profit that have prevented the ornamental Western groups conducting audits of workplace safety practices from releasing their findings to the workers at risk of being killed by the neoliberal regime of global manufacturing.

Barking Dogmas

Still, the dogmas of neoliberal market prerogative are far sturdier than a collapsing factory or a raging fire on the production line. If the dogmatists have thrown overboard Hayek-era intellectual values like experimentation and skepticism, at least they can stave off their inevitable extinction by shoring up Friedman-era platitudes and, from the mantles of the nation's most prestigious universities and op-ed shops, try to pass them off as the nation's highest common sense. So former University of Chicago law professor Richard Epstein, who helped found the influential law and economics movement that essentially transposed the shibboleths of public choice theory into legal doctrine, has patiently explained that the just and measured response to the collapse of Rana Plaza is to seek enforcement of preexisting building codes across the Bangladeshi private sector. Writing on the heels of the disaster, in the Hoover Institution's web journal, Defining Ideas , Epstein takes pains to rule out the passage of any "new laws" to improve worker-safety standards or international monitoring efforts.

In other words: Bangladeshi workers can either be more safe or starve more rapidly.

But lest even this minimal recourse to regulation sound like too heady a plunge into statist remedies, Professor Epstein also cautions that the aggrieved and grieving workers in the Bangladeshi garment trade must not veer recklessly into unionism or other non-market-approved modes of worker self-determination. After all, he reasons, "in order to stave a shutdown off by improving factory safety, the savvy firm will have to raise its asking price from foreign purchasers . . . and may have to lower wages to remain competitive." (This is another classic myth of the neoliberal faith -- the rational "trade-off" between personal safety and wages that the independent broker makes when he or she contracts with an employer to freely exchange time and skills for wages. Only, of course, the notion of such rational choice has been reduced to a bitter farce in workplaces such as Rana Plaza, where the basic human rights of workers are only acknowledged theatrically, for the purposes of Potemkin auditing tours.) A more activist approach to the crisis in global worker safety would create intolerable distress to Epstein's utopian vision of the carefully calibrated relations of global market production. Sure, the EU might ban exports of clothes bearing the taint of labor exploitation -- but such a measure would just perversely create "undeserved economic protection" for EU economies that are net clothing exporters (and by implication, would deprive consumers of the sacred right to the cheapest possible attire that bullied and undercompensated labor can provide).

And do not get Epstein started on the mischief wrought by unions, which are all but certain to multiply calamities like the Rana Plaza disaster:

It is not as though the only thing that a union does once it gains its dominant position is to advocate for the safety of its workers, even if that item is at the top of its agenda. Unions also bargain over wages, work rules, seniority, pensions, benefits, and other conditions of employment. In dealing with these issues, they exert a monopoly clout that can easily raise wages and reduce productivity. In a market with many firms, they can exert that force only if they are prepared to take retaliatory action against the firms that refuse to bow to their conditions. And they can only do so if they induce the government to take measures to restrict the entry of non-union firms that could underbid them.

In other words: Bangladeshi workers can either be more safe or starve more rapidly. But according to Epstein, they assuredly aren't entitled to earn a living wage without the threat of being crushed or burned to death at any given moment. The pertinent market trade-offs simply won't permit it. Indeed, if you want to know the truth, Epstein claims, "labor agitation was . . . one of the contributing causes to the collapse at Rana Plaza." Even the threat of union-related disruptions to established work discipline can be Kryptonite to the beleaguered clothes barons of Bangladesh. We find ourselves confronted yet again by the torments of the heroic job creator. Prospective labor agitation, Epstein contends, "places enormous strains on the firms that have to deliver goods to foreign purchasers in order to remain in business. The threat of a repeat protest has led many firm bosses to step up the pace of work in the factories, which in turn means longer shifts, more workers, more extensive use of heavy equipment in order to make up for lost production, and stockpiling goods. That maneuver turned into a fatal insurance policy against future labor disruptions."

You see? One minute you're protesting for a wage increase or a work regime less likely to injure you, and before you know it, you've frightened your employer into stockpiling inventory at such a frenetic pace that he kills you. Could the tonic discipline of market preferences really be any clearer? One can only hope that future no-goodnik labor agitators will heed this tragic lesson and recognize "foreign purchasers" as the remote, punitive, and awesome deities that the market meant them to be.

Trapped in the Moneybox

It is not all that surprising, in light of the trajectory of neoliberal ascendancy, to see rigidly orthodox market apologists like Professor Epstein driven to such extremities to tease out a neoliberal moral from the bloody, smoldering squalor of the Rana Plaza disaster. But the neoliberal consensus has long since transcended conventional divisions of party and ideology; the axiomatic assertion of market dominance is a conditioned reflex among nearly all established pundits.

In a now-infamous April 24 write-up of the Bangladeshi catastrophe, Slate 's Moneybox columnist Matt Yglesias -- an eager Democratic partisan brandishing pious Washington credentials from The American Prospect and the Center for American Progress -- tried his own hand at an Epstein-style vindication of the market's undeviating wisdom. In a post bearing the reassuring free-to-be-you-and-me headline "Different Places Have Different Safety Rules and That's OK," Yglesias framed his defense of the status quo regime of erratic standards for worker safety in the hoary rhetoric of the public choice "trade-off." "While having a safe job is good," Yglesias chirped, "money is also good."

OK, then! But note again the pinched moral universe in which employees are permitted only to have a safe job or a (barely) sustenance income, and never both at the same time. It seems a modest social goal to demand that the exchange of labor value for a paycheck in non-mortal conditions be accepted as an incontrovertible human right. If a rapidly globalizing market order is unable to secure that baseline personal and financial security, its support for wildly varying models of job safety should be regarded precisely as the problem -- and not as the taken-for-granted standard for phony assertions about what individual workers (let alone "the Bangladeshis," tout court) are purported to be choosing.

"While having a safe job is good," Yglesias chirped, "money is also good."

But Matt Yglesias, like many of Washington's market-besotted, faux-contrarian pundits on the notional left side of the partisan aisle, will not be rushed into stating the morally obvious. Yes, he concedes, there could well be an abstract case here for collective action aimed at upgrading the safety conditions of Bangladeshi workplaces -- but like Epstein, he frets that the collective-action models of richer, Western workplaces create prohibitive costs of doing business and therefore may not fall within the ambit of choices that workers in Bangladesh should reasonably be permitted to make. "Bangladesh is a lot poorer than the United States, and there are very good reasons for Bangladeshi people to make different choices in this regard than Americans," Yglesias writes. "Safety rules that are appropriate for the United States would be unnecessarily immiserating in much poorer Bangladesh."

So, not to worry, Mr. Moneybox confidently asserts. The trade-offs have yielded optimal gains in each diverse market setting, in this, the best of all possible neoliberal worlds: "American jobs have gotten much safer over the past 20 years, and Bangladesh has gotten a lot richer." As an authority for this sweeping claim -- which, by the way, is untrue in what Yglesias sees as the argument-clinching "safer" U.S. end of the spectrum; Bureau of Labor Statistics data on workplace fatalities show steady increases over the past five years, with right-to-work states such as Texas leading the grisly toll -- Yglesias cites the work of Robert Frank, a public-choice enthusiast who, in his recent book The Darwin Economy , seeks to lay the groundwork for a terrifying entity he calls the "libertarian welfare state."

Social media scourges wasted little time in calling out Yglesias's smug, fatuous, and opportunistic effort to advertise his market contrarianism on the ruins of the Rana Plaza collapse. Eventually the scribe was hounded into publishing a passive-aggressive follow-up post averring that he'd been misread and unfairly castigated by his critics. The stalwart wonk remained unbowed, however; Yglesias wrote that he still "absolutely" stood by the conclusion that, in matters of workplace safety, it's "appropriate for rich countries to have more stringent standards than poor ones."

Now, Matt Yglesias is not a doctrinaire neoliberal thinker -- certainly not in the sense that a disciplined propagandist like Milton Friedman was (even though he longs, absurdly, for a revival of "Friedman-style pragmatism" to bring the economic right to its senses). [**] But that's precisely the point. Neoliberal orthodoxy has leached so deeply into the intellectual groundwater of the nation's political class that it's no longer a meaningful descriptor of ideological difference. That's why Yglesias's erstwhile American Prospect colleague Ezra Klein, over at his prestigious post atop the Washington Post 's economic blog shop, can marvel at the tough-minded budget "seriousness" of serial Randian liar Paul Ryan -- or why the Obama White House can confidently slot offshore billionaire Penny Pritzker as its second-term commerce secretary while it continues to mouth empty platitudes about saving the nation's middle class.

All Friedmans Now

It was Milton Friedman himself who famously announced, during his tour as an informal adviser to Richard Nixon, that "we're all Keynesians now" -- but that oft-quoted maxim has been badly truncated from its full context. What Friedman actually said, in a 1968 interview with Time magazine, was "in one sense, we are all Keynesians now; in another, no one is a Keynesian any longer." He went on to spell out the paradox more fully: "We all use the Keynesian language and apparatus; none of us any longer accepts the initial Keynesian conclusions."

Now, more than four decades on, Friedman's savvy rhetorical dodge is the watchword of all mainstream macroeconomic thought. Even putative liberals who pay lip service to the efficacy of government intervention dig in behind their own pet postulates about the market's transcendent wisdom and beneficence -- about the need to temper the alleged excesses of the social-democratic usages of social wealth with sterner, more austere pieties about the real-world trade-offs mandated by the lords of neoliberal market liberation.

It is an undeniable species of gibberish, one that would have likely appalled even as firm a market stoic as Hayek, who, whatever his other intellectual handicaps, well understood the mischief wrought by a glib and self-seeking centrism. During the Mont Pelerin group's tenth anniversary gathering in 1957, Hayek delivered a controversial speech called "Why I Am Not a Conservative." It was designed, among other things, to distance the group from the steady accretion of self-insulated and untested right-wing bromides that would later be the hallmark of Friedman's successor reign. Today, however, Hayek's oration sounds a much more sobering note of prophecy for our political culture at large. "Advocates of the Middle Way with no goal of their own, conservatives have been guided by the belief that the truth must lie somewhere between the extremes -- with the result that they have shifted position every time a more extreme movement appeared on either wing," Hayek announced.

The one true road to intellectual serfdom, in other words, was the one that Hayek correctly saw lurking within the heart of the neoliberal revolution.

[*] Meanwhile, the actual state of the labor economy told a different story -- that corporate profits had spiked to record highs and that, instead of scaling back entirely on job expenditures, employers were in fact adding hours to the average employee workweek, rightly calculating that they could continue getting more value out of the existing workforce in an artificially slack job market with anemic, and declining, union representation. (Once again, Dean Baker was virtually alone among economic commentators in noting this important shift.) Never mind, as well, that when significant provisions of the allegedly business-killing health care law finally began to kick in, health care spending in the private sector started to slow and stabilize on what looked to be a permanent and structural basis, with a projected decline of $770 billion over the next decade. In other words, government intervention in the economy -- even via a mechanism as compromised and graft-riddled as the 2010 Affordable Care Act -- was showing a striking capacity to even out and stabilize one of the most stubborn and devastating inequalities in the American economy, access to affordable health care. And far from producing a steeper drag on broader conditions for recovery, the stabilization of health care spending occurred amid a pronounced spike in health care hiring, and indeed a long overdue (if still altogether too weak) rebound in the labor economy generally.

[**] Yglesias has offered qualified support for the Obama stimulus plan and health care overhaul, and on this past May Day, even ventured a classically coy Slate post where he pretended to flirt with Marxism. (Hipster-trolling headline: "Capitalism is looking pretty shabby.")

Chris Lehmann is editor in chief of The Baffler and author of Rich People Things . His latest book, The Money Cult , is out now from Melville House.

[Dec 15, 2017] Rise and Decline of the Welfare State, by James Petras

Highly recommended!
Petras did not mention that it was Carter who started neoliberalization of the USA. The subsequent election of Reagan signified the victory of neoliberalism in this country or "quite coup". The death of New Deal from this point was just a matter of time. Labor relations drastically changes and war on union and atomization of workforce are a norm.
Welfare state still exists but only for corporation and MIC. Otherwise the New Deal society is almost completely dismanted.
It is true that "The ' New Deal' was, at best, a de facto ' historical compromise' between the capitalist class and the labor unions, mediated by the Democratic Party elite. It was a temporary pact in which the unions secured legal recognition while the capitalists retained their executive prerogatives." But the key factor in this compromise was the existence of the USSR as a threat to the power of capitalists in the USA. when the USSR disappeared cannibalistic instincts of the US elite prevailed over caution.
Notable quotes:
"... The earlier welfare 'reforms' and the current anti-welfare legislation and austerity practices have been accompanied by a series of endless imperial wars, especially in the Middle East. ..."
"... In the 1940's through the 1960's, world and regional wars (Korea and Indo-China) were combined with significant welfare program – a form of ' social imperialism' , which 'buy off' the working class while expanding the empire. However, recent decades are characterized by multiple regional wars and the reduction or elimination of welfare programs – and a massive growth in poverty, domestic insecurity and poor health. ..."
"... modern welfare state' ..."
"... Labor unions were organized as working class strikes and progressive legislation facilitated trade union organization, elections, collective bargaining rights and a steady increase in union membership. Improved work conditions, rising wages, pension plans and benefits, employer or union-provided health care and protective legislation improved the standard of living for the working class and provided for 2 generations of upward mobility. ..."
"... Social Security legislation was approved along with workers' compensation and the forty-hour workweek. Jobs were created through federal programs (WPA, CCC, etc.). Protectionist legislation facilitated the growth of domestic markets for US manufacturers. Workplace shop steward councils organized 'on the spot' job action to protect safe working conditions. ..."
"... World War II led to full employment and increases in union membership, as well as legislation restricting workers' collective bargaining rights and enforcing wage freezes. Hundreds of thousands of Americans found jobs in the war economy but a huge number were also killed or wounded in the war. ..."
"... So-called ' right to work' ..."
"... Trade union officials signed pacts with capital: higher pay for the workers and greater control of the workplace for the bosses. Trade union officials joined management in repressing rank and file movements seeking to control technological changes by reducing hours (" thirty hours work for forty hours pay ..."
"... Trade union activists, community organizers for rent control and other grassroots movements lost both the capacity and the will to advance toward large-scale structural changes of US capitalism. Living standards improved for a few decades but the capitalist class consolidated strategic control over labor relations. While unionized workers' incomes, increased, inequalities, especially in the non-union sectors began to grow. With the end of the GI bill, veterans' access to high-quality subsidized education declined ..."
"... With the election of President Carter, social welfare in the US began its long decline. The next series of regional wars were accompanied by even greater attacks on welfare via the " Volker Plan " – freezing workers' wages as a means to combat inflation. ..."
"... Guns without butter' became the legislative policy of the Carter and Reagan Administrations. The welfare programs were based on politically fragile foundations. ..."
"... The anti-labor offensive from the ' Oval Office' intensified under President Reagan with his direct intervention firing tens of thousands of striking air controllers and arresting union leaders. Under Presidents Carter, Reagan, George H.W. Bush and William Clinton cost of living adjustments failed to keep up with prices of vital goods and services. Health care inflation was astronomical. Financial deregulation led to the subordination of American industry to finance and the Wall Street banks. De-industrialization, capital flight and massive tax evasion reduced labor's share of national income. ..."
"... The capitalist class followed a trajectory of decline, recovery and ascendance. Moreover, during the earlier world depression, at the height of labor mobilization and organization, the capitalist class never faced any significant political threat over its control of the commanding heights of the economy ..."
"... Hand in bloody glove' with the US Empire, the American trade unions planted the seeds of their own destruction at home. The local capitalists in newly emerging independent nations established industries and supply chains in cooperation with US manufacturers. Attracted to these sources of low-wage, violently repressed workers, US capitalists subsequently relocated their factories overseas and turned their backs on labor at home. ..."
"... President 'Bill' Clinton ravaged Russia, Yugoslavia, Iraq and Somalia and liberated Wall Street. His regime gave birth to the prototype billionaire swindlers: Michael Milken and Bernard 'Bernie' Madoff. ..."
"... Clinton converted welfare into cheap labor 'workfare', exploiting the poorest and most vulnerable and condemning the next generations to grinding poverty. Under Clinton the prison population of mostly African Americans expanded and the breakup of families ravaged the urban communities. ..."
"... President Obama transferred 2 trillion dollars to the ten biggest bankers and swindlers on Wall Street, and another trillion to the Pentagon to pursue the Democrats version of foreign policy: from Bush's two overseas wars to Obama's seven. ..."
"... Obama was elected to two terms. His liberal Democratic Party supporters swooned over his peace and justice rhetoric while swallowing his militarist escalation into seven overseas wars as well as the foreclosure of two million American householders. Obama completely failed to honor his campaign promise to reduce wage inequality between black and white wage earners while he continued to moralize to black families about ' values' . ..."
"... Obama's war against Libya led to the killing and displacement of millions of black Libyans and workers from Sub-Saharan Africa. The smiling Nobel Peace Prize President created more desperate refugees than any previous US head of state – including millions of Africans flooding Europe. ..."
"... Forty-years of anti welfare legislation and pro-business regimes paved the golden road for the election of Donald Trump ..."
"... Trump and the Republicans are focusing on the tattered remnants of the social welfare system: Medicare, Medicaid, Social Security. The remains of FDR's New Deal and LBJ's Great Society -- are on the chopping block. ..."
"... The moribund (but well-paid) labor leadership has been notable by its absence in the ensuing collapse of the social welfare state. The liberal left Democrats embraced the platitudinous Obama/Clinton team as the 'Great Society's' gravediggers, while wailing at Trump's allies for shoving the corpse of welfare state into its grave. ..."
"... Over the past forty years the working class and the rump of what was once referred to as the ' labor movement' has contributed to the dismantling of the social welfare state, voting for ' strike-breaker' Reagan, ' workfare' Clinton, ' Wall Street crash' Bush, ' Wall Street savior' Obama and ' Trickle-down' Trump. ..."
"... Gone are the days when social welfare and profitable wars raised US living standards and transformed American trade unions into an appendage of the Democratic Party and a handmaiden of Empire. The Democratic Party rescued capitalism from its collapse in the Great Depression, incorporated labor into the war economy and the post- colonial global empire, and resurrected Wall Street from the 'Great Financial Meltdown' of the 21 st century. ..."
"... The war economy no longer fuels social welfare. The military-industrial complex has found new partners on Wall Street and among the globalized multi-national corporations. Profits rise while wages fall. Low paying compulsive labor (workfare) lopped off state transfers to the poor. Technology – IT, robotics, artificial intelligence and electronic gadgets – has created the most class polarized social system in history ..."
"... "The collaboration of liberals and unions in promoting endless wars opened the door to Trump's mirage of a stateless, tax-less, ruling class." ..."
"... Corporations [now] are welfare recipients and the bigger they are, the more handouts they suck up ..."
"... Corporations not only continuously seek monopolies (with the aid and sanction of the state) but they steadily fine tune the welfare state for their benefit. In fact, in reality, welfare for prols and peasants wouldn't exist if it didn't act as a money conduit and ultimate profit center for the big money grubbers. ..."
"... The article is dismal reading, and evidence of the failings of the "unregulated" society, where the anything goes as long as you are wealthy. ..."
"... Like the Pentagon. Americans still don't readily call this welfare, but they will eventually. Defense profiteers are unions in a sense, you're either in their club Or you're in the service industry that surrounds it. ..."
Dec 13, 2017 | www.unz.com

Introduction

The American welfare state was created in 1935 and continued to develop through 1973. Since then, over a prolonged period, the capitalist class has been steadily dismantling the entire welfare state.

Between the mid 1970's to the present (2017) labor laws, welfare rights and benefits and the construction of and subsidies for affordable housing have been gutted. ' Workfare' (under President 'Bill' Clinton) ended welfare for the poor and displaced workers. Meanwhile the shift to regressive taxation and the steadily declining real wages have increased corporate profits to an astronomical degree.

What started as incremental reversals during the 1990's under Clinton has snowballed over the last two decades decimating welfare legislation and institutions.

The earlier welfare 'reforms' and the current anti-welfare legislation and austerity practices have been accompanied by a series of endless imperial wars, especially in the Middle East.

In the 1940's through the 1960's, world and regional wars (Korea and Indo-China) were combined with significant welfare program – a form of ' social imperialism' , which 'buy off' the working class while expanding the empire. However, recent decades are characterized by multiple regional wars and the reduction or elimination of welfare programs – and a massive growth in poverty, domestic insecurity and poor health.

New Deals and Big Wars

The 1930's witnessed the advent of social legislation and action, which laid the foundations of what is called the ' modern welfare state' .

Labor unions were organized as working class strikes and progressive legislation facilitated trade union organization, elections, collective bargaining rights and a steady increase in union membership. Improved work conditions, rising wages, pension plans and benefits, employer or union-provided health care and protective legislation improved the standard of living for the working class and provided for 2 generations of upward mobility.

Social Security legislation was approved along with workers' compensation and the forty-hour workweek. Jobs were created through federal programs (WPA, CCC, etc.). Protectionist legislation facilitated the growth of domestic markets for US manufacturers. Workplace shop steward councils organized 'on the spot' job action to protect safe working conditions.

World War II led to full employment and increases in union membership, as well as legislation restricting workers' collective bargaining rights and enforcing wage freezes. Hundreds of thousands of Americans found jobs in the war economy but a huge number were also killed or wounded in the war.

The post-war period witnessed a contradictory process: wages and salaries increased while legislation curtailed union rights via the Taft Hartley Act and the McCarthyist purge of leftwing trade union activists. So-called ' right to work' laws effectively outlawed unionization mostly in southern states, which drove industries to relocate to the anti-union states.

Welfare reforms, in the form of the GI bill, provided educational opportunities for working class and rural veterans, while federal-subsidized low interest mortgages encourage home-ownership, especially for veterans.

The New Deal created concrete improvements but did not consolidate labor influence at any level. Capitalists and management still retained control over capital, the workplace and plant location of production.

Trade union officials signed pacts with capital: higher pay for the workers and greater control of the workplace for the bosses. Trade union officials joined management in repressing rank and file movements seeking to control technological changes by reducing hours (" thirty hours work for forty hours pay "). Dissident local unions were seized and gutted by the trade union bosses – sometimes through violence.

Trade union activists, community organizers for rent control and other grassroots movements lost both the capacity and the will to advance toward large-scale structural changes of US capitalism. Living standards improved for a few decades but the capitalist class consolidated strategic control over labor relations. While unionized workers' incomes, increased, inequalities, especially in the non-union sectors began to grow. With the end of the GI bill, veterans' access to high-quality subsidized education declined.

While a new wave of social welfare legislation and programs began in the 1960's and early 1970's it was no longer a result of a mass trade union or workers' "class struggle". Moreover, trade union collaboration with the capitalist regional war policies led to the killing and maiming of hundreds of thousands of workers in two wars – the Korean and Vietnamese wars.

Much of social legislation resulted from the civil and welfare rights movements. While specific programs were helpful, none of them addressed structural racism and poverty.

The Last Wave of Social Welfarism

The 1960'a witnessed the greatest racial war in modern US history: Mass movements in the South and North rocked state and federal governments, while advancing the cause of civil, social and political rights. Millions of black citizens, joined by white activists and, in many cases, led by African American Viet Nam War veterans, confronted the state. At the same time, millions of students and young workers, threatened by military conscription, challenged the military and social order.

Energized by mass movements, a new wave of social welfare legislation was launched by the federal government to pacify mass opposition among blacks, students, community organizers and middle class Americans. Despite this mass popular movement, the union bosses at the AFL-CIO openly supported the war, police repression and the military, or at best, were passive impotent spectators of the drama unfolding in the nation's streets. Dissident union members and activists were the exception, as many had multiple identities to represent: African American, Hispanic, draft resisters, etc.

Under Presidents Lyndon Johnson and Richard Nixon, Medicare, Medicaid, OSHA, the EPA and multiple poverty programs were implemented. A national health program, expanding Medicare for all Americans, was introduced by President Nixon and sabotaged by the Kennedy Democrats and the AFL-CIO. Overall, social and economic inequalities diminished during this period.

The Vietnam War ended in defeat for the American militarist empire. This coincided with the beginning of the end of social welfare as we knew it – as the bill for militarism placed even greater demands on the public treasury.

With the election of President Carter, social welfare in the US began its long decline. The next series of regional wars were accompanied by even greater attacks on welfare via the " Volker Plan " – freezing workers' wages as a means to combat inflation.

Guns without butter' became the legislative policy of the Carter and Reagan Administrations. The welfare programs were based on politically fragile foundations.

The Debacle of Welfarism

Private sector trade union membership declined from a post-world war peak of 30% falling to 12% in the 1990's. Today it has sunk to 7%. Capitalists embarked on a massive program of closing thousands of factories in the unionized North which were then relocated to the non-unionized low wage southern states and then overseas to Mexico and Asia. Millions of stable jobs disappeared.

Following the election of 'Jimmy Carter', neither Democratic nor Republican Presidents felt any need to support labor organizations. On the contrary, they facilitated contracts dictated by management, which reduced wages, job security, benefits and social welfare.

The anti-labor offensive from the ' Oval Office' intensified under President Reagan with his direct intervention firing tens of thousands of striking air controllers and arresting union leaders. Under Presidents Carter, Reagan, George H.W. Bush and William Clinton cost of living adjustments failed to keep up with prices of vital goods and services. Health care inflation was astronomical. Financial deregulation led to the subordination of American industry to finance and the Wall Street banks. De-industrialization, capital flight and massive tax evasion reduced labor's share of national income.

The capitalist class followed a trajectory of decline, recovery and ascendance. Moreover, during the earlier world depression, at the height of labor mobilization and organization, the capitalist class never faced any significant political threat over its control of the commanding heights of the economy.

The ' New Deal' was, at best, a de facto ' historical compromise' between the capitalist class and the labor unions, mediated by the Democratic Party elite. It was a temporary pact in which the unions secured legal recognition while the capitalists retained their executive prerogatives.

The Second World War secured the economic recovery for capital and subordinated labor through a federally mandated no strike production agreement. There were a few notable exceptions: The coal miners' union organized strikes in strategic sectors and some leftist leaders and organizers encouraged slow-downs, work to rule and other in-plant actions when employers ran roughshod with special brutality over the workers. The recovery of capital was the prelude to a post-war offensive against independent labor-based political organizations. The quality of labor organization declined even as the quantity of trade union membership increased.

Labor union officials consolidated internal control in collaboration with the capitalist elite. Capitalist class-labor official collaboration was extended overseas with strategic consequences.

The post-war corporate alliance between the state and capital led to a global offensive – the replacement of European-Japanese colonial control and exploitation by US business and bankers. Imperialism was later 're-branded' as ' globalization' . It pried open markets, secured cheap docile labor and pillaged resources for US manufacturers and importers.

US labor unions played a major role by sabotaging militant unions abroad in cooperation with the US security apparatus: They worked to coopt and bribe nationalist and leftist labor leaders and supported police-state regime repression and assassination of recalcitrant militants.

' Hand in bloody glove' with the US Empire, the American trade unions planted the seeds of their own destruction at home. The local capitalists in newly emerging independent nations established industries and supply chains in cooperation with US manufacturers. Attracted to these sources of low-wage, violently repressed workers, US capitalists subsequently relocated their factories overseas and turned their backs on labor at home.

Labor union officials had laid the groundwork for the demise of stable jobs and social benefits for American workers. Their collaboration increased the rate of capitalist profit and overall power in the political system. Their complicity in the brutal purges of militants, activists and leftist union members and leaders at home and abroad put an end to labor's capacity to sustain and expand the welfare state.

Trade unions in the US did not use their collaboration with empire in its bloody regional wars to win social benefits for the rank and file workers. The time of social-imperialism, where workers within the empire benefited from imperialism's pillage, was over. Gains in social welfare henceforth could result only from mass struggles led by the urban poor, especially Afro-Americans, community-based working poor and militant youth organizers.

The last significant social welfare reforms were implemented in the early 1970's – coinciding with the end of the Vietnam War (and victory for the Vietnamese people) and ended with the absorption of the urban and anti-war movements into the Democratic Party.

Henceforward the US corporate state advanced through the overseas expansion of the multi-national corporations and via large-scale, non-unionized production at home.

The technological changes of this period did not benefit labor. The belief, common in the 1950's, that science and technology would increase leisure, decrease work and improve living standards for the working class, was shattered. Instead technological changes displaced well-paid industrial labor while increasing the number of mind-numbing, poorly paid, and politically impotent jobs in the so-called 'service sector' – a rapidly growing section of unorganized and vulnerable workers – especially including women and minorities.

Labor union membership declined precipitously. The demise of the USSR and China's turn to capitalism had a dual effect: It eliminated collectivist (socialist) pressure for social welfare and opened their labor markets with cheap, disciplined workers for foreign manufacturers. Labor as a political force disappeared on every count. The US Federal Reserve and President 'Bill' Clinton deregulated financial capital leading to a frenzy of speculation. Congress wrote laws, which permitted overseas tax evasion – especially in Caribbean tax havens. Regional free-trade agreements, like NAFTA, spurred the relocation of jobs abroad. De-industrialization accompanied the decline of wages, living standards and social benefits for millions of American workers.

The New Abolitionists: Trillionaires

The New Deal, the Great Society, trade unions, and the anti-war and urban movements were in retreat and primed for abolition.

Wars without welfare (or guns without butter) replaced earlier 'social imperialism' with a huge growth of poverty and homelessness. Domestic labor was now exploited to finance overseas wars not vice versa. The fruits of imperial plunder were not shared.

As the working and middle classes drifted downward, they were used up, abandoned and deceived on all sides – especially by the Democratic Party. They elected militarists and demagogues as their new presidents.

President 'Bill' Clinton ravaged Russia, Yugoslavia, Iraq and Somalia and liberated Wall Street. His regime gave birth to the prototype billionaire swindlers: Michael Milken and Bernard 'Bernie' Madoff.

Clinton converted welfare into cheap labor 'workfare', exploiting the poorest and most vulnerable and condemning the next generations to grinding poverty. Under Clinton the prison population of mostly African Americans expanded and the breakup of families ravaged the urban communities.

Provoked by an act of terrorism (9/11) President G.W. Bush Jr. launched the 'endless' wars in Afghanistan and Iraq and deepened the police state (Patriot Act). Wages for American workers and profits for American capitalist moved in opposite directions.

The Great Financial Crash of 2008-2011 shook the paper economy to its roots and led to the greatest shakedown of any national treasury in history directed by the First Black American President. Trillions of public wealth were funneled into the criminal banks on Wall Street – which were ' just too big to fail .' Millions of American workers and homeowners, however, were ' just too small to matter' .

The Age of Demagogues

President Obama transferred 2 trillion dollars to the ten biggest bankers and swindlers on Wall Street, and another trillion to the Pentagon to pursue the Democrats version of foreign policy: from Bush's two overseas wars to Obama's seven.

Obama's electoral 'donor-owners' stashed away two trillion dollars in overseas tax havens and looked forward to global free trade pacts – pushed by the eloquent African American President.

Obama was elected to two terms. His liberal Democratic Party supporters swooned over his peace and justice rhetoric while swallowing his militarist escalation into seven overseas wars as well as the foreclosure of two million American householders. Obama completely failed to honor his campaign promise to reduce wage inequality between black and white wage earners while he continued to moralize to black families about ' values' .

Obama's war against Libya led to the killing and displacement of millions of black Libyans and workers from Sub-Saharan Africa. The smiling Nobel Peace Prize President created more desperate refugees than any previous US head of state – including millions of Africans flooding Europe.

'Obamacare' , his imitation of an earlier Republican governor's health plan, was formulated by the private corporate health industry (private insurance, Big Pharma and the for-profit hospitals), to mandate enrollment and ensure triple digit profits with double digit increases in premiums. By the 2016 Presidential elections, ' Obama-care' was opposed by a 45%-43% margin of the American people. Obama's propagandists could not show any improvement of life expectancy or decrease in infant and maternal mortality as a result of his 'health care reform'. Indeed the opposite occurred among the marginalized working class in the old 'rust belt' and in the rural areas. This failure to show any significant health improvement for the masses of Americans is in stark contrast to LBJ's Medicare program of the 1960's, which continues to receive massive popular support.

Forty-years of anti welfare legislation and pro-business regimes paved the golden road for the election of Donald Trump

Trump and the Republicans are focusing on the tattered remnants of the social welfare system: Medicare, Medicaid, Social Security. The remains of FDR's New Deal and LBJ's Great Society -- are on the chopping block.

The moribund (but well-paid) labor leadership has been notable by its absence in the ensuing collapse of the social welfare state. The liberal left Democrats embraced the platitudinous Obama/Clinton team as the 'Great Society's' gravediggers, while wailing at Trump's allies for shoving the corpse of welfare state into its grave.

Conclusion

Over the past forty years the working class and the rump of what was once referred to as the ' labor movement' has contributed to the dismantling of the social welfare state, voting for ' strike-breaker' Reagan, ' workfare' Clinton, ' Wall Street crash' Bush, ' Wall Street savior' Obama and ' Trickle-down' Trump.

Gone are the days when social welfare and profitable wars raised US living standards and transformed American trade unions into an appendage of the Democratic Party and a handmaiden of Empire. The Democratic Party rescued capitalism from its collapse in the Great Depression, incorporated labor into the war economy and the post- colonial global empire, and resurrected Wall Street from the 'Great Financial Meltdown' of the 21 st century.

The war economy no longer fuels social welfare. The military-industrial complex has found new partners on Wall Street and among the globalized multi-national corporations. Profits rise while wages fall. Low paying compulsive labor (workfare) lopped off state transfers to the poor. Technology – IT, robotics, artificial intelligence and electronic gadgets – has created the most class polarized social system in history. The first trillionaire and multi-billionaire tax evaders rose on the backs of a miserable standing army of tens of millions of low-wage workers, stripped of rights and representation. State subsidies eliminate virtually all risk to capital. The end of social welfare coerced labor (including young mother with children) to seek insecure low-income employment while slashing education and health – cementing the feet of generations into poverty. Regional wars abroad have depleted the Treasury and robbed the country of productive investment. Economic imperialism exports profits, reversing the historic relation of the past.

Labor is left without compass or direction; it flails in all directions and falls deeper in the web of deception and demagogy. To escape from Reagan and the strike breakers, labor embraced the cheap-labor predator Clinton; black and white workers united to elect Obama who expelled millions of immigrant workers, pursued 7 wars, abandoned black workers and enriched the already filthy rich. Deception and demagogy of the labor-

Issac , December 11, 2017 at 11:01 pm GMT

"The military-industrial complex has found new partners on Wall Street and among the globalized multi-national corporations."

"The collaboration of liberals and unions in promoting endless wars opened the door to Trump's mirage of a stateless, tax-less, ruling class."

A mirage so real, it even has you convinced.

whyamihere , December 12, 2017 at 4:24 am GMT
If the welfare state in America was abolished, major American cities would burn to the ground. Anarchy would ensue, it would be magnitudes bigger than anything that happened in Ferguson or Baltimore. It would likely be simultaneous.

I think that's one of the only situations where preppers would actually live out what they've been prepping for (except for a natural disaster).

I've been thinking about this a little over the past few years after seeing the race riots. What exactly is the line between our society being civilized and breaking out into chaos. It's probably a lot thinner than most people think.

I don't know who said it but someone long ago said something along the lines of, "Democracy can only work until the people figure out they can vote for themselves generous benefits from the public treasury." We are definitely in this situation today. I wonder how long it can last.

Disordered , December 13, 2017 at 8:41 am GMT
While I agree with Petras's intent (notwithstanding several exaggerations and unnecessary conflations with, for example, racism), I don't agree so much with the method he proposes. I don't mind welfare and unions to a certain extent, but they are not going to save us unless there is full employment and large corporations that can afford to pay an all-union workforce. That happened during WW2, as only wartime demand and those pesky wage freezes solved the Depression, regardless of all the public works programs; while the postwar era benefited from the US becoming the world's creditor, meaning that capital could expand while labor participation did as well.

From then on, it is quite hard to achieve the same success after outsourcing and mechanization have happened all over the world. Both of these phenomena not only create displaced workers, but also displaced industries, meaning that it makes more sense to develop individual workfare (and even then, do it well, not the shoddy way it is done now) rather than giving away checks that probably will not be cashed for entrepreneurial purposes, and rather than giving away money to corrupt unions who depend on trusts to be able to pay for their benefits, while raising the cost of hiring that only encourages more outsourcing.

The amount of welfare given is not necessarily the main problem, the problem is doing it right for the people who truly need it, and efficiently – that is, with the least amount of waste lost between the chain of distribution, which should reach intended targets and not moochers.

Which inevitably means a sound tax system that targets unearned wealth and (to a lesser degree) foreign competition instead of national production, coupled with strict, yet devolved and simple government processes that benefit both business and individuals tired of bureaucracy, while keeping budgets balanced. Best of both worlds, and no military-industrial complex needed to drive up demand.

Wally , Website December 13, 2017 at 8:57 am GMT
"President Obama transferred 2 trillion dollars to the ten biggest bankers and swindlers on Wall Street " That's twice the amount that Bush gave them.
jacques sheete , December 13, 2017 at 10:52 am GMT

The American welfare state was created in 1935 and continued to develop through 1973. Since then, over a prolonged period, the capitalist class has been steadily dismantling the entire welfare state.

Wrong wrong wrong.

Corporations [now] are welfare recipients and the bigger they are, the more handouts they suck up, and welfare for them started before 1935. In fact, it started in America before there was a USA. I do not have time to elaborate, but what were the various companies such as the British East India Company and the Dutch West India Companies but state pampered, welfare based entities? ~200 years ago, Herbert Spencer, if memory serves, pointed out that the British East India Company couldn't make a profit even with all the special, government granted favors showered upon it.

Corporations not only continuously seek monopolies (with the aid and sanction of the state) but they steadily fine tune the welfare state for their benefit. In fact, in reality, welfare for prols and peasants wouldn't exist if it didn't act as a money conduit and ultimate profit center for the big money grubbers.

Den Lille Abe , December 13, 2017 at 11:09 am GMT
Well, the author kind of nails it. I remember from my childhood in the 50-60 ties in Scandinavia that the US was the ultimate goal in welfare. The country where you could make a good living with your two hands, get you kids to UNI, have a house, a telly ECT. It was not consumerism, it was the American dream, a chicken in every pot; we chewed imported American gum and dreamed.

In the 70-80 ties Scandinavia had a tremendous social and economic growth, EQUALLY distributed, an immense leap forward. In the middle of the 80 ties we were equal to the US in standards of living.

Since we have not looked at the US, unless in pity, as we have seen the decline of the general income, social wealth fall way behind our own.
The average US workers income has not increased since 90 figures adjusted for inflation. The Scandinavian workers income in the same period has almost quadrupled. And so has our societies.

The article is dismal reading, and evidence of the failings of the "unregulated" society, where the anything goes as long as you are wealthy.

wayfarer , December 13, 2017 at 1:01 pm GMT

Between the mid 1970's to the present (2017) labor laws, welfare rights and benefits and the construction of and subsidies for affordable housing have been gutted. 'Workfare' (under President 'Bill' Clinton) ended welfare for the poor and displaced workers. Meanwhile the shift to regressive taxation and the steadily declining real wages have increased corporate profits to an astronomical degree.

source: http://www.unz.com/jpetras/rise-and-decline-of-the-welfare-state/

What does Hollywood "elite" JAP and wannabe hack-stand-up-comic Sarah Silverman think about the class struggle and problems facing destitute Americans? "Qu'ils mangent de la bagels!", source: https://en.wikipedia.org/wiki/Let_them_eat_cake

... ... ...

Anonymous , Disclaimer December 13, 2017 at 1:40 pm GMT
@Greg Fraser

Like the Pentagon. Americans still don't readily call this welfare, but they will eventually. Defense profiteers are unions in a sense, you're either in their club Or you're in the service industry that surrounds it.

Anonymous , Disclaimer December 13, 2017 at 2:43 pm GMT
As other commenters have pointed out, it's Petras curious choice of words that sometimes don't make too much sense. We can probably blame the maleable English language for that, but here it's too obvious. If you don't define a union, people might assume you're only talking about a bunch of meat cutters at Safeway.

The welfare state is alive and well for corporate America. Unions are still here – but they are defined by access and secrecy, you're either in the club or not.

The war on unions was successful first by co-option but mostly by the media. But what kind of analysis leaves out the role of the media in the American transformation? The success is mind blowing.

America has barely literate (white) middle aged males trained to spout incoherent Calvinistic weirdness: unabased hatred for the poor (or whoever they're told to hate) and a glorification of hedge fund managers as they get laid off, fired and foreclosed on, with a side of opiates.

There is hardly anything more tragic then seeing a web filled with progressives (management consultants) dedicated to disempowering, disabling and deligitimizing victims by claiming they are victims of biology, disease or a lack of an education rather than a system that issues violence while portending (with the best media money can buy) that they claim the higher ground.

animalogic , December 13, 2017 at 2:57 pm GMT
@Wally

""Democracy can only work until the people figure out they can vote for themselves generous benefits from the public treasury." We are definitely in this situation today."

Quite right: the 0.01% have worked it out & US democracy is a Theatre for the masses.

Reg Cćsar , December 13, 2017 at 3:08 pm GMT

They elected militarists and demagogues as their new presidents.

Wilson and FDR were much more militarist and demagogic than those that followed.

Reg Cćsar , December 13, 2017 at 3:20 pm GMT
@whyamihere

I don't know who said it but someone long ago said something along the lines of, "Democracy can only work until the people figure out they can vote for themselves generous benefits from the public treasury."

Some French aristocrat put it as, once the gates to the treasury have been breached, they can only be closed again with gunpowder. Anyone recognize the author?

phil , December 13, 2017 at 4:48 pm GMT
The author doesn't get it. What we have now IS the welfare state in an intensely diverse society. We have more transfer spending than ever before and Obamacare represents another huge entitlement.

Intellectuals continue to fantasize about the US becoming a Big Sweden, but Sweden has only been successful insofar as it has been a modest nation-state populated by ethnic Swedes. Intense diversity in a huge country with only the remnants of federalism results in massive non-consensual decision-making, fragmentation, increased inequality, and corruption.

HallParvey , December 13, 2017 at 4:57 pm GMT
@Anonymous

The welfare state is alive and well for corporate America. Unions are still here – but they are defined by access and secrecy, you're either in the club or not.

They are largely defined as Doctors, Lawyers, and University Professors who teach the first two. Of course they are not called unions. Access is via credentialing and licensing. Good Day

Anonymous , Disclaimer December 13, 2017 at 4:57 pm GMT
@Linda Green

Bernie Sanders, speaking on behalf of the MIC's welfare bird: "It is the airplane of the United States Air Force, Navy, and of NATO."

Elizabeth Warren, referring to Mossad's Estes Rockets: "The Israeli military has the right to attack Palestinian hospitals and schools in self defense"

Barack Obama, yukking it up with pop stars: "Two words for you: predator drones. You will never see it coming."

It's not the agitprop that confuses the sheep, it's whose blowhole it's coming out of (labled D or R for convenience) that gets them to bare their teeth and speak of poo.

Anonymous , Disclaimer December 13, 2017 at 5:54 pm GMT
@HallParvey

What came first, the credentialing or the idea that it is a necessary part of education? It certainly isn't an accurate indication of what people know or their general intelligence – although that myth has flourished. Good afternoon.

Logan , December 13, 2017 at 9:10 pm GMT
@Realist

For an interesting projection of what might happen in total civilizational collapse, I recommend the Dies the Fire series of novels by SM Stirling.

It has a science-fictiony setup in that all high-energy system (gunpowder, electricity, explosives, internal combustion, even high-energy steam engines) suddenly stop working. But I think it does a good job of extrapolating what would happen if suddenly the cities did not have food, water, power, etc.

Spoiler alert: It ain't pretty. Those who dream of a world without guns have not really thought it through.

Logan , December 13, 2017 at 9:19 pm GMT
@phil

It has been pointed out repeatedly that Sweden does very well relative to the USA. It has also been noted that people of Swedish ancestry in the USA do pretty well also. In fact considerably better than Swedes in Sweden

[Dec 15, 2017] Neoliberalism undermines workers health not only via the financial consequences of un/under employment and low wages, but also through chronic exposure to stress due to insecurity

Neoliberalism as "Die-now economics." "Embodiment into lower class" or "the representation as a member the lower class" if often fatal and upper mobility mobility is artificially limited (despite all MSM hype it is lower then in Europe). So just being a member of lower class noticeably and negatively affects your life expectancy and other social metrics. Job insecurity is the hazard reserved for lower and lower middle classes destructivly effect both physical and mental health. Too much stress is not good for humans. Neoliberalism with its manta of competition uber alles and atomization of the workforce is a real killer. also the fact that such article was published and the comments below is a clear sign that the days of neoliberalism are numbered. It should go.
Notable quotes:
"... In our new book , we draw on an extensive body of scientific literature to assess the health effects of three decades of neoliberal policies. Focusing on the social determinants of health -- the conditions of life and work that make it relatively easy for some people to lead long and healthy lives, while it is all but impossible for others -- we show that there are four interconnected neoliberal epidemics: austerity, obesity, stress, and inequality. They are neoliberal because they are associated with or worsened by neoliberal policies. ..."
"... Neoliberalism operates through labor markets to undermine health not only by way of the financial consequences of unemployment, inadequate employment, or low wages, as important as these are, but also through chronic exposure to stress that 'gets under your skin' by way of multiple mechanisms. Quite simply, the effects of chronic insecurity wear people out over the life course in biologically measurable ways . ..."
"... Oh, and "beyond class" because for social beings embodiment involves "social production; social consumption; and social reproduction." In the most reductive definition of class -- the one I used in my crude 1% + 10% + 90% formulation -- class is determined by wage work (or not), hence is a part of production (of capital), not social consumption (eating, etc.) or social reproduction (children, families, household work ). So, even if class in our political economy is the driver, it's not everything. ..."
"... "Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that "the market" delivers benefits that could never be achieved by planning. ..."
"... Attempts to limit competition are treated as inimical to liberty. Tax and regulation should be minimised, public services should be privatised. The organisation of labour and collective bargaining by trade unions are portrayed as market distortions that impede the formation of a natural hierarchy of winners and losers. Inequality is recast as virtuous: a reward for utility and a generator of wealth, which trickles down to enrich everyone. Efforts to create a more equal society are both counterproductive and morally corrosive. The market ensures that everyone gets what they deserve." ..."
"... As opposed to being champions of "self-actualization/identity" and "absolute relativism", I always got the impression that they were both offering stark warnings about diving too deeply into the self, vis-a-vis, identity. As if, they both understood the terrifying world that it could/would create, devoid of common cause, community, and ultimately empathy. A world where "we" are not possible because we have all become "I". ..."
"... Wonks like Yglesias love to mock working class concerns as "economic anxiety," which is at once belittling (it's all about f-e-e-e-lings ..."
"... "we have measurable health outcomes from political choices" So True!!! ..."
Dec 12, 2017 | www.nakedcapitalism.com

...Neoliberal epidemics are particular pathways of embodiment. From Ted Schrecker and Clare Bambra in The Conversation :

In our new book , we draw on an extensive body of scientific literature to assess the health effects of three decades of neoliberal policies. Focusing on the social determinants of health -- the conditions of life and work that make it relatively easy for some people to lead long and healthy lives, while it is all but impossible for others -- we show that there are four interconnected neoliberal epidemics: austerity, obesity, stress, and inequality. They are neoliberal because they are associated with or worsened by neoliberal policies. They are epidemics because they are observable on such an international scale and have been transmitted so quickly across time and space that if they were biological contagions they would be seen as of epidemic proportions.

(The Case-Deaton study provides an obvious fifth: Deaths of despair. There are doubtless others.) Case in point for one of the unluckier members of the 90%:

On the morning of 25 August 2014 a young New Jersey woman, Maria Fernandes, died from inhaling gasoline fumes as she slept in her 13-year-old car. She often slept in the car while shuttling between her three, low-wage jobs in food service; she kept a can of gasoline in the car because she often slept with the engine running, and was worried about running out of gasoline. Apparently, the can accidentally tipped over and the vapours from spilled gasoline cost her life. Ms Fernandes was one of the more obvious casualties of the zero-hours culture of stress and insecurity that pervades the contemporary labour market under neoliberalism.

And Schrecker and Bambra conclude:

Neoliberalism operates through labor markets to undermine health not only by way of the financial consequences of unemployment, inadequate employment, or low wages, as important as these are, but also through chronic exposure to stress that 'gets under your skin' by way of multiple mechanisms. Quite simply, the effects of chronic insecurity wear people out over the life course in biologically measurable ways .

... ... ...

Oh, and "beyond class" because for social beings embodiment involves "social production; social consumption; and social reproduction." In the most reductive definition of class -- the one I used in my crude 1% + 10% + 90% formulation -- class is determined by wage work (or not), hence is a part of production (of capital), not social consumption (eating, etc.) or social reproduction (children, families, household work ). So, even if class in our political economy is the driver, it's not everything.

nonclassical , December 11, 2017 at 8:30 pm

L.S. reminiscent of Ernst Becker's, "The Structure of Evil" – "Escape from Evil"? (..not to indicate good vs. evil dichotomy) A great amount of perspective must be agreed upon to achieve "change" intoned. Divide and conquer are complicit, as noted .otherwise (and as indicated by U.S. economic history) change arrives only when all have lost all and can therefore agree begin again.

There is however, Naomi Klein perspective, "Shock Doctrine", whereby influence contributes to destabilization, plan in hand leading to agenda driven ("neoliberal"=market fundamentalism) outcome, not at all spontaneous in nature:

"Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that "the market" delivers benefits that could never be achieved by planning.

Attempts to limit competition are treated as inimical to liberty. Tax and regulation should be minimised, public services should be privatised. The organisation of labour and collective bargaining by trade unions are portrayed as market distortions that impede the formation of a natural hierarchy of winners and losers. Inequality is recast as virtuous: a reward for utility and a generator of wealth, which trickles down to enrich everyone. Efforts to create a more equal society are both counterproductive and morally corrosive. The market ensures that everyone gets what they deserve."

Amfortas the Hippie , December 11, 2017 at 4:20 pm

Well done, as usual.

On Case-Deason: Sounds like home. I keep the scanner on(local news) ems and fire only since 2006(sheriff got a homeland security grant). The incidence of suicide, overdose and "intoxication psychosis" are markedly increased in the last 10+ years out here in the wilderness(5K folks in whole county, last I looked). Our local economy went into near depression after the late 90's farm bill killed the peanut program then 911 meant no hunting season that year(and it's been noticeably less busy ever since) then drought and the real estate crash(we had 30 some realtors at peak..old family land being sold off, mostly). So the local Bourgeoisie have had less money to spend, which "trickles down" onto the rest of us.:less construction, less eating out even at the cheap places, less buying of gas, and on and on means fewer employees are needed, thus fewer jobs. To boot, there is a habit among many employers out here of not paying attention to labor laws(it is Texas ) the last minwage rise took 2 years to filter out here, and one must scrutinize one's pay stub to ensure that the boss isn't getting squirrelly with overtime and witholding.
Geography plays into all this, too 100 miles to any largish city.

... ... ...

Rosario , December 11, 2017 at 10:55 pm

I'm not well versed in Foucault or Lacan but I've read some of both and in reading between the lines of their writing (the phantom philosophy?) I saw a very different message than that often delivered by post-modern theorists.

As opposed to being champions of "self-actualization/identity" and "absolute relativism", I always got the impression that they were both offering stark warnings about diving too deeply into the self, vis-a-vis, identity. As if, they both understood the terrifying world that it could/would create, devoid of common cause, community, and ultimately empathy. A world where "we" are not possible because we have all become "I".

Considering what both their philosophies claimed, if identity is a lie, and the subject is always generated relative to the other, then how the hell can there be any security or well being in self-actualization? It is like trying to hit a target that does not exist.

All potentially oppressive cultural categorizations are examples of this (black, latino, gay, trans, etc.). If the identity is a moving target, both to the oppressor and the oppressed, then how can it ever be a singular source of political action? You can't hit what isn't there. This is not to say that these groups (in whatever determined category) are not oppressed, just that formulating political action based strictly on the identity (often as an essential category) is impossible because it does not actually exist materially. It is an amalgamation of subjects who's subjectivity is always relative to some other whether ally or oppressor. Only the manifestations of oppression on bodies (as brought up in Lambert's post) can be utilized as metrics for political action.

... ... ...

Lambert Strether Post author , December 11, 2017 at 11:20 pm

I thought of a couple of other advantages of the "embodiment" paradigm:

Better Framing . Wonks like Yglesias love to mock working class concerns as "economic anxiety," which is at once belittling (it's all about f-e-e-e-lings *) and disempowering (solutions are individual, like therapy or drugs). Embodiment by contrast insists that neoliberalism (the neoliberal labor market (class warfare)) has real, material, physiological effects that can be measured and tracked, as with any epidemic.

... ... ...

oaf , December 12, 2017 at 7:11 am

"we have measurable health outcomes from political choices" So True!!!

Thank you for posting this.

[Dec 15, 2017] The underlying problem of Trump vs. Hillary choice is the problem of the degradation of the US elite, a slide to gerontocracy which reminds me the deterioration of Soviet elite. At this point people do not respect their leaders. Much like was the case in the USSR after 1960

Dec 09, 2017 | www.zerohedge.com

Internet-is-Beast -> Ms No , Dec 9, 2017 3:25 AM

I acknowledge what you are saying. However, I have learned that when one is in the midst of a pessimistic scenario, one tends to develop tunnel vision and assume that the future will be like the present, only worse. Though I despise psychology as a science, this is a very psychological phenomenon. Granting what you say about Trump and the false optimism he generated, I voted for him not because I hated Trump less, but that I hated Hillary more.

Nevertheless, notwithstanding, in spite of all this, I do have a certain optimism about the American people, as a rayon de lumičre in a gloomy prospect.

Davidduke2000 -> Internet-is-Beast , Dec 9, 2017 3:05 AM

keep the blinders on, even better yet wear the virtual reality goggles of MAGA while the country is living off a never ending fraud.

Every part of the us government is a fraud, the money is a fraud, wall street is a fraud, 99% of the food you eat is kosher fraud and you pension is fraud as the money is not there to allow you to collect your pension yet most people are paying dearly for their pension and the money goes to either israel or the profiteers of the war machine.

Clock Crasher -> Ms No , Dec 9, 2017 12:57 AM

They are toast. The leaks are not going to stop. Once the baby boom generation dies off completely the next generations will clean up their mess. The baby boom can't see past their own prosperity. But everyone else is ready for reform.

(trying to throw a little optimism into the mix)

Think about it.. when you look at the electoral map by county HRC was thoroughly crushed. Is DJT a SomaSalesMan aka Mega Psyop.. who the fuck knows. The awakening is happen Chinese water torture style.

This is a lot like being a Gold perma Bull. We want to come into the forums every day and write about how hopeless the situation is (a lot like what I do here everyday).

Just remember this.. Even Mao's wife had to stand trial for crimes against the populace. In 20 years the babyboomers will be out of the way and we can get onto bigger and better things.

Davidduke2000 -> Clock Crasher , Dec 9, 2017 2:58 AM

the biggest problems come from the millennial who grew up with bullshit, baby boomers lived threw a lot of american bullshit and they are the ones like PCR are warning the youngs that america's days are numbered . even Deagel.com predict that the us population in 2025 will dwindle from 325 million to only 55 millions, where do you think the 275 million will go? nuclear war will take care of them.

http://www.deagel.com/country/forecast.aspx

the corruption is so great that every single new weapon does not work and all these weapons are built at a great cost. The bulk of the left activists are millennials , the same with the super left, yet on the right the millennials are busy filing their nails, surfing and buying bitcoin for a quick profit.

I am Canadian, I am an outsider and see clearly as I am not part of the system, I see a country where the leaders convinced the population that they are exceptional but the people took it as a compliment, it was meant to fool them into a sense of being above the rest of the world, yet most americans do not know the capital of florida, california, mississippi, alabama yet they are in their own country.

This exceptionalism is preventing them from understanding the danger they are in.

For the first time I see a consensus on zerohedge that PCR is 100% right and the posters are worried what will become of america if israel is left with a huge hold on all us presidents and on the political infrastructure of the us and they agree with PCR on the list of propaganda the us have been telling the citizens to keep them distracted from knowing that their days are numbered when the Russians might attack thinking america wants to annihilate them.

FredFlintstone -> Ms No , Dec 9, 2017 5:55 AM

Damnit! I just wanted to retire quietly to a golf course.

veritas semper ... , Dec 9, 2017 12:27 AM

Pax Britannica<< Pax Americana<< Pax Judaica.

We are in the late stages of Pax Judaica. They, through their money magic,usury,fiat printing,and the bought/paid for/bribed/blackmailed sycophants,rule almost the whole world.The West entirely.

They have push so much,on all aspects of the society,that the recoil is going to be devastating.We started seeing this with the Jerusalem f*ck up.

US can not be saved at this point. It is at the Event Horizon already. I don't know what will be left of it: a few 4th world small countries ,where warlords kill each other? Americans love violence.

I absolutely sure IS...RA...EL is NOT going to survive. Neither Saudi Barbaria. Especially after this last blunder.

Will they go into the dustbin of history gracefully,without destroying the whole world in the process?

I don't think so,they are psychopaths.They do not like to lose or to be exposed for what they really are.

PCR makes a valid point. The Russians are patient ,balanced, intelligent people,but if they sense they are dealing with irrational ones ,they will not take a chance. The Russians have already said that US is not agreement capable, a great insult in their view.

Internet-is-Beast -> veritas semper vinces , Dec 9, 2017 2:46 AM

Referencing your first line, there's also "army intelligence" "Long Island expressway" to cite a couple of other examples of the same wordplay.

HRClinton -> veritas semper vinces , Dec 9, 2017 3:44 AM

Pax Iudaea. Delenda est.

Hostis humani generis. Delenda est.

roddy6667 -> JibjeResearch , Dec 9, 2017 1:06 AM

In America everybody has their labels (businessman, Libertarian, Democrat, Republican) so they can all fight with each other better. The country is so Balkanized that cannot function as a whole any more. I guess that was the plan all along.

IDESofMARCH , Dec 9, 2017 1:07 AM

Peace and truth are not welcome at the Whitehouse which should be painted BLOOD RED. Politicians are a greedy bloodthirsty criminals, That includes Trump. If you want to save the world from WW3 which we are watching incubate. ALL current crop of politicians have to be thrown out of government. YOU NEED A BLOODY REVOLUTION and throw these criminals into maximum security with the killers and molestors to do as they wish with them.

Without public revolt we'll just keep seeing, hearing and swallowing fake news after fake news brain wash and send our children to kill the innocent in WAR after WAR.

Walt , Dec 9, 2017 1:28 AM

Private interests and agendas have control over the US government. As in (((Private interests and agendas))) have control over the US government.

Seasmoke , Dec 9, 2017 1:34 AM

Don't forget the biggest lie. Even bigger than 9/11. That in the mid 2000s millions of deadbeats all decided to buy houses that they could not afford. What a joke of a country. Land of the fee. Home of the Slave.

Moe Howard , Dec 9, 2017 1:46 AM

"What Mueller is doing is so corrupt that he really should be arrested and renditioned to Egypt." Best line of the whole piece. Love it. We are not, however, "Walking Into Armageddon" Rather, we are "Slouching into the Apocolypse"

I am ENTERTAINED.

Ivan de beers , Dec 9, 2017 2:05 AM

Trump handing Jerusalem to israel is just the first step in setting up the rise of Israel and the fall of America. It is a symbolic transfer of power. All is left is world war 3 and the financial system collapse.

GardenWeasel , Dec 9, 2017 2:57 AM

PCR is way off this time. Flynn is acting as bait, and the swamp critters went for it. Trump and Bannon are playing the ol' rope-a-dope rather well. After the Dems and Deep Staters wear themselves out throwing all of these ineffective punches they will take them out.

ProsperD9 -> GardenWeasel , Dec 9, 2017 3:56 AM

You might be on to something...as the Dems and Deep State reveal themselves for what they really are, it makes it easier for Trump to go in for the kill....! They are getting more and more careless and their corruption and stupidity revealed more and more each day. I hope Trump be able to pave the way to cleaning up America and getting it back on its feet....we will see...!

jafo2me , Dec 9, 2017 3:01 AM

As many of you either know or have heard...

"THE" controllers of the puppet politicans, bankers and world leaders "WANT YOU TO LIVE IN FEAR." All the reasons stated by PCR are valid but not one of them is a reason to go out and get drunk tomorrow. Either you believe in your own fate and the actions which control the fate which you harvest "OR YOU DON'T."

Why would I worry about things I have zero control over, especially when I "KNOW" "THEY" live off of that fear? I will live every moment of my life in the joy and happiness which is this blessing to be alive "AND" will live in fear of no one. If you live your life this way they lose and you get to appreciate a gift which is greater then any material object on the planet.

The worse which they can do when you decide to refuse to live in fear of "THEM" is to take your life which they have no power to do either.. Put up your middle finger to all of them, smile and move on and enjoy what time you have here to make it the best you can do.

Choose not to live in fear of them..

We all fear death and question our place in the universe. The artist's job is not to succumb to despair, but to find an antidote for the emptiness of existence. ... Ernest Hemingway

slicktroutman -> jafo2me , Dec 9, 2017 8:40 AM

And then he killed himself.....l...

Conscious Reviver , Dec 9, 2017 3:08 AM

Two interesting pieces of news out of moonofalabama.org

First b says the real buyer of the fake $450M fake DaVinci is MbS, the KSA crown prince. Second, MbS just fired his Zino-friendly, Jared-friendly foreign minister.

jafo2me , Dec 9, 2017 3:23 AM

As for Flynn...

The rumors early on were that Flynn knew who all the pedophiles were in Washington, wanted to go after them "AND" would not back down. Trump's VP was included on that list and played a part in the decision to move him out of the public eye and into the position he currently occupies behind the scenes.

Interestingly enough it was supposedly this stupid explanation of him not telling Pence about his meeting with the Russian Ambassador which was the excuse as to why he had to be removed. On face value, think about how ridiculous this is. A decorated General who answers to the President withheld information on a meeting which is fairly typical military procedure.

"IT'S CALLED THE NEED TO KNOW." HELLO....

Trump could have simply stated that Flynn was not under orders from Pence and was acting under a protocol common to members within the Military but not common to politicians. If Pence wanted to know anything about what people within my Administration are doing he is always welcome to discuss it with me. PERIOD...

THE ENTIRE EXCUSE IS TOTAL BS AND THE WEAKNESS OF THAT EXCUSE GIVES ME SUSPICION TO BELIEVE THAT THE ORIGIONAL RUMORS WERE ACCURATE.

JailBanksters , Dec 9, 2017 3:29 AM

America Isn't "Walking Into Armageddon", America Is "Pushing for Armageddon"

Conscious Reviver -> JailBanksters , Dec 9, 2017 4:46 AM

The Fascist Tom Cotton with his hair on fire leading the charge. Metaphorically leading the charge to our own destruction. He would never get himself involved in any genuine battle charge. Russia is not my enemy or adversary.

JailBanksters -> Conscious Reviver , Dec 9, 2017 5:11 AM

Has Iraq, Libya, Syria, Iran, Russia, China, North Korea ever done any physical harm to the USA ? No ... How about the reverse ? Mmm, it appears the only ones that have attacked the USA are Saudi Arabia and Israel. But America does not attack them, instead it only attacks the countries that have never attacked the USA.

Is that wierd or what ?, it's almost as if there is another agenda at play.

slipreedip , Dec 9, 2017 4:57 AM

US foreign Policy in a nutshell. Its war...one way or another.

Stan Derdissue -> Tellthetruth , Dec 9, 2017 6:25 AM

You mean the Islam that allows grandads to marry and abuse 10 year olds. Husbands to beat up their wives, hang gay teenage boys off cranes in public squares. Whip 12 year old girls in public for wearing western tight jeans ( underneath their hijab may I add). Satan would approve of this sadistic protocol.

free corn , Dec 9, 2017 5:59 AM

it's amazing to see so much naivety here. People seems to believe that America/Russia are bad/good. But people it's not just imperialism anymore it's globalism. Therefore it's not about interests of countries but rather the ones of oligarchs. And oligarchs interests are international, so why would they be interested in Armageddon? Earth belong to them, why would they want to damage their wealth so much? i think we'll see busyness as usual - small wars, removing obstacles for transnationals, concentration of wealth and power and social engineering on global scale.

Conscious Reviver -> free corn , Dec 9, 2017 7:00 AM

The NWO globalism program failed already. Now we are on to something else.

slicktroutman -> Conscious Reviver , Dec 9, 2017 8:30 AM

Can you explain how it failed already? Be specific.

WTFUD -> free corn , Dec 9, 2017 7:23 AM

Naive, ha ha! Take a look at Libya, the War Crimes & Genocide, overseen by the US & Vassals and talk about Good/Bad, NO SON, we're talking Class A EVIL here, and in the other Regime Change Neocon Playbook. How many Foreign Bases/Entanglements are Russia involved in, outside of Russia? In their Only ME base/port in Syria the US tried to fuck them over. Now Russia has half a dozen strategic Bases ( including a meeting of minds with Egypt, Qatar, Libya, Turkey, Sudan ) to eliminate DAESH/al-CIAd'uh (US Constructs).

Lastly, Only through Threat and Intimidation can the US keep these Vassals on board. Have you not noticed how the Geopolitical Landmark is changing with Sovereigns flocking far and wide to Moscow, for an ALTERNATIVE to the Vassal Prisoner Status offered up by Vichy DC.

Naive Son? Z/Hedgers will call out Russia if they deviate from the Path of Righteousness.

No Russia didn't displace, maim, murder, tens of millions of citizens in the ME, VICHY DC did.

Dark star , Dec 9, 2017 6:46 AM

I read somewhere that the Ukrainian Army has changed its rule book to allow soldiers to wear beards. The inference from this is that those ISIS members rescued by the Americans are being shipped to Ukraine to fight with the Nazis against those in the East who object to Kiev's desire to genocide ethnic Russians. It would appear that, not content with arming Nazis and putting them in Ukraine's Government, the US is now putting an armed ISIS into Eastern Europe. Does anybody have more detail?

WTFUD -> Dark star , Dec 9, 2017 6:59 AM

Airlifting them from Der el Zor ( and inevitable destruction at the hands of Syrian/Hezbollah Bravehearts ) onto the demarcation line in the Donbass? Good luck with that Chestnut! What are the Jihadi's wearing, 3 SETS OF THERMALS? Let's put it this way, no matter how many Jihadi proxy scum/Advisers they airlift into Donbass there will be 10 times more FOREIGN FREEDOM-FIGHTERS (ok mainly Russian, but from Everywhere ) ready to join that gig, me included.

Death to ZATO!

WTFUD , Dec 9, 2017 6:47 AM

How convenient that Trump gets to play the Good Guy, supposedly fingers tied at every turn by Deep State, preventing him from reaching out.

There's not a shred of evidence that he's intervened to mend relations with Russia and if there is can someone shed light on this?

First up he has a filthy Neocon POS in Nikki Haley in the UN, the Only one on the Security Council who's a War Hawk (including the Palestinian fiasco ).

Did he intervene in the ILLEGAL eviction of Russian Diplomatic Quarters? Has he worked diligently with China & Russia to resolve DPRK or contributed to the Neocon war-drum beat with more bluster? Has he increased or defused tension in the ME by withdrawing US Troops or has he added to Obama's clandestine proxy jihadi recruitment programme by sending moar ADVISERS?

They say Tillerson's on his way out, to be replaced by a Neocon war-hawk in Mike Pompeo who's current charge of al-CIAd'uh covert operations is a continuation of the Obama failings.

Unlike Obama ( one of his few credits in 8 years ) Trump's Encouraging Netanyahu's Deviancy?

I've read over at the Saker/Other that behind the scenes Vichy DC could step up the supply of WMD's/Advisers to Kiev.

The US Coalition Forces in Syria (minus the US, lol), like their Iraqi counterparts (the Kurds in the main ) are at least talking with Russia/Government to thwart, long-term US Military Bases on Syrian soil. Obviously the US is unhappy about this with their Partition ambitions.

FUCK VICHY DC & EVERYONE IN IT!

Conscious Reviver -> WTFUD , Dec 9, 2017 7:05 AM

When Vicky Nuland's relatives ran Russia. https://youtube.com/watch?v=pRfY8CwjXvY

Able Ape , Dec 9, 2017 8:15 AM

The US suffers from MIC Induced Psychosis - the only cure is stop funding the military!...

"Rebellion to t... , Dec 9, 2017 8:33 AM

Pope John Paul II, Gorbachev, and Reagan, together, ended the Cold War. HW Bush is the architect on how the USA kept its military industrial complex intact. The USA no longer had an existential threat, and no longer a reason to maintain a multiple tens of billions annual defense budget. So HW Bush picked an enemy and started a global war, that continues to this day. The British military map makers, redrew much of the middle east, after WWI.

The state of Israel was already in the works, long before the story of the holocaust, some 20 years later. Anyway, Sadaam Hussein, leader of Iraq, and US ally, spoke to the Bush administration about Kuwait; and taking back for Iraq, what Sadaam believed the British map makers took away in 1917. Saddam was fooled, and the Bush administration had a reason to keep the military industrial complex intact. The globalism/new world order, that US and EU government officials speak of, is simply another way of saying that no one has any civil liberties and everyone is being monitored.

This dangerous game was effective and working for quite a while. A great deal of wealth and power transferred to a select few. The strategy went sideways when Mr Putin said enough is enough, in roughly 2011.

Now, freedom fighters have joined Mr Putin, such as Edward Snowden, Julian Assange, Barrett Brown, Manning, Glenn Greenwald, Sarah Carter,and many other, to restore freedom and honor back to the people of the world by shining light on all of the corruption.

It will take Trump and Sessions some time to restore trust and to root out the corruption.

The bottom line is that there are good people out there, who will never let this criminal behavior and corruption to be hidden from the unwashed masses.

Sudden Debt , Dec 9, 2017 9:01 AM

America is just looking for an excuse to send their young kids to war to get shot to pieces and get mentally fucked up so the drug industry can profit, the war industry can profit, the banks can profit...

in all...

It's clear that it's the patriotic thing to do.

[Dec 15, 2017] The Crisis Ahead The U.S. Is No Country for Older Men and Women

Notable quotes:
"... The U.S. has a retirement crisis on its hands, and with the far right controlling the executive branch and both houses of Congress, as well as dozens of state governments, things promise to grow immeasurably worse. ..."
"... It wasn't supposed to be this way. Past progressive presidents, notably Franklin D. Roosevelt and Lyndon B. Johnson, took important steps to make life more comfortable for aging Americans. FDR signed the Social Security Act of 1935 into law as part of his New Deal, and when LBJ passed Medicare in 1965, he established a universal health care program for those 65 and older. But the country has embraced a neoliberal economic model since the election of Ronald Reagan, and all too often, older Americans have been quick to vote for far-right Republicans antagonistic to the social safety net. ..."
"... Since then, Ryan has doubled down on his delusion that the banking sector can manage Social Security and Medicare more effectively than the federal government. Republican attacks on Medicare have become a growing concern: according to EBRI, only 38 percent of workers are confident the program will continue to provide the level of benefits it currently does. ..."
"... As 2017 winds down, Americans with health problems are still in the GOP's crosshairs -- this time because of so-called tax reform. The Tax Cuts and Jobs Act (both the House and Senate versions) includes provisions that would undermine Obamacare and cause higher health insurance premiums for older Americans. According to AARP, "Older adults ages 50-64 would be at particularly high risk under the proposal, facing average premium increases of up to $1,500 in 2019 as a result of the bill." ..."
"... Countless Americans who are unable to afford those steep premiums would lose their insurance. The CBO estimates that the Tax Cuts and Jobs Act would cause the number of uninsured under 65 to increase 4 million by 2019 and 13 million by 2027. The bill would also imperil Americans 65 and over by cutting $25 billion from Medicare . ..."
"... Analyzing W2 tax records in 2012, U.S. Census Bureau researchers Michael Gideon and Joshua Mitchell found that only 14 percent of private-sector employers in the U.S. were offering a 401(k) or similar retirement packages to their workers. That figure was thought to be closer to 40 percent, but Gideon and Mitchell discovered the actual number was considerably lower when smaller businesses were carefully analyzed, and that larger companies were more likely to offer 401(k) plans than smaller ones. ..."
"... Today, millions of Americans work in the gig economy who don't have full-time jobs or receive W2s, but instead receive 1099s for freelance work. ..."
"... The combination of stagnant wages and an increasingly high cost of living have been especially hellish for Americans who are trying to save for retirement. The United States' national minimum wage, a mere $7.25 per hour, doesn't begin to cover the cost of housing at a time when rents have soared nationwide. Never mind the astronomical prices in New York City, San Francisco or Washington, D.C. Median rents for one-bedroom apartments are as high as $1,010 per month in Atlanta, $960 per month in Baltimore, $860 per month in Jacksonville and $750 per month in Omaha, according to ApartmentList.com. ..."
"... yeah, Canada has a neoliberal infestation that is somewhere between the US and the UK. France has got one too, but it is less advanced. I'll enjoy my great healthcare, public transportation, and generous paid time off while I can. ..."
"... Europeans may scratch their heads, but they should recall their own histories and the long struggle to the universal benefits now enjoyed. Americans are far too complacent. This mildness is viewed by predators as weakness and the attacks will continue. ..."
"... Not sure if many of the readers here watch non-cable national broadcast news, but Pete Peterson and his foundation are as everpresent an advertiser as the pharma industry. Peterson is the strongest, best organized advocate for gutting social services, social security, and sending every last penny out of the tax-mule consumer's pocket toward wall street. The guy needs an equivalent counterpoint enemy. ..."
"... The social advantages that we still enjoy were fought in the streets, and on the "bricks" flowing with the participants blood. 8 hr. day; women's right to vote; ability and right for groups of laborers to organize; worker safety laws ..and so many others. There is no historical memory on how those rights were achieved. We are slowly slipping into an oligarchy greased by the idea that the physical possession of material things is all that matters. Sheeple, yes. ..."
"... Mmm, I think American voters get what they want in the end. They want their politicians because they believe the lies. 19% of Americans believe they are in the top 1% of wealth. A huge percentage of poor people believe they or their kids will (not can, but will) become wealthy. Most Americans can't find France on a map. ..."
"... I may have been gone for about thirty years, but that has only sharpened my insights into America. It's very hard to see just how flawed America is from the inside but when you step outside and have some perspective, it's frightening. ..."
"... Our government, beginning with Reagan, turned its back on promoting the general welfare. The wealthy soon learned that their best return on investment was the "purchase" of politicians willing to pass the legislation they put in their hands. Much of their investment included creating the right wing media apparatus. ..."
"... The Class War is real. It has been going on for 40 years, with the Conservative army facing virtually no resistance. Conservatives welcome Russia's help. Conservatives welcome barriers to people voting. Conservatives welcome a populace that believes lies that benefit them. Conservatives welcome the social and financial decline of the entire middle class and poor as long as it profits the rich financially, and by extension enhances their power politically. ..."
"... "Single acts of tyranny may be ascribed to the accidental opinion of the day, but a series of oppressions, begun at a distinguished period and pursued unalterably through every change of ministers, too plainly prove a deliberate, systematic plan of reducing [a people] to slavery" Thomas Jefferson. Rights of British America, 1774 ME 1:193, Papers 1:125 ..."
"... yes, my problem with the post as well, completely ignores democrat complicity the part where someone with a 26k salary will pay 16k in insurance? No they won't, the system would collapse in that case which will be fine with me. ..."
"... As your quote appears to imply, it's not a problem that can be solved by voting which, let's not forget, is nothing more than expressing an opinion. I am not sticking around just to find out if economically-crushed, opiod-, entertainment-, social media-addled Americans are actually capable of rolling out tumbrils for trips to the guillotines in the city squares. I strongly suspect not. ..."
"... This is the country where, after the banks crushed the economy in 2008, caused tens of thousands to lose their jobs, and then got huge bailouts, the people couldn't even be bothered to take their money out of the big banks and put it elsewhere. Because, you know, convenience! Expressing an opinion, or mobilizing others to express an opinion, or educating or proselytizing others about what opinion to have, is about the limit of what they are willing, or know how to do. ..."
Dec 14, 2017 | www.nakedcapitalism.com

Yves here. I imagine many readers are acutely aware of the problems outlined in this article, if not beset by them already. By any rational standard, I should move now to a much cheaper country that will have me. I know individuals who live most of the year in third-world and near-third world countries, but they have very cheap ways of still having a toehold in the US and not (yet or maybe ever) getting a long-term residence visa. Ecuador is very accommodating regarding retirement visas, and a Social Security level income goes far there, but yours truly isn't retiring any time soon. And another barrier to an international move (which recall I did once, so I have some appreciation for what it takes), is that one ought to check out possible destinations but if you are already time and money and energy stressed, how do you muster the resources to do that at all, let alone properly?

Aside from the potential to greatly reduce fixed costs, a second impetus for me is Medicare. I know for most people, getting on Medicare is a big plus. I have a very rare good, very old insurance policy. When you include the cost of drug plans, Medicare is no cheaper than what I have now, and considerably narrows my network. Moreover, I expect it to be thoroughly crapified by ten years from now (when I am 70), which argues for getting out of Dodge sooner rather than later.

And that's before you get to another wee problem Lambert points out that I would probably not be happy in a third world or high end second world country. But the only bargain "world city" I know of is Montreal. I'm not sure it would represent enough of an all-in cost saving to justify the hassle of an international move and the attendant tax compliance burdens .and that charitably assumes I could even find a way to get permanent residence. Ugh.

By Alex Henderson, who has written for the L.A. Weekly, Billboard, Spin, Creem, the Pasadena Weekly and many other publications. Follow him on Twitter @alexvhenderson. Originally published at Alternet

Millions can no longer afford to retire, and may never be able when the GOP passes its tax bill.

The news is not good for millions of aging Baby Boomers and Gen Xers in the United States who are moving closer to retirement age. According to the Employee Benefit Research Institute's annual report on retirement preparedness for 2017, only 18 percent of U.S.-based workers feel "very confident" about their ability to retire comfortably ; Craig Copeland, senior research associate for EBRI and the report's co-author, cited "debt, lack of a retirement plan at work, and low savings" as "key factors" in workers' retirement-related anxiety. The Insured Retirement Institute finds a mere 23 percent of Baby Boomers and 24 percent of Gen Xers are confident that their savings will last in retirement. To make matters worse, more than 40 percent of Boomers and over 30 percent of Gen Xers report having no retirement savings whatsoever .

The U.S. has a retirement crisis on its hands, and with the far right controlling the executive branch and both houses of Congress, as well as dozens of state governments, things promise to grow immeasurably worse.

It wasn't supposed to be this way. Past progressive presidents, notably Franklin D. Roosevelt and Lyndon B. Johnson, took important steps to make life more comfortable for aging Americans. FDR signed the Social Security Act of 1935 into law as part of his New Deal, and when LBJ passed Medicare in 1965, he established a universal health care program for those 65 and older. But the country has embraced a neoliberal economic model since the election of Ronald Reagan, and all too often, older Americans have been quick to vote for far-right Republicans antagonistic to the social safety net.

In the 2016 presidential election, 55 percent of voters 50 and older cast their ballots for Donald Trump against just 44 percent for Hillary Clinton. (This was especially true of older white voters; 90 percent of black voters 45 and older, as well as 67 percent of Latino voters in the same age range voted Democratic.)

Sen. Bernie Sanders' (I-VT) economic proposals may have been wildly popular with millennials, but no demographic has a greater incentive to vote progressive than Americans facing retirement. According to research conducted by the American Association of Retired Persons, the three greatest concerns of Americans 50 and older are Social Security, health care costs and caregiving for loved ones -- all areas that have been targeted by Republicans.

House of Representatives Speaker Paul Ryan, a devotee of social Darwinist Ayn Rand , has made no secret of his desire to privatize Social Security and replace traditional Medicare with a voucher program. Had George W. Bush had his way and turned Social Security over to Wall Street, the economic crash of September 2008 might have left millions of senior citizens homeless.

Since then, Ryan has doubled down on his delusion that the banking sector can manage Social Security and Medicare more effectively than the federal government. Republican attacks on Medicare have become a growing concern: according to EBRI, only 38 percent of workers are confident the program will continue to provide the level of benefits it currently does.

The GOP's obsession with abolishing the Affordable Care Act is the most glaring example of its disdain for aging Americans. Yet Obamacare has been a blessing for Boomers and Gen Xers who have preexisting conditions. The ACA's guaranteed issue plans make no distinction between a 52-year-old American with diabetes, heart disease or asthma and a 52-year-old who has never had any of those illnesses. And AARP notes that under the ACA, the uninsured rate for Americans 50 and older decreased from 15 percent in 2013 to 9 percent in 2016.

According to the Congressional Budget Office, the replacement bills Donald Trump hoped to ram through Congress this year would have resulted in staggering premium hikes for Americans over 50. The CBO's analysis of the American Health Care Act, one of the earlier versions of Trumpcare, showed that a 64-year-old American making $26,500 per year could have gone from paying $1,700 annually in premiums to just over $16,000. The CBO also estimated that the GOP's American Health Care Act would have deprived 23 million Americans of health insurance by 2026.

As 2017 winds down, Americans with health problems are still in the GOP's crosshairs -- this time because of so-called tax reform. The Tax Cuts and Jobs Act (both the House and Senate versions) includes provisions that would undermine Obamacare and cause higher health insurance premiums for older Americans. According to AARP, "Older adults ages 50-64 would be at particularly high risk under the proposal, facing average premium increases of up to $1,500 in 2019 as a result of the bill."

The CBO estimates that the bill will cause premiums to spike an average of 10 percent overall, with average premiums increasing $890 per year for a 50-year-old, $1,100 per year for a 55-year-old, $1,350 per year for a 60-year-old and $1,490 per year for a 64-year-old. Premium increases, according to the CBO, would vary from state to state; in Maine, average premiums for a 64-year-old would rise as much as $1,750 per year.

Countless Americans who are unable to afford those steep premiums would lose their insurance. The CBO estimates that the Tax Cuts and Jobs Act would cause the number of uninsured under 65 to increase 4 million by 2019 and 13 million by 2027. The bill would also imperil Americans 65 and over by cutting $25 billion from Medicare .

As morally reprehensible as the GOP's tax legislation may be, it is merely an acceleration of the redistribution of wealth from the bottom to the top that America has undergone since the mid-1970s. (President Richard Nixon may have been a paranoid right-winger with authoritarian tendencies, but he expanded Medicare and supported universal health care.) Between the decline of labor unions, age discrimination, stagnant wages, an ever-rising cost of living, low interest rates, and a shortage of retirement accounts, millions of Gen Xers and Baby Boomers may never be able to retire.

Traditional defined-benefit pensions were once a mainstay of American labor, especially among unionized workers. But according to Pew Charitable Trusts, only 13 percent of Baby Boomers still have them (among millennials, the number falls to 6 percent). In recent decades, 401(k) plans have become much more prominent, yet a majority of American workers don't have them either.

Analyzing W2 tax records in 2012, U.S. Census Bureau researchers Michael Gideon and Joshua Mitchell found that only 14 percent of private-sector employers in the U.S. were offering a 401(k) or similar retirement packages to their workers. That figure was thought to be closer to 40 percent, but Gideon and Mitchell discovered the actual number was considerably lower when smaller businesses were carefully analyzed, and that larger companies were more likely to offer 401(k) plans than smaller ones.

Today, millions of Americans work in the gig economy who don't have full-time jobs or receive W2s, but instead receive 1099s for freelance work. Tax-deferred SEP-IRAs were once a great, low-risk way for freelancers to save for retirement without relying exclusively on Social Security, but times have changed since the 1980s and '90s when interest rates were considerably higher for certificates of deposit and savings accounts. According to Bankrate.com, average rates for one-year CDs dropped from 11.27 percent in 1984 to 8.1 percent in 1990 to 5.22 percent in 1995 to under 1 percent in 2010, where it currently remains.

The combination of stagnant wages and an increasingly high cost of living have been especially hellish for Americans who are trying to save for retirement. The United States' national minimum wage, a mere $7.25 per hour, doesn't begin to cover the cost of housing at a time when rents have soared nationwide. Never mind the astronomical prices in New York City, San Francisco or Washington, D.C. Median rents for one-bedroom apartments are as high as $1,010 per month in Atlanta, $960 per month in Baltimore, $860 per month in Jacksonville and $750 per month in Omaha, according to ApartmentList.com.

That so many older Americans are renting at all is ominous in its own right. FDR made home ownership a primary goal of the New Deal, considering it a key component of a thriving middle class. But last year, the Urban Institute found that 19 million Americans who previously owned a home are now renting, 31 percent between the ages of 36 and 45. Laurie Goodman, one of the study's authors, contends the Great Recession has "permanently raised the number of renters," and that the explosion of foreclosures has hit Gen Xers especially hard.

The severity of the U.S. retirement crisis is further addressed in journalist Jessica Bruder's new book "Nomadland: Surviving America in the 21st Century," which follows Americans in their 50s, 60s and even 70s living in RVs or vans , barely eking out a living doing physically demanding, seasonal temp work from harvesting sugar beets to cleaning toilets at campgrounds. Several had high-paying jobs before their lives were blown apart by the layoffs, foreclosures and corporate downsizing of the Great Recession. Bruder speaks with former college professors and software professionals who now find themselves destitute, teetering on the brink of homelessness and forced to do backbreaking work for next to nothing. Unlike the big banks, they never received a bailout.

These neo-nomads recall the transients of the 1930s, themselves victims of Wall Street's recklessness. But whereas FDR won in a landslide in 1932 and aggressively pursued a program of progressive economic reforms, Republicans in Congress have set out to shred what little remains of the social safety net, giving huge tax breaks to millionaires and billionaires . The older voters who swept Trump into office may have signed their own death warrants.

If aging Americans are going to be saved from this dystopian future, the U.S. will have to forge a new Great Society. Programs like Social Security, Medicare and Medicaid will need to be strengthened, universal health care must become a reality and age discrimination in the workplace will have to be punished as a civil rights violation like racial and gender-based discrimination. If not, millions of Gen Xers and Boomers will spend their golden years scraping for pennies.

Expat , , December 14, 2017 at 6:29 am

I certainly will never go back to the States for these and other reasons. I have a friend, also an American citizen, who travels frequently back to California to visit his son. He is truly worried about getting sick or having an accident when he is there since he knows it might bankrupt him. As he jokes, he would be happy to have another heart attack here in France since it's free!

For those of you who have traveled the world and talked to people, you probably know that most foreigners are perplexed by America's attitude to health care and social services. The richest nation in the world thinks that health and social security (in the larger sense of not being forced into the street) are not rights at all. Europeans scratch their heads at this.

The only solution is education and information, but they are appalling in America. America remains the most ignorant and worst educated of the developed nations and is probably beaten by many developing nations. It is this ignorance and stupidity that gets Americans to vote for the likes of Trump or any of the other rapacious millionaires they send to office every year.

A first step would be for Americans to insist that Congress eliminate its incredibly generous and life-long healthcare plans for elected officials. They should have to do what the rest of Americans do. Of course, since about 95% of Congress are millionaires, it might not be effective. But it's a start.

vidimi , , December 14, 2017 at 6:40 am

France has its share of problems, but boy do they pale next to the problems in America or even Canada. Life here is overall quite pleasant and I have no desire to go back to N.A.

Marco , , December 14, 2017 at 6:46 am

Canada has problems?

WobblyTelomeres , , December 14, 2017 at 7:47 am

Was in Yellowknife a couple of years ago. The First Nations people have a rough life. From what I've read, such extends across the country.

vidimi , , December 14, 2017 at 8:03 am

yeah, Canada has a neoliberal infestation that is somewhere between the US and the UK. France has got one too, but it is less advanced. I'll enjoy my great healthcare, public transportation, and generous paid time off while I can.

JEHR , , December 14, 2017 at 1:46 pm

The newest neoliberal effort in Canada was put forward by our Minister of Finance (a millionaire) who is touting a bill that will get rid of defined benefit pension plans given to public employees for so-called target benefit pension plans. The risk for target plans is taken by the recipient. Morneau's former firm promotes target benefit pension plans and the change could benefit Morneau himself as he did not put his assets from his firm in a blind trust. At the very least, he has a conflict of interest and should probably resign.

There is always an insidious group of wealthy people here who would like to re-make the world in their own image. I fear for the future.

JEHR , , December 14, 2017 at 1:55 pm

Yes, I agree. There is an effort to "simplify" the financial system of the EU to take into account the business cycle and the financial cycle .

Dita , , December 14, 2017 at 8:25 am

Europeans may scratch their heads, but they should recall their own histories and the long struggle to the universal benefits now enjoyed. Americans are far too complacent. This mildness is viewed by predators as weakness and the attacks will continue.

jefemt , , December 14, 2017 at 10:02 am

We really should be able to turn this around, and have an obligation to ourselves and our 'nation state' , IF there were a group of folks running on a fairness, one-for-all, all-for-one platform. That sure isn't the present two-sides-of-the-same-coin Democraps and Republicrunts.

Not sure if many of the readers here watch non-cable national broadcast news, but Pete Peterson and his foundation are as everpresent an advertiser as the pharma industry. Peterson is the strongest, best organized advocate for gutting social services, social security, and sending every last penny out of the tax-mule consumer's pocket toward wall street. The guy needs an equivalent counterpoint enemy.

Check it out, and be vigilant in dispelling his message and mission. Thanks for running this article.

Running away: the almost-haves run to another nation state, the uber-wealthy want to leave the earth, or live in their private Idaho in the Rockies or on the Ocean. What's left for the least among us? Whatever we create?
https://www.pgpf.org/

Scramjett , , December 14, 2017 at 1:43 pm

I think pathologically optimistic is a better term than complacent. Every time someone dumps on them, their response is usually along the lines of "Don't worry, it'll get better," "Everything works itself out in the end," "maybe we'll win the lottery," my personal favorite "things will get better, just give it time" (honestly it's been 40 years of this neoliberal bullcrap, how much more time are we supposed to give it?), "this is just a phase" or "we can always bring it back later and better than ever." The last one is most troubling because after 20 years of witnessing things in the public sphere disappearing, I've yet to see a single thing return in any form at all.

I'm not sure where this annoying optimism came from but I sure wish it would go away.

sierra7 , , December 14, 2017 at 8:45 pm

The "optimism" comes from having a lack of historical memory. So many social protections that we have/had is seen as somehow coming out of the ether benevolently given without any social struggles. The lack of historical education on this subject in particular is appalling. Now, most would probably look for an "APP" on their "dumbphones" to solve the problem.

The social advantages that we still enjoy were fought in the streets, and on the "bricks" flowing with the participants blood. 8 hr. day; women's right to vote; ability and right for groups of laborers to organize; worker safety laws ..and so many others. There is no historical memory on how those rights were achieved. We are slowly slipping into an oligarchy greased by the idea that the physical possession of material things is all that matters. Sheeple, yes.

Jeremy Grimm , , December 14, 2017 at 4:44 pm

WOW! You must have been outside the U.S. for a long time. Your comment seems to suggest we still have some kind of democracy here. We don't get to pick which rapacious millionaires we get to vote for and it doesn't matter any way since whichever one we pick from the sad offerings ends up with policies dictated from elsewhere.

Expat , , December 14, 2017 at 6:10 pm

Mmm, I think American voters get what they want in the end. They want their politicians because they believe the lies. 19% of Americans believe they are in the top 1% of wealth. A huge percentage of poor people believe they or their kids will (not can, but will) become wealthy. Most Americans can't find France on a map.

So, yes, you DO get to pick your rapacious millionaire. You send the same scumbags back to Washington every year because it's not him, it the other guys who are the problem. One third of Americans support Trump! Really, really support him. They think he is Jesus, MacArthur and Adam Smith all rolled up into one.

I may have been gone for about thirty years, but that has only sharpened my insights into America. It's very hard to see just how flawed America is from the inside but when you step outside and have some perspective, it's frightening.

Disturbed Voter , , December 14, 2017 at 6:29 am

The Democrat party isn't a reform party. Thinking it is so, is because of the "No Other Choice" meme. Not saying that the Republican party works in my favor. They don't. Political reform goes deeper than reforming either main party. It means going to a European plurality system (with its own downside). That way growing Third parties will be viable, if they have popular, as opposed to millionaire, support. I don't see this happening, because of Citizens United, but if all you have is hope, then you have to go with that.

Carolinian , , December 14, 2017 at 8:05 am

Had George W. Bush had his way and turned Social Security over to Wall Street, the economic crash of September 2008 might have left millions of senior citizens homeless.

Substitute Bill Clinton for George Bush in that sentence and it works just as well. Neoliberalism is a bipartisan project.

And many of the potential and actual horrors described above arise from the price distortions of the US medical system with Democratic acquiescence in said system making things worse. The above article reads like a DNC press release.

And finally while Washington politicians of both parties have been threatening Social Security for years that doesn't mean its third rail status has been repealed. The populist tremors of the last election -- which have caused our elites to lose their collective mind -- could be a mere prelude to what will happen in the event of a full scale assault on the safety net.

KYrocky , , December 14, 2017 at 12:05 pm

Substitute Obama's quest for a Grand Bargain as well.

Our government, beginning with Reagan, turned its back on promoting the general welfare. The wealthy soon learned that their best return on investment was the "purchase" of politicians willing to pass the legislation they put in their hands. Much of their investment included creating the right wing media apparatus.

The Class War is real. It has been going on for 40 years, with the Conservative army facing virtually no resistance. Conservatives welcome Russia's help. Conservatives welcome barriers to people voting. Conservatives welcome a populace that believes lies that benefit them. Conservatives welcome the social and financial decline of the entire middle class and poor as long as it profits the rich financially, and by extension enhances their power politically.

If retirees flee our country that will certainly please the Conservatives as that will be fewer critics (enemies). Also less need or demand for social programs.

rps , , December 14, 2017 at 5:01 pm

"Single acts of tyranny may be ascribed to the accidental opinion of the day, but a series of oppressions, begun at a distinguished period and pursued unalterably through every change of ministers, too plainly prove a deliberate, systematic plan of reducing [a people] to slavery" Thomas Jefferson. Rights of British America, 1774 ME 1:193, Papers 1:125

tegnost , , December 14, 2017 at 8:59 am

yes, my problem with the post as well, completely ignores democrat complicity the part where someone with a 26k salary will pay 16k in insurance? No they won't, the system would collapse in that case which will be fine with me.

Marco , , December 14, 2017 at 6:55 am

"President Richard Nixon may have been a paranoid right-winger with authoritarian tendencies, but he expanded Medicare and supported universal health care."

"Gimme that old time Republican!"

One of the reasons I love NC is that most political economic analysis is often more harsh on the Democrats than the Repubs so I am a bit dismayed how this article is way too easy on Team D. How many little (and not so little) knives in the back from Clinton and Obama? Is a knife in the chest that much worse?

OpenThePodBayDoorsHAL , December 14, 2017 at 3:57 pm

This entire thread is simply heartbreaking, Americans have had their money, their freedom, their privacy, their health, and sometimes their very lives taken away from them by the State. But the heartbreaking part is that they feel they are powerless to do anything at all about it so are just trying to leave.

But "People should not fear the government; the government should fear the people"

tagio , December 14, 2017 at 4:39 pm

It's more than a feeling, HAL. https://www.newyorker.com/news/john-cassidy/is-america-an-oligarchy Link to the academic paper embedded in article.

As your quote appears to imply, it's not a problem that can be solved by voting which, let's not forget, is nothing more than expressing an opinion. I am not sticking around just to find out if economically-crushed, opiod-, entertainment-, social media-addled Americans are actually capable of rolling out tumbrils for trips to the guillotines in the city squares. I strongly suspect not.

This is the country where, after the banks crushed the economy in 2008, caused tens of thousands to lose their jobs, and then got huge bailouts, the people couldn't even be bothered to take their money out of the big banks and put it elsewhere. Because, you know, convenience! Expressing an opinion, or mobilizing others to express an opinion, or educating or proselytizing others about what opinion to have, is about the limit of what they are willing, or know how to do.

[Dec 14, 2017] Tech Giants Trying to Use WTO to Colonize Emerging Economies

Notable quotes:
"... The initiative described in this article reminds me of how the World Bank pushed hard for emerging economies to develop capital markets, for the greater good of America's investment bankers. ..."
"... By Burcu Kilic, an expert on legal, economic and political issues. Originally published at openDemocracy ..."
"... Today, the big tech race is for data extractivism from those yet to be 'connected' in the world – tech companies will use all their power to achieve a global regime in which small nations cannot regulate either data extraction or localisation. ..."
"... One suspects big money will be thrown at this by the leading tech giants. ..."
"... Out of idle curiosity, how could you accurately deduce my country of origin from my name? ..."
Dec 14, 2017 | www.nakedcapitalism.com

December 14, 2017 by Yves Smith Yves here. Notice that Costa Rica is served up as an example in this article. Way back in 1997, American Express had designated Costa Rica as one of the countries it identified as sufficiently high income so as to be a target for a local currency card offered via a franchise agreement with a domestic institution (often but not always a bank). 20 years later, the Switzerland of Central America still has limited Internet connectivity, yet is precisely the sort of place that tech titans like Google would like to dominate.

The initiative described in this article reminds me of how the World Bank pushed hard for emerging economies to develop capital markets, for the greater good of America's investment bankers.

By Burcu Kilic, an expert on legal, economic and political issues. Originally published at openDemocracy

Today, the big tech race is for data extractivism from those yet to be 'connected' in the world – tech companies will use all their power to achieve a global regime in which small nations cannot regulate either data extraction or localisation.

n a few weeks' time, trade ministers from 164 countries will gather in Buenos Aires for the 11th World Trade Organization (WTO) Ministerial Conference (MC11). US President Donald Trump in November issued fresh accusations of unfair treatment towards the US by WTO members , making it virtually impossible for trade ministers to leave the table with any agreement in substantial areas.

To avoid a 'failure ministerial," some countries see the solution as pushing governments to open a mandate to start conversations that might lead to a negotiation on binding rules for e-commerce and a declaration of the gathering as the "digital ministerial". Argentina's MC11 chair, Susana Malcorra, is actively pushing for member states to embrace e-commerce at the WTO, claiming that it is necessary to " bridge the gap between the haves and have-nots ".

It is not very clear what kind of gaps Malcorra is trying to bridge. It surely isn't the "connectivity gap" or "digital divide" that is growing between developed and developing countries, seriously impeding digital learning and knowledge in developing countries. In fact, half of humanity is not even connected to the internet, let alone positioned to develop competitive markets or bargain at a multilateral level. Negotiating binding e-commerce rules at the WTO would only widen that gap.

Dangerously, the "South Vision" of digital trade in the global trade arena is being shaped by a recent alliance of governments and well-known tech-sector lobbyists, in a group called 'Friends of E-Commerce for Development' (FED), including Argentina, Chile, Colombia, Costa Rica, Kenya, Mexico, Nigeria, Pakistan, Sri Lanka, Uruguay, and, most recently, China. FED claims that e-commerce is a tool to drive growth, narrow the digital divide, and generate digital solutions for developing and least developed countries.

However, none of the countries in the group (apart from China) is leading or even remotely ready to be in a position to negotiate and push for binding rules on digital trade that will be favorable to them, as their economies are still far away from the technology revolution. For instance, it is perplexing that one of the most fervent defenders of FED's position is Costa Rica. The country's economy is based on the export of bananas, coffee, tropical fruits, and low-tech medical instruments, and almost half of its population is offline . Most of the countries in FED are far from being powerful enough to shift negotiations in favor of small players.

U.S.-based tech giants and Chinese Alibaba – so-called GAFA-A – dominate, by far, the future of the digital playing field, including issues such as identification and digital payments, connectivity, and the next generation of logistics solutions. In fact, there is a no-holds-barred ongoing race among these tech giants to consolidate their market share in developing economies, from the race to grow the advertising market to the race to increase online payments.

An e-commerce agenda that claims unprecedented development for the Global South is a Trojan horse move. Beginning negotiations on such topics at this stage – before governments are prepared to understand what is at stake – could lead to devastating results, accelerating liberalization and the consolidation of the power of tech giants to the detriment of local industries, consumers, and citizens. Aware of the increased disparities between North and South, and the data dominance of a tiny group of GAFA-A companies, a group of African nations issued a statement opposing the digital ambitions of the host for MC11. But the political landscape is more complex, with China, the EU, and Russia now supporting the idea of a "digital" mandate .

Repeating the Same Mistakes?

The relationships of most countries with tech companies are as imbalanced as their relationships with Big Pharma, and there are many parallels to note. Not so long ago, the countries of the Global South faced Big Pharma power in pharmaceutical markets in a similar way. Some developing countries had the same enthusiasm when they negotiated intellectual property rules for the protection of innovation and research and development costs. In reality, those countries were nothing more than users and consumers of that innovation, not the owners or creators. The lessons of negotiating trade issues that lie at the core of public interest issues – in that case, access to medicines – were costly. Human lives and fundamental rights of those who use online services should not be forgotten when addressing the increasingly worrying and unequal relationships with tech power.

The threat before our eyes is similarly complex and equally harmful to the way our societies will be shaped in the coming years. In the past, the Big Pharma race was for patent exclusivity, to eliminate local generic production and keep drug prices high. Today, the Big Tech race is for data extractivism from those who have yet to be connected in the world, and tech companies will use all the power they hold to achieve a global regime in which small nations cannot regulate either data extraction or data localization.

Big Tech is one of the most concentrated and resourceful industries of all time. The bargaining power of developing countries is minimal. Developing countries will basically be granting the right to cultivate small parcels of a land controlled by data lords -- under their rules, their mandate, and their will -- with practically no public oversight. The stakes are high. At the core of it is the race to conquer the markets of digital payments and the battle to become the platform where data flows, splitting the territory as old empires did in the past. As the Economist claimed on May 6, 2017: "Conflicts over control of oil have scarred the world for decades. No one yet worries that wars will be fought over data. But the data economy has the same potential for confrontation."

If countries from the Global South want to prepare for data wars, they should start thinking about how to reduce the control of Big Tech over -- how we communicate, shop, and learn the news -- , again, over our societies. The solution lies not in making rules for data liberalization, but in devising ways to use the law to reduce Big Tech's power and protect consumers and citizens. Finding the balance would take some time and we are going to take that time to find the right balance, we are not ready to lock the future yet.

Jef , December 14, 2017 at 11:32 am

I thought thats what the WTO is for?

Thuto , December 14, 2017 at 2:14 pm

One suspects big money will be thrown at this by the leading tech giants. To paraphrase from a comment I made recently regarding a similar topic : "with markets in the developed world pretty much sewn up by the tripartite tech overlords (google, fb and amazon), the next 3 billion users for their products/services are going to come from developing world". With this dynamic in mind, and the "constant growth" mantra humming incessantly in the background, it's easy to see how high stakes a game this is for the tech giants and how no resources will be spared to stymie any efforts at establishing a regulatory oversight framework that will protect the digital rights of citizens in the global south.

Multilateral fora like the WTO are de facto enablers for the marauding frontal attacks of transnational corporations, and it's disheartening to see that some developing nations have already nailed the digital futures of their citizens to the mast of the tech giants by joining this alliance. What's more, this signing away of their liberty will be sold to the citizenry as the best way to usher them into the brightest of all digital futures.

Mark P. , December 14, 2017 at 3:30 pm

One suspects big money will be thrown at this by the leading tech giants.

Vast sums of money are already being thrown at bringing Africa online, for better or worse. Thus, the R&D aimed at providing wireless Internet via giant drones/balloons/satellites by Google, Facebook, etc.

You're African. Possibly South African by your user name, which may explain why you're a little behind the curve, because the action is already happening, but more to the north -- and particularly in East Africa.

The big corporations -- and the tech giants are competing with the banking/credit card giants -- have noted how mobile technology leapt over the dearth of last century's telephony tech, land lines, and in turn enabled the highest adoption rates of cellphone banking in the world. (Particularly in East Africa, as I say.) The payoffs for big corporations are massive -- de facto cashless societies where the corporations control the payment systems –and the politicians are mostly cheap.

In Nigeria, the government has launched a Mastercard-branded national ID card that's also a payment card, in one swoop handing Mastercard more than 170 million potential customers, and their personal and biometric data.

In Kenya, the sums transferred by mobile money operator M-Pesa are more than 25 percent of that country's GDP.

You can see that bringing Africa online is technically a big, decade-long project. But also that the potential payoffs are vast. Though I also suspect China may come out ahead -- they're investing far more in Africa and in some areas their technology -- drones, for instance -- is already superior to what the Europeans and the American companies have.

Thuto , December 14, 2017 at 4:58 pm

Thank you Mark P.

Hoisted from a comment I made here recently: "Here in South Africa and through its Free Basics programme, facebook is jumping into bed with unsuspecting ISPs (I say unsuspecting because fb will soon be muscling in on their territory and becoming an ISP itself by provisioning bandwidth directly from its floating satellites) and circumventing net neutrality "

I'm also keenly aware of the developments in Kenya re: safaricom and Mpesa and how that has led to traditional banking via bank accounts being largely leapfrogged for those moving from being unbanked to active economic citizens requiring money transfer facilities. Given the huge succes of Mpesa, I wouldn't be surprised if a multinational tech behemoth (chinese or american) were to make a play for acquiring safaricom and positioning it as a triple-play ISP, money transfer/banking services and digital content provider (harvesting data about users habits on an unprecedented scale across multiple areas of their lives), first in Kenya then expanded throughout east, central and west africa. I must add that your statement about Nigeria puts Mark Zuckerberg's visit there a few months back into context somewhat, perhaps a reconnaissance mission of sorts.

Out of idle curiosity, how could you accurately deduce my country of origin from my name?

Mark P. , December 14, 2017 at 6:59 pm

Out of idle curiosity, how could you accurately deduce my country of origin from my name?

Though I've lived in California for decades, my mother was South African and I maintain a UK passport, having grown up in London.

Mark P. , December 14, 2017 at 3:34 pm

As you also write: "with markets in the developed world pretty much sewn up by the tripartite tech overlords (google, fb and amazon), the next 3 billion users for their products/services are going to come from developing world."

Absolutely true. This cannot be stressed enough. The tech giants know this and the race is on.

Mattski , December 14, 2017 at 3:41 pm

Been happening with food for 50 years.

[Dec 14, 2017] The 1970's was in many ways the watershed decade for the neoliberal transformation of the American economy and society

Highly recommended!
Notable quotes:
"... What I also remember well however, is how little support PATCO was able to garnish from other unionized workers (and in many cases from union leadership as well). It seemed to me at the time that some of the strongest hostility came from rank and file of trade and utilities unions. ..."
"... I recall too that it was in the 1970's that the threat of "relocation", at that time mainly from the more heavily unionized north and northeastern states to the union-hostile south began to play a major role in the destruction of the power of labor. ..."
"... And I remember the beginning of the financialization of the American corporation that I experienced on a "micro" scale, a kid lucky enough to have a summer job while in university at a large resource-extraction corporation's HQ in NYC. I recall white-collar conversations about compensation and about how salaries had steadily risen over the past decade (the company was said to be doing "really well"). And I remember how towards the end of my summer stints more and more conversation was about stock prices and Wall Street favor and about the new executive managerial style brought in by "those young MBA"s", and about (for the first time) worries of a "take-over" by "outsiders" (the company, although public, had had family leadership for many years). ..."
"... And most of all I remember how gradually the material-economic components to the identity of the blue-collar and middle class worker were written out of existence. The great narrative, the myth that explains to us what it means to be "an American," no longer included any hint of class solidarity, of the kind of work we did, the pay we earned, the common living conditions in the small towns and urban neighborhoods and "cookie-cutter" suburbs of America. ..."
"... Formerly the struggle of economic and material improvement was seen by most ordinary Americas as a struggle for certain necessary conditions to maintain, strengthen, and perpetuate a way-of-life in which the common core assumptions about the "good life" remained basically stable and unchallenged: family, stable job, residential security, public schools, public places -- neighborhood bars, coffee shops, civic clubs, parks and playgrounds -- where people could meet and interact as social equals. ..."
"... The financialization of the economy, indeed of social life itself to a great extent, meant the drive for the maximization of private profit and the pursuit of interests and 'efficiencies" conceived entirely apart from any impact of the common good of society as a whole, and should have been seen as a grave threat to the very conditions of material and economic security, only recently achieved, that were the foundation of these other civic and social institutions. ..."
"... Instead, through a grand and diabolical deceit cynically promulgated by a mostly Republican capitalist class of privilege, but also aided and abetted by a "new Left" that increasingly postured itself as the enemy of this older and more traditional way of life ..."
Dec 14, 2017 | www.unz.com

BigAl , December 13, 2017 at 1:17 pm GMT

The 1970's was in many ways the watershed decade for the radical transformation of the American economy and society, even more than the 1960's (I lived through both as a young man). I have yet to read the definitive social-critical analysis of these years to explain the changes that, looking back, seem to have taken the country of my childhood right out from under me, gone forever, increasingly difficult to remember through the fog of nostalgia that tends to distort as much as to reveal.

Some of the things I do remember about this time include the PATCO (air traffic controllers) strike, very well. What is often not mentioned is that PATCO was attempting to do something that had not been permitted under federal civil service law, that is, bargain for wages as well as working conditions. Wage bargaining, PATCO correctly assessed, was the issue that made or broke unions and had enabled state and local public employees to finally begin to earn a decent, living wage beginning in the 1960's (think the iconic Mike Quill and the NYC TWU).

Reagan correctly (from his point of view) saw that to fail to break PATCO on this issue was to open the floodgates and turn the U.S. civil services into something akin to its European counterpart, with the possibility of general strikes and the rest. And of course to encourage private sector unions in their drive to organize and to change federal and state labor laws to strengthen the right to picket strike and organize.

What I also remember well however, is how little support PATCO was able to garnish from other unionized workers (and in many cases from union leadership as well). It seemed to me at the time that some of the strongest hostility came from rank and file of trade and utilities unions. Of course Reagan, following the Nixon playbook, shrewdly played the patriot-nationalist card, painting PATCO as a threat to national security as well as composed of a bunch of ingrates who should have been happy to have jobs. But by then the segmentation of the American workforce, a tactic that played right into the hands of the corporate-capitalist class was in full swing. The American worker lucky enough to possess a decent paying skilled or semi-skilled union job was being taught to see their situation as morally "deserved" and to see newer aspirants to similar positions, whether recently arrived immigrants or members of racial-ethnic groups previously suppressed by law, custom and prejudice as threats/dangers/enemies of their own recently won status.

I recall too that it was in the 1970's that the threat of "relocation", at that time mainly from the more heavily unionized north and northeastern states to the union-hostile south began to play a major role in the destruction of the power of labor. This was the beginning of the "globalization" factor and of the off-shoring of manufacturing jobs that has been commented on extensively and that took off a decade or so later. What is often not recalled is that unions and other pro-labor groups attempted to lobby Congress to amend the NLRA (National Labor Relations Act) and to appoint labor-friendly members to the NLRB to ensure that plant relocation would be a mandatory subject of bargaining and thus prevent unilateral (by capital ownership) relocation or the threat of relocation as a means to destroy the power of labor. They were, of course, not successful, and factories and business continued to move away from traditional centers of labor power and worker-protections, first to so-called "right-to-work" states and eventually to Asia.

And I remember the beginning of the financialization of the American corporation that I experienced on a "micro" scale, a kid lucky enough to have a summer job while in university at a large resource-extraction corporation's HQ in NYC. I recall white-collar conversations about compensation and about how salaries had steadily risen over the past decade (the company was said to be doing "really well"). And I remember how towards the end of my summer stints more and more conversation was about stock prices and Wall Street favor and about the new executive managerial style brought in by "those young MBA"s", and about (for the first time) worries of a "take-over" by "outsiders" (the company, although public, had had family leadership for many years).

And most of all I remember how gradually the material-economic components to the identity of the blue-collar and middle class worker were written out of existence. The great narrative, the myth that explains to us what it means to be "an American," no longer included any hint of class solidarity, of the kind of work we did, the pay we earned, the common living conditions in the small towns and urban neighborhoods and "cookie-cutter" suburbs of America.

Formerly the struggle of economic and material improvement was seen by most ordinary Americas as a struggle for certain necessary conditions to maintain, strengthen, and perpetuate a way-of-life in which the common core assumptions about the "good life" remained basically stable and unchallenged: family, stable job, residential security, public schools, public places -- neighborhood bars, coffee shops, civic clubs, parks and playgrounds -- where people could meet and interact as social equals.

The financialization of the economy, indeed of social life itself to a great extent, meant the drive for the maximization of private profit and the pursuit of interests and 'efficiencies" conceived entirely apart from any impact of the common good of society as a whole, and should have been seen as a grave threat to the very conditions of material and economic security, only recently achieved, that were the foundation of these other civic and social institutions.

Instead, through a grand and diabolical deceit cynically promulgated by a mostly Republican capitalist class of privilege, but also aided and abetted by a "new Left" that increasingly postured itself as the enemy of this older and more traditional way of life, the enemy was reconceived as the new "elites", the young, urban, hipster "Leftist" who despised the old ways and represented a singular assault on everything good about America.

Meanwhile, steadily, relentlessly, the material conditions and hard-won economic improvements that had gradually made small town, urban-neighborhood, and inner-suburban life decent and livable were being destroyed by a class that paid lip-service to Capra's Bedford Falls while at the same time endlessly working to transform it into Pottersville.

[Dec 14, 2017] In defence of the labour theory of value

Actually Marx's "labor theory of value" should be properly called the "theory of surplus value".
Notable quotes:
"... For Marx, value was socially-necessary labour time: David Harvey is good on this. From this perspective, exploitation and alienation are linked. Workers are exploited because they must work longer than necessary to get their consumption bundle. And they are alienated because this work is unsatisfying and a source of unfreedom. Now, I'll concede that many people hate the labour theory of value. One reason for this is that many discussions of it quickly become obscurantist – as if "value" is some mystical entity embodied in commodities. ..."
"... This, though, certainly was not Marx's intention. Quite the opposite. He intended his theory to be a demystification. He wanted to show how what looked like relations between things – the exchange of money for goods or labour-time – were in fact relations between people. And unequal ones at that. ..."
"... I suspect that some of the animosity to Marx's use of LTV arises because of a resistance to the inference that Marx drew from it – that workers are exploited. This issue, however, is independent of the validity of not of the LTV. For example, Roemer thinks workers are exploited without believing in the LTV, and Smith believed the LTV without arguing that workers were exploited. ..."
"... * He seems to be recovering now. The vet is also expected to make a full recovery eventually. ..."
"... Further understanding, which evolved after Marx, is that the LTV is just special case of the principle that what produces a surplus of usefulness is not labour per se, but the energy used in the transformation of a larger quantity of something into a smaller quantity of something else, and muscle power is just one way, even if it was the main one for a very long time, to obtain energy to transform a large quantity of less useful commodities into a smaller quantity of more useful commodities. ..."
"... And this follows into the impression that I have derived from various authors that our high standards of living depend not on the high "productivity" of labour, but on the high "productivity" of fossil fuels, which are the product of the fertility of land ..."
"... the complex process of differentiation in the economy (aka the division of labor) obscures the relationship between the creation of the surplus (work time above that necessary to reproduce consumption bundle) and its utilization by capitalists via investment. Investment is not possible without exploitation of workers, but that relationship is occluded by the mechanics of employment, markets, and property. ..."
"... My impression is that your bearded friend Karl does not use "alienation" in that sense at all, in an economic sense, but in a humanist sense: that by being separated from the means of production proletarians are alienated from the meaning of their work, from work as a human activity, as distinct from an economic activity ..."
"... Practically every "Dilbert" strip is about "alienation". This is my favourite ..."
"... Placing a high value on the frivolous and "useless" has always been the hallmark of those most able to decide the value of anything, because they have no use for economic use (so to speak), but rather social signaling. Broad social respect is an extremely expensive thing to buy with money alone. ..."
Dec 11, 2017 | stumblingandmumbling.typepad.com

Lucius has been poorly recently, which has required some trips to the vet and therefore a bill of a size that only David Davis could negotiate*. This has made me wonder: is there more to be said for the labour theory of value than we like to think?

For a long time, I've not really cared about this theory one way or the other. This is partly because I've not bothered much with questions of value; partly because, as John Roemer has shown, we don't need (pdf) a labour theory of value to suggest workers are exploited; and partly because the main Marxian charges against capitalism – for example that it entails relationships of domination – hold true (or not!) independently of the theory.

As I approach retirement, however, I've begun to change my mind. I think of major expenses in terms of labour-time because they mean I have to work longer. A trip to the vet is an extra fortnight of work; a good guitar an extra month, a car an extra year, and so on.

When I consider my spending, I ask: what must I give up in order to get that? And the answer is my time and freedom. My labour-time is the measure of value.

This is a reasonable basis for the claim that workers are exploited. To buy a bundle of goods and services, we must work a number of hours a week. But taking all workers together, the hours we work are greater than the hours needed to produce those bundles because we must also work to provide a profit for the capitalist. As Marx put it:

We have seen that the labourer, during one portion of the labour-process, produces only the value of his labour-power, that is, the value of his means of subsistence During the second period of the labour-process, that in which his labour is no longer necessary labour, the workman, it is true, labours, expends labour-power; but his labour, being no longer necessary labour, he creates no value for himself. He creates surplus-value which, for the capitalist, has all the charms of a creation out of nothing. This portion of the working-day, I name surplus labour-time.

For Marx, value was socially-necessary labour time: David Harvey is good on this. From this perspective, exploitation and alienation are linked. Workers are exploited because they must work longer than necessary to get their consumption bundle. And they are alienated because this work is unsatisfying and a source of unfreedom. Now, I'll concede that many people hate the labour theory of value. One reason for this is that many discussions of it quickly become obscurantist – as if "value" is some mystical entity embodied in commodities.

This, though, certainly was not Marx's intention. Quite the opposite. He intended his theory to be a demystification. He wanted to show how what looked like relations between things – the exchange of money for goods or labour-time – were in fact relations between people. And unequal ones at that.

What's more, the charge of obscurantism against Marx is an especially weak one when it comes from orthodox economics. Much of this invokes unobservable concepts such as the natural rate of unemployment, marginal productivity, utility, the marginal product of capital and natural rate of interest – ideas which, in the last two cases, might not even be theoretically coherent.

In fact, the LTV is reasonably successful by the standards of conventional economics: we have empirical evidence to suggest that it does (pdf) a decent (pdf) job of explaining (pdf) relative prices – not that this was how Marx intended it to be used.

You can of course, think of counter-examples to the theory. But so what? in the social sciences, no substantial theory is 100% true.

I suspect that some of the animosity to Marx's use of LTV arises because of a resistance to the inference that Marx drew from it – that workers are exploited. This issue, however, is independent of the validity of not of the LTV. For example, Roemer thinks workers are exploited without believing in the LTV, and Smith believed the LTV without arguing that workers were exploited.

By the (low) standards of economic theories, perhaps the LTV isn't so bad.

* He seems to be recovering now. The vet is also expected to make a full recovery eventually.

December 11, 2017 Permalink

Comments

Luis Enrique , December 11, 2017 at 02:09 PM

But the LTV says more than the output of the economy is divided between the workers and the (suppliers and) owners of capital goods, doesn't it? I mean, mainstream econ says that too. And unless ownership of capital inputs to production is distributed equally across society, then some people consume things that other's labour has produced, which means workers must produce more than they consume. But again, that's basic mainstream stuff, not LVT. You end by saying you can believe in exploitation but not LVT, and vice versa, but the main body of this blog seems to be connecting the two. I am confused.

Of course if you have the ability to vary your labour supply, and labour is how you earn your money, then you ask yourself how much you need to work to purchase whatever. But again that's mainstream not LVT.

David Friedman , December 11, 2017 at 06:14 PM

Your version of the labor theory of value is one of Adam Smith's versions. I don't think it is Marx's, but I know Smith better than Marx.

And definitely not Ricardo's.

ConfusedNeoLiberal , December 11, 2017 at 08:51 PM

What about value, in terms of risk among others, that the employers put in starting a new business?

Blissex , December 12, 2017 at 12:23 AM

"Smith believed the LTV without arguing that workers were exploited."

The Marxian approach was interested in, as other commenters have said, in the specific capitalist case, where "capitalism" for him means strictly "labour for hire" by workers alienated from the means of production by their ownership by capitalists.

But the labour theory of value, as understood by what Marx called "classicals", applies also to all labour, and he used it in that sense.

My understanding of the classicals and the LTV is reduced to a minimum this:

Further understanding, which evolved after Marx, is that the LTV is just special case of the principle that what produces a surplus of usefulness is not labour per se, but the energy used in the transformation of a larger quantity of something into a smaller quantity of something else, and muscle power is just one way, even if it was the main one for a very long time, to obtain energy to transform a large quantity of less useful commodities into a smaller quantity of more useful commodities.

And this follows into the impression that I have derived from various authors that our high standards of living depend not on the high "productivity" of labour, but on the high "productivity" of fossil fuels, which are the product of the fertility of land.

Blissex , December 12, 2017 at 12:29 AM

"value, in terms of risk among others, that the employers put in starting a new business?"

If the business produces a surplus, that is value added, than the surplus is the product of the energy/labour expended by all participants

How it is accounted for is one issue, especially over multiple time periods, and how it is shared out is a social relationship.

As to risk, everybody in the business runs the risk of not getting paid at the end of the month, and the opportunity cost of not doing something else, whichever labour they put in.

How risk and opportunity cost are accounted for, especially over multiple time periods, is another issue, and how they are shared is another social relationship.

Blissex , December 12, 2017 at 01:14 AM

"the surplus is the product of the energy/labour expended by all participants"

I'll perhaps further diminish the reputation of my "contributions" this way: perhaps all social relationships of production (at least among males) map closely onto (cursorial) group hunts.

https://78.media.tumblr.com/d4db6631d383cbfc9bd135c799a06e7f/tumblr_n3u8r0eJu01sohvpko1_500.jpg

:-)

Luis Enrique , December 12, 2017 at 08:40 AM

That's a very long winded way of saying that making stuff requires labour.

Blissex , December 12, 2017 at 01:50 PM

"a very long winded way of saying that making stuff requires labour"

Well, that's obvious, but what the classicals thought of as the LTV was not entirely obvious: that "surplus" (rather than "stuff") comes from the fertility of land and the transformation achieved with labour, and that nothing else is needed to achieve "surplus". Because for example capital goods are themselves surplus from fertility or labour, again back to the first blades made from chipping lumps of obsidian.

That's quite a bit more insightful, never mind also controversial, than "making stuff requires labour".

Rich Clayton , December 12, 2017 at 03:35 PM

Love this post. But, being a fellow marxist, I can't help but to disagree with this bit: "And they are alienated because this work is unsatisfying and a source of unfreedom." This is a colloquial use of alienation, and its not wrong.

But Marx is getting at something else: the complex process of differentiation in the economy (aka the division of labor) obscures the relationship between the creation of the surplus (work time above that necessary to reproduce consumption bundle) and its utilization by capitalists via investment. Investment is not possible without exploitation of workers, but that relationship is occluded by the mechanics of employment, markets, and property.

That's the sense in which workers are alienated under capitalism. Socialism could still have boring work, but, in so far as the investment function is brought under collective democratic control, workers would not be alienated in the special sense Marx is using.

Lukas , December 12, 2017 at 03:41 PM

@Luis Enrique

"Where else could stuff come from?" Well, assuming by "stuff" we mean objects of value, nowhere. But the reasons for which we value them are not dependent upon their natural origins or the labor required for their production. I don't value a computer because it's made of plastic and silicon and so forth, nor because of the labor required to produce it. It's useful because of what it does, not what it is; it's sort of Kant's definition of art versus the general conception of tools.

As for the relationship between production functions and the LTV, that seems (at least prima facie) pretty straightforward. If there is a high olefimity ascribed to the surplus provided by the product created by X, Y, then those production functions will, themselves, be assigned greater value, i.e., be worthy of more labor-time to attain. E.g., even if I'm not very good at fishing, if I really like the flavor of fish over other protein sources, I'll spend more time increasing my labor efficiency (be a better fisherman).

Blissex , December 12, 2017 at 05:36 PM

"Everything ultimately derives from nature and the labour of humans. Where else could stuff come from? That's all there is."

Then in theory the cost (not the price) of everything can be measured in terms of physical quantities of primary inputs and of hours of work.

"What's controversial about it?"

What is controversial is that written like that you sound like a Marxist: the alternative approach is to say that *property* creates surplus.
In the standard neoclassical approach "property" is the often forgotten "initial endowments" of the single representative agent.

Anyhow the "narrative" is: as Mr. Moneybags owns the iron mine and the coal mine and the smelter and the ingot roller and spoon press, then he is entitled to the surplus because without his property it is impossible to make spoons. Labour on its own is worthless, wastes away, while property is "valuable" capital.

"And how one gets from a production function (stuff is made from X, Y and Z) to LTV"

Production functions are just not very elaborate scams to pretend that property is the factor of production, rather then the fertility of land and the energy of labour, and land does not exist (after JB Clark "disappeared" it) and labour is just an accessory. Part of the scam is that "X, Y and Z" are denominated in money, not physical quantities.

As I wrote in another answer accounting for the output of land fertility and labour energy and how it is shared are the difficult bits. Welcome to the institutional approach to the political economy. :-)

Blissex , December 12, 2017 at 05:41 PM

"the reasons for which we value them are not dependent upon their natural origins or the labor required for their production"

And here be dragons. Your old bearded acquaintance Karl has something to say about this :-).

"It's useful because of what it does, not what it is"

So cleaning floors which is very useful should have a high value, while Leonardo paintings, that are merely scarce, should have a low value :-).

I though that most people reckoned that "value" depends on scarcity: so there is a scarcity of even not very good promoters of torysm, so G Osborne is entitled to Ł600,000 a year to edit the "Evening Standard", but there is no scarcity of excellent cleaners, so cleaners gets minimum wage if they are lucky.

:-)

Luis Enrique , December 12, 2017 at 05:43 PM

counting hours of worked is not a measure of cost, it is a tally of hours worked. In mainstream econ, production functions describe a physical production process (to make 1 unit of Y, you combine inputs like so) and are not not denominated in money. e.g. You multiply L by w to get cost.

mulp , December 12, 2017 at 05:46 PM

Economies are zero sum. GDP must be paid for, otherwise it won't be produced. The only source of money comes from labor costs, the money paid to workers to work producing GDP. As conservatives note, all taxes fall on workers by directly taking their pay, or by hiking the prices of what workers buy.

Taxes pay workers, e.g. teachers, and doctors with Medicare and Medicaid, weapons makers and warriors, or pay people to pay workers, Social Security benefits and SNAP.

Capital has value because it is built by paying workers. It gets a cut to repay the payers of workers.

Monopoly rent seeking is unsustainable. If a monoplists takes more from workers than they pay workers, he eventually takes so much money workers can no longer pay for GDP and it falls to zero as workers produce what they consume without buying from the monopolist capital.

Tanstaafl

As Keynes put it:

"I feel sure that the demand for capital is strictly limited in the sense that it would not be difficult to increase the stock of capital up to a point where its marginal efficiency had fallen to a very low figure. This would not mean that the use of capital instruments would cost almost nothing, but only that the return from them would have to cover little more than their exhaustion by wastage and obsolescence together with some margin to cover risk and the exercise of skill and judgment. In short, the aggregate return from durable goods in the course of their life would, as in the case of short-lived goods, just cover their labour costs of production plus an allowance for risk and the costs of skill and supervision.

"Now, though this state of affairs would be quite compatible with some measure of individualism, yet it would mean the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital. Interest today rewards no genuine sacrifice, any more than does the rent of land. The owner of capital can obtain interest because capital is scarce, just as the owner of land can obtain rent because land is scarce. But whilst there may be intrinsic reasons for the scarcity of land, there are no intrinsic reasons for the scarcity of capital. An intrinsic reason for such scarcity, in the sense of a genuine sacrifice which could only be called forth by the offer of a reward in the shape of interest, would not exist, in the long run, except in the event of the individual propensity to consume proving to be of such a character that net saving in conditions of full employment comes to an end before capital has become sufficiently abundant. But even so, it will still be possible for communal saving through the agency of the State to be maintained at a level which will allow the growth of capital up to the point where it ceases to be scarce."


Economies are zero sum. The value of goods and services must equal the labor costs in the long run. Tanstaaafl

Blissex , December 12, 2017 at 06:01 PM

"Socialism could still have boring work, but, in so far as the investment function is brought under collective democratic control, workers would not be alienated in the special sense Marx is using."

My impression is that your bearded friend Karl does not use "alienation" in that sense at all, in an economic sense, but in a humanist sense: that by being separated from the means of production proletarians are alienated from the meaning of their work, from work as a human activity, as distinct from an economic activity.

Collective ownership does not change at all that kind of alienation: being a cog in the capitalist machinery is no less alienating than being a cog in the collectivist machinery.

I think that our blogger when he talks about distributing control of the production process to workers is far closer to the marxian ideal than a collectivist approach.

Practically every "Dilbert" strip is about "alienation". This is my favourite:

http://dilbert.com/strip/2002-03-09

But these are also good:

http://dilbert.com/strip/1991-12-26
http://dilbert.com/strip/1993-01-05
http://dilbert.com/strip/1993-04-26
http://dilbert.com/strip/1994-11-07
http://dilbert.com/strip/1996-03-03
http://dilbert.com/strip/1996-07-24
http://dilbert.com/strip/1996-10-10
http://dilbert.com/strip/2002-08-10

Luis Enrique , December 12, 2017 at 06:26 PM

That is not what zero sum means

Blissex , December 12, 2017 at 06:53 PM

"counting hours of worked is not a measure of cost"

For a definition of "cost" that is made-up disregarding P Sraffa's work and in general the classics.

"multiply L by w to get cost."

As J Robinson and others pointed out that "w" depends on the distribution of income, on the interest rate, etc., so is an institutional matter.
As I was saying, accounting for the surplus and how to share it is not so easily handwavable.

Luis Enrique , December 12, 2017 at 08:55 PM

sorry, I meant for a money definition of cost that is not just counting inputs, but which is inputs multiplied by their prices.

nobody is hand waving. I think the mainstream view is that 'value' and 'surplus' are not meaningful terms, only prices and profits and subjective value. A production function says nothing about prices, you have to explain them with other stuff, and as you say, institutions and all manner of things could come in the play there.

You can say that that workers produce more in money terms than than they are paid, which is trivial (the wages paid by an employer are less than its gross profits so long as there are non-zero returns to capital, interest on a loan or dividends or whatever) and to my mind it's silly to define that as exploitation because it would apply in situations where the 'capitalist' is getting a small return and workers rewarded handsomely by any standard. Better imo to define exploitation as when capitalists are earning excess returns (and I'd fudge that by differentiating between workers' wages and salaries of top execs). Otherwise you lay yourself open to "the only thing worse than being exploited by capitlists is not beingn exploited by capitalists" which is J Robinson too I believe.

Luis Enrique , December 12, 2017 at 08:57 PM

and i think you only have to look at the income distribution to infer workers are being expoloited

B.L. Zebub , December 13, 2017 at 04:02 AM

@Blissex,

This is a genuine question: what you exposed above is related to or influenced by Steve Keen's ideas, yes? If so, I'd be interested in reading about that in more detail.

Lukas , December 13, 2017 at 04:28 AM

@Blissex

I've always thought that defining value by scarcity was an absurd misdirection, in part because there is no reason that the two should correlate at all. At any point in socioeconomic development beyond subsistence, value is to some extent socially defined, not economically defined. Status ends up being the most "useful" resource, as we see among all those who've never had to worry about their material conditions.

Placing a high value on the frivolous and "useless" has always been the hallmark of those most able to decide the value of anything, because they have no use for economic use (so to speak), but rather social signaling. Broad social respect is an extremely expensive thing to buy with money alone.

@Luis Enrique

Ah, but name for me a production process that doesn't take place over time. There's an infinite amount of time for all of us, but for each of us only so much, and those who fail to value it die full of regret. Surely someone somewhere must have something to say about this.

Luis Enrique , December 13, 2017 at 08:34 AM

I don't know why I wrote the above. Surplus is also a mainstream term. See wages set by bargaing over a surplus. Presume it's based on prices of outputs compared to inputs or if in model with real quantities not prices, then in subjective values.

Lukas production functions are defined over a period of time.

Blissex , December 13, 2017 at 11:43 AM

Ahem, I am trying to explain my understanding of Marx, who wrote both as economist and a philosopher, and a politial theorist.

Alienation, exploitation and inequality are technically distinct concepts, even if in the marxist (view (and that of every business school, that are faithful to marxist political economy) capitalist control of the means of production leads to alienation which leads to exploitation which leads to inequality. In the marxian political economy inequality can exist even with exploitation, for example, and that makes it less objectionable.

"Surplus is also a mainstream term. See wages set by bargaing over a surplus."

Some Economists have not forgotten at least some terminology of political economy and some Departments of Business still have surviving "history of economic thought" courses that some postgrads may still accidentally occasionally wander into and pick up some terms from...

"are not meaningful terms, only prices and profits and subjective value."

But the mainstream focus on prices and profits etc. is the purest handwaving, because it begs the question...

"A production function says nothing about prices"

Ha! This is one of the best examples where mainstream theory handwaves furiously: mainstream production functions switch effortlessly from "capital" as phusical quantities to aggregating "capital" by reckoning it in "numeraire". That is all about prices, and even about future expected prices and future expected rates of discount. Therefore rational expectations, a grand feat of handwaving.

Blissex , December 13, 2017 at 11:51 AM

"defining value by scarcity was an absurd misdirection, in part because there is no reason that the two should correlate at all."

Ahhhhhhh but this is a very political point and not quite agreeable because:

One of the conceits of "microfoundations" is to show that there are "laws" of Economics that are precise, so everybody get exactly their just compensation, so for example demand-supply schedules are always presented, cleverly, as lines and static.

The view of political economists is that instead "everything" lies within boundaries of feasibility, which are dynamic, so for example demand-supply schedules are ribbons that change over time and circumstances, and transactions happens not at uniquely determined points of intersections, but in regions of feasibility, the precise point dependent on institutional arrangements.

So the LTV determines one boundary for "price" and desirability another boundary.

Blissex , December 13, 2017 at 12:03 PM

"exposed above is related to or influenced by Steve Keen's ideas"

Related and independently derived, but also a bit influenced. I had always suspected that the "classicals" used "labour" as a synonym for "muscle power", but various later readings persuaded me that was indeed the case. Later post will have some hopefully interesting detail. Then I looked into the literature and found that obviously this had been figured out before (centuries ago in some cases, like B de Mandeville).

Anyhow for similar approaches some references:

Luis Enrique , December 13, 2017 at 04:33 PM

Blissex if you can come up with a better way of trying to describe total quantities of highly heterogeneous things (i.e. capital) you have a Nobel awaiting. Everybody know that attempts to put a number on the real quantity of capital is always going to be a rough and ready endeavour.

I don't see how working with prices and profits is 'handwaving'. What question does it beg? Much of economics is about trying to explain these things. I would not say economics focuses on prices and profits because many economics models work with real quantities that are high abstract and in theory are made commensurate using subjective value (utility) as the unit of account.

And I don't think this lot
https://www.theguardian.com/business/2010/oct/11/nobel-prize-for-economics-three-winners
picked up the term surplus by accidentally wandering in to the wrong seminar

[Dec 13, 2017] A stunning 33% of job seekers ages 55 and older are long-term unemployed, according to the AARP Public Policy Institute

Notable quotes:
"... And, recent studies have shown, the longer you're out of work - especially if you're older and out of work - the harder it becomes to get a job offer. ..."
Dec 13, 2017 | www.nakedcapitalism.com

Livius Drusus , December 13, 2017 at 2:44 pm

I thought this was an interesting article. Apologies if this has been posted on NC already.

A stunning 33% of job seekers ages 55 and older are long-term unemployed, according to the AARP Public Policy Institute. The average length of unemployment for the roughly 1.2 million people 55+ who are out of work: seven to nine months. "It's emotionally devastating for them," said Carl Van Horn, director of Rutgers University's John J. Heldrich Center for Workforce Development, at a Town Hall his center and the nonprofit WorkingNation held earlier this year in New Brunswick, N.J.

... ... ...

The fight faced by the long-term unemployed

And, recent studies have shown, the longer you're out of work - especially if you're older and out of work - the harder it becomes to get a job offer.

The job-finding rate declines by roughly 50% within eight months of unemployment, according to a 2016 paper by economists Gregor Jarosch of Stanford University and Laura Pilossoph of the Federal Reserve Bank of New York. "Unemployment duration has a strongly negative effect on the likelihood of subsequent employment," wrote researchers from the University of Maryland and the U.S. Census Bureau in another 2016 paper.

"Once upon a time, you could take that first job and it would lead to the next job and the job after that," said Town Hall panelist John Colborn, chief operating officer at the nonprofit JEVS Human Services, of Philadelphia. "The notion of a career ladder offered some hope of getting back into the labor market. The rungs of the ladder are getting harder and harder to find and some of them are broken."

In inner cities, said Kimberly McClain, CEO of The Newark Alliance, "there's an extra layer beyond being older and out of work. There are issues of race and poverty and being defined by your ZIP Code. There's an incredible sense of urgency."

... ... ...

Filling a work gap

If you are over 50, unemployed and have a work gap right now, the Town Hall speakers said, fill it by volunteering, getting an internship, doing project work, job-shadowing someone in a field you want to be in or taking a class to re-skill. These kind of things "make a candidate a lot more attractive," said Colborn. Be sure to note them in your cover letter and résumé.

Town Hall panelist Amanda Mullan, senior vice president and chief human resources officer of the New Jersey Resources Corp. (a utility company based in Wall, N.J.), said that when her company is interviewing someone who has been out of work lately, "we will ask: 'What have you done during that time frame?' If we get 'Nuthin,' that shows something about the individual, from a motivational perspective."

... ... ...

The relief of working again

Finally finding work when you're over 50 and unemployed for a stretch can be a relief for far more than financial reasons.

"Once I landed my job, the thing I most looked forward to was the weekend," said Konopka. "Not to relax, but because I didn't have to think about finding a job anymore. That's 24/7 in your head. You're always thinking on a Saturday: 'If I'm not doing something to find a job, will there be a posting out there?'"

Full article: https://www.marketwatch.com/story/jobs-are-everywhere-just-not-for-people-over-55-2017-12-08

[Dec 13, 2017] Stress of long-term unemployment takes a toll on thousands of Jerseyans who are out of work by Leslie Kwoh

Notable quotes:
"... Leslie Kwoh may be reached at lkwoh@starledger.com or (973) 392-4147. ..."
Jun 13, 2010 | www.nj.com

At 5:30 every morning, Tony Gwiazdowski rolls out of bed, brews a pot of coffee and carefully arranges his laptop, cell phone and notepad like silverware across the kitchen table.

And then he waits.

Gwiazdowski, 57, has been waiting for 16 months. Since losing his job as a transportation sales manager in February 2009, he wakes each morning to the sobering reminder that, yes, he is still unemployed. So he pushes aside the fatigue, throws on some clothes and sends out another flurry of resumes and cheery cover letters.

But most days go by without a single phone call. And around sundown, when he hears his neighbors returning home from work, Gwiazdowski -- the former mayor of Hillsborough -- can't help but allow himself one tiny sigh of resignation.

"You sit there and you wonder, 'What am I doing wrong?'" said Gwiazdowski, who finds companionship in his 2-year-old golden retriever, Charlie, until his wife returns from work.

"The worst moment is at the end of the day when it's 4:30 and you did everything you could, and the phone hasn't rung, the e-mails haven't come through."

Gwiazdowski is one of a growing number of chronically unemployed workers in New Jersey and across the country who are struggling to get through what is becoming one long, jobless nightmare -- even as the rest of the economy has begun to show signs of recovery.

Nationwide, 46 percent of the unemployed -- 6.7 million Americans -- have been without work for at least half a year, by far the highest percentage recorded since the U.S. Labor Department began tracking the data in 1948.

In New Jersey, nearly 40 percent of the 416,000 unemployed workers last year fit that profile, up from about 20 percent in previous years, according to the department, which provides only annual breakdowns for individual states. Most of them were unemployed for more than a year.

But the repercussions of chronic unemployment go beyond the loss of a paycheck or the realization that one might never find the same kind of job again. For many, the sinking feeling of joblessness -- with no end in sight -- can take a psychological toll, experts say.

Across the state, mental health crisis units saw a 20 percent increase in demand last year as more residents reported suffering from unemployment-related stress, according to the New Jersey Association of Mental Health Agencies.

"The longer the unemployment continues, the more impact it will have on their personal lives and mental health," said Shauna Moses, the association's associate executive director. "There's stress in the marriage, with the kids, other family members, with friends."

And while a few continue to cling to optimism, even the toughest admit there are moments of despair: Fear of never finding work, envy of employed friends and embarassment at having to tell acquaintances that, nope, still no luck.

"When they say, 'Hi Mayor,' I don't tell a lot of people I'm out of work -- I say I'm semi-retired," said Gwiazdowski, who maxed out on unemployment benefits several months ago.

"They might think, 'Gee, what's wrong with him? Why can't he get a job?' It's a long story and maybe people really don't care and now they want to get away from you."


SECOND TIME AROUND

Lynn Kafalas has been there before, too. After losing her computer training job in 2000, the East Hanover resident took four agonizing years to find new work -- by then, she had refashioned herself into a web designer.

That not-too-distant experience is why Kafalas, 52, who was laid off again eight months ago, grows uneasier with each passing day. Already, some of her old demons have returned, like loneliness, self-doubt and, worst of all, insomnia. At night, her mind races to dissect the latest interview: What went wrong? What else should she be doing? And why won't even Barnes & Noble hire her?

"It's like putting a stopper on my life -- I can't move on," said Kafalas, who has given up karate lessons, vacations and regular outings with friends. "Everything is about the interviews."

And while most of her friends have been supportive, a few have hinted to her that she is doing something wrong, or not doing enough. The remarks always hit Kafalas with a pang.

In a recent study, researchers at Rutgers University found that the chronically unemployed are prone to high levels of stress, anxiety, depression, loneliness and even substance abuse, which take a toll on their self-esteem and personal relationships.

"They're the forgotten group," said Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers, and a co-author of the report. "And the longer you are unemployed, the less likely you are to get a job."

Of the 900 unemployed workers first interviewed last August for the study, only one in 10 landed full-time work by March of this year, and only half of those lucky few expressed satisfaction with their new jobs. Another one in 10 simply gave up searching.

Among those who were still unemployed, many struggled to make ends meet by borrowing from friends or family, turning to government food stamps and forgoing health care, according to the study.

More than half said they avoided all social contact, while slightly less than half said they had lost touch with close friends. Six in 10 said they had problems sleeping.

Kafalas says she deals with her chronic insomnia by hitting the gym for two hours almost every evening, lifting weights and pounding the treadmill until she feels tired enough to fall asleep.

"Sometimes I forget what day it is. Is it Tuesday? And then I'll think of what TV show ran the night before," she said. "Waiting is the toughest part."


AGE A FACTOR

Generally, the likelihood of long-term unemployment increases with age, experts say. A report by the National Employment Law Project this month found that nearly half of those who were unemployed for six months or longer were at least 45 years old. Those between 16 and 24 made up just 14 percent.

Tell that to Adam Blank, 24, who has been living with his girlfriend and her parents at their Martinsville home since losing his sales job at Best Buy a year and half ago.

Blank, who graduated from Rutgers with a major in communications, says he feels like a burden sometimes, especially since his girlfriend, Tracy Rosen, 24, works full-time at a local nonprofit. He shows her family gratitude with small chores, like taking out the garbage, washing dishes, sweeping floors and doing laundry.

Still, he often feels inadequate.

"All I'm doing on an almost daily basis is sitting around the house trying to keep myself from going stir-crazy," said Blank, who dreams of starting a social media company.

When he is feeling particularly low, Blank said he turns to a tactic employed by prisoners of war in Vietnam: "They used to build dream houses in their head to help keep their sanity. It's really just imagining a place I can call my own."


LESSONS LEARNED

Meanwhile, Gwiazdowski, ever the optimist, says unemployment has taught him a few things.

He has learned, for example, how to quickly assess an interviewer's age and play up or down his work experience accordingly -- he doesn't want to appear "threatening" to a potential employer who is younger. He has learned that by occasionally deleting and reuploading his resume to job sites, his entry appears fresh.

"It's almost like a game," he said, laughing. "You are desperate, but you can't show it."

But there are days when he just can't find any humor in his predicament -- like when he finishes a great interview but receives no offer, or when he hears a fellow job seeker finally found work and feels a slight twinge of jealousy.

"That's what I'm missing -- putting on that shirt and tie in the morning and going to work," he said.

The memory of getting dressed for work is still so vivid, Gwiazdowski says, that he has to believe another job is just around the corner.

"You always have to hope that that morning when you get up, it's going to be the day," he said.

"Today is going to be the day that something is going to happen."

Leslie Kwoh may be reached at lkwoh@starledger.com or (973) 392-4147.

DrBuzzard Jun 13, 2010

I collect from the state of iowa, was on tier I and when the gov't recessed without passing extension, iowa stopped paying tier I claims that were already open, i was scheduled to be on tier I until july 15th, and its gone now, as a surprise, when i tried to claim my week this week i was notified. SURPRISE, talk about stress.

berganliz Jun 13, 2010

This is terrible....just wait until RIF'd teachers hit the unemployment offices....but then, this is what NJ wanted...fired teachers who are to blame for the worst recession our country has seen in 150 years...thanks GWB.....thanks Donald Rumsfeld......thanks Dick Cheney....thanks Karl "Miss Piggy" Rove...and thank you Mr. Big Boy himself...Gov Krispy Kreame!

rp121 Jun 13, 2010

For readers who care about this nation's unemployed- Call your Senators to pass HR 4213, the "Extenders" bill. Unfortunately, it does not add UI benefits weeks, however it DOES continue the emergency federal tiers of UI. If it does not pass this week many of us are cut off at 26 wks. No tier 1, 2 -nothing.

[Dec 13, 2017] Unemployment health hazard and stress

The longer you are unemployed, the more you are effected by those factors.
Notable quotes:
"... The good news is that only a relatively small number of people are seriously affected by the stress of unemployment to the extent they need medical assistance. Most people don't get to the serious levels of stress, and much as they loathe being unemployed, they suffer few, and minor, ill effects. ..."
"... Worries about income, domestic problems, whatever, the list is as long as humanity. The result of stress is a strain on the nervous system, and these create the physical effects of the situation over time. The chemistry of stress is complex, but it can be rough on the hormonal system. ..."
"... Not at all surprisingly, people under stress experience strong emotions. It's a perfectly natural response to what can be quite intolerable emotional strains. It's fair to say that even normal situations are felt much more severely by people already under stress. Things that wouldn't normally even be issues become problems, and problems become serious problems. Relationships can suffer badly in these circumstances, and that, inevitably, produces further crises. Unfortunately for those affected, these are by now, at this stage, real crises. ..."
"... Some people are stubborn enough and tough enough mentally to control their emotions ruthlessly, and they do better under these conditions. Even that comes at a cost, and although under control, the stress remains a problem. ..."
"... One of the reasons anger management is now a growth industry is because of the growing need for assistance with severe stress over the last decade. This is a common situation, and help is available. ..."
"... Depression is universally hated by anyone who's ever had it. ..."
"... Very important: Do not, under any circumstances, try to use drugs or alcohol as a quick fix. They make it worse, over time, because they actually add stress. Some drugs can make things a lot worse, instantly, too, particularly the modern made-in-a-bathtub variety. They'll also destroy your liver, which doesn't help much, either. ..."
"... You don't have to live in a gym to get enough exercise for basic fitness. A few laps of the pool, a good walk, some basic aerobic exercises, you're talking about 30-45 minutes a day. It's not hard. ..."
Dec 13, 2017 | www.cvtips.com

It's almost impossible to describe the various psychological impacts, because there are so many. There are sometimes serious consequences, including suicide, and, some would say worse, chronic depression.

There's not really a single cause and effect. It's a compound effect, and unemployment, by adding stress, affects people, often badly.

The world doesn't need any more untrained psychologists, and we're not pretending to give medical advice. That's for professionals. Everybody is different, and their problems are different. What we can do is give you an outline of the common problems, and what you can do about them.

The good news is that only a relatively small number of people are seriously affected by the stress of unemployment to the extent they need medical assistance. Most people don't get to the serious levels of stress, and much as they loathe being unemployed, they suffer few, and minor, ill effects.

For others, there are a series of issues, and the big three are:

Stress

Stress is Stage One. It's a natural result of the situation. Worries about income, domestic problems, whatever, the list is as long as humanity. The result of stress is a strain on the nervous system, and these create the physical effects of the situation over time. The chemistry of stress is complex, but it can be rough on the hormonal system.

Over an extended period, the body's natural hormonal balances are affected, and this can lead to problems. These are actually physical issues, but the effects are mental, and the first obvious effects are, naturally, emotional.

Anger, and other negative emotions

Not at all surprisingly, people under stress experience strong emotions. It's a perfectly natural response to what can be quite intolerable emotional strains. It's fair to say that even normal situations are felt much more severely by people already under stress. Things that wouldn't normally even be issues become problems, and problems become serious problems. Relationships can suffer badly in these circumstances, and that, inevitably, produces further crises. Unfortunately for those affected, these are by now, at this stage, real crises.

If the actual situation was already bad, this mental state makes it a lot worse. Constant aggravation doesn't help people to keep a sense of perspective. Clear thinking isn't easy when under constant stress.

Some people are stubborn enough and tough enough mentally to control their emotions ruthlessly, and they do better under these conditions. Even that comes at a cost, and although under control, the stress remains a problem.

One of the reasons anger management is now a growth industry is because of the growing need for assistance with severe stress over the last decade. This is a common situation, and help is available.

If you have reservations about seeking help, bear in mind it can't possibly be any worse than the problem.

Depression

Depression is universally hated by anyone who's ever had it. This is the next stage, and it's caused by hormonal imbalances which affect serotonin. It's actually a physical problem, but it has mental effects which are sometimes devastating, and potentially life threatening.

The common symptoms are:

It's a disgusting experience. No level of obscenity could possibly describe it. Depression is misery on a level people wouldn't conceive in a nightmare. At this stage the patient needs help, and getting it is actually relatively easy. It's convincing the person they need to do something about it that's difficult. Again, the mental state is working against the person. Even admitting there's a problem is hard for many people in this condition.

Generally speaking, a person who is trusted is the best person to tell anyone experiencing the onset of depression to seek help. Important: If you're experiencing any of those symptoms:

Very important: Do not, under any circumstances, try to use drugs or alcohol as a quick fix. They make it worse, over time, because they actually add stress. Some drugs can make things a lot worse, instantly, too, particularly the modern made-in-a-bathtub variety. They'll also destroy your liver, which doesn't help much, either.

Alcohol, in particular, makes depression much worse. Alcohol is a depressant, itself, and it's also a nasty chemical mix with all those stress hormones.

If you've ever had alcohol problems, or seen someone with alcohol wrecking their lives, depression makes things about a million times worse.

Just don't do it. Steer clear of any so-called stimulants, because they don't mix with antidepressants, either.

Unemployment and staying healthy

The above is what you need to know about the risks of unemployment to your health and mental well being.

These situations are avoidable.

Your best defense against the mental stresses and strains of unemployment, and their related problems is staying healthy.

We can promise you that is nothing less than the truth. The healthier you are, the better your defenses against stress, and the more strength you have to cope with situations.

Basic health is actually pretty easy to achieve:

Diet

Eat real food, not junk, and make sure you're getting enough food. Your body can't work with resources it doesn't have. Good food is a real asset, and you'll find you don't get tired as easily. You need the energy reserves.

Give yourself a good selection of food that you like, that's also worth eating.

The good news is that plain food is also reasonably cheap, and you can eat as much as you need. Basic meals are easy enough to prepare, and as long as you're getting all the protein veg and minerals you need, you're pretty much covered.

You can also use a multivitamin cap, or broad spectrum supplements, to make sure you're getting all your trace elements. Also make sure you're getting the benefits of your food by taking acidophilus or eating yogurt regularly.

Exercise

You don't have to live in a gym to get enough exercise for basic fitness. A few laps of the pool, a good walk, some basic aerobic exercises, you're talking about 30-45 minutes a day. It's not hard.

Don't just sit and suffer

If anything's wrong, check it out when it starts, not six months later. Most medical conditions become serious when they're allowed to get worse.

For unemployed people the added risk is also that they may prevent you getting that job, or going for interviews. If something's causing you problems, get rid of it.

Nobody who's been through the blender of unemployment thinks it's fun.

Anyone who's really done it tough will tell you one thing:

Don't be a victim. Beat the problem, and you'll really appreciate the feeling.

[Dec 13, 2017] Being homeless is better than working for Amazon by Nichole Gracely

Notable quotes:
"... According to Amazon's metrics, I was one of their most productive order pickers -- I was a machine, and my pace would accelerate throughout the course of a shift. What they didn't know was that I stayed fast because if I slowed down for even a minute, I'd collapse from boredom and exhaustion ..."
"... toiling in some remote corner of the warehouse, alone for 10 hours, with my every move being monitored by management on a computer screen. ..."
"... ISS could simply deactivate a worker's badge and they would suddenly be out of work. They treated us like beggars because we needed their jobs. Even worse, more than two years later, all I see is: Jeff Bezos is hiring. ..."
"... I have never felt more alone than when I was working there. I worked in isolation and lived under constant surveillance ..."
"... That was 2012 and Amazon's labor and business practices were only beginning to fall under scrutiny. ..."
"... I received $200 a week for the following six months and I haven't had any source of regular income since those benefits lapsed. I sold everything in my apartment and left Pennsylvania as fast as I could. I didn't know how to ask for help. I didn't even know that I qualified for food stamps. ..."
Nov 28, 2014 | theguardian.com

wa8dzp:

Nichole Gracely has a master's degree and was one of Amazon's best order pickers. Now, after protesting the company, she's homeless.

I am homeless. My worst days now are better than my best days working at Amazon.

According to Amazon's metrics, I was one of their most productive order pickers -- I was a machine, and my pace would accelerate throughout the course of a shift. What they didn't know was that I stayed fast because if I slowed down for even a minute, I'd collapse from boredom and exhaustion.

During peak season, I trained incoming temps regularly. When that was over, I'd be an ordinary order picker once again, toiling in some remote corner of the warehouse, alone for 10 hours, with my every move being monitored by management on a computer screen.

Superb performance did not guarantee job security. ISS is the temp agency that provides warehouse labor for Amazon and they are at the center of the SCOTUS case Integrity Staffing Solutions vs. Busk. ISS could simply deactivate a worker's badge and they would suddenly be out of work. They treated us like beggars because we needed their jobs. Even worse, more than two years later, all I see is: Jeff Bezos is hiring.

I have never felt more alone than when I was working there. I worked in isolation and lived under constant surveillance. Amazon could mandate overtime and I would have to comply with any schedule change they deemed necessary, and if there was not any work, they would send us home early without pay. I started to fall behind on my bills.

At some point, I lost all fear. I had already been through hell. I protested Amazon. The gag order was lifted and I was free to speak. I spent my last days in a lovely apartment constructing arguments on discussion boards, writing articles and talking to reporters. That was 2012 and Amazon's labor and business practices were only beginning to fall under scrutiny. I walked away from Amazon's warehouse and didn't have any other source of income lined up.

I cashed in on my excellent credit, took out cards, and used them to pay rent and buy food because it would be six months before I could receive my first unemployment compensation check.

I received $200 a week for the following six months and I haven't had any source of regular income since those benefits lapsed. I sold everything in my apartment and left Pennsylvania as fast as I could. I didn't know how to ask for help. I didn't even know that I qualified for food stamps.

I furthered my Amazon protest while homeless in Seattle. When the Hachette dispute flared up I "flew a sign," street parlance for panhandling with a piece of cardboard: "I was an order picker at amazon.com. Earned degrees. Been published. Now, I'm homeless, writing and doing this. Anything helps."

I have made more money per word with my signs than I will probably ever earn writing, and I make more money per hour than I will probably ever be paid for my work. People give me money and offer well wishes and I walk away with a restored faith in humanity.

I flew my protest sign outside Whole Foods while Amazon corporate employees were on lunch break, and they gawked. I went to my usual flying spots around Seattle and made more money per hour protesting Amazon with my sign than I did while I worked with them. And that was in Seattle. One woman asked, "What are you writing?" I told her about the descent from working poor to homeless, income inequality, my personal experience. She mentioned Thomas Piketty's book, we chatted a little, she handed me $10 and wished me luck. Another guy said, "Damn, that's a great story! I'd read it," and handed me a few bucks.

[snip]

[Dec 12, 2017] Who can control the post-superpower capitalist world order? by Slavoj Žižek

Highly recommended!
This is three years old article. What changed ? The USA is still the center of the global neoliberal empire.
Slavoj Žižek develops a false premise but with real mastery of the language. he is definitely talanted writer, but not so much a thinker. He completely missed the gorth of nationalism as a reaction to neoliberalism. So comments are more interesting then that article and some of them proved to be prophetic.
This guy does not even use the term "neoliberalism", probably because he himself is part of neoliberal consensus. and that's why he can get to Guardian pages. So much for the value of this philosopher... From comments: "Here Zizek encourages a kind of liberal naiveté, astonishing for a guy who pretends to be comfortable with Lenin's no-nonsense revolutionary analytic approach. Yes, a global world democracy would be nice. But it's hardly the case that in not having it we have only chaos. Global capital doesn't want world democracy. They want the TransPacific Partnership G8, etc. They want elite enrichment and militarized police. They've got it, or are in the process of getting it.. Instead of the pap he wrote, Zizek should be talking about the creation of a world-wide opposition to those political structures."
Notable quotes:
"... The stabilisation of society under the Putin reign is largely because of the newly established transparency of these unwritten rules. ..."
"... the US stands for neoliberal capitalism, Europe for what remains of the welfare state, China for authoritarian capitalism, Latin America for populist capitalism. ..."
"... This is why our times are potentially more dangerous than they may appear. ..."
"... the next stage of a geopolitical struggle for control in a nonregulated, multicentred world. ..."
"... the impossibility of creating a global political order that would correspond to the global capitalist economy. ..."
"... In politics, age-old fixations, and particular, substantial ethnic, religious and cultural identities, have returned with a vengeance ..."
"... Capitalism is a system engineered to ensure that the psychopaths get to the top. Ruthlessness, selfishness, blind pursuit of profit, manipulation and coercion of others, believing your own lies - these are the necessary qualities for success, which have been elevated into desirable qualities. If you don't have them, you're a loser. ..."
"... To get to the top, you have to be a psychopath. If you're at the top, you're a psychopath. ..."
"... The oligarchs, of course. ..."
"... The current Ukrainian problem may have more in common with Georgia, than Syria, Libya and Iraq, but they all have the US squaring off against Russia. ..."
"... What might be more worrying is when the current FRB resuscitation of the US economy fails to show the promise anticipated and the debt to China becomes a political problem. What then? Does Washington send warships to Beijing? ..."
"... Most likely Ukraine would be a quasi-independent, bankrupt state heavily indebted to the West, with NATO bases, folklore instead of real politics, large emigration (mostly illegal), and desperate population ..."
"... The rest of the population would be slowly dropping to substance level, no jobs, no money, no futures. ..."
"... So having Russia - as a savior, boogeyman or a distraction - immensely help all Ukrainians. It makes them important enough to have to be bought out. It forces a competition for their affection and thus bids up any rewards. ..."
"... This is an end-of-days party for those who seem to have no place in the neo-liberal world, either EU or the Russian version. ..."
"... Most power gets dissipated with over-reach, so I am not sure capitalizing faster would have been better for US. Most power is also always local, and the world is a big place. ..."
"... US neo-con dreamers tend to see the world as a map. It is not a "map". It is a much more complex environment with local dynamics, histories, and lots and lots of people. Who want stuff. Moving in, or "capitalizing" as you call it, creates heightened expectations and inevitable disappointments. My advise is to chill and keep it small. Over-reach and too much ambition never work in the long run. ..."
"... and kill left and right for 'freedoms'. ..."
"... Therein is another contradiction. Globalists cannot focus on their national economy. ..."
"... Our predicament TOMORROW will be defined by an intensifying scarcity of finite resources, with the additional whammy of climate change. ..."
"... My own gut-feeling is that globalisation is already beginning to decline and disintegrate due to economic, political, resource and environmental constraints. ..."
"... My guess is Bankers and big corporations will control the post capitalist world. ..."
"... the US stands for neoliberal capitalism, Europe for what remains of the welfare state, China for authoritarian capitalism, Latin America for populist capitalism ..."
"... First and foremost; perturbations we are witnessing are processes of reversing the globalisation-effect that in its core value destroys centralised global-powers control. ..."
"... There's no such thing as your fantasy version of Capitalism; where all the markets are "free" and there are no assholes and sociopaths trying to manipulate and screw people. ..."
"... ALL the ISM words are worthless labels used by people with economic morality OCD. ..."
"... Zizek's analysis is once again spot on and would be accepted as self-evident (Ukraine a proxy war between superpowers) were it not for our twisted corporate controlled media. ..."
"... Seems very obvious here in the USA we are controlled (owned) by the multi-national corporations. ..."
"... Governments now exist to funnel wealth to the .01% who own the corporations. ..."
"... or the corporate elite more likely !! ..."
"... will involve the nation state recapturing its power and the diminishing authority of the corporate elite who of course are hell bent on taking over everything affecting our lives ..."
"... The 'corporate elite' already OWN our governments. The nation state is disappearing at the same rate as democratic representation. ..."
"... Something I find interesting is the transnational nature of modern capital, and labour. This is making geo control difficult for modern superpowers, not impossible, but increasingly difficult. As revenue is increasingly tied to transnational enterprises, the paradox is that state interests are tied to cross border peace and stability. Not a goal helped by upsetting regional stability. ..."
"... Our predicament today is defined by this tension: the global free circulation of commodities is accompanied by growing separations in the social sphere. Since the fall of the Berlin Wall and the rise of the global market, new walls have begun emerging everywhere, separating peoples and their cultures. Perhaps the very survival of humanity depends on resolving this tension. ..."
"... Consider that there may be an elite group of power-mongers who, through the control of global mega-institutions, wield the power to mobilize e.g the military might of the U.S. and of Britain and of other puppet nations ..."
"... Actually, even Obama himself, could be a proxy! ..."
"... Global corporations appear to be the new weapon of war, ..."
"... most power and influence in any country comes from its wealth holders and in many cases these are faceless suits in big business and high finance all protected by a blag legal system set up to protect companies and 'their' assets. ..."
"... The transnational entity called the United Nations has long passed its use-by date. The US government is in thrall to Wall Street, corporations and their lobby groups and is over-extended in numerous wars and conflicts across the planet. Americans are tired of fighting, they are sinking into Third World poverty, their jobs are disappearing and more of them are ending up in prisons operated by private firms for profit. ..."
"... It is definitely time to teach the superpowers, old and new, some manners, but who will do it? ..."
"... All gringos have done in their century of greatness ("the land of 'the' 'free' and 'the' 'brave'") is abusing people who can't defend themselves on an equal basis, mess with the environment and (very successfully I would admit) brainwash many, many people by selling them very stupid and unsustainable illusions ..."
"... Monied interests will control the 'post-superpower capitalist world order.' During the past few years, they quietly used their power to force governments austerity policies in both the US and Europe and hack away at their social safety nets. ..."
"... Communism at least gave social liberalism in the West a chance, as an alternative to deprive the Soviets of sympathizers. Once communism collapsed in Eastern Europe, the monied interests felt they could dispense with liberalism and pursue more extreme aims. ..."
"... We exist in a world where might makes right. ..."
"... These few percent, consciously or not, create, enforce, and change all the rules; it is for the rest of us to find some way to survive under them. Good luck all. ..."
"... Otherwise, the US was pretty much entirely indifferent to Russia's national interests and preferences ..."
"... Far more accurate to say that the US simply treated Russia as the loser of the Cold War ..."
"... and as such should simply roll over and accept all edicts from Washington. ..."
"... Gangs are the most primitive form of government and within neo-liberalism all governments are merely gangs. ..."
"... neo-liberalism's excessive division is dehumanising hence the institutional collapse. ..."
"... Super-rich people and large corporations, are a luxury we can no longer afford. ..."
"... 'Survival in numbers' is a prime survival mechanism in our species. Cooperation trumps competition most of the time. Neo-liberalism has made far too much division for our species to survive it. Cooperating with neo-liberalism is the biggest mistake. ..."
"... What if, for structural reasons, and not only due to empirical limitations, there cannot be a worldwide democracy or a representative world government? ..."
"... since Consumerism is nothing more than a superstitious belief in Perpetual Motion ..."
"... Here Zizek encourages a kind of liberal naiveté, astonishing for a guy who pretends to be comfortable with Lenin's no-nonsense revolutionary analytic approach. ..."
"... Global capital doesn't want world democracy. They want the TransPacific Partnership G8, etc. They want elite enrichment and militarized police. ..."
"... Slavoj Žižek develops a false premise with great ease. ..."
"... The USA is subconsciously aware of this problem and its inevitable endpoint. It is thus armed to the teeth and will remain so. ..."
"... Only an economic collapse can disarm the USA. ..."
"... The problem could be tempered by the citizenry, but the public is cowed by fears of terrorism, real and imagined. ..."
May 06, 2014 | The Guardian

In a divided and dangerous world, we need to teach the new powers some manners

To know a society is not only to know its explicit rules. One must also know how to apply them: when to use them, when to violate them, when to turn down a choice that is offered, and when we are effectively obliged to do something but have to pretend we are doing it as a free choice. Consider the paradox, for instance, of offers-meant-to-be-refused. When I am invited to a restaurant by a rich uncle, we both know he will cover the bill, but I nonetheless have to lightly insist we share it – imagine my surprise if my uncle were simply to say: "OK, then, you pay it!"

There was a similar problem during the chaotic post-Soviet years of Yeltsin's rule in Russia. Although the legal rules were known, and were largely the same as under the Soviet Union, the complex network of implicit, unwritten rules, which sustained the entire social edifice, disintegrated. -[ It's he is completely detached from reality; that was a neoliberal revolution, nothing more nothing less -- NNB] In the Soviet Union, if you wanted better hospital treatment, say, or a new apartment, if you had a complaint against the authorities, were summoned to court or wanted your child to be accepted at a top school, you knew the implicit rules. You understood whom to address or bribe, and what you could or couldn't do.

After the collapse of Soviet power, one of the most frustrating aspects of daily life for ordinary people was that these unwritten rules became seriously blurred. People simply did not know how to react, how to relate to explicit legal regulations, what could be ignored, and where bribery worked. (One of the functions of organized crime was to provide a kind of ersatz legality. If you owned a small business and a customer owed you money, you turned to your mafia protector, who dealt with the problem, since the state legal system was inefficient.)

The stabilisation of society under the Putin reign is largely because of the newly established transparency of these unwritten rules. Now, once again, people mostly understand the complex cobweb of social interactions.

In international politics, we have not yet reached this stage. Back in the 1990s, a silent pact regulated the relationship between the great western powers and Russia. Western states treated Russia as a great power on the condition that Russia didn't act as one.--[ That' beyong naive -- the USA treated Yeltisn Russia as a vassal, it actually was a time --NNB] But what if the person to whom the offer-to-be-rejected is made actually accepts it? What if Russia starts to act as a great power? A situation like this is properly catastrophic, threatening the entire existing fabric of relations – as happened five years ago in Georgia. Tired of only being treated as a superpower, Russia actually acted as one.

How did it come to this? The "American century" is over, and we have entered a period in which multiple centres of global capitalism have been forming. In the US, Europe, China and maybe Latin America, too, capitalist systems have developed with specific twists: the US stands for neoliberal capitalism, Europe for what remains of the welfare state, China for authoritarian capitalism, Latin America for populist capitalism.

After the attempt by the US to impose itself as the sole superpower – the universal policeman – failed, there is now the need to establish the rules of interaction between these local centres as regards their conflicting interests.

This is why our times are potentially more dangerous than they may appear. During the cold war, the rules of international behaviour were clear, guaranteed by the Mad-ness – mutually assured destruction – of the superpowers. When the Soviet Union violated these unwritten rules by invading Afghanistan, it paid dearly for this infringement. The war in Afghanistan was the beginning of its end. Today, the old and new superpowers are testing each other, trying to impose their own version of global rules, experimenting with them through proxies – which are, of course, other, small nations and states.

Karl Popper once praised the scientific testing of hypotheses, saying that, in this way, we allow our hypotheses to die instead of us. In today's testing, small nations get hurt and wounded instead of the big ones – first Georgia, now Ukraine. Although the official arguments are highly moral, revolving around human rights and freedoms, the nature of the game is clear. The events in Ukraine seem something like the crisis in Georgia, part twothe next stage of a geopolitical struggle for control in a nonregulated, multicentred world.

It is definitely time to teach the superpowers, old and new, some manners, but who will do it? Obviously, only a transnational entity can manage it – more than 200 years ago, Immanuel Kant saw the need for a transnational legal order grounded in the rise of the global society. In his project for perpetual peace, he wrote: "Since the narrower or wider community of the peoples of the earth has developed so far that a violation of rights in one place is felt throughout the world, the idea of a law of world citizenship is no high-flown or exaggerated notion."

This, however, brings us to what is arguably the "principal contradiction" of the new world order (if we may use this old Maoist term): the impossibility of creating a global political order that would correspond to the global capitalist economy.

What if, for structural reasons, and not only due to empirical limitations, there cannot be a worldwide democracy or a representative world government? What if the global market economy cannot be directly organised as a global liberal democracy with worldwide elections?

Today, in our era of globalisation, we are paying the price for this "principal contradiction." In politics, age-old fixations, and particular, substantial ethnic, religious and cultural identities, have returned with a vengeance. Our predicament today is defined by this tension: the global free circulation of commodities is accompanied by growing separations in the social sphere. Since the fall of the Berlin Wall and the rise of the global market, new walls have begun emerging everywhere, separating peoples and their cultures. Perhaps the very survival of humanity depends on resolving this tension.

GreeneGrasshopper -> Strummered, 06 May 2014 10:05pm

Capitalism is a system engineered to ensure that the psychopaths get to the top. Ruthlessness, selfishness, blind pursuit of profit, manipulation and coercion of others, believing your own lies - these are the necessary qualities for success, which have been elevated into desirable qualities. If you don't have them, you're a loser.

To get to the top, you have to be a psychopath. If you're at the top, you're a psychopath.

Whitt, 06 May 2014 9:22pm

"Who can control the post-superpower capitalist world order?"
*
Is this a trick question?

The oligarchs, of course.

Silvertown Swedinburgh, 06 May 2014 11:24pm

For the 1948 Italian General Election the US fleet was in Italian ports with the US Marines on board just so the electorate would get the message and as one CIA agent said "We had bags of money that we delivered to selected politicians, to defray their political expenses, their campaign expenses, for posters, for pamphlets," according to CIA operative F. Mark Wyatt. and they kept interfering in Italian elections into the 1970s

MsrOboulot Malkatrinho, 07 May 2014 1:19pm

Northern Cyprus was annexed by Turkey. Many commentators would also argue that Croatia and Slovenia were effectively annexed by the EU, if not Austria and Germany. Commentators such as Pilger would argue that 80% of Latin America was annexed by the US a long time ago, but let's not go there. Of course, we can also talk about the Occupied Territories, how would you describe them? As I said, it's a matter of political views we disagree on, not one of terminology.

StephenStafford, 06 May 2014 9:39pm

Though the article deals with countries and geographic areas, much might be equivalently true of companies which may be likened to countries especially when some have larger revenues than many countries which they may tend to be able. individually or as a group, to dominate.

The Obama regime is calling fo sanctions on the Putin regime, whilst ExxonMobil seems unfazed and is busily investing with a Russian oil company Rosneft.

After Yeltsin, Putin very obviously searched for ways to reclaim State assets sold off on the cheap and whereas he could manage to deal with one (Yukos), his Government was obviously too impaired to go after many other Oligarchs, so for the moment they and their ill-gotten assets are 'safe' .

The current Ukrainian problem may have more in common with Georgia, than Syria, Libya and Iraq, but they all have the US squaring off against Russia. In Ukraine, Russia acted decisively over Crimea and left the US in a quandary as to what their next move could be, other than backing their puppet regime.

The US has shown little wish to be directly involved after Iraq in many of these local skirmishes apart from 'drones'. Russia has not turned up in any war zone using drones so far, though Iran and Hezbollah seem to see in their next conflicts, the use of drones will be very important.

What might be more worrying is when the current FRB resuscitation of the US economy fails to show the promise anticipated and the debt to China becomes a political problem. What then? Does Washington send warships to Beijing?

Putin told Bush a long while ago that Russia appreciated the US interest in its natural resources, but no thank you.

Beckow -> StephenStafford, 06 May 2014 11:50pm

"Ukrainian problem may have more in common with Georgia, than Syria, Libya and Iraq, but they all have the US squaring off against Russia."

I agree that Georgia was a mini-version of this, but because of its size the Ukraine problem is in a class of its own. In other words, this is truly new and almost anything can happen.

When trying to understand the reality around us it helps to do a few logical games, and Zizek does that, just not fully. For example, let's say there was no Russia, or only an absolutely powerless Russia (like Yeltsin in the 90's). What would happen?

Most likely Ukraine would be a quasi-independent, bankrupt state heavily indebted to the West, with NATO bases, folklore instead of real politics, large emigration (mostly illegal), and desperate population. It would be run by Western approved oligarchs who would share all local resources with Western "investors". It would not be in EU, although a small layer of Kiev intelligentsia would be heavily subsidized by the West, given do-nothing cushy NGO positions, offered frequent trips and humored as needed. The nationalists would be changing public holidays, tearing down and putting up statues, and occasionally venting their anger at minorities and at football games. The rest of the population would be slowly dropping to substance level, no jobs, no money, no futures. In other words just like some of the poorer EU countries, except without the accumulated wealth, euro currency and access to EU as an escape valve.

So having Russia - as a savior, boogeyman or a distraction - immensely help all Ukrainians. It makes them important enough to have to be bought out. It forces a competition for their affection and thus bids up any rewards. All Ukrainians do better (except the killed ones): the NGO crowd in Kiev gets more grants, oligarchs get more deals, nationalists get more respect, Russians in the south-east will get a veto power, so they will also have to be compensated. This is a win-win and on the ground the people engaged sense it: so they will keep it going, they will escalate. What are the alternatives? Greece without the Aegean islands? Or a dumpy provincial life?

This is locally driven and not any longer by super-powers, indispensable one, aspiring one, or any other kind. It will go on and will be quite entertaining. That's what Zizek missed, he is too globally focused. This is about a unique place, strange and desperate people, and no resources to pay for the entertainment. This is an end-of-days party for those who seem to have no place in the neo-liberal world, either EU or the Russian version.

StephenStafford -> Beckow, 07 May 2014 2:12pm

Good synopsis of the problem in Ukraine.

re

What would happen?

The weakness of Russia wasn't immediately capitalised upon by the USA, though the Clinton foreign policy increasingly reflected this, particularly with the interference in the Balkans. The PNAC on the other hand did see the advantage that the USA could take and that was obvious in the Afghanistan attack and more especially with Iraq.

Arguably in this post 1990 period, the USA acted relatively slowly to capitalise on the dissolution of the USSR.

Beckow StephenStafford, 07 May 2014 7:54pm

Most power gets dissipated with over-reach, so I am not sure capitalizing faster would have been better for US. Most power is also always local, and the world is a big place.

US neo-con dreamers tend to see the world as a map. It is not a "map". It is a much more complex environment with local dynamics, histories, and lots and lots of people. Who want stuff. Moving in, or "capitalizing" as you call it, creates heightened expectations and inevitable disappointments. My advise is to chill and keep it small. Over-reach and too much ambition never work in the long run.

WhatIsWhat -> StephenStafford

The US has shown little wish to be directly involved after Iraq in many of these local skirmishes apart from 'drones'.

For the sake of the truth, little correction:

The US has shown little wish to be openly and visibly involved after Iraq in many of these local skirmishes apart from 'drones'. They prefer to be invisible and remotely control 'human drones' who 'peacefully protest' and kill left and right for 'freedoms'.

Rialbynot, 06 May 2014 9:47pm

What if the global market economy cannot be directly organised as a global liberal democracy with worldwide elections?

Today, in our era of globalisation, we are paying the price for this "principal contradiction."

Some are paying the price; others are benefitting. That's the first thing we need to recognise.

Having done so, we can then start "solving" the contradiction by re-focussing attention on our national economies, while also seeking to make the global market economy a little more people-friendly (the aim being a global social market economy).

Perhaps the EU's principle (or concept) of subsidiarity, which, unfortunately, the EU itself so often fails to apply, could be used to identify at which level decisions should be taken.

Brigitte Bernadotte -> Rialbynot, 07 May 2014 12:43pm

A "global democracy" is a nightmare per se, because it's a global government. The US is a democracy, and Germany was a democracy in the 20's, too. However, it turned into one of the most terrible dictatorships ever. Hell-bent on removing borders actually.

Any kind of global government, as friendly and benevolent it might be, could turn into a global dictaorship, like in Star Wars the Republic was turned into the Empire. Which country would fight the golbal dictorship? To which country wold whistleblowers and refugees go? Ivory tower left-wing populist academics like Zizek, who conveniently blames "capitalism" (the right to own property) as the root of all evil - as if the Soviet Union and Mao's China had been bastions of liberty - fail to deal with this aspect. I am not surprised, the EU welfare state is the reason for the euro debt mountain (in the US it's military overstretch), which is the reason for the EU's misery, and he failed to even mention that, too.

That's also why the EU is dangerous, it reduces political diversity, which helped Europe to overcome dictatorships in the past. Several EU countries grounding Morales' plane on American orders was a taste of that. As for subsidiarity, the EU is based on "ever closer union", which is an euphemism for centralist power grab.

Brian o'Cualain -> Brigitte Bernadotte, 07 May 2014 1:51pm

The US is no more a Democracy than Russia and probably not much less than what passes for democracies in most countries. He who pays the piper calls the tune. http://www.telegraph.co.uk/news/worldnews/northamerica/usa/10769041/The-US-is-an-oligarchy-study-concludes.html

When looking at the EU welfare debt mountain it's worth looking who exactly benefits from the welfare, not only in terms of the generally recognized view of welfare but also the whole notion of corporate welfare, subsidies, tax-breaks etc. I think you'll find the scales will tend to tip where they tip for everything else.

Avi Unobtaniumstein -> Rialbynot, 08 May 2014 11:36am

Therein is another contradiction. Globalists cannot focus on their national economy.

michaelmichael, 06 May 2014 9:58pm

"Our predicament today is defined by this tension: the global free circulation of commodities is accompanied by growing separations in the social sphere. "

The tension lies primarily between those who have and those who haven't. As far as the corporations are concerned, its business as usual.

Our predicament TOMORROW will be defined by an intensifying scarcity of finite resources, with the additional whammy of climate change.

Luismdv, 06 May 2014 10:25pm

"What if the global market economy cannot be directly organised as a global liberal democracy with worldwide elections?"

There seems to be some plausibility in that hypothesis. If this was true, both the left and the right will have to check their political premises because the "democratic consensus" is shared across the whole political specter (except, both political extremes, largely irrelevant).

But unlike classic Marxism, which made the (socio-cultural) superstructure dependent on the (economic) structure, there is no evidence that this is true now. The implication could be that the economic structure remains in place (supported by basic human needs) while the democratic superstructure falls apart. This is not what I want, but is a possibility.

TransReformation , 06 May 2014 10:32pm

What if, for structural reasons, and not only due to empirical limitations, there cannot be a worldwide democracy or a representative world government? What if the global market economy cannot be directly organised as a global liberal democracy with worldwide elections?

Today, in our era of globalisation, we are paying the price for this "principal contradiction.

A rather strange and unsatisfying article from Zizek. I partly agree with him but feel he needs to spell out what these 'structural reasons' to which he alludes. Why it's dissatisfying is that he appears to lament the impossibility of a world government or liberal democratic order. I consider that a blessing though, whatever shape or form it takes - not least liberal democratic - structurally it could only be oppressive.

I also find it strange that Zizek appears to accept 'this era of (economic) globalisation' as something natural and permanent rather than as contingent and transient - only a manifestation of a certain stage in the development of capitalism. My own gut-feeling is that globalisation is already beginning to decline and disintegrate due to economic, political, resource and environmental constraints.

While I'd certainly agree that this is a very dangerous time, in the long-run there's no point in lamenting the absence of a global order/government - it's in fact our last, best hope of freedom and equality. If the oligarchs and plutocrats across the globe were ever able to overcome their differences and unite behind a single global order or government it would inherently have to be highly authoritarian and undemocratic to maintain control.

NOTaREALmerican -> TransReformation, 06 May 2014 10:37pm

Re: If the oligarchs and plutocrats across the globe were ever able to overcome their differences and unite behind a single global order or government it would inherently have to be highly authoritarian and undemocratic to maintain control.

Well, not if it was run by the nice guys in Brussels. Didn't the people of the EU vote to consolidate power in Brussels because of their hope that a United States of Europe would be as democratic and freedom-loving as the United States of Merica?

DailyMailHatesMe, 06 May 2014 10:38pm

In the discipline of international relations, constructivism is the claim that significant aspects of international relations are historically and socially constructed, rather than inevitable consequences of human nature or other essential characteristics of world politics.

Philosophish, 06 May 2014 10:42pm

Though geopolitics qua content change all the time in history the age old dictum stands strong as ever: he with the money makes the rules!

The question is not who can control the 'superpowers', the question is who controls the money suppy.

sadhu, 06 May 2014 10:47pm

My guess is Bankers and big corporations will control the post capitalist world. Forget the political and moral arguments. The top layer will do everything in their power to control. But the dilemma is if 'they' have the power and 'free will' to control the 'we' the underdog should have the 'free will' as well to counter their control. However, as interesting as this article is, it still argues in political, economic and super power terms, where as a more realistic approach would be to look at this in biological and natural terms.

For example in plate tectonics, what controls what. Or does the matter of control even come into plate. In the past they attributed volcanoes to the power of Gods and Devils, where as through scientific analysis (as apposed to social and particularly religious ones) we have come to view volcanoes and plate tectonics as intricate natural processes.

Therefore, instead of speaking of controls how long will it take us to speak in terms of natural processes. How does it come about that one strata of society much like some particular genes, hormones and possibly bacteria and viruses take over the processes of a particular life form. It happens through natural processes and not political and moral arguments.

Bucky Fuller used to say that in order to have true democracy we should learn/discover its true principles just as we discovered the principles of gravity and electricity.

Here is a good place to mention John McMurtry and his 'Cancer Stage of Capitalism', downloadable from his info in Wikipedia.

I am so grateful to the Guardian and Cif for it was in such discussions where a kind soul introduced me to McMurtry.

EarlyVictoria, 06 May 2014 10:53pm

the US stands for neoliberal capitalism, Europe for what remains of the welfare state, China for authoritarian capitalism, Latin America for populist capitalism

Liking this neat formulation.

Laserlurk, 06 May 2014 10:56pm

First and foremost; perturbations we are witnessing are processes of reversing the globalisation-effect that in its core value destroys centralised global-powers control.

Second; humans as a race have lost momentum of the discovery and are pretty much bound to the known territories, continents and practices.
Without drive we are lost in a consumption and quite retarded innovation of the things and technologies that cause auto-dumb effect.
As understanding all of which is written above eases consequences of a post-Lacan society, we are generally unhappy about everything, but we lost the crying shoulder.
So, one might say we also live post- mutually assured destruction, as everyone is inflicting it slowly on themselves.

Then again, one can be rather nihilistic and write as well: Who cares?

NOTaREALmerican -> Laserlurk , 06 May 2014 11:01pm

Re: Then again

Or, one can be pathologically optimist and keep consolidating power in the hope that - eventually - the nice people WILL eventually run things.

taxhaven, 06 May 2014 11:08pm

...multiple centres of global capitalism have been forming. In the US, Europe, China and maybe Latin America, too, capitalist systems have developed with specific twists: the US stands for neoliberal capitalism, Europe for what remains of the welfare state, China for authoritarian capitalism, Latin America for populist capitalism...

Funny...everywhere I look I see authoritarian socialism, not "capitalism". I see manipulated markets, manipulated prices, crony favourites, insolvent public sectors, rigged wages and prices and zillions of regulations.

NOTaREALmerican -> taxhaven, 06 May 2014 11:19pm

There's no such thing as your fantasy version of Capitalism; where all the markets are "free" and there are no assholes and sociopaths trying to manipulate and screw people.

You live in the same fantasyland the Socialists and Libertarians do. None of the economic ISM's work according to moral rules when you've got lots of smart-n-savvy assholes and sociopaths.

The morals are for the children, and the adults are out trying to figure out how to screw the children (which - it turns out - is pretty easy).

taxhaven -> NOTaREALmerican, 06 May 2014 11:45pm

There's no such thing as your fantasy version of Capitalism (?)

So what IS there? It sure isn't anything close to "capitalism", is it...

NOTaREALmerican -> taxhaven, 06 May 2014 11:52pm

Re: So what IS there?

ALL the ISM words are worthless labels used by people with economic morality OCD. The assholes and sociopaths could care less what "the systems" is, because from an asshole and sociopath's perspective there is only one system: how much can I take NOW and how can I screw people to take more later.

What ELSE exists or has EVER existed? These dumbasses ISM's are worthless to even talk about; they exists only in a fantasyland of no assholes and manipulative sociopaths who confidently take what they want and have no morals.

GiulioSica, 06 May 2014 11:13pm

Zizek's analysis is once again spot on and would be accepted as self-evident (Ukraine a proxy war between superpowers) were it not for our twisted corporate controlled media.

But, unfortunately, he offers no solutions, only questions. As a result, it can be summed up in a short sentence: "Things are bad. What is to be done?"

ID1812901, 06 May 2014 11:16pm

Big banks rule the world, don't they?

NOTaREALmerican ID1812901, 06 May 2014 11:22pm

When ya think about, a bank creates money from nothing and is protected by the state. How could they NOT rule the world.

WillShirley, 06 May 2014 11:24pm

Seems very obvious here in the USA we are controlled (owned) by the multi-national corporations. They control our government, therefor they control our military and that makes them extremely dangerous.

They do not see killing tens of thousands of people as troubling in the slightest. Look at our invasion of Iraq. Look at the other little wars we started to protect the corporations. They own most of the so-called civilized world and plan to retain that control. They can't control the sunlight so we have almost NO solar power plants. They know clean water is going to be a problem... it is now... so they sell us bottles of what they say is clean water.... and we buy it happily.

Governments now exist to funnel wealth to the .01% who own the corporations. We exist for the same reason cattle are found at a dairy farm. Until the herd decides to act like adult men and women instead of domesticated animals we will continue to allow the corporate takeover of our world. Until we stop worshiping the dollar and acting as if only money can make us happy we will be in thrall to the capitalists/fascists who currently run the whole show.


North10, 06 May 2014 11:29pm

Sorry Zizek .far too sloppy .first Georgia, now Ukraine, well no, the US has interfered militarily with 75 countries since WW2 and currently has military bases in 135 sovereign nations ..so hardly first Georgia and now Ukraine .just watch four star US General Wesley Clark discussing in 2007 the US plans to topple seven countries, including Afghanistan, Iraq, Libya, and Syria, coincidence with real events, hardly. https://www.youtube.com/watch?v=nAWzvtVJA5A

So, hardly first Georgia and now Ukraine...

Vatslav Rente, 06 May 2014 11:30pm

Strange, abstract thinking Mr. Zizek.
What is this nonsense about Georgia and Ukraine. In Georgia, Russia prevented the genocide against Ossetians. In Eastern Ukraine supported ethnic Russians. What is the problem?
The rules never change. Money and Power are everything. Democracy, dictatorship, the international community - fiction for outsiders, words which superpower cover their interests. Of course Russia is holding its geopolitics. It's not like the state Department. Is this news? Maybe Mr. Zizek doubts in competence of the American President? Don't worry, the U.S. can't win all the time, this is normal. Moreover, to be "the world's policeman" ungrateful and dangerous activity, constantly crazy fundamentalist trying to burn the flag of your country)

HumbleDawes, 06 May 2014 11:39pm

To know a society is not only to know its explicit rules. One must also know how to apply them: when to use them, when to violate them, when to turn down a choice that is offered, and when we are effectively obliged to do something but have to pretend we are doing it as a free choice. Consider the paradox, for instance, of offers-meant-to-be-refused. When I am invited to a restaurant by a rich uncle, we both know he will cover the bill, but I nonetheless have to lightly insist we share it – imagine my surprise if my uncle were simply to say: "OK, then, you pay it!"

This uninspired paragraph, including its misuse of the word 'paradox', could have just been written: 'to know a society is not only to know its laws, one must also be aware of its social norms' without any real loss of meaning. 'Offers-meant-to-be-refused.' Endless verbiage. Sort-it-out-Slavoj.

ronaldadair, 06 May 2014 11:43pm

You have it all wrong my friend - that is to say you are barking up the wrong tree when you talk about a world controlled by who ? - one nation ? - or the corporate elite more likely !!

What so many people are missing is that we are heading at a fair rate of knots " back to the future " which will involve the nation state recapturing its power and the diminishing authority of the corporate elite who of course are hell bent on taking over everything affecting our lives not because they have any particular crusade in this direction, but simply because in order to continue to enlarge their empires - to increase their economies of scale , their future, as they see it, lies in a world where the corporation govern

This will not happen and one only has to move into a space where the correction occurs to see that the nation state will once again govern us as part of a world connected by bi-lateral trade agreements.

GordonGecko -> ronaldadair, 07 May 2014 8:43am

The 'corporate elite' already OWN our governments. The nation state is disappearing at the same rate as democratic representation.

JacobJonker -> ronaldadair, 07 May 2014 11:20am

Obvious and uncommon common sense.It may,however,not eventuate due to the propensity of the majority to be blind to their fate.There is also the usual apathy,though the coming generations will see a division into slaves,stooges,slave-masters,dissenters,freedom fighters and the usual coterie of the power pyramid from the top to the bottom layer of slaves to a system.Nation-states whose citizens wish to survive have a challenge ahead of them.Typically,only a minority is growing in awareness.

Robbli, 06 May 2014 11:45pm

"All governments suffer a recurring problem: Power attracts pathological personalities. It is not that power corrupts but that it is magnetic to the corruptible. Such people have a tendency to become drunk on violence, a condition to which they are quickly addicted.". - Frank Herbert, Dune.

Nice people are too busy doing nice things and have no desires to rule and exploit, hence we will always be ruled by a-holes as long as we keep on voting for them and no, I don't know what the answer is unless we are prepared to make sacrifices, become self sufficient and live off the grid.

ThomasPaine2 -> Robbli, 07 May 2014 9:18am

A very well made point. I have a suggestion about how it could possibly be fixed.

In order to prevent the scum rising to the top, for want of a better cliché, we should look to re-structure our local and central law-making bodies. Rather than elections, which necessarily attract the vainglorious and selfish, a system of conscription should be implemented. Government (local and central) should have an upper-house composed of people from the community selected randomly, much like jury service.

Their job is to hear the legislative proposals and counter arguments and decide based upon evidence presented whether to approve a proposal. That will instantly remove the capacity for political corruption, as all legislation will need the approval of citizen's juries. Couple this with state funding of political parties for the lower house and corporate influence will be dramatically reduced.

alexschwarz , 06 May 2014 11:46pm
When I am invited to a restaurant by a rich uncle, we both know he will cover the bill, but I nonetheless have to lightly insist we share it – imagine my surprise if my uncle were simply to say: "OK, then, you pay it!"

I gave up those social contracts a long time ago and I've never looked back. Your uncle knows damn well he is expected to pay, since you would never go to that restaurant if it weren't for his invite. If both parties know what that you aren't being genuine, then why bother at all? This is something that's always bothered me. Keep it real folks!

Now someone translate that to world politics.

Argieman alexschwarz , 07 May 2014 12:31am
I´ll try an example: Slavoj´s uncle represents the banks, and Slavoj represent us. Slavoj is invited to dinner, he eats -not much. This Slavoj´s meal were the cheap and easy-to-get credits to buy homes, that became the famous "junk bonds" through a complicated financial engineering.

The end differs from Slavoj´s article:

I can´t pay, you know -Uncle says
So I´ll have to pay? -Slavoj, sweating, answers
I´m afraid you´ll have to -Uncle insists
Slavoj he asks the waiter to bring the bill, and thinks he´ll have to sell his car, no holidays, less clothes...

travellersjoy, 06 May 2014 11:58pm

Since US governments willingly colluded with its corporate class, and bullied and coerced Europe and the Anglosphere to transfer the wealth of the West, to the Middle East and then China, I have no confidence that there is a class of people with the skills, abilities, and INTELLIGENCE to see beyond the immediate profit horizon - except perhaps in China - and they are only thinking about their own interests.

If the people of the western world are incapable of electing good governments in the public/national interest, I doubt the possibility of any supra-power being more responsible. The fact is, all our governments can be, and often are, bought and sold by the great multinationals that demand free rein to do what they will - and who brought us the GFC, as well as the shift of economic power from West to East.

Asking for a benign dictator is just asking for trouble as any citizen of a fascist state can attest.

nj61nj, 07 May 2014 12:28am

what a depressing article which really doesn't tell us anything much at all. So kant -> almost pointless and sometimes damaging UN, Popper - an exposure of the problem of positivism. To say there is a contradiction or tension here is a misnomer, in fact it is just an increasingly unilateral domination of capitalism. It is increasingly difficult to find a dialectic within which to understand struggles and tensions which result from this situation. What of the state in Syria, or South Sudan, or Ukraine? Marxist philosophy needs to catch up quick.

Stevo0012345, 07 May 2014 12:32am

Something I find interesting is the transnational nature of modern capital, and labour. This is making geo control difficult for modern superpowers, not impossible, but increasingly difficult. As revenue is increasingly tied to transnational enterprises, the paradox is that state interests are tied to cross border peace and stability. Not a goal helped by upsetting regional stability.

In the good old days when the world was divided into 2 spheres of influence stability was reasonably easy to enforce.

RentControlNow , 07 May 2014 8:42am

It is definitely time to teach the superpowers, old and new, some manners, but who will do it? Obviously, only a transnational entity can manage it

Does Žižek really mean that only a transnational entity / a law of world citizenship / a global political order can keep the PTB in check?

Presumably not, as he questions it:

What if, for structural reasons, and not only due to empirical limitations, there cannot be a worldwide democracy or a representative world government? What if the global market economy cannot be directly organised as a global liberal democracy with worldwide elections?

The notion of a worldwide democracy is obviously absurd.

However, Žižek is right. We do need legal and politcal mechanisms that, as I see it, will stand up for individuals, communities and cultures in the face of the global economic order.

I think the solutions will have to be culturally pluralistic and local.

We need to recognise that superpowers, politicians and governments are still stuck in the 19th-Century of competitng nation states, the fight economic wars to be the top dogs.

World economy is now a fact:

We only have one global economy and what we think of as the US economy or the Russian economy does not have any reality outside of world economy. Governments try to impose their own rules on how they interact with global economic reality, but these rules are merely reactive. World economy is fact. The problem is that governments continue to view nation states as separate controllable economic entities -- which they are not.

They are not even interdependent entities (as was the case during colonial times). Goods and services can come for anywhere and are financed from multiple global locations, produced in multiple locations and consumed worldwide in different locations. This is even more the case when you consider global financial markets. Global financial actors and multinational corporations know this, whereas governments are still stuck in 19th Century thinking. It is this outmoded way of thinking that has led to economic wars in the past, continues to fuel current wars and will lead to future economic war if politicians don't wake up to the fact of world economy.

2bapilgrim, 07 May 2014 8:52am

So many comments on the headline, but the real problem to be solved is stated in the last paragraph:

Our predicament today is defined by this tension: the global free circulation of commodities is accompanied by growing separations in the social sphere. Since the fall of the Berlin Wall and the rise of the global market, new walls have begun emerging everywhere, separating peoples and their cultures. Perhaps the very survival of humanity depends on resolving this tension.

MysticFish, 07 May 2014 8:53am

We now have a deeply serious moral crisis in politics not just a capitalist one. In the past right wing political crimes used to be reported. This time, what we get instead is worrying silence and one-sidedness from the media. Why would our governments go to such trouble to brush aside the gratuitous massacre of innocent unarmed Ukrainians?

http://ersieesist.livejournal.com/813.html

Kosmicfriend , 07 May 2014 8:54am
" Today the old and new superpowers are...trying to impose their own version of global rules, experimenting with them through proxies - which are, of course,...small nations and states. (...small nations get hurt and wounded instead of the big ones)."

Consider that there may be an elite group of power-mongers who, through the control of global mega-institutions, wield the power to mobilize e.g the military might of the U.S. and of Britain and of other puppet nations. The anger resulting from their atrocities would in effect be directed at the U.S or British footsoldier, NOT the hidden MANIPULATORS! Actually, even Obama himself, could be a proxy!

MysticFish -> Kosmicfriend, 07 May 2014 10:25am

Your argument is plausible, since all kinds of entities are now able to disguise themselves behind global corporations, who in turn, strangely exercise undue persuasion over our elected politicians. It's very difficult to see just what is going on. Global corporations appear to be the new weapon of war, when, for example, you look at the carpet bombing effect fracking has on vital agricultural land and water resources. The far right seem to think this technology serves their countries' interests, but then they are not particularly bright when they also act as paid mercenaries for Chinese ambitions.

imight, 07 May 2014 9:02am

the only way to stop the big powers fighting is to stop the reasons they fight at source.....greed

most power and influence in any country comes from its wealth holders and in many cases these are faceless suits in big business and high finance all protected by a blag legal system set up to protect companies and 'their' assets. i highlight 'their' as companies have more rights than individuals in modern law and this allows a disconnect between the people running the company and the consequences of decisions made.....


if companies and their executives and shareholders wish to continue receiving this rights of limited liability the law should be changed to force them to to behave ethically and pay fairly (the difference between highest and lowest paid workers should be low) and be responsible to the environment, if they cant do that ... why should they have limited public liabilities .... ????

sign up peeps pls

https://www.change.org/en-GB/petitions/vince-cable-change-the-publicly-limited-companies-p-l-c-laws-force-companies-to-behave-ethically-to-receive-limited-liabilities

Rozina, 07 May 2014 9:30am

If proof were needed that Slavoj Žižek has little understanding of the current crisis in Ukraine, who the responsible agents are and what they seek to gain from plunging the country into chaos and war, this execrable post is it.

The transnational entity called the United Nations has long passed its use-by date. The US government is in thrall to Wall Street, corporations and their lobby groups and is over-extended in numerous wars and conflicts across the planet. Americans are tired of fighting, they are sinking into Third World poverty, their jobs are disappearing and more of them are ending up in prisons operated by private firms for profit.

It seems Žižek prefers the old order of one country dominating the world and that country being the United States. Russia on the other hand should meekly accept allowing Ukraine to fall under fascist rule and then itself being plundered by US corporations and divided up into small squabbling statelets while Siberian mineral wealth and Caspian Sea oil and gas enrich a small parasitic class that flits from one country to the next.

Martyn -> Blackburn, 07 May 2014 9:47am

The banks control the money supply, and so hold the nations to ransom. Some influential groups, some of them very wealthy, are interested in controlling and manipulating public opinion both at local and international level. One might be tempted to think that the people in power are those who have been democratically elected, but this is perhaps a deception. Whose democracy is it? The leaders? Or does it belong to those who do things behind the scenes? Control the money supply and public opinion and you already have a monopoly on rule.

Writeangle, 07 May 2014 10:22am

There are far too many different cultures and religions for there ever to be work agreement in many areas.Its only the political elite that dream their dogmas will take over the world. The welfare state ridden EU has dreams of getting bigger and more important, dreams that are extremely unlikely to be met.
Most Likely China will be the next world's superpower with the narcissistic welfare state EU sinking slowly in the west.

We will have to wait and see how China plays its new hand and how the others respond to it.
My guess is that the west will not be able to match China and will fall behind even in the US.

NinthLegion, 07 May 2014 10:34am

The Roman Caesars knew that thy could command respect, achieve unity, and lead efficiently and with deep authority if they had an enemy - any credible enemy. Its what holds nations together with what passes for a common mindset. The psychology has not changed. After the demise of the Soviet Union, Al Quieda stepped into the breach. Such a scenario also keeps a powerful and wholly influental industrial military complex happy - as Eisenhower warned. It keeps macho politicians with huge nuclear arsenals in power, clothed with their baubles at the conference tabe, and it also serves to impress wayward regimes. The threat to most governments today, I believe, comes more from within, rather than from without, and a perceived need for security against a potential enemy is beneficial (for them) in promoting a steady erosion of liberty.

Nations need an enemy that must be credible, sufficiently powerful, and able to provide a relatively malignant threat.

FrJack NinthLegion, 07 May 2014 11:24am

Nations need an enemy that must be credible, sufficiently powerful, and able to provide a relatively malignant threat.

Do you mean that there must actually be such a threat or that for a nation to hold together, it's population must believe (be made to believe, constantly told) there is such a threat?

FrJack, 07 May 2014 10:39am

Perhaps the very survival of humanity depends on resolving this tension.

Perhaps the opposite is true. The success of humans as a species, humanity, has and is in large part driven by the soiciobiologically evolved propensity to continually have the tensions/dynamic of competitive groups going on. We live in an age where it is now easier than ever to see/make analysis and judgment on the minutiae of how these tensions constantly ebb and flow and morph, how the players jockey for position and we are on the look out to see where that leaves us. But there is nothing new here, it is a never ending process without resolution. The idea of resolution is a quasi religious dream of return to the garden of eden where all the nuisance things that we have to worry about and deal with simply for being alive are 'solved' for us. 'Re'-solution is a dream of something that never existed except for when we were babies. It is an infantile memory.

tiojo, 07 May 2014 12:05pm

The USA just now is comparable with Britain and its empire at the time prime minister MacMillan made his famous 'Winds of Change' speech in South Africa. He was a politician who realised that the game was up. Britain was no longer the world power it had been. Although he knew that to be the case he didn't have a coherent plan for the future. The empire was dismantled. Britain dithered, and still does, about whether its future lies with Europe or not. Slow decline continued.

The USA post-Iraq is in slow decline as a world power. The bipolar world of the Cold War was replaced by an all too brief unipolar world of US hegemony. But now with the EU, China, India, Russia, Brazil and others providing alternatives we are, as Mr Zizek says, entering a multi-polar world where the dance moves have not been rehearsed. Such a shame that this fracturing of power does not lead to a reaffirmation of faith in internationalism and a willingness to compromise and collaborate through the UN and its agencies.


lioninthemeadow, 07 May 2014 12:06pm

Žižek touches on a fundamental truth that all reasonable human beings recognise: humanity must jettison its tribal attachments to nations etc. and vest greater powers in supranational bodies like the UN.

I believe it is inevitable that the world will increasingly fuse together in the decades and centuries ahead - it is logical, it is pragmatic and it is the only means of ensuring our mutual survival as a species.

As long as humans are divided by tribalism and reactionary loyalties then the world will be host to all manner of social catastrophes.

FrJack -> Danny Bird, 07 May 2014 12:49pm

As long as humans are divided by tribalism and reactionary loyalties then the world will be host to all manner of social catastrophes.

The biggest catastrophy we are all facing is environmental. This is due in large part to the seemingly unending proliferation of human beings. Now, evolution wise, it can be said that as a species, our proliferation is a big success. I have not seen anyone argue that the behavioural propensity of tribalism and loyalty has or is having an effect that is hindering our evolutionary success. Indeed, it seems more credible that they are positive attributes in that sense. But if faced with a scenario that population growth must be curtailed or even reduced if we are to stand any hope of mitigating environmental ills, then I'd say it is better that some other tribe than mine bear the cost of that. I have no doubt they feel they same way. Now, plenty of people seem to be hoping for some other way out of this problem. I think they are dreaming.

RCLopez , 07 May 2014 12:38pm
Well, as you yourself say, in those old times of "mad"-ness (mutually assured destruction) at least we entertained more secure and stable illusions even if based on very dangerous and unsustainable premises

It is definitely time to teach the superpowers, old and new, some manners, but who will do it?

No one ever has taught anything to the powerful. The best we can do is exactly what those so-called pro-Russia "terrorists" are doing in Eastern Ukraine

There is not such a thing as "rationality" or Karl Popper's falsifiability and "scientific testing of hypotheses" among many other things, because you can only have such a thing in the physical sciences. What on earth would be a baseline understanding of truth in politics, when it is all based on lying and manipulating people?!?

Immanuel Kant saw the need for a transnational legal order grounded in the rise of the global society

Yeah, and the closest we have gotten to it is the UN which is an odd joke. They are just a proxy to the USG. Even its secretary compulsively criticizes Snowden even if he doesn't have to, as a way to show "respect" his masters

"Since the narrower or wider community of the peoples of the earth has developed so far that a violation of rights in one place is felt throughout the world, the idea of a law of world citizenship is no high-flown or exaggerated notion."

Yes, and this is happening. People are widely opening their eyes to the "freedom-loving" b#llsh!t of the USG

All gringos have done in their century of greatness ("the land of 'the' 'free' and 'the' 'brave'") is abusing people who can't defend themselves on an equal basis, mess with the environment and (very successfully I would admit) brainwash many, many people by selling them very stupid and unsustainable illusions


... or a representative world government

You are kidding us, right?


What if the global market economy cannot be directly organised as a global liberal democracy with worldwide elections?

Well, I think definitely are. I don't think that market forces will help our "global" problems. We should stop ferally playing into market forces hoping for those illusions to solve our problems.

We have advanced our technologies and market a bit since the stone age, but morally we are still pretentious animals (monkeys wearing ties and thumbing our cell phones).

truth and peace and love,

peterDKK , 07 May 2014 1:26pm
One great punch:

What if the global market economy cannot be directly organised as a global liberal democracy with worldwide elections?

And some muddle about walls separating people and cultures. While delighted to read (at last) a reasonable article in the Guardian, I find Žižek's take wanting.

I am certain he can do better, given how well he describes the mainstay of the system ruling the world today.

EpaminondasUSA , 07 May 2014 3:12pm
Monied interests will control the 'post-superpower capitalist world order.' During the past few years, they quietly used their power to force governments austerity policies in both the US and Europe and hack away at their social safety nets.

Communism at least gave social liberalism in the West a chance, as an alternative to deprive the Soviets of sympathizers. Once communism collapsed in Eastern Europe, the monied interests felt they could dispense with liberalism and pursue more extreme aims.

America is the first effective 'post-democratic' western nation, that is an oligarchy of business-people. Over the coming decades, the machinery of democracy there will break down to be replaced by a shadow government of old money, CEOs, and financiers. It will then quietly work to induce the same in the other western nations. John Calvin's Switzerland will be the model of this new order.

TrasdentBacal EpaminondasUSA , 07 May 2014 4:06pm

Over the coming decades, the machinery of democracy there will break down to be replaced by a shadow government of old money, CEOs, and financiers. It will then quietly work to induce the same in the other western nations

It didn't work before...remember WWII! True, the dimensions of globalized markets and imperialistic interests were not the same those days, now they got internet and other means of cultural turning.

But national, religious, and ethnic identities remain strong in the Old World, from Portugal to Japan, you won't get people to speak American English and hail an identity-lacking world order. I am not totally sure whether that is good or bad, though.

Cousin2, 07 May 2014 4:17pm

The sad reality is that nothing has changed. We exist in a world where might makes right. In some countries, the brief period roughly between the end of WW2 and the beginning of the Reagan/Thatcher regimes will be remembered as a time when workers' wages kept pace with increased productivity.

Today, we are some 35 years back into business as usual, when increases in prosperity flow largely to the top few percent as they have been doing since the beginning and probably will "to the last syllable of recorded time."

These few percent, consciously or not, create, enforce, and change all the rules; it is for the rest of us to find some way to survive under them. Good luck all.

akarlin, 07 May 2014 9:31pm

Back in the 1990s, a silent pact regulated the relationship between the great western powers and Russia. Western states treated Russia as a great power on the condition that Russia didn't act as one. But what if the person to whom the offer-to-be-rejected is made actually accepts it? What if Russia starts to act as a great power?

With all due respect to Zizek, this is only half-true at best.

This "acknowledgement" of Russia as a great power only extended to pretty insignificant measures such as including it in the G8 (and only in its political, not financial, component). Otherwise, the US was pretty much entirely indifferent to Russia's national interests and preferences (often after having promised otherwise). NATO expansion is the big one, of course, but there are plenty of others (creeping missile defense, Libya, etc).

Far more accurate to say that the US simply treated Russia as the loser of the Cold War (despite Gorbachev's piteous assertions that it was ended by the USSR's own free choice and hence such attitudes are unfair) and as such should simply roll over and accept all edicts from Washington.

yourmiddleclassfarce, 08 May 2014 8:34am

Gangs are the most primitive form of government and within neo-liberalism all governments are merely gangs.

neo-liberalism = raising importance of the invention called money over that of people which is a dehumanising process which cultivates (culture being the inclusive process)

All institutions (specialism within and due to the divisive process called civilization) are collapsing (because the dehumanising process is collapsing culture which is the inclusive process). Even the world's gangs (of all type and power) are in that same precarious process.

neo-liberalism's excessive division is dehumanising hence the institutional collapse.

Rich people are a luxury WE can no longer afford.

MysticFish -> yourmiddleclassfarce, 08 May 2014 8:45am

Super-rich people and large corporations, are a luxury we can no longer afford. People will always need to hoard to a certain extent, though, to get them through winter and, if you are a farmer, lean years. It's not good to have everyone totally dependent on the tender mercies of a mafia run state, or they will become abject slaves.

We need to encourage benign human-scale enterprises that are responsive to local needs and don't cause harm on an industrial scale.

yourmiddleclassfarce -> MysticFish, 08 May 2014 11:48pm

I agree however if enough of us get together to make, for instance, a decision regarding a transport system for everyone (inclusive) that is not exclusive then benign state scale or even interstate scale agreements that are inclusive and not divisive will generate more social cohesion, interaction and economy precisely because the most efficient use of the invention called money rides on the back of social currency and not social exclusion. Social currency is destroyed by excessive division.

[Notice how the neo-liberals have removed the term 'mass transit' from the lexicon of social discourse?]

'Survival in numbers' is a prime survival mechanism in our species. Cooperation trumps competition most of the time. Neo-liberalism has made far too much division for our species to survive it. Cooperating with neo-liberalism is the biggest mistake.

LittleRichardjohn, 08 May 2014 9:45am

What if, for structural reasons, and not only due to empirical limitations, there cannot be a worldwide democracy or a representative world government? What if the global market economy cannot be directly organised as a global liberal democracy with worldwide elections?

... ... ....

The prospect of global solidarity is almost certainly dependent on the absurdity of Consumerism hitting the buffers, which, since Consumerism is nothing more than a superstitious belief in Perpetual Motion...

takethat , 09 May 2014 12:53pm
Here Zizek encourages a kind of liberal naiveté, astonishing for a guy who pretends to be comfortable with Lenin's no-nonsense revolutionary analytic approach.

Yes, a global world democracy would be nice. But it's hardly the case that in not having it we have only chaos. Global capital doesn't want world democracy. They want the TransPacific Partnership G8, etc. They want elite enrichment and militarized police. They've got it, or are in the process of getting it.. Instead of the pap he wrote, Zizek should be talking about the creation of a world-wide opposition to those political structures.

johncdvorak , 09 May 2014 6:37pm
Slavoj Žižek develops a false premise with great ease. He hints that some sort of reference point for unwritten social codes should exist when it's always been an experiment that is never resolved except by wars when the all sides are stretched too thin with endless tolerance.

The USA is subconsciously aware of this problem and its inevitable endpoint. It is thus armed to the teeth and will remain so.

In this situation it is impossible not to be a bully. Everyone else has to tolerate the bully and will continue to do so for a very long time. Only an economic collapse can disarm the USA. A collapse of the magnitude necessary does not seem likely.

The problem could be tempered by the citizenry, but the public is cowed by fears of terrorism, real and imagined. Everyone is monitored by the NSA to keep them in line. None of this will be resolved by any sort of world government as Žižek and other idealists imagine. The world is stuck in limbo.

Much of this is discussed on the No Agenda Show. Google it.

Desh Mott , 09 May 2014 8:56pm
Zizek doesn't literally think that international crises are because of psychodramas relating to rules, does he?

[Dec 12, 2017] When a weaker neoliberal state fights the dominant neoliberal state, the center of neoliberal empire, it faces economic sanctions and can t retaliate using principle eye for eye

Highly recommended!
Three years later Russia is still standing... Still to a neoliberal state and not to be a USA vassal is a pipe dream. The system is Washington-centric by design. but what is the alternative in unclear. Russia is still a neoliberal state and Putin is not eternal.
Contrary to Putin's vision, a neoliberal state can't be sovereign, it can only be a vassal of Washington. As soon as a neoliberal state shows some independence it became a "rogue state" and punishment via financial system (and for smaller states via military actions) will follow. Dominance in finance sphere gives the USA the ability to punish Russia to almost any extent they wish without significant possibilities of retaliation, unless formal block of Russia and China is created.\
Russia can only retaliate in selected carefully chosen "weak spots". NGOs, media, the USA food companies (Coca-cola, junk food, chickens, etc), financial and consulting firms (and first of all Big Three, closely connected with the USA government). Not so far nine got under Russian government knife.
Notable quotes:
"... Yep, how dare the Russkies retaliate, when they ought to come begging on their knees to be allowed to do what the grand master in DC wants them to do ..."
"... Russians are using "trade as a geopolitical tool," warns a Washington think tank. Russia engaging in trade war – How despicable! ..."
"... And next Russans claim that "Fruit shipments from the EU have recently contained Oriental fruit moths " ..."
"... "It's not unusual for Russia to find something wrong when they have a political reason to do so". ..."
"... No word on whether his tongue immediately turned black and started to smoke, then fell out of his mouth. It's not unusual for the United States to apply sanctions when they have a political reason to do so, and fuck-all else. ..."
"... I was wrong about Rosoboronexport. It is EXEMPT from the list of sanctions. No doubt some of the deals (titanium) are critical for the US's own MIC. ..."
"... The baying audience of FOX-friends might be stoked at the idea of economic war with Russia, but the cold-eyed businessmen are likely to be unenthused at best ..."
Jul 30, 2014 | marknesop.wordpress.com

colliemum, July 30, 2014 at 10:05 am

Found at zerohedge, a US reaction on Russia's reaction to the sanctions:

"Assuming that they take this action, it would be blatant protectionism," Clayton Yeutter, a U.S. Trade Representative under President Ronald Reagan, said in a phone interview. "There is little or no legitimacy to their complaints."

http://www.zerohedge.com/news/2014-07-30/us-will-feel-tangible-losses-russia-prepares-unleash-retaliatory-trade-wars

Yep, how dare the Russkies retaliate, when they ought to come begging on their knees to be allowed to do what the grand master in DC wants them to do

yalensis, July 30, 2014 at 3:31 pm
Russians are using "trade as a geopolitical tool," warns a Washington think tank. Russia engaging in trade war – How despicable!

First Russkies pretend to find antibiotics in McDonalds "cheese" products. But everybody knows the cheese cannot possibly contain antibiotics, because it's not even real cheese! (it's a kind of edible plastic substance )

And next Russans claim that "Fruit shipments from the EU have recently contained Oriental fruit moths "

That's a lie too.

Everybody knows that if you eat your Polish quinces with a runcible spoon, then they will not contain any measurable amounts of moth larvae.

ThatJ, July 30, 2014 at 3:39 pm
"Fedorov said consulting firms and audit firms will be the first to be targeted by the new bill. Next will be U.S. media, he said."

The US media helps in spreading liberasty. It should have been barred years ago.

colliemum, July 31, 2014 at 12:44 am
Above all else, Putin should throw out all Western NGOs – especially those with links to Soros.
marknesop, July 30, 2014 at 9:41 pm
"It's not unusual for Russia to find something wrong when they have a political reason to do so".

No word on whether his tongue immediately turned black and started to smoke, then fell out of his mouth. It's not unusual for the United States to apply sanctions when they have a political reason to do so, and fuck-all else.

cartman, July 30, 2014 at 10:21 am
I was wrong about Rosoboronexport. It is EXEMPT from the list of sanctions. No doubt some of the deals (titanium) are critical for the US's own MIC. Put Kadyrov or someone on the board and force Congress to slit Boeing's throat.
cartman, July 30, 2014 at 10:26 am
Or hire him to the company that produces rolled titanium alloys for Boeing and Airbus. A shot across the bow to say that Western leaders will have to be standing in front of their populations as they crash their economies. Russia won't do it for them.
marknesop, July 30, 2014 at 9:51 pm
Excellent reasoning. The baying audience of FOX-friends might be stoked at the idea of economic war with Russia, but the cold-eyed businessmen are likely to be unenthused at best. This is a great plan for achieving leverage cheaply and easily, and the U.S. government would be left 'splaining to Boeing that they had to lay off a couple of thousand workers because a bad man was appointed to the board of their major supplier.

The west is locked into its lame sanctions groove, and too proud to back down. This might be the big shootout from which only one currency will walk away.

[Dec 12, 2017] Can Uber Ever Deliver Part Eleven Annual Uber Losses Now Approaching $5 Billion

Notable quotes:
"... Total 2015 gross passenger payments were 200% higher than 2014, but Uber corporate revenue improved 300% because Uber cut the driver share of passenger revenue from 83% to 77%. This was an effective $500 million wealth transfer from drivers to Uber's investors. ..."
"... Uber's P&L gains were wiped out by higher non-EBIDTAR expense. Thus the 300% Uber revenue growth did not result in any improvement in Uber profit margins. ..."
"... In 2016, Uber unilaterally imposed much larger cuts in driver compensation, costing drivers an additional $3 billion. [6] Prior to Uber's market entry, the take home pay of big-city cab drivers in the US was in the $12-17/hour range, and these earnings were possible only if drivers worked 65-75 hours a week. ..."
"... An independent study of the net earnings of Uber drivers (after accounting for the costs of the vehicles they had to provide) in Denver, Houston and Detroit in late 2015 (prior to Uber's big 2016 cuts) found that driver earnings had fallen to the $10-13/hour range. [7] Multiple recent news reports have documented how Uber drivers are increasing unable to support themselves from their reduced share of passenger payments. [8] ..."
"... Since mass driver defections would cause passenger volume growth to collapse completely, Uber was forced to reverse these cuts in 2017 and increased the driver share from 68% to 80%. This meant that Uber's corporate revenue, which had grown over 300% in 2015 and over 200% in 2016 will probably only grow by about 15% in 2017. ..."
"... Socialize the losses, privatize the gains, VC-ize the subsidies. ..."
"... The cold hard truth is that Uber is backed into a corner with severely limited abilities to tweak the numbers on either the supply or the demand side: cut driver compensation and they trigger driver churn (as has already been demonstrated), increase fare prices for riders and riders defect to cheaper alternatives. ..."
"... "Growth and Efficiency" are the sine qua non of Neoliberalism. Kalanick's "hype brilliance" was to con the market with "revenue growth" and signs ..."
Dec 12, 2017 | www.nakedcapitalism.com

Uber lost $2.5 billion in 2015, probably lost $4 billion in 2016, and is on track to lose $5 billion in 2017.

The top line on the table below shows is total passenger payments, which must be split between Uber corporate and its drivers. Driver gross earnings are substantially higher than actual take home pay, as gross earning must cover all the expenses drivers bear, including fuel, vehicle ownership, insurance and maintenance.

Most of the "profit" data released by Uber over time and discussed in the press is not true GAAP (generally accepted accounting principles) profit comparable to the net income numbers public companies publish but is EBIDTAR contribution. Companies have significant leeway as to how they calculate EBIDTAR (although it would exclude interest, taxes, depreciation, amortization) and the percentage of total costs excluded from EBIDTAR can vary significantly from quarter to quarter, given the impact of one-time expenses such as legal settlements and stock compensation. We only have true GAAP net profit results for 2014, 2015 and the 2nd/3rd quarters of 2017, but have EBIDTAR contribution numbers for all other periods. [5]

Uber had GAAP net income of negative $2.6 billion in 2015, and a negative profit margin of 132%. This is consistent with the negative $2.0 billion loss and (143%) margin for the year ending September 2015 presented in part one of the NC Uber series over a year ago.

No GAAP profit results for 2016 have been disclosed, but actual losses likely exceed $4 billion given the EBIDTAR contribution of negative $3.2 billion. Uber's GAAP losses for the 2nd and 3rd quarters of 2017 were over $2.5 billion, suggesting annual losses of roughly $5 billion.

While many Silicon Valley funded startups suffered large initial losses, none of them lost anything remotely close to $2.6 billion in their sixth year of operation and then doubled their losses to $5 billion in year eight. Reversing losses of this magnitude would require the greatest corporate financial turnaround in history.

No evidence of significant efficiency/scale gains; 2015 and 2016 margin improvements entirely explained by unilateral cuts in driver compensation, but losses soared when Uber had to reverse these cuts in 2017.

Total 2015 gross passenger payments were 200% higher than 2014, but Uber corporate revenue improved 300% because Uber cut the driver share of passenger revenue from 83% to 77%. This was an effective $500 million wealth transfer from drivers to Uber's investors. These driver compensation cuts improved Uber's EBIDTAR margin, but Uber's P&L gains were wiped out by higher non-EBIDTAR expense. Thus the 300% Uber revenue growth did not result in any improvement in Uber profit margins.

In 2016, Uber unilaterally imposed much larger cuts in driver compensation, costing drivers an additional $3 billion. [6] Prior to Uber's market entry, the take home pay of big-city cab drivers in the US was in the $12-17/hour range, and these earnings were possible only if drivers worked 65-75 hours a week.

An independent study of the net earnings of Uber drivers (after accounting for the costs of the vehicles they had to provide) in Denver, Houston and Detroit in late 2015 (prior to Uber's big 2016 cuts) found that driver earnings had fallen to the $10-13/hour range. [7] Multiple recent news reports have documented how Uber drivers are increasing unable to support themselves from their reduced share of passenger payments. [8]

A business model where profit improvement is hugely dependent on wage cuts is unsustainable, especially when take home wages fall to (or below) minimum wage levels. Uber's primary focus has always been the rate of growth in gross passenger revenue, as this has been a major justification for its $68 billion valuation. This growth rate came under enormous pressure in 2017 given Uber efforts to raise fares, major increases in driver turnover as wages fell, [9] and the avalanche of adverse publicity it was facing.

Since mass driver defections would cause passenger volume growth to collapse completely, Uber was forced to reverse these cuts in 2017 and increased the driver share from 68% to 80%. This meant that Uber's corporate revenue, which had grown over 300% in 2015 and over 200% in 2016 will probably only grow by about 15% in 2017.

MKS , December 12, 2017 at 6:19 am

"Uber's business model can never produce sustainable profits"

Two words not in my vocabulary are "Never" and "Always", that is a pretty absolute statement in an non-absolute environment. The same environment that has produced the "Silicon Valley Growth Model", with 15x earnings companies like NVIDA, FB and Tesla (Average earnings/stock price ratio in dot com bubble was 10x) will people pay ridiculous amounts of money for a company with no underlying fundamentals you damn right they will! Please stop with the I know all no body knows anything, especially the psychology and irrationality of markets which are made up of irrational people/investors/traders.

JohnnySacks , December 12, 2017 at 7:34 am

My thoughts exactly. Seems the only possible recovery for the investors is a perfectly engineered legendary pump and dump IPO scheme. Risky, but there's a lot of fools out there and many who would also like to get on board early in the ride in fear of missing out on all the money to be hoovered up from the greater fools. Count me out.

SoCal Rhino , December 12, 2017 at 8:30 am

The author clearly distinguishes between GAAP profitability and valuations, which is after all rather the point of the series. And he makes a more nuanced point than the half sentence you have quoted without context or with an indication that you omitted a portion. Did you miss the part about how Uber would have a strong incentive to share the evidence of a network effect or other financial story that pointed the way to eventual profit? Otherwise (my words) it is the classic sell at a loss, make it up with volume path to liquidation.

tegnost , December 12, 2017 at 9:52 am

apples and oranges comparison, nvidia has lots and lots of patented tech that produces revenue, facebook has a kajillion admittedly irrational users, but those users drive massive ad sales (as just one example of how that company capitalizes itself) and tesla makes an actual car, using technology that inspires it's buyers (the put your money where your mouth is crowd and it can't be denied that tesla, whatever it's faults are, battery tech is not one of them and that intellectual property is worth a lot, and tesla's investors are in on that real business, profitable or otherwise)

Uber is an iphone app. They lose money and have no path to profitability (unless it's the theory you espouse that people are unintelligent so even unintelligent ideas work to fleece them). This article touches on one of the great things about the time we now inhabit, uber drivers could bail en masse, there are two sides to the low attachment employees who you can get rid of easily. The drivers can delete the uber app as soon as another iphone app comes along that gets them a better return

allan , December 12, 2017 at 6:52 am

Yet another source (unintended) of subsidies for Uber, Lyft, etc., which might or might not have been mentioned earlier in the series:

Airports Are Losing Money as Ride-Hailing Services Grow [NYT]

For many air travelers, getting to and from the airport has long been part of the whole miserable experience. Do they drive and park in some distant lot? Take mass transit or a taxi? Deal with a rental car?

Ride-hailing services like Uber and Lyft are quickly changing those calculations. That has meant a bit less angst for travelers.

But that's not the case for airports. Travelers' changing habits, in fact, have begun to shake the airports' financial underpinnings. The money they currently collect from ride-hailing services do not compensate for the lower revenues from the other sources.

At the same time, some airports have had to add staff to oversee the operations of the ride-hailing companies, the report said. And with more ride-hailing vehicles on the roads outside terminals,
there's more congestion.

Socialize the losses, privatize the gains, VC-ize the subsidies.

Thuto , December 12, 2017 at 6:55 am

The cold hard truth is that Uber is backed into a corner with severely limited abilities to tweak the numbers on either the supply or the demand side: cut driver compensation and they trigger driver churn (as has already been demonstrated), increase fare prices for riders and riders defect to cheaper alternatives. The only question is how long can they keep the show going before the lights go out, slick marketing and propaganda can only take you so far, and one assumes the dumb money has a finite supply of patience and will at some point begin asking the tough questions.

Louis Fyne , December 12, 2017 at 8:35 am

The irony is that Uber would have been a perfectly fine, very profitable mid-sized company if Uber stuck with its initial model -- sticking to dense cities with limited parking, limiting driver supply, and charging a premium price for door-to-door delivery, whether by livery or a regular sedan. And then perhaps branching into robo-cars.

But somehow Uber/board/Travis got suckered into the siren call of self-driving cars, triple-digit user growth, and being in the top 100 US cities and on every continent.

Thuto , December 12, 2017 at 11:30 am

I've shared a similar sentiment in one of the previous posts about Uber. But operating profitably in decent sized niche doesn't fit well with ambitions of global domination. For Uber to be "right-sized", an admission of folly would have to be made, its managers and investors would have to transcend the sunk cost fallacy in their strategic decision making, and said investors would have to accept massive hits on their invested capital. The cold, hard reality of being blindsided and kicked to the curb in the smartphone business forced RIM/Blackberry to right-size, and they may yet have a profitable future as an enterprise facing software and services company. Uber would benefit from that form of sober mindedness, but I wouldn't hold my breath.

David Carl Grimes , December 12, 2017 at 6:57 am

The question is: Why did Softbank invest in Uber?

Michael Fiorillo , December 12, 2017 at 9:33 am

I know nothing about Softbank or its management, but I do know that the Japanese were the dumb money rubes in the late '80's, overpaying for trophy real estate they lost billions on.

Until informed otherwise, that's my default assumption

JimTan , December 12, 2017 at 10:50 am

Softbank possibly looking to buy more Uber shares at a 30% discount is very odd. Uber had a Series G funding round in June 2016 where a $3.5 billion investment from Saudi Arabia's Public Investment Fund resulted in its current $68 billion valuation. Now apparently Softbank wants to lead a new $6 billion funding round to buy the shares of Uber employees and early investors at a 30% discount from this last "valuation". It's odd because Saudi Arabia's Public Investment Fund has pledged $45 billion to SoftBank's Vision Fund , an amount which was supposed to come from the proceeds of its pending Aramco IPO. If the Uber bid is linked to SoftBank's Vision Fund, or KSA money, then its not clear why this investor might be looking to literally 'double down' from $3.5 billion o $6 billion on a declining investment.

Yves Smith Post author , December 12, 2017 at 11:38 am

SoftBank has not yet invested. Its tender is still open. If it does not get enough shares at a price it likes, it won't invest.

As to why, I have no idea.

Robert McGregor , December 12, 2017 at 7:04 am

"Growth and Efficiency" are the sine qua non of Neoliberalism. Kalanick's "hype brilliance" was to con the market with "revenue growth" and signs of efficiency, and hopes of greater efficiency, and make most people just overlook the essential fact that Uber is the most unprofitable company of all time!

divadab , December 12, 2017 at 7:19 am

What comprises "Uber Expenses"? 2014 – $1.06 billion; 2015 $3.33 billion; 2016 $9.65 billion; forecast 2017 $11.418 billion!!!!!! To me this is the big question – what are they spending $10 billion per year on?

ALso – why did driver share go from 68% in 2016 to 80% in 2017? If you use 68% as in 2016, 2017 Uber revenue is $11.808 billion, which means a bit better than break-even EBITDA, assuming Uber expenses are as stated $11.428 billion.

Perhaps not so bleak as the article presents, although I would not invest in this thing.

Phil in Kansas City , December 12, 2017 at 7:55 am

I have the same question: What comprises over 11 billion dollars in expenses in 2017? Could it be they are paying out dividends to the early investors? Which would mean they are cannibalizing their own company for the sake of the VC! How long can this go on before they'll need a new infusion of cash?

lyman alpha blob , December 12, 2017 at 2:37 pm

The Saudis have thrown a few billion Uber's way and they aren't necessarily known as the smart money.

Maybe the pole dancers have started chipping in too as they are for bitcoin .

Vedant Desai , December 12, 2017 at 10:37 am

Oh article does answer your 2nd question. Read this paragraph:-

Since mass driver defections would cause passenger volume growth to collapse completely , Uber was forced to reverse these cuts in 2017 and increased the driver share from 68% to 80%. This meant that Uber's corporate revenue, which had grown over 300% in 2015 and over 200% in 2016 will probably only grow by about 15% in 2017.

As for the 1st, read this line in the article:-

There are undoubtedly a number of things Uber could do to reduce losses at the margin, but it is difficult to imagine it could suddenly find the $4-5 billion in profit improvement needed merely to reach breakeven.

Louis Fyne , December 12, 2017 at 8:44 am

in addition to all the points listed in the article/comments, the absolute biggest flaw with Uber is that Uber HQ conditioned its customers on (a) cheap fares and (b) that a car is available within minutes (1-5 if in a big city).

Those two are not mutually compatible in the long-term.

Alfred , December 12, 2017 at 9:49 am

Thus (a) "We cost less" and (b) "We're more convenient" -- aren't those also the advantages that Walmart claims and feeds as a steady diet to its ever hungry consumers? Often if not always, disruption may repose upon delusion.

Martin Finnucane , December 12, 2017 at 11:06 am

Uber's business model could never produce sustainable profits unless it was able to exploit significant anti-competitive market power.

Upon that dependent clause hangs the future of capitalism, and – dare I say it? – its inevitable demise.

Altandmain , December 12, 2017 at 11:09 am

When this Uber madness blows up, I wonder if people will finally begin to discuss the brutal reality of Silicon Valley's so called "disruption".

It is heavily built in around the idea of economic exploitation. Uber drivers are often, especially when the true costs to operate an Uber including the vehicle depreciation are factored in, making not very much per hour driven, especially if they don't get the surge money.

Instacart is another example. They are paying the deliver operators very little.

Jim A. , December 12, 2017 at 12:21 pm

At a fundamental level, I think that the Silicon Valley "disruption" model only works for markets (like software) where the marginal cost for production is de minimus and the products can be protected by IP laws. Volume and market power really work in those cases. But out here in meat-space, where actual material and labor are big inputs to each item sold, you can never just sit back on your laurels and rake in the money. Somebody else will always be able to come and and make an equivalent product. If they can do it more cheaply, you are in trouble.

Altandmain , December 12, 2017 at 5:40 pm

There aren't that many areas in goods and services where the marginal costs are very low.

Software is actually quite unique in that regard, costing merely the bandwidth and permanent storage space to store.

Let's see:

1. From the article, they cannot go public and have limited ways to raise more money. An IPO with its more stringent disclosure requirements would expose them.

2. They tried lowering driver compensation and found that model unsustainable.

3. There are no benefits to expanding in terms of economies of scale.

From where I am standing, it looks like a lot of industries gave similar barriers. Silicon Valley is not going to be able to disrupt those.

Tesla, another Silicon Valley company seems to be struggling to mass produce its Model 3 and deliver an electric car that breaks even, is reliable, while disrupting the industry in the ways that Elon Musk attempted to hype up.

So that basically leaves services and manufacturing out for Silicon Valley disruption.

Joe Bentzel , December 12, 2017 at 2:19 pm

UBER has become a "too big to fail" startup because of all the different tentacles of capital from various Tier 1 VCs and investment bankers.

VCs have admitted openly that UBER is a subsidized business, meaning it's product is sold below market value, and the losses reflect that subsidization. The whole "2 sided platform" argument is just marketecture to hustle more investors. It's a form of service "dumping" that puts legacy businesses into bankruptcy. Back during the dotcom bubble one popular investment banker (Paul Deninger) characterized this model as "Terrorist Competition", i.e. coffers full of invested cash to commoditize the market and drive out competition.

UBER is an absolute disaster that has forked the startup model in Silicon Valley in order to drive total dependence on venture capital by founders. And its current diversification into "autonomous vehicles", food delivery, et al are simply more evidence that the company will never be profitable due to its whacky "blitzscaling" approach of layering on new "businesses" prior to achieving "fit" in its current one.

It's economic model has also metastasized into a form of startup cancer that is killing Silicon Valley as a "technology" innovator. Now it's all cargo cult marketing BS tied to "strategic capital".

UBER is the victory of venture capital and user subsidized startups over creativity by real entrepreneurs.

It's shadow is long and that's why this company should be ..wait for it UNBUNDLED (the new silicon valley word attached to that other BS religion called "disruption"). Call it a great unbundling and you can break up this monster corp any way you want.

Naked Capitalism is a great website.

Phil in KC , December 12, 2017 at 3:20 pm

1. I Agree with your last point.

2. The elevator pitch for Uber: subsidize rides to attract customers, put the competition out of business, and then enjoy an unregulated monopoly, all while exploiting economically ignorant drivers–ahem–"partners."

3. But more than one can play that game, and

4. Cab and livery companies are finding ways to survive!

Phil in KC , December 12, 2017 at 3:10 pm

If subsidizing rides is counted as an expense, (not being an accountant, I would guess it so), then whether the subsidy goes to the driver or the passenger, that would account for the ballooning expenses, to answer my own question. Otherwise, the overhead for operating what Uber describes as a tech company should be minimal: A billion should fund a decent headquarters with staff, plus field offices in, say, 100 U.S. cities. However, their global pretensions are probably burning cash like crazy. On top of that, I wonder what the exec compensation is like?

After reading HH's initial series, I made a crude, back-of-the-envelope calculation that Uber would run out of money sometime in the third fiscal quarter of 2018, but that was based on assuming losses were stabilizing in the range of 3 billion a year. Not so, according to the article. I think crunch time is rapidly approaching. If so, then SoftBank's tender offer may look quite appetizing to VC firms and to any Uber employee able to cash in their options. I think there is a way to make a re-envisioned Uber profitable, and with a more independent board, they may be able to restructure the company to show a pathway to profitability before the IPO. But time is running out.

A not insignificant question is the recruitment and retention of the front line "partners." It would seem to me that at some point, Uber will run out of economically ignorant drivers with good manners and nice cars. I would be very interested to know how many drivers give up Uber and other ride-sharing gigs once the 1099's start flying at the beginning of the year. One of the harsh realities of owning a business or being an contractor is the humble fact that you get paid LAST!

Jan Stickle , December 12, 2017 at 5:00 pm

We became instant Uber riders while spending holidays with relatives in San Diego. While their model is indeed unique from a rider perspective, it was the driver pool that fascinates me. These are not professional livery drivers, but rather freebooters of all stripes driving for various reasons. The remuneration they receive cannot possibly generate much income after expenses, never mind the problems associated with IRS filing as independent contractors.

One guy was just cruising listening to music; cooler to get paid for it than just sitting home! A young lady was babbling and gesticulating non stop about nothing coherent and appeared to be on some sort of stimulant. A foreign gentleman, very professional, drove for extra money when not at his regular job. He was the only one who had actually bought a new Prius for this gig, hoping to pay it off in two years.

This is indeed a brave new world. There was a period in Nicaragua just after the Contra war ended when citizens emerged from their homes and hit the streets in large numbers, desperately looking for income. Every car was a taxi and there was a bipedal mini Walmart at every city intersection as individuals sold everything and anything in a sort of euphoric optimism towards the future. Reality just hadn't caught up with them yet .

[Dec 12, 2017] The IMF and the WORLD BANK Puppets of the Neoliberal Onslaught

Dec 12, 2017 | www.mit.edu

Today, September 26, thousands of activists are protesting in Prague, in the Czech Republic, against the policies and institutional structures of the International Monetary Fund (IMF) and the World Bank. These protests are the latest action in a growing movement that is highly critical of the neoliberal economic policies being imposed on people all over the world, including those in western countries. As Robert McChesney concisely describes it, neoliberalism "refers to the policies and processes whereby a relative handful of private interests are permitted to control as much as possible of social life in order to maximize their personal profit." The major beneficiaries of neoliberalism are large trans-national corporations and wealthy investors. The implementation of neoliberal policies came into full force during the eighties under Thatcher and Reagan. Today, the principles of neoliberalism are widely held with near-religious fervor by most major political parties in the US and Britain and are gaining acceptance by those holding power elsewhere.

Although the proponents of neoliberalism extol the virtues of free markets, free trade, private enterprise and consumer choice, the effects of neoliberal policies is quite the opposite. In fact, these policies typically result in very protectionist markets dominated by a few trans-national corporations. Many sectors of the economy - ranging from food processing and distribution to the corporate media to aviation - are oligopolies and can be characterized as highly centralized command economies that are only a shade more competitive than the economy of the former Soviet Union. A major theme of neoliberal policies is deregulation and the removal of government interference in the economy. Consistently, such policies are applied in a one sided way, and always in a manner that benefits large trans-national corporations, the most influential entities in policy making. Hence, within neoliberalism as it is actually applied, capital is allowed to roam the world freely with very few restrictions, yet workers are to remain trapped within the borders of their countries. This serves trans-national corporations well, though for some, not well enough. According to Jack Welsh, CEO of GE, he and GE's shareholders would be best served if factories were on barges so that when workers demand higher wages and better working conditions, the barges could easily be moved to a country with more compliant workers. Another component of neoliberalism is the dismantling of the welfare state. Again, in practice, this policy is applied to the majority of the population, who have to accept cut backs in unemployment benefits and health care, while large corporations continue to receive massive subsidies and tax breaks.

The effects of neoliberal policies on people everywhere has been devastating. During the last two to three decades, wealth disparity has increased many fold within countries as well as between countries. In the US, inflation adjusted median wages are lower today than they were in 1973 (when median wages reached their peak) while the wealth of the top 1% of society has soared. One out of every five children in the US lives in a state of poverty characterized by continual hunger, insecurity and lack of adequate health care. This, after almost ten years of a record breaking economic boom. For the poorest people in the world, the situation has become even more desperate. John Gershman and Alec Irwin state in "Dying for growth":

    100 countries have undergone grave economic decline over the past three decades. Per capita income in these 100 countries is now lower than it was 10, 15, 20 or in some cases even 30 years ago. In Africa, the average household consumes 20 percent less today than it did 25 years ago. Worldwide, more than 1 billion people saw their real incomes fall during the period 1980-1993. Meanwhile, according to the United Nations Development Program's 1998 Human Development Report, the 15 richest people in the world enjoy combined assets that exceed the total annual gross domestic product of sub-Saharan Africa. At the end of the 1990's, the wealth of the three richest individuals on earth surpassed the combined annual GDP of the 48 least developed countries.

The Thistle won't waste ink on how the wealthy have fared since the mainstream corporate press does a very commendable job in this respect.

Neoliberalism has been a disaster for the environment as well. Despite the growing awareness in the late eighties that the rate of fossil fuel consumption at that time would cause global warming and many other forms of unpredictable and dangerous environmental changes, energy consumption has continued to increase at an alarming rate. This has been facilitated by neoliberal deregulation of environmental protections championed by corporate puppets such as Newt Gingrich and Tom Delay. In their continued quest for windfall profits, for example, corporations such as Ford and GM aggressively marketed (and continue to do so) highly polluting sports utility vehicles (SUVs) while ignoring cleaner and more efficient technologies. This was made possible by loop holes in environmental laws allowing SUVs to be sold that do not meet the emission standards imposed on passenger cars. Consumer Reports Magazine (Nov. pg. 54) noted in 1997, that "the growing popularity of SUVs, has helped make the 1997 automotive model year the least fuel-efficient in the last 16 years". Due to the subservience of government to large corporations, these loop holes are still in place. Today, the qualitative predictions of a decade ago are starting to manifesting themselves. The average temperature of the world has risen over the last decade and for the first time, water has been observed on the polar caps.

One industry that has benefited significantly from neoliberal policies is the biotech industry, though not without potentially catastrophic costs for the majority of the population. While large biotech corporations such as Monsanto and Dupont are aiming for massive profits, the environment and our food supply is irreversibly being altered in the process, creating a situation where large portions of the population and all future generations are subjected to potentially severe and unpredictable health risks. As a way to promote the nascent biotech industry, the Bush administration in the early nineties adopted a policy which held that regulations should not be created in such a way as to be a burden on the industry. The Clinton administration has continued this policy, and today approximately 60% of our food is genetically modified. This transformation of our food supply has occurred with scant public knowledge or oversight. And although genes from viruses, bacteria or arctic fish with anti-freeze properties are inserted into crops, the federal regulatory agencies, with heavy industry influence, maintain that genetically modified foods are no different from crops obtained with traditional breeding techniques and therefore do not need to be approved (unless the transported genes are known to induce a human allergen). Studies investigating the long term health and environmental effects of genetically modified crops are not required by any federal agency and are rarely performed. In this atmosphere of deregulation and concentrated corporate control, it is only a matter of time before a serious biological catastrophe occurs.

What does the IMF and World Bank have to do with this?

The IMF and World Bank were both created at the end of world war II in a political climate the is very different from that of today. Nevertheless, their roles and modalities have been suitably updated to serve the interests of those that benefit from neoliberalism. The institutional structures of the IMF and World Bank were framed at an international conference in Bretton Woods, New Hampshire. Initially, the primary focus of the IMF was to regulate currency exchange rates to facilitate orderly international trade and to be a lender of last resort when a member country experiences balance of payments difficulties and is unable to borrow money from other sources. The original purpose of the World Bank was to lend money to Western European governments to help them rebuild their countries after the war. In later years, the World Bank shifted its attention towards development loans to third world countries.

Immediately after world war II, most western countries, including the US, had 'New Deal' style social contracts with sufficient welfare provisions to ensure 'stability' between labor and capital. It was understood that restrictions on international capital flow were necessary to protect these social contracts. The postwar 'Bretton Woods' economic system which lasted until the early seventies, was based on the right and obligation of governments to regulate capital flow and was characterized by rapid economic growth. In the early seventies, the Nixon administration unilaterally abandoned the Bretton Woods system by dropping the gold standard and lifting restrictions on capital flows. The ensuing period has been marked by dramatically increased financial speculation and low growth rates.

Although seemingly neutral institutions, in practice, the IMF and World Bank end up serving powerful interests of western countries. At both institutions, the voting power of a given country is not measured by, for example, population, but by how much capital that country contributes to the institutions and by other political factors reflecting the power the country wields in the world. The G7 plays a dominant role in determining policy, with the US, France, Germany, Japan and Great Britain each having their own director on the institution's executive board while 19 other directors are elected by the rest of the approximately 150 member countries. The president of the World Bank is traditionally an American citizen and is chosen with US congressional involvement. The managing director of the IMF is traditionally a European. On the IMF board of governors, comprised of treasury secretaries, the G7 have a combined voting power of 46%.

The power of the IMF becomes clear when a country gets into financial trouble and needs funds to make payments on private loans. Before the IMF grants a loan, it imposes conditions on that country, requiring it to make structural changes in its economy. These conditions are called 'Structural Adjustment Programs' (SAPs) and are designed to increase money flow into the country by promoting exports so that the country can pay off its debts. Not surprisingly, in view of the dominance of the G7 in IMF policy making, the SAPs are highly neoliberal. The effective power of the IMF is often larger than that associated with the size of its loans because private lenders often deem a country credit-worthy based on actions of the IMF.

The World Bank plays a qualitatively different role than the IMF, but works tightly within the stringent SAP framework imposed by the IMF. It focuses on development loans for specific projects, such as the building of dams, roads, harbors etc that are considered necessary for 'economic growth' in a developing country. Since it is a multilateral institution, the World Bank is less likely than unilateral lending institutions such as the Export Import Bank of the US to offer loans for the purpose of promoting and subsidizing particular corporations. Nevertheless, the conceptions of growth and economic well being within the World Bank are very much molded by western corporate values and rarely take account of local cultural concerns. This is clearly exhibited by the modalities of its projects, such as the 'Green Revolution' in agriculture, heavily promoted in the third world by the World Bank in the sixties and seventies. The 'Green Revolution' refers to the massive industrialization of agriculture, involving the replacement of a multitude of indigenous crops with a few high-yielding varieties that require expensive investments of chemicals, fertilizers and machinery. In the third world, the 'Green Revolution' was often imposed on indigenous populations with reasonably sustainable and self sufficient traditions of rural agriculture. The mechanization of food production in third world countries, which have a large surplus labor pool, has led to the marginalization of many people, disconnecting them from the economy and exacerbating wealth disparity in these countries. Furthermore, excessive chemical agriculture has led to soil desertification and erosion, increasing the occurrence of famines. While the 'Green Revolution' was a catastrophe for the poor in third world countries, western chemical corporations such as Monsanto, Dow and Dupont fared very well, cashing in high profits and increasing their control over food production in third world countries.

Today, the World Bank is at it again. This time it is promoting the use of genetically modified seeds in the third world and works with governments to solidify patent laws which would grant biotech corporations like Monsanto unprecedented control over food production. The pattern is clear, whether deliberate or nor, the World Bank serves to set the stage for large trans-national corporations to enter third world countries, extract large profits and then leave with carnage in their wake.

While the World Bank publicly emphasizes that it aims to alleviate poverty in the world, imperialistic attitudes occasionally emerge from its leading figures. In 1991, then chief economist Lawrence Summers (now US Secretary of the Treasury) wrote in an internal memo that was leaked:

    Just between you and me, shouldn't the World Bank be encouraging more migration of the dirty industries to the LDCs [less developed countries]? ... The economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable, and we should face up to that ... Under-populated countries in Africa are vastly under-polluted; their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City .... The concern over an agent that causes a one-in-a-million chance in the odds of prostate cancer is obviously going to be much higher in a country where people survive to get prostate cancer than in a country where under-five mortality is 200 per thousand.

And thistle thought that the World Bank tried to extend lives in developing countries, not take advantage of low life expectancy.

How do countries get into financial troubles, the Debt Crisis.

The most devastating program imposed by the IMF and the World Bank on third world countries are the Structural Adjustment Programs. The widespread use of SAPs started in the early eighties after a major debt crisis. The debt crisis arose from a combination of (i) reckless lending by western commercial banks to third world countries, (ii) mismanagement within third world countries and (iii) changes in the international economy.

During the seventies, rising oil prices generated enormous profits for petrochemical corporations. These profits ended up in large commercial banks which then sought to reinvest the capital. Much of this capital was invested in the form of high risk loans to third world countries, many of which were run by corrupt dictators. Instead of investing the capital in productive projects that would benefit the general population, dictators often diverted the funds to personal Swiss bank accounts or used the them to purchase military equipment for domestic repression. This state of affairs persisted for a while, since commodity prices remained stable and interest rates were relatively low enabling third world countries to adequately service their debts. In 1979, the situation changed, however, when Paul Volker, the new Federal Reserve Chairman, raised interest rates. This dramatically increased the cost of debtor countries' loans. At the same time, the US was heading into a recession and world commodity prices dropped, tightening cash flows necessary for debt payment. The possibility that many third world countries would default on their debt payments threatened a major financial crisis that would result in large commercial bank failures. To prevent this, powerful countries from the G7 stepped in and actively used the IMF and World Bank to bail out third world countries. Yet the bail-out packages were contingent upon the third world countries introducing major neoliberal policies (i.e. SAPs) to promote exports.

Examples of SAP prescriptions include:

    - an increase in 'labor flexibility' which means caps on minimum wages, and policies to weaken trade unions and worker's bargaining power.
    - tax increases combined with cuts in social spending such as education and health care, to free up funds for debt repayment.
    - privatization of public sector enterprises, such as utility companies and public transport
    - financial liberalization designed to remove restrictions on the flow of international capital in and out of the country coupled with the removal of restrictions on what foreign corporations and banks can buy.

    Despite almost two decades of Structural Adjustment Programs, many third world countries have not been able to pull themselves out of massive debt. The SAPs have, however, served corporations superbly, offering them new opportunities to exploit workers and natural resources.

    As Prof. Chomsky often says, the debt crisis is an ideological construct. In a true capitalist society, the third world debt would be wiped out. The Banks who made the risky loans would have to accept the losses, and the dictators and their entourage would have to repay the money they embezzled. The power structure in society however, prevents this from happening. In the west tax payers end up assuming the risk while the large banks run off with the high profits often derived from high risk loans. In the third world, the people end up paying the costs while their elites retire in the French Riviera.

    It is important to realize that the IMF and World Bank are tools for powerful entities in society such as trans-national corporations and wealthy investors. The Thistle believes that massive world poverty and environmental destruction is the result of the appalling concentration of power in the hands of a small minority whose sights are blinded by dollar signs and whose passions are the aggrandizement of ever more power. The Thistle holds that an equitable and democratic world centered around cooperation and solidarity would be more able to deal with environmental and human crises.

[Dec 12, 2017] Henry Giroux on Resisting the Neoliberal Revolution

Notable quotes:
"... Moreover, Lofgren needs to say more about a growing culture of cruelty brought about by the death of concessions in politics -- a politics now governed by the ultra-rich and mega corporations that has no allegiance to local politics and produces a culture infused with a self-righteous coldness that takes delight in the suffering of others. Power is now separated from politics and floats, unchecked and uncaring. ..."
"... Neoliberalism is a new form of hybrid global financial authoritarianism. It is connected to the Deep State and marked by its savage willingness in the name of accumulation, privatization, deregulation, dispossession and power to make disposable a wide range of groups extending from low income youth and poor minorities to elements of the middle class that have lost jobs, social protections and hope. ..."
Dec 12, 2017 | billmoyers.com

The notion of the "Deep State" as outlined by Mike Lofgren may be useful in pointing to a new configuration of power in the US in which corporate sovereignty replaces political sovereignty, but it is not enough to simply expose the hidden institutions and structures of power.

... ... ...

Moreover, Lofgren needs to say more about a growing culture of cruelty brought about by the death of concessions in politics -- a politics now governed by the ultra-rich and mega corporations that has no allegiance to local politics and produces a culture infused with a self-righteous coldness that takes delight in the suffering of others. Power is now separated from politics and floats, unchecked and uncaring.

This is a revolution in which the welfare state is being liquidated, along with the collective provisions that supported it. It is a revolution in which economics drives politics. Neoliberalism is a new form of hybrid global financial authoritarianism. It is connected to the Deep State and marked by its savage willingness in the name of accumulation, privatization, deregulation, dispossession and power to make disposable a wide range of groups extending from low income youth and poor minorities to elements of the middle class that have lost jobs, social protections and hope.

Then, there is the central question, how does the Deep State function to encourage particular types of individualistic, competitive, acquisitive and entrepreneurial behavior in its citizens?

The biggest problem facing the US may not be its repressive institutions, modes of governance and the militarization of everyday life, but the interiority of neoliberal nihilism, the hatred of democratic relations and the embrace of a culture of cruelty. The role of culture as an educative force, a new and powerful force in politics is central here and is vastly underplayed in the essay (which of course cannot include everything). For instance, in what ways does the Deep State use the major cultural apparatuses to convince people that there is no alternative to existing relations of power, that consumerism is the ultimate mark of citizenship and that making money is the essence of individual and social responsibility?

In other words, there is no theory of cultural domination here, no understanding of how identities, subjectivities and values are shaped in the narrow and selfish image of commerce, how exchange values are the only values. In my estimation, the Deep State is symptomatic of something more ominous, the rise of a new form of authoritarianism, a counter-revolution in which society is being restructured and advanced under what might be called the neoliberal revolution. This is a revolution in which the welfare state is being liquidated, along with the collective provisions that supported it. It is a revolution in which economics drives politics.

... ... ...

[Dec 12, 2017] The neoliberal revolution by Sean Michael Butler

Notable quotes:
"... Copyright Sean Butler 2006 ..."
"... Written for an Intro to Political Economy class at Carleton University in 2006 ..."
Dec 12, 2017 | seanmichaelbutler.wordpress.com

For 25 years following the end of the Second World War, the global economy experienced an unprecedented period of sustained growth. In the industrialized world, millions of people joined the ranks of the middle class, and wealth inequality sunk to historic lows. After decades of strife, labour and capital reached a relative ceasefire, and a mixed economy of governmental macroeconomic guidance combined with private microeconomic initiative emerged. Capital was able to make healthy profits, while much of the rising productivity of labour was passed on in the form of higher wages. Governments made full employment a priority, and increasingly accepted the responsibility of providing for the poor and disadvantaged. By the late 1960s, governments were seriously considering implementing a basic income (also known as a guaranteed annual income) and many policymakers thought that our biggest problem in another 20 years would be what to do with all our free time once the work week had been significantly reduced.

This exuberant economic attitude was arguably reflected in the radical social experimentation and revolution that emanated from universities now accessible to the majority, and in the various movements for liberty and social justice erupting worldwide. For many, all this social and economic optimism had one man to thank: the British political economist John Maynard Keynes, who had emerged from the academic wilderness in the 1930s to play a leading role in the design of the post-war economy at Bretton Woods, and whose focus on the counter-cyclical stimulus of aggregate demand became the lynchpin of governmental economic policy in subsequent decades. "There was a broad body of optimism that the 1950s and 1960s were the product of Keynesian economic engineering. Indeed, there was no reason why the prosperity of the international economy should not continue as long as appropriate Keynesian policies were pursued " In 1971, even the conservative US president Richard Nixon would famously proclaim, "We are all Keynesians now." The triumph of Keynesianism seemed complete.

Yet shortly after Nixon uttered these words, it all fell apart. That same year, Nixon ended the era of dollar to gold convertibility, a move that many see as the beginning of the end for the great post-war compromise between capital and labour.

Three years later, in the face of the first oil embargo and other pressures, the economy nose-dived into the worst recession since the Great Depression, never to rebound to earlier levels. Worse still, the theoretical underpinnings of Keynesianism were called into question by the simultaneous appearance of high inflation and high unemployment – a new phenomenon dubbed "stagflation". While Keynesianism floundered for an explanation, new theories stepped into the breach; monetarism and supply-side economics were the two most popular. While these new theories had distinctive approaches, both shared the belief that big government – namely Keynesianism – was the problem, and that the solution to stagflation was to restrict government intervention in the economy to a strict inflation-fighting monetary policy (in the case of monetarism) or to cut taxes to stimulate private investment (in the case of the supply-siders). This move away from government intervention and the welfare state, and towards more emphasis on an unfettered market, can been summed up by the term "neoliberalism". As the 1970s ran their course, neoliberalism gradually took over from Keynesianism as the reigning economic orthodoxy, to be consummated in the Anglo-Saxon world by the elections of Margaret Thatcher in the UK in 1979, Ronald Reagan in the US in 1980, and Brian Mulroney in Canada in 1984.

The story told by the victors of this ideological battle – the neoliberals – is that Keynesianism, despite its apparent success for 25 years, was in the end responsible for the constellation of economic crises that descended on the industrialized countries during the 1970s, and that neoliberalism was the remedy. The shift from Keynesianism to neoliberalism was, according to this story, the only rational option in the face of stagflation; as Thatcher crisply remarked at the time, "There is no alternative."

I will call into question this story, by first examining the causes of the 1970s economic malaise, and then looking at what interests were behind the promotion of neoliberalism as a solution, how it gained political power, and how it was disseminated around the world. I will fashion an alternate narrative, one in which Keynesianism was not to blame for stagflation, in which the economic crises of the 1970s put the compromise between capital and labour under severe strain and ultimately broke it, in which the capitalist class went on the offensive partly because it feared for its very survival, and in which this class achieved its ends by forming an alliance with social conservatives equally fearful in the face of the 1960s counter-cultural revolution. The protagonist of this story will be the United States; as the capitalist world's superpower, it was largely responsible for the crisis of the 1970s, it suffered the worst from it, and it led the way down the new path of neoliberalism.

THE FALL OF KEYNESIANISM

As one of the principle fathers of neoliberalism, the economist Milton Friedman's indictment of Keynesianism is of special relevance, for it is emblematic of the neoliberal attempt to – quite successfully – pin the blame for chronic recession squarely on Keynesian shoulders. Briefly, Friedman theorized that there was a so-called "natural" rate of unemployment, which persisted in the long-term despite governmental attempts to stimulate demand through spending. Running a budget deficit to pump money into the economy might bring down the unemployment rate in the short term, he thought, but in the long run it would only create inflation, while unemployment would inevitably return to its natural rate – now higher because of the inflation. He essentially argued that fiscal policy was useless – even damaging – and that if governments wanted to bring down the natural rate of unemployment, they should focus on keeping inflation low through monetary policy, while loosening restrictions on markets so that, for instance, wage levels could find their equilibrium point. This explanation for the stagflation encountered in the 1970s proved quite convincing to many searching for answers to the predicament, as well as enormously appealing to those who had always wished for a return to unfettered markets, and played a key role in justifying the switch from Keynesianism to neoliberalism, in its guise of monetarism.

How realistic is this account? Certainly, deficit financing played an important role in the soaring inflation of the 1970s, but was this solely the result of spending on social programs, such as under president Lyndon Johnson's Great Society initiative, or were there other causes for deficit spending? The Vietnam War, combined with Johnson's unwillingness to raise taxes in the face of rising war expenditures, caused the US Federal Reserve to print large amounts of new dollars. Military spending is often seen as the most inflationary form of government spending, because it puts new money into the economy without a corresponding increase in output. The US had some leeway to get away with this rapid increase in the money supply, since the dollar was the international reserve currency, but there was a limit to this, and the explosive inflation of the 1970s was the result.

It must be noted that the US proved a dismal failure in its short-lived role as manager of the world's monetary system. At Bretton Woods, it had been entrusted with the task of maintaining a sound monetary system, through the gold exchange standard, just as Britain had previously. Britain, being a trading nation, had had a strong interest in maintaining a sound international monetary system, and had been effective (some would say too effective) at maintaining it. The United States, on the other hand, traded much less, and consequentially took its responsibilities much less seriously. It is easy to speculate about the justification made by US officials as they printed irresponsible amounts money to pay for their war in Vietnam: they surely saw themselves as defending the free world against the tyranny of communism, a cause for which a little monetary instability, shouldered by the "free world" in general, was a small price to pay.

The first cracks in the system started to show during the series of currency crises that struck in the late 1960s. By the end of the decade, the dollars held outside the US were worth eight times as much as the US had in gold reserves. In 1971, rather than saving the system by devaluing the dollar, and fearing a run on US gold, Nixon ended the gold exchange standard. The US had abused its power of seigniorage (as monarchs before had), but wouldn't escape without paying a price.

The result was more inflation, as the dollar, now cut loose from the Bretton Woods standard of $35 per ounce of gold, shed its inflated value. The lower dollar also raised the cost of imports to the US consumer, further fueling domestic inflation. (The end of dollar convertibility also brought with it more far-reaching consequences. The fixed exchange rates of the 1950s and 60s were incompatible with free flows of capital. Yet taking the dollar off gold led directly to floating exchange rates, which in turn paved the way for freer flows of capital between countries. This development would later aid greatly in the furtherance of the neoliberal agenda.)

As if these developments were not inflationary enough, the Yom Kippur War of October 1973 led OPEC to restrict oil exports to Israel's allies, quadrupling oil prices virtually overnight. Yet this was inflation of a different nature than the kind that had been building up in the 1960s; rather than being linked to excess demand and an overheated economy, it was driven by increases in costs on the supply side and brought with it recessionary pressures. An increase in the price of oil, being fundamental to so much of the economy, is "similar to the imposition of a substantial sales tax. The price of the product goes up and consumers have less income available to spend on other goods and services. The result is a bout of inflation, at least temporarily, and sluggish economic expansion if not recession." This goes a long way towards explaining the supposedly impossible coincidence of high inflation with high unemployment.

Yet there were other factors that also contributed to the so-called "misery index" (inflation rate plus unemployment rate). The most basic of these was that governments tried repeatedly to beat inflation by attacking perceived excess demand through restrictive monetary and fiscal policies; when Nixon tried this strategy in 1970, it resulted in recession. His successor, Gerald Ford, tried the same approach in 1974 – despite the fact that inflation at that point was not being driven by excess demand, but by high costs on the supple side (namely oil). Thus, poor governmental reaction to inflation caused recession and rising unemployment, while failing to master inflation.

Another factor contributing to the slow-down of growth in the US economy was the end of the privileged position it enjoyed as the only power to emerge from the Second World War relatively unscathed. As Germany and Japan laboured to reconstruct their war-ravaged economies, the US faced little competition. Yet by the end of the 1960s, the old Axis powers, now recast as capitalist democracies but still economic powerhouses, were flexing their economic muscles again. This, combined with increasing competition from newly industrialized countries in East Asia and from other developing countries, cut into the robust economic growth the US had enjoyed for two decades previously.

To sum up, inflation caused by first the Vietnam War and later the oil embargo (itself the result of war in the Mideast), coupled with increasing competition to US business internationally, along with the shock of the collapse of the Bretton Woods framework, were the major factors that combined to create the "perfect storm" known as stagflation:

the stage was set for the deepest recession since the 1930s. The long period of post-war expansion had at last come to an end; America and world capitalism entered a new phase of turbulence which, amongst other things, threw economic policy and economics as a theory into a state of flux.

AND THE RISE OF NEOLIBERALISM

In the previous section, I outlined the confluence of factors that led to the crisis of stagflation in the 1970s. In the following section, I will describe the reaction to this crisis – the how and why of neoliberalism's triumph as the new economic orthodoxy.

Different authors ascribe to different points in time when the balance decisively shifted from Keynesianism to neoliberalism – some place the tipping point as early as the latter half of the 1960s, others as late as the ascendancy of Thatcher and Reagan – but the midway year 1974 seems as good as any. It was in this year that Gerald Ford came to the White House with the slogan, "Whip Inflation Now" (WIN), declaring that inflation was public enemy number one and that reduction in government spending was the chief means to that end. It was also in this year that inflation peaked (at 11% – although it would later be surpassed by a second peak of 13.5% in 1980), and that the "perfect storm" that had been building for years, catalyzed by the energy crisis, finally unleashed its full fury on the economy. In declaring war on inflation, Ford broke with the Keynesian bias of giving precedence to full employment; whereas before inflation had been a tool to control unemployment, now unemployment was to be used as a tool to control inflation:

The choice seemed to be stark: accept some inflation as the price of expansion and adapt business and accounting practices accordingly, or pursue a firm deflationary policy even if that meant accepting a higher level of unemployment than had been customary since the Second World War.

In choosing the latter, Ford shattered the fragile compromise between labour and capital and, favouring capital, took America on its first real steps towards neoliberalism.

Yet, as the crisis had gathered steam in the early 1970s, it was by no means clear which way the winds would blow. It was well remembered that the last major economic crisis, in the 1930s, had resulted in the socialist policies of the New Deal, and indeed in the 1970s labour again called for more governmental intervention as the solution to the crisis. Capital, meanwhile, as it suffered from reduced profits due to increased competition abroad and recession at home, also saw the crisis as both an opportunity to advance its interests and as a threat to its interests from an increasingly militant labour. "The upper classes had to move decisively if they were to protect themselves from political and economic annihilation." The ceasefire between labour and capital had held when times were good, but as soon as conditions started to sour, both sides went on the offensive. It was to be one or the other.

Sensing both the opportunity and the threat presented by the crisis, the capitalist class put aside its differences and united against the common enemy of labour. The 1970s marked the beginning of the right-wing think tank, with corporate dollars founding such now well-known beacons of neoliberal thought as the Heritage Foundation, the Hoover Institute, and the American Enterprise Institute. Lobbying efforts, though such umbrella organizations as the American Chamber of Commerce, the National Association of Manufacturers, and the Business Roundtable (a group of CEOs founded in 1972), were massively ramped up; business schools at Stanford and Harvard, established through corporation benefaction, " became centres of neoliberal orthodoxy from the very moment they opened" ; and "the supposedly 'progressive' campaign finance laws of 1971 [that] in effect legalized the financial corruption of politics," were followed by a series of Supreme Court decisions that established the right of corporations to make unlimited donations to political parties. "During the 1970s, the political wing of the nation's corporate sector staged one of the most remarkable campaigns in the pursuit of power in recent history."

The ideology adopted by capital during this remarkable drive to win the minds of the political leadership " had long been lurking in the wings of public policy." It emanated largely from the writings of the Austrian economist Friedrich von Hayek, around whom a collection of admirers (including Milton Friedman) called the Mont Pelerin Society had formed in 1947. This group's ideas became known as neoliberalism because of its adherence to such neoclassical economists of the latter half of the 19th Century as Alfred Marshall, William Stanley Jevons, and Leon Walras. Hayek had argued presciently that it might take a generation before they could win the battle of ideas; by the time he won the Nobel Prize for economics in 1974, followed by Friedman two years later, victory was indeed close at hand.

Why did capital " [pluck] from the shadows of relative obscurity [this] particular doctrine that went under the name of 'neoliberalism' "? Was it to save the world from the ravages of Keynesian stagnation and to free people from the heavy hand of bloated government? This was certainly part of the rhetoric used to sell neoliberalism to the public, but one need only look at who benefited from neoliberalism to get a strong sense of whose interests it really served. It was eventually quite successful in lowering inflation rates, and moderately successful in lowering unemployment, but failed to revive economic growth to pre-1970s levels; meanwhile, it resulted in levels of wealth inequality not seen since the 1920s in the US, stagnating real wages, and a decreased quality of life for those reliant on government services. Alan Budd, Thatcher's economic advisor, was candid about the real motives behind the neoliberal rhetoric when he said, "The 1980s policies of attacking inflation by squeezing the economy and public spending were a cover to bash the workers." Neoliberalism was capital's way of disciplining labour through unemployment, creating what Marx called an "industrial reserve army" that would break unions and drag wages down. Reagan facing down the air traffic controller's union, PATCO, during a bitter strike in 1981, paralleled across the Atlantic by Thatcher's similarly tough stance with the National Union of Mineworkers' year-long strike in 1984-85, was emblematic of the new hostile approach to labour reintroduced to state policy by neoliberalism. In short, neoliberalism was driven by class interests; it was the vehicle best suited " to restor[ing] the power of economic elites." The true point of neoliberalism is revealed by the fact that whenever the dictates of neoliberal theory conflicted with the interests of the capitalist class, such as when it came to running massive budgetary deficits to pay for military spending during peacetime, neoliberalism was discarded in favour of the interests of capital.

Before neoliberalism came to roost in the White House, however, there were several experiments conducted in the periphery. It is revealing to note that the first nationwide imposition of neoliberalism occurred under conditions of tyranny: Augusto Pinochet's Chile; it is likewise fitting that neoliberalism drove from Chile its antithesis, the communism of Salvador Allende, and that it was imposed through a US-backed coup. After the coup in 1973, Chile became a field school for graduates from the economics department of the University of Chicago, where disciples of Milton Friedman, who taught there, had formed their own monetarist/neoliberal school of thought. These economists attempted to remake the Chilean economy into the ideal neoliberal state (in the same way that US neoliberals are currently attempting in Iraq), a transformation that likely would not have been possible without the Chilean military ensuring a compliant labour. Despite lackluster economic results (particularly after the 1982 debt crisis in Latin America), Chile served as a model to neoliberals who wanted the rich countries to follow the same path.

There was another coup, of sorts – less known and less violent – that occurred in New York City in 1975. In that year, the city went bankrupt, and the subsequent bailout came with strict conditions attached, including budgetary rules and other institutional restructuring. "This amounted to a coup by the financial institutions against the democratically elected government of New York City, and it was every bit as effective as the military coup that had occurred in Chile." It was "an early, perhaps decisive battle in a new war," the purpose of which was "to show others that what is happening to New York could and in some cases would happen to them." "The management of the New York fiscal crisis pioneered the way for neoliberal practices both domestically under Reagan and internationally through the IMF in the 1980s."

While coups, either military or financial, were possible against developing countries and municipalities, neoliberalism would have to gain dominance in the US federal government through slightly more democratic means. As noted earlier, the intense drive to power through lobbying, think tanks, and academia convinced many in the elite of the virtues of neoliberalism, but ultimately this ideology would have to sway masses of people to actually vote in favour of it. In order to secure the broad base of support necessary to win elections, neoliberals formed an alliance in the 1970s with the religious right (a move that has forever since confused the terms "liberal" and "conservative"). While this significant segment of the American population had previously been largely apolitical, the counter-cultural revolution of the late 1960s and early 1970s provoked many of these "neoconservatives" to enter the political arena to oppose the perceived moral corruption of American society – a movement that came to fruition with preacher Jerry Fallwell's so-called "moral majority" in 1978. While neoliberals and neoconservatives may seem like strange bedfellows, the coalition was likely facilitated by religious fundamentalists' relative indifference towards the material, economic world; according to their extremist Christian worldview, their material interests in this world would be well worth sacrificing to secure the spiritual interests of their nation in the next world. Furthermore, both religious and economic fundamentalists must have found a comforting familiarity in each other's simplistic extremism (the "invisible hand" of the neoliberals' free market is eerily similar to the Christians' God in its omnipotence, omnipresence, and inscrutability).

The Republican Party gathered under its banner these religious reactionaries, as well as those non-religious (largely white, heterosexual, male, and working-class) who simply feared the growing liberation of blacks, gays, and women, and who felt threatened by affirmative action, the emerging welfare state, and the Soviet Union. "Not for the first time, nor, it is to be feared, for the last time in history had a social group been persuaded to vote against its material, economic, and class interests for cultural, nationalist, and religious reasons." It was this alliance of social fear and economic opportunism that swept arch-neoliberal Ronald Reagan to the White House in 1980 – " a turning point in post-war American economic and social history." After a decade-long campaign, the neoliberals had come to Washington.

Of course, the crusade to reshape society along neoliberal ideals was far from won; Reagan faced a Democratic Congress, and was often forced to govern more pragmatically than ideologically when his supply-side policies failed. As Margaret Thatcher said, "Economics are the method, but the object is to change the soul," and it takes time to change people's souls.

There was also still a whole world to convert to the gospel of market liberalization. The crisis of stagflation that had opened the door to neoliberal ideas in the US had also created financial incentives for the dissemination of neoliberalism to other countries. With the impact of the first oil crisis flooding New York investment banks with petrodollars, and a depressed economy at home offering fewer places to spend them, the banks poured the money into developing countries. This created pressure on the US government to pry open new markets for investment, as well as to protect the growing investments overseas – helping to bring US-bred neoliberalism to foreign shores.

Yet these pressures were only a taste of what was to come; after the Iranian revolution in 1979 caused oil prices to suddenly double, inflation in the US returned with a vengeance. This in turn led the US Federal Reserve, under its new neoliberal-minded chairman Paul Volcker, to drastically raise interest rates. This "Volcker shock", resulting in nominal interest rates close to 20% by 1981, coming on the heels of the profligate lending of petrodollars during the 1970s, played a major part in the debt crisis that descended on the developing world during the 1980s. As countries defaulted on their debts, they were driven into the arms of the International Monetary Fund (IMF), which, after what economist Joseph Stiglitz described as a "purge" of Keynesians in 1982, became a center " for the propagation and enforcement of 'free market fundamentalism' and neoliberal orthodoxy." Mexico, after its debt default of 1982-84, became one of the first countries to submit to neoliberal reforms in exchange for debt rescheduling, thus " beginning the long era of structural adjustment."

Many of the IMF economists who designed these Structural Adjustment Programs (SAPs), as well as those who staffed the World Bank and the finance departments of many developing countries, were trained at the top US research universities, which by 1990 were dominated by neoliberal ideas – providing yet another avenue by which neoliberalism spread from the US to other parts of the world. By the mid-1990s, the process of neoliberal market liberalization (under the supervision of the World Trade Organization (WTO)) came to be known as the "Washington Consensus", in recognition of the origins of this ideological revolution.

THE REVOLUTION CONTINUES

Some authors have called neoliberalism the antithesis to Keynesianism , yet its real opposite is communism; Keynesianism represented a compromise between the two – a middle way. Yet this fragile balance did not survive the economic crucible of the 1970s. Neoliberalism's strategic political alliance with neoconservatism can be seen as a natural reaction to the rapid changes that had unfolded during the 1950s and 60s in both the US economy (with the growth of the welfare state) and society (with the rise of the counter-cultural revolution); at the same time, it can also be seen as an opportunist power grab by the capitalist class during a period of uncertainty about the foundations of the old order. The fear of communism – captured succinctly in the title of Hayek's famous work, The Road to Serfdom – drove neoliberals to the opposite extreme: the belief in the superiority of the unfettered marketplace as the guiding principle to human civilization. Neoliberalism, therefore, represents an extremist ideology that, if carried through to its end, will likely end up being as destructive to the societies it touches as extremist socialism was to the former Soviet bloc.

Although the neoliberal revolution is still winning many political battles, such as the growing attack on Medicare in Canada or on Social Security in the United States, evidence of an emerging counter-movement (such as the poorly named "anti-globalization movement" – anti-neoliberalization would be more apt) is growing. As Karl Polanyi described in his classic, The Great Transformation, the industrialization and economic liberalization of the 19th Century resulted in a reaction from society for more governmental intervention to protect people and communities from the destructive effects of unfettered markets. It is highly likely that we are now witnessing the first stages of a similar reaction to the latest round of rapid technological change and market liberalization. Hopefully, this reaction will lead to a society that better balances capitalism's creative destruction with the needs of humans and their communities for continuity and security.

Copyright Sean Butler 2006

Written for an Intro to Political Economy class at Carleton University in 2006

[Dec 12, 2017] The end of neoliberalism

Dec 12, 2017 | www.weforum.org

World Economic Forum

A similar trend can be seen at the organizational level. A recent study by Erling Bath, Alex Bryson, James Davis, and Richard Freeman showed that the diffusion of individual pay since the 1970s is associated with pay differences between, not within, companies. The Stanford economists Nicholas Bloom and David Price confirmed this finding, and argue that virtually the entire increase in income inequality in the US is rooted in the growing gap in average wages paid by firms. Such outcomes are the result not just of inevitable structural shifts, but also of decisions about how to handle those shifts. In the late 1970s, as neoliberalism took hold, policymakers became less concerned about big firms converting profits into political influence, and instead worried that governments were protecting uncompetitive companies. With this in mind, policymakers began to dismantle the economic rules and regulations that had been implemented after the Great Depression, and encouraged vertical and horizontal mergers. These decisions played a major role in enabling a new wave of globalization, which increasingly diffused growth and wealth across countries, but also laid the groundwork for the concentration of income and wealth within countries. The growing "platform economy" is a case in point. In China, the e-commerce giant Alibaba is leading a massive effort to connect rural areas to national and global markets, including through its consumer-to-consumer platform Taobao. That effort entails substantial diffusion: in more than 1,000 rural Chinese communities – so-called " Taobao Villages " – over 10% of the population now makes a living by selling products on Taobao. But, as Alibaba helps to build an inclusive economy comprising millions of mini-multinationals, it is also expanding its own market power. Policymakers now need a new approach that resists excessive concentration, which may create efficiency gains, but also allows firms to hoard profits and invest less. Of course, Joseph Schumpeter famously argued that one need not worry too much about monopoly rents, because competition would quickly erase the advantage. But corporate performance in recent decades paints a different picture: 80% of the firms that made a return of 25% or more in 2003 were still doing so ten years later. (In the 1990s, that share stood at about 50% .) Have you read? To counter such concentration, policymakers should, first, implement smarter competition laws that focus not only on market share or pricing power, but also on the many forms of rent extraction, from copyright and patent rules that allow incumbents to cash in on old discoveries to the misuse of network centrality. The question is not "how big is too big," but how to differentiate between "good" and "bad" bigness. The answer hinges on the balance businesses strike between value capture and creation. Moreover, policymakers need to make it easier for startups to scale up. A vibrant entrepreneurial ecosystem remains the most effective antidote to rent extraction. Digital ledger technologies, for instance, have the potential to curb the power of large oligopolies more effectively than heavy-handed policy interventions. Yet economies must not rely on markets alone to bring about the "churn" that capitalism so badly needs. Indeed, even as policymakers pay lip service to entrepreneurship, the number of startups has declined in many advanced economies. Finally, policymakers must move beyond the neoliberal conceit that those who work hard and play by the rules are those who will rise. After all, the flipside of that perspective, which rests on a fundamental belief in the equalizing effect of the market, is what Michael Sandel calls our " meritocratic hubris ": the misguided idea that success (and failure) is up to us alone. This implies that investments in education and skills training, while necessary, will not be sufficient to reduce inequality. Policies that tackle structural biases head-on – from minimum wages to, potentially, universal basic income schemes – are also needed. Neoliberal economics has reached a breaking point, causing the traditional left-right political divide to be replaced by a different split: between those seeking forms of growth that are less inclined toward extreme concentration and those who want to end concentration by closing open markets and societies. Both sides challenge the old orthodoxies; but while one seeks to remove the "neo" from neoliberalism, the other seeks to dismantle liberalism altogether. The neoliberal age had its day. It is time to define what comes next.

[Dec 12, 2017] Thoughts on Neoconservatism and Neoliberalism by Hugh

Highly recommended!
Notable quotes:
"... I got to thinking today about how neocon and neoliberal are becoming interchangeable terms. ..."
"... As neoconservatism developed, that is with Iraq and Afghanistan, the neocons even came to embrace nation building which had always been anathema to traditional conservatism. Neocons sold this primarily by casting nation building in military terms, the creation and training of police and security forces in the target country. ..."
"... 9/11 too was critical. It vastly increased the scope of the neocon project in spawning the Global War on Terror. It increased the stage of neocon operations to the entire planet. ..."
"... Politically, neoconservatism has become the bipartisan foreign policy consensus. Democrats are every bit as neocon in their views as Republicans. Only a few libertarians on the right and progressives on the left reject it. ..."
"... The roots of neoliberalism are the roots of kleptocracy. Both begin under Carter. Neoliberalism also known at various times and places as the Washington Consensus (under Clinton) and the Chicago School is the political expression for public consumption of the kleptocratic economic philosophy, just as libertarian and neoclassical economics (both fresh and salt water varieties) are its academic and governmental face. The central tenets of neoliberalism are deregulation, free markets, and free trade. If neoliberalism had a prophet or a patron saint, it was Milton Friedman. ..."
"... Again just as neoconservatism and kleptocracy or bipartisan so too is neoliberalism. There really is no daylight between Reaganism/supply side economics/trickledown on the Republican side and Clinton's Washington Consensus or Team Obama on the other. ..."
"... The distinctions between neoconservatism and neoliberalism are being increasingly lost, perhaps because most of our political classes are practitioners of both. ..."
"... At the same time, neoliberalism went from domestic to global, and here I am not just thinking about neoliberal experiments, like Pinochet's Chile or post-Soviet Russia, but the financialization of the world economy and the adoption of kleptocracy as the world economic model. ..."
"... I'm now under the opinion that you can't talk about any of the "neo-isms" without talking about the corporate state. ..."
"... With neocons, it manifests itself through the military-industrial complex (Boeing, Raytheon, etc.), and with neolibs it manifests itself through finance and industrial policy. ..."
"... But each leg has two components, a statist component and a corporate component. ..."
"... It also explains why economic/financial interests (neolib) are now considered national security interests (neocon). The viability of the state is now tied to the viability of the corporation. ..."
"... Corporate/statist (not sure "corporate" captures the looting/rentier aspect though). We see it everywhere, for example in the revolving door. ..."
"... I think you could also make the argument that Obama is perhaps the most ideal combination of neolib & neocon. ..."
"... A reading of the classical liberal economists puts some breaks on the markets, corporations, etc. Neoliberalism goes to the illogical extremes of market theory and iirc, has some influence from the Austrian school ... which gives up on any pretense of scientific exposition of economics or rationality at the micro level, assuming that irrationality will magically become rational behavior in aggregate. ..."
"... Therefore, US conservatives post Eisenhower but especially post Reagan are almost certainly economic neoliberals. Since Clinton, liberals/Democrats have been too (at least the elected ones). You nailed neoconservative and both parties are in foreign policy since at least Clinton ... though here lets not forget to go back as far as JFK and his extreme anti-Communism that led to all sorts of covert operations, The Bay of Pigs, Vietnam, and the Cuban Missile Crisis. Remember, the Soviets put the missiles in Cuba because we put missiles in Turkey and they backed down from Cuba because we agreed to remove the missiles from Turkey; Nikita was nice enough not to talk about that so that Kennedy didn't lose face. ..."
"... Perhaps it should be pointed out that the Clintons became fabulously wealthy just after Bill left office, mostly on the strength of his speaking engagements for the financial sector that he'd just deregulated. ..."
"... The unfortunate fact of the matter is that at that level of politics, the levers of money and power work equally well on both party's nomenklatura. They flock to it like moths to porch light. ..."
"... "Don't believe them, don't fear them, don't ask anything of them" - Aleksandr Solzhenitsyn ..."
Aug 19, 2012 | Corrente

I got to thinking today about how neocon and neoliberal are becoming interchangeable terms. They did not start out that way. My understanding is they are ways of rationalizing breaks with traditional conservatism and liberalism. Standard conservatism was fairly isolationist. Conservatism's embrace of the Cold War put it at odds with this tendency. This was partially resolved by accepting the Cold War as a military necessity despite its international commitments but limiting civilian programs like foreign aid outside this context and rejecting the concept of nation building altogether.

With the end of the Cold War conservative internationalism needed a new rationale, and this was supplied by the neoconservatives. They advocated the adoption of conservatism's Cold War military centered internationalism as the model for America's post-Cold War international relations. After all, why drop a winning strategy? America had won the Cold War against a much more formidable opponent than any left on the planet. What could go wrong?

America's ability not simply to project but its willingness to use military power was equated with its power more generally. If America did not do this, it was weak and in decline. However, the frequent use of military power showed that America was great and remained the world's hegemon. In particular, the neocons focused on the Middle East. This sales pitch gained them the backing of both supporters of Israel (because neoconservatism was unabashedly pro-Israel) and the oil companies. The military industrial complex was also on board because the neocon agenda effectively countered calls to reduce military spending. But neoconservatism was not just confined to these groups. It appealed to both believers in American exceptionalism and backers of humanitarian interventions (of which I once was one).

As neoconservatism developed, that is with Iraq and Afghanistan, the neocons even came to embrace nation building which had always been anathema to traditional conservatism. Neocons sold this primarily by casting nation building in military terms, the creation and training of police and security forces in the target country.

9/11 too was critical. It vastly increased the scope of the neocon project in spawning the Global War on Terror. It increased the stage of neocon operations to the entire planet. It effectively erased the distinction between the use of military force against countries and individuals. Individuals more than countries became targets for military, not police, action. And unlike traditional wars or the Cold War itself, this one would never be over. Neoconservatism now had a permanent raison d'ętre.

Politically, neoconservatism has become the bipartisan foreign policy consensus. Democrats are every bit as neocon in their views as Republicans. Only a few libertarians on the right and progressives on the left reject it.

Neoliberalism, for its part, came about to address the concern of liberals, especially Democrats, that they were too anti-business and too pro-union, and that this was hurting them at the polls. It was sold to the rubiat as pragmatism.

The roots of neoliberalism are the roots of kleptocracy. Both begin under Carter. Neoliberalism also known at various times and places as the Washington Consensus (under Clinton) and the Chicago School is the political expression for public consumption of the kleptocratic economic philosophy, just as libertarian and neoclassical economics (both fresh and salt water varieties) are its academic and governmental face. The central tenets of neoliberalism are deregulation, free markets, and free trade. If neoliberalism had a prophet or a patron saint, it was Milton Friedman.

Again just as neoconservatism and kleptocracy or bipartisan so too is neoliberalism. There really is no daylight between Reaganism/supply side economics/trickledown on the Republican side and Clinton's Washington Consensus or Team Obama on the other.

And just as we saw with neoconservatism, neoliberalism expanded from its core premises and effortlessly transitioned into globalization, which can also be understood as global kleptocracy.

The distinctions between neoconservatism and neoliberalism are being increasingly lost, perhaps because most of our political classes are practitioners of both. But initially at least neoconservatism was focused on foreign policy and neoliberalism on domestic economic policy. As the War on Terror expanded, however, neoconservatism came back home with the creation and expansion of the surveillance state.

At the same time, neoliberalism went from domestic to global, and here I am not just thinking about neoliberal experiments, like Pinochet's Chile or post-Soviet Russia, but the financialization of the world economy and the adoption of kleptocracy as the world economic model.

jest on Mon, 08/20/2012 - 5:55am

I'm now under the opinion that you can't talk about any of the "neo-isms" without talking about the corporate state.

That's really the tie that binds the two things you are speaking of.

With neocons, it manifests itself through the military-industrial complex (Boeing, Raytheon, etc.), and with neolibs it manifests itself through finance and industrial policy.

For example, you need the US gov't to bomb Iraq (Raytheon) in order to secure oil (Halliburton), which is priced & financed in US dollars (Goldman Sachs). It's like a 3-legged stool; if you remove one of these legs, the whole thing comes down. But each leg has two components, a statist component and a corporate component.

The entity that enables all of this is the corporate state.

It also explains why economic/financial interests (neolib) are now considered national security interests (neocon). The viability of the state is now tied to the viability of the corporation.

lambert on Mon, 08/20/2012 - 9:18am

Corporate/statist (not sure "corporate" captures the looting/rentier aspect though). We see it everywhere, for example in the revolving door.

I think the stool has more legs and is also more dynamic; more like Ikea furniture. For example, the press is surely critical in organizing the war.

But the yin/yang of neo-lib/neo-con is nice: It's as if the neo-cons handle the kinetic aspects (guns, torture) and the neo-libs handle the mental aspects (money, mindfuckery) but both merge (like Negronponte being on the board of Americans Select) over time as margins fall and decorative aspects like democratic institutions and academic freedom get stripped away. The state and the corporation have always been tied to each other but now the ties are open and visible (for example, fines are just a cost of doing business, a rent on open corruption.)

And then there's the concept of "human resource," that abstracts all aspects of humanity away except those that are exploitable.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

jest on Mon, 08/20/2012 - 1:37pm

I like the term much better than Fascist, as it is 1) more accurate, 2) avoids the Godwin's law issue, and 3) makes them sound totalitarianist.

Yes, I would agree that additional legs make sense. The media aspect is essential, as it neutralizes the freedom of the press, without changing the constitution. It dovetails pretty well with the notion of Inverted Totalitarianism.

I think you could also make the argument that Obama is perhaps the most ideal combination of neolib & neocon. The two sides of him flow together so seamlessly, no one seems to notice. But that's in part because he is so corporate.

Lex on Mon, 08/20/2012 - 8:28am

Actually, neoliberalism is an economic term. An economic liberal in the UK and EU is for open markets, capitalism, etc. You're right that neoliberalism comes heavily from the University of Chicago, but it has little to do with American political liberalism.

A reading of the classical liberal economists puts some breaks on the markets, corporations, etc. Neoliberalism goes to the illogical extremes of market theory and iirc, has some influence from the Austrian school ... which gives up on any pretense of scientific exposition of economics or rationality at the micro level, assuming that irrationality will magically become rational behavior in aggregate.

Therefore, US conservatives post Eisenhower but especially post Reagan are almost certainly economic neoliberals. Since Clinton, liberals/Democrats have been too (at least the elected ones). You nailed neoconservative and both parties are in foreign policy since at least Clinton ... though here lets not forget to go back as far as JFK and his extreme anti-Communism that led to all sorts of covert operations, The Bay of Pigs, Vietnam, and the Cuban Missile Crisis. Remember, the Soviets put the missiles in Cuba because we put missiles in Turkey and they backed down from Cuba because we agreed to remove the missiles from Turkey; Nikita was nice enough not to talk about that so that Kennedy didn't lose face.

"Don't believe them, don't fear them, don't ask anything of them" - Aleksandr Solzhenitsyn

Hugh on Mon, 08/20/2012 - 3:57pm

I agree that neoconservatism and neoliberalism are two facets of corporatism/kleptocracy. I like the kinetic vs. white collar distinction.

The roots of neoliberalism go back to the 1940s and the Austrians, but in the US it really only comes into currency with Clinton as a deliberate shift of the Democratic/liberal platform away from labor and ordinary Americans to make it more accommodating to big business and big money. I had never heard of neoliberalism before Bill Clinton but it is easy to see how those tendencies were at work under Carter, but not under Johnson.

This was a rough and ready sketch. I guess I should also have mentioned PNAC or the Project to Find a New Mission for the MIC.

Hugh on Mon, 08/20/2012 - 10:44pm

I have never understood this love of Clinton that some Democrats have just as I have never understood the attraction of Reagan for Republicans. There is no Clinton faction. There is no Obama faction. Hillary Clinton is Obama's frigging Secretary of State. Robert Rubin and Larry Summers, both of whom served as Bill Clinton's Treasury Secretary, were Obama's top financial and economic advisors. Timothy Geithner was their protégé. Leon Panetta Obama's Director of the CIA and current Secretary of Defense was Clinton's Director of OMB and then Chief of Staff.

The Democrats as a party are neoconservative and neoliberal as are Obama and the Clintons. As are Republicans.

What does corporations need regulation mean? It is rather like saying that the best way to deal with cancer is to find a cure for it. Sounds nice but there is no content to it. Worse in the real world, the rich own the corporations, the politicians, and the regulators. So even if you come up with good ideas for regulation they aren't going to happen.

What you are suggesting looks a whole lot another iteration of lesser evilism meets Einstein's definition of insanity. How is it any different from any other instance of Democratic tribalism?

Lex on Mon, 08/20/2012 - 11:49pm

Perhaps it should be pointed out that the Clintons became fabulously wealthy just after Bill left office, mostly on the strength of his speaking engagements for the financial sector that he'd just deregulated. Both he and Hillary hew to a pretty damned neoconservative foreign policy ... with that dash of "humanitarian interventionism" that makes war palatable to liberals.

But your deeper point is that there isn't enough of a difference between Obama and Bill Clinton to really draw a distinction, not in terms of ideology. What a theoretical Hillary Clinton presidency would have looked like is irrelevant, because both Bill and Obama talked a lot different than they walked. Any projection of a Hillary Clinton administration is just that and requires arguing that it would have been different than Bill's administration and policies.

The unfortunate fact of the matter is that at that level of politics, the levers of money and power work equally well on both party's nomenklatura. They flock to it like moths to porch light.

That the money chose Obama over Clinton doesn't say all that much, because there's no evidence suggesting that the money didn't like Clinton or that it would have chosen McCain over Clinton. It's not as if Clinton's campaign was driven into the ground by lack of funds.

Regardless, that to be a Democrat i would kind of have to chose between two factions that are utterly distasteful to me just proves that i have no business being a Democrat. And since i wouldn't vote for either of those names, i guess i'll just stick to third parties and exit the political tribalism loop for good.

"Don't believe them, don't fear them, don't ask anything of them" - Aleksandr Solzhenitsyn

[Dec 11, 2017] The Neoliberal Revolution by Scott Sumner

It's kind of sad that neoliberal eclectic theories got such a prominence in70th. after all 20th demonstrated that they will eventually lead to Great Deprettion. And Great Recession started in 2008 was just a replay. looks like people learn nothing, especially if they are driven by greed. It probably would be prudent to treat financial sector as a kind of organized crime unit. Otherwise the society is always in danger as those guys have money to buy politicians and dismantle anything that they do not like. which happened within the US with the New Deal regulations.
Minton Friedman actually was a criminal who probably would be convicted in the court like Nuremberg for his role in Pinochet putsch. His role as the key political figure within Mont Pelerin Society is also pretty sinister -- he moved it right.
Notable quotes:
"... Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics , by Daniel Stedman Jones, Princeton University Press, 424 pages, $35 ..."
"... Jones traces the origins of neoliberalism to the mid-1940s, specifically to the nearly simultaneous publication of Hayek's The Road to Serfdom ..."
"... The Open Society and Its Enemies ..."
"... Beginning in the late 1970s, neoliberal ideas began to have a significant impact on policy in the U.S. and Britain. Under President Jimmy Carter there was significant deregulation of transportation, utilities, and banking, and capital gains taxes were reduced. Deregulation continued in the 1980s under President Reagan, who also slashed the top income tax rate from 70 percent to 28 percent. ..."
Feb 01, 2013 | reason.com

The review of: Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics, by Daniel Stedman Jones, Princeton University Press, 424 pages, $35

Socialist ideas were already floating around the democratic West in the early 1900s, but they gained much greater popularity after the Great Depression, which was widely seen as a failure of capitalism. One part of this shift entailed a greater role for the government in regulating or owning business enterprises. The second part involved a major expansion of social insurance programs.

Beginning in the late 1970s, there was a backlash against excessive government intervention in the economy. This neoliberal revolution involved privatization, deregulation, and cuts in marginal tax rates, but it left most social insurance programs in place.

Daniel Stedman Jones, an independent historian (and barrister) in London, has written a balanced and informative study of neoliberal thinkers such as F.A. Hayek and Milton Friedman, exploring their impact on policy making, particularly during Margaret Thatcher's administration in the United Kingdom and Ronald Reagan's in the United States. Jones suggests a policy revolution that began in the 1970s drew on 30 years of neoliberal research and advocacy, partly financed by businessmen hostile to Franklin Roosevelt's New Deal policies. Although Jones is skeptical of the more radical elements of neoliberalism, he is mostly respectful of the major neoliberal figures, despite the fact that his own politics are clearly left of center.

Jones traces the origins of neoliberalism to the mid-1940s, specifically to the nearly simultaneous publication of Hayek's The Road to Serfdom (1944), Ludwig von Mises' Bureaucracy (1944), and Karl Popper's The Open Society and Its Enemies (1945). The appearance of these highly influential books was followed by the formation of the Mont Pelerin Society, a group of American and European neoliberals who met annually starting in 1947. Even within this group there were important ideological differences, with Popper being much more sympathetic to the democratic left than Mises. Early neoliberals rejected complete laissez faire, which was widely seen as discredited by the depression; they supported economic interventions such as antitrust laws, the regulation of natural monopolies, health and safety regulation, and government provision of education and other social services.

Over time the center of the neoliberal movement shifted from Europe to America, especially the economics departments at the University of Chicago, where Milton Friedman taught, and the University of Virginia, where James Buchanan and Gordon Tullock developed "public choice" theory, which aims to explain why government policies often end up serving special interest groups. At the same time, the ideology drew closer to laissez faire. Neoliberal economists were less likely to endorse interventions such as antitrust and more likely to support a radical program of deregulation.

Beginning in the late 1970s, neoliberal ideas began to have a significant impact on policy in the U.S. and Britain. Under President Jimmy Carter there was significant deregulation of transportation, utilities, and banking, and capital gains taxes were reduced. Deregulation continued in the 1980s under President Reagan, who also slashed the top income tax rate from 70 percent to 28 percent. In Britain the Labour Party began to move away from traditional Keynesian stimulus programs, as these policies were widely blamed for the high rates of inflation during the 1970s. Thatcher sped up that trend after taking office in 1979. Her Tory government privatized state-owned firms and public housing, deregulated the financial industry, weakened labor unions, and sharply reduced the top income tax rate.

... ... ..

Consider Jones' description of neoliberalism's evolution from the late 1940s to the '70s: "The early neoliberals were marked by their desire to move beyond both laissez-faire economics and the New Deal. Later neoliberals, defined by the Chicago emphasis on unregulated markets, were less ambiguous in their opposition to the welfare state and to the need for government intervention in the economy."

In political practice, neoliberalism was not about abandoning the welfare state. It was about deregulation, privatization, freer trade, lower marginal tax rates, and keeping inflation under control. Thatcher's policies were viewed as a big neoliberal success, despite the fact that government spending remained close to 40 percent of GDP. There is far less regulation of investment, trade, market access, and prices in developed countries today than in the 1970s. Many state-owned enterprises have been sold to the private sector, and inflation has been brought down to relatively low levels. Virtually every developed country has sharply cut its top income tax rate from the levels of the 1970s. Yet the welfare state in those countries is roughly as large as it was four decades ago.

Nor was opposition to the welfare state ever a big part of the academic side of neoliberalism. I studied economics at the University of Chicago between 1977 and 1980, when the Chicago school had reached its peak of influence. There was a heavy focus on the failures of Keynesian demand-side macroeconomics as well as the often counterproductive effects of regulation. But if the welfare state ever came up, it was generally brushed aside with the comment that the optimal policy would probably be to just give money to the poor.

Milton Friedman proposed a "negative income tax" that would have replaced many welfare programs with direct cash payments. He also advocated vouchers for education and health care, plus a progressive consumption tax. Jones suggests that Friedman was opposed to both the welfare state and progressive taxes, but that's a bit misleading. What Friedman opposed was paternalism and inefficiency. At times Friedman indicated that his ideal society was a minimal state, but his policy recommendations would have given the government a substantial role in addressing issues such as health care, education, and income inequality. Hayek too supported a basic safety net.

A study by the libertarian political scientist Charles Murray in the mid-1980s did point to the pernicious effect of welfare on incentives, but the issue was not significantly addressed until the mid-1990s, when the welfare system was modified -- under a Democratic president -- to provide smaller benefits to the nonworking poor and more subsidies to the working poor. This wasn't a conservative plot to cut spending. It was an example of modern liberalism being transformed by academic research.

All the other major neoliberal initiatives in America were essentially bipartisan, including free trade agreements, cuts in capital gains taxes, the reduction of the top income tax rate, and the deregulation of transportation, utilities, and banking. Because big social programs such as Medicare and Social Security in America and the National Health Service in the U.K. are highly popular, criticism of the welfare state is often directed at relatively modest efforts aimed at groups not likely to vote for the more conservative party. Even as Mitt Romney complained about people "who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them," he campaigned vigorously against President Barack Obama's Medicare cuts.

[Dec 11, 2017] I am not saying Trump is a closet atheist, but he is no evangelical

The US official religion is neoliberalism not Christianity. Christianity is in sharp decline.
Notable quotes:
"... Where evangelicals emphasize asking God for forgiveness, Trump says, "I am not sure I have. I think if I do something wrong, I think, I just try and make it right. I don't bring God into that picture. I don't." ..."
"... Compare these remarks to the more earnest faith of President George W. Bush, who claimed divine consultation before invading Iraq, or the incessant God-talk of candidates like Ted Cruz, Mike Huckabee, Rick Perry, Rick Santorum, Sarah Palin and Ben Carson ..."
"... Since then, it's hard to see what benefit America's strong leaning toward theocracy has had. Comparing 17 first-world prosperous democracies on a number of societal health measures, social scientist Gregory S. Paul found that the most religious country of them all-the United States -- had by far the worse measures on a number of criteria, including the highest rates of homicides, suicides, incarceration, STDs, teen pregnancies, abortions, divorce, alcohol consumption, corruption, poverty and income inequality. Correlation is not causation, of course. ..."
"... "Seems to me Donald has been doing a lot more God talk since taking office, " I agree 1,000% – which just validates my view that Trump is all bullsh*ter. Elmer Gantry comes to mind ..."
"... And another point – it strikes me that those saying Trump is a liar misses the point – Trump is more like a parrot in that Trump will say (parrot) whatever he believes is necessary to get the cracker (though I didn't intend "cracker" to mean racists, but merely a reward, I note one can interpret that as one wishes .). ..."
"... PAUL JAY: Under the protection of God, America, we'll use the Mother of All Bombs and fight without restraint. That's the message Donald wanted to send, and perhaps that's the message this bomb was meant to deliver in Afghanistan. ..."
"... Pointing out hypocrisy misses the point because it's never been about religious doctrine as much as trying to belong to something and have purpose. Trump can miss every question about angels dancing on heads of pins, and it won't matter. Trump in his own way embraced the evangelicals. In effect, Hillary said she wanted the non-evangelical republicans who are so smart and moderate. ..."
"... In "The Merchant of Venice" (Act 1, Scene 3), Antonio says, "even the devil can cite scripture for his own use." This is all they need because it's not about scripture and never has been. ..."
"... You and Marx: "Religion is the sigh of the oppressed creature, the heart of a heartless world, and the soul of soulless conditions. It is the opium of the people" ..."
Apr 19, 2017 | www.nakedcapitalism.com
fresno dan , April 17, 2017 at 7:28 am

http://www.politico.com/magazine/story/2017/04/donald-trump-religion-215033

This Sunday [Easter], tens of millions of American Christians will celebrate Easter, and thousands of children and their families will descend on the White House to take part in the annual Easter Egg Roll. As the festivities spill over the grounds of 1600 Penn., I wonder if anyone will stop to note the obvious irony: That President Donald J. Trump is very likely the least religious president to occupy the White House since Thomas Jefferson.

I'm not saying Trump is a closeted atheist, but he's no evangelical. As a self-proclaimed Protestant, or Presbyterian, or something he describes as "a wonderful religion," Trump nominally attends the nondenominational Marble Collegiate Church in New York City.

Where evangelicals emphasize asking God for forgiveness, Trump says, "I am not sure I have. I think if I do something wrong, I think, I just try and make it right. I don't bring God into that picture. I don't."

Compare these remarks to the more earnest faith of President George W. Bush, who claimed divine consultation before invading Iraq, or the incessant God-talk of candidates like Ted Cruz, Mike Huckabee, Rick Perry, Rick Santorum, Sarah Palin and Ben Carson.

Since then, it's hard to see what benefit America's strong leaning toward theocracy has had. Comparing 17 first-world prosperous democracies on a number of societal health measures, social scientist Gregory S. Paul found that the most religious country of them all-the United States -- had by far the worse measures on a number of criteria, including the highest rates of homicides, suicides, incarceration, STDs, teen pregnancies, abortions, divorce, alcohol consumption, corruption, poverty and income inequality. Correlation is not causation, of course. But if religion is suppose to be such a powerful force for societal health, then why is America-the most religious nation in the Western world-also the unhealthiest on all of these important social measures?***
===================================================

I almost posted this yesterday, but I thought that would be churlish. I read Trump's "religious" remarks and find them extremely off putting. Than I read the religious remarks of other repubs, and I find them EVEN MORE off putting .

***Teen pregnancy – so much for the solemn pledges of abstinence made by teenagers .*** ***
*** *** What is it with the US? How can anybody in hypersexualized America really believe American teens are gonna keep it in their pants?

fresno dan , April 17, 2017 at 8:41 am

Linda
April 17, 2017 at 7:59 am

"Seems to me Donald has been doing a lot more God talk since taking office, " I agree 1,000% – which just validates my view that Trump is all bullsh*ter. Elmer Gantry comes to mind.

And another point – it strikes me that those saying Trump is a liar misses the point – Trump is more like a parrot in that Trump will say (parrot) whatever he believes is necessary to get the cracker (though I didn't intend "cracker" to mean racists, but merely a reward, I note one can interpret that as one wishes .).

RWood , April 17, 2017 at 9:44 am

Playing to the sanctity of slaughter:

PAUL JAY: Under the protection of God, America, we'll use the Mother of All Bombs and fight without restraint. That's the message Donald wanted to send, and perhaps that's the message this bomb was meant to deliver in Afghanistan.

https://zcomm.org/znetarticle/deadly-propaganda-events/

NotTimothyGeithner , April 17, 2017 at 10:55 am

From my experience with Catholic school and church, I've long since determined "god talk" isn't as relevant as "us v. them" talk. Hillary's "deplorable" statement was just an affirmation of a view many "Christians" believe is held about them.

Pointing out hypocrisy misses the point because it's never been about religious doctrine as much as trying to belong to something and have purpose. Trump can miss every question about angels dancing on heads of pins, and it won't matter. Trump in his own way embraced the evangelicals. In effect, Hillary said she wanted the non-evangelical republicans who are so smart and moderate.

In "The Merchant of Venice" (Act 1, Scene 3), Antonio says, "even the devil can cite scripture for his own use." This is all they need because it's not about scripture and never has been.

grayslady , April 17, 2017 at 2:14 pm

Why were enslaved Africans in the American South so religious?

Actually, they weren't all that religious. The slave owners allowed them time off on Sunday for religious services. The slaves were savvy enough to make sure that "services" were an all-day affair. Even meals and socialization were woven into the Sunday religious celebrations. That practice is the genesis of many AME and AME-Z all day (or most of the day) Sunday services today. (I learned that bit of information in my Black Religion college course many years ago.)

witters , April 17, 2017 at 7:03 pm

You and Marx: "Religion is the sigh of the oppressed creature, the heart of a heartless world, and the soul of soulless conditions. It is the opium of the people"

[Dec 11, 2017] Religion has de-legitimized itself with its hypocrisy

Should probably be "neoliberal religion has de-legitimized itself with its hypocrisy
Notable quotes:
"... Sorry, as a church-attending person, I object. Religion has de-legitimized itself with its hypocrisy. One example: Jerry Falwell, a "battler" against abortion actually supported it before his plutocratic masters told him it was a wedge issue. ..."
"... Michael Hudso says Jesus' first appearance in the Jerusalem temple was to announce just such a Jubilee Boy is that ever ignored! ..."
"... Your correlating the hypocritical actions of the leadership with the ideals of a religion. Corrupt leadership may delegitimize those individuals but does not delegitimize the ideals of the religion. Is the ideal of America totally dependent on the actions of its political leadership? Personally, I think there is far more to America than just the president and congress whether corrupt or not. ..."
"... What is or are the ideal(s) of "America?" Get rich quick, violence on all fronts, anti-intellectualism, imperial project across the planet? "Democracy?" If you trot that out as a "feature", you better explain what you mean, with some specificity. More to America? If youtube is any guide, try searching it for "syria combat" or "redneck" or "full auto," or all the really sick racist and extreme stuff - a pretty sorry place. But we all recite the Pledge so dutifully, don't we? and feel a thrill as the F-22s swoop over the football stadium? ..."
Apr 18, 2017 | www.nakedcapitalism.com
Adam Eran, April 17, 2017 at 1:31 pm

Sorry, as a church-attending person, I object. Religion has de-legitimized itself with its hypocrisy. One example: Jerry Falwell, a "battler" against abortion actually supported it before his plutocratic masters told him it was a wedge issue.

Positions on the wedge issues (abortion, the gays) are actually difficult to prove with scripture–not that it has the kind of authority it did before 35,000 variations on old manuscripts were discovered in the 17th century. (Marcus Borg is the scholar to consult here).

Meanwhile, the big issues - e.g. covetousness, forbidden very explicitly in one of the 10 commandments - is an *industry* in the U.S.

I'll believe these evangelicals are guided by the bible when I see them picketing Madison Avenue for promoting covetousness, or when I see them lobbying for a debt jubilee.

Michael Hudso says Jesus' first appearance in the Jerusalem temple was to announce just such a Jubilee Boy is that ever ignored!

Jagger , April 17, 2017 at 2:32 pm

Your correlating the hypocritical actions of the leadership with the ideals of a religion. Corrupt leadership may delegitimize those individuals but does not delegitimize the ideals of the religion. Is the ideal of America totally dependent on the actions of its political leadership? Personally, I think there is far more to America than just the president and congress whether corrupt or not.

hunkerdown , April 17, 2017 at 5:00 pm

Ideals only serve in practice to create primordial debts, buttress power differentials, and enable selective malfeasance. I fail to see the social utility of any of those products and believe humanity would be better off repudiating them and their vectors. Disease is not a public good.

Jagger , April 17, 2017 at 7:57 pm

Well I am using this definition of ideal: "a person or thing conceived as embodying such a conception or conforming to such a standard, and taken as a model for imitation". I guess you are welcome to your definition.

JTMcPhee , April 17, 2017 at 5:10 pm

I think "America" is maybe a shibboleth of some sort, but there is not a dam' thing left of the stuff I was taught and brought to believe, as a young person, Boy Scout, attendee at the Presbyterian Westminster Fellowship, attentive student of Mrs. Thompson and Mr. Fleming in Civics, Social Studies and US History classes, and all that. I was well enough steeped in that stuff to let "patriotism" overcome better sense, strongly enough to enlist in the Army in 1966.

Maybe you think "The Birth of a Nation" captures the essence of our great country?

What is or are the ideal(s) of "America?" Get rich quick, violence on all fronts, anti-intellectualism, imperial project across the planet? "Democracy?" If you trot that out as a "feature", you better explain what you mean, with some specificity. More to America? If youtube is any guide, try searching it for "syria combat" or "redneck" or "full auto," or all the really sick racist and extreme stuff - a pretty sorry place. But we all recite the Pledge so dutifully, don't we? and feel a thrill as the F-22s swoop over the football stadium?

[Dec 10, 2017] Russia-gate s Reach into Journalism by Dennis J Bernstein

Highly recommended!
When national security establishment is trying to undermine sitting President this is iether color revolution or coup d'état. In the USa it looks more like color revolution.
"Now you have this interesting dynamic where the national security establishment is effectively undermining a duly elected president of the United States. I recognize that Trump is vulnerable, but these types of investigations often become highly politicized."
Notable quotes:
"... The Credico subpoena, after he declined a request for a "voluntary" interview, underscores how the investigation is moving into areas of "guilt by association" and further isolating whistleblowers who defy the powers-that-be through unauthorized release of information to the public, a point made by National Security Agency whistleblower Thomas Drake in an interview. ..."
"... Drake knows well what it means to blow the whistle on government misconduct and get prosecuted for it. A former senior NSA executive, Drake complained about a multi-billion-dollar fraud, waste, and widespread violation of the rights of civilians through secret mass surveillance programs. As a result, the Obama administration indicted Drake in 2010, "as the first whistleblower since Daniel Ellsberg charged with espionage," according to the Institute for Public Accuracy. ..."
"... In 2011, the government's case against him, which carried a potential 35 years in prison, collapsed. Drake went free in a plea deal and was awarded the 2011 Ridenhour Truth Telling Prize. ..."
"... In this hyper-inflated, politicized environment, it is extremely difficult to wade through the massive amount of disinformation on all sides. Hacking is something all modern nation-states engage in, including the United States, including Russia. The challenge here is trying to figure out who the players are, whose ox is being gored, and who is doing the goring. ..."
"... From all accounts, Trump was duly elected. Now you have the Mueller investigation and the House investigation. Where is this all leading? The US intelligence agency hasn't done itself any favors. The ICA provides no proof either, in terms of allegations that the Russians "hacked" the election. We do have the evidence disclosed by Reality Winner that maybe there was some interference. But the hyper-politicization is making it extraordinarily difficult. ..."
"... Well, if you consider the content of those emails .Certainly, the Clinton folks got rid of Bernie Sanders. ..."
"... The national security establishment was far more comfortable having Clinton as president. Someone central to my own case, General Michael Hayden, just a couple days ago went apoplectic because of a tweet from Trump taking on the mainstream media. Hayden got over 100,000 likes on his response. Well, Hayden was central to what we did in deep secrecy at the highest levels of government after 9/11, engaging in widespread surveillance and then justifying it as "raw executive authority." ..."
"... Now you have this interesting dynamic where the national security establishment is effectively undermining a duly elected president of the United States. I recognize that Trump is vulnerable, but these types of investigations often become highly politicized. I worry that what is really happening is being sacrificed on the altar of entertainment and the stage of political theater. ..."
"... What is happening to Randy is symptomatic of a larger trend. If you dare speak truth to power, you are going to pay the price. Is Randy that much of a threat, just because he is questioning authority? Are we afraid of the press? Are we afraid of having the uncomfortable conversations, of dealing with the inconvenient truths about ourselves? ..."
"... Yeah, it is definitely a way of describing the concept of fascism without using the word. The present Yankee regime seems to be quite far along that road, and the full-on types seem to be engaged in a coup to eliminate those they fear may not be as much in the fascist deep-state bag. ..."
"... How disgusting to have to live today in the society so accurately described by Orwell in 1984. It was a nice book to read, but not to live in! ..."
"... Truth is he enemy of coercive power. Lies and secrecy are essential in leading the sheeple to their slaughter. ..."
"... Perhaps the one good thing about Trumps election is that its shows democracy is still just about alive and breathing in the US, because as is pointed out in this article, Trump was never expected to win and those who lost are still in a state of shock and disbelief. ..."
"... One things for sure: the Neocons, the deep state, and all the rest of the skunks that infest Washington will make absolutely sure that future elections will go the way as planned, so perhaps we should celebrate Trump, because he may well be the last manifestation of the democracy in the US. ..."
"... In the end, what will bring this monstrously lumbering "Russia-gate" dog and pony show crashing down is that stupid, fake Fusion GPS dossier that was commissioned, paid for, and disseminated by Team Hillary and the DNC. Then, as with the sinking of the Titanic, all of the flotsam and jetsam floating within its radius of destruction will go down with it. What will left to pluck from the lifeboats afterwards is anyone's guess. All thanks to Hillary. ..."
Dec 10, 2017 | www.facebook.com

The investigation to somehow blame Russia for Donald Trump's election has now merged with another establishment goal of isolating and intimidating whistleblowers and other dissidents, as Dennis J Bernstein describes.

The Russia-gate investigation has reached into the ranks of journalism with the House Intelligence Committee's subpoena of Randy Credico, who produced a series about WikiLeaks founder Julian Assange for Pacifica Radio and apparently is suspected of having passed on early word about leaked Democratic emails to Donald Trump's supporter Roger Stone.

The Credico subpoena, after he declined a request for a "voluntary" interview, underscores how the investigation is moving into areas of "guilt by association" and further isolating whistleblowers who defy the powers-that-be through unauthorized release of information to the public, a point made by National Security Agency whistleblower Thomas Drake in an interview.

Drake knows well what it means to blow the whistle on government misconduct and get prosecuted for it. A former senior NSA executive, Drake complained about a multi-billion-dollar fraud, waste, and widespread violation of the rights of civilians through secret mass surveillance programs. As a result, the Obama administration indicted Drake in 2010, "as the first whistleblower since Daniel Ellsberg charged with espionage," according to the Institute for Public Accuracy.

In 2011, the government's case against him, which carried a potential 35 years in prison, collapsed. Drake went free in a plea deal and was awarded the 2011 Ridenhour Truth Telling Prize.

I interviewed Drake about the significance of Credico's subpoena, which Credico believes resulted from his journalism about the persecution of Julian Assange for releasing information that powerful people would prefer kept hidden from the public. (I had a small role in Credico's 14-part radio series, Julian Assange: Countdown to Freedom . It was broadcast first as part of his Live on the Fly Series, over WBAI and later on KPFA and across the country on community radio.)

Credico got his start as a satirist and became a political candidate for mayor of New York City and later governor of New York, making mainstream politicians deal with issues they would rather not deal with.

I spoke to Thomas Drake by telephone on Nov. 30, 2017.

Dennis Bernstein: How do you look at Russiagate, based on what you know about what has already transpired in terms of the movement of information? How do you see Credico's role in this?

Thomas Drake: Information is the coin of the realm. It is the currency of power. Anyone who questions authority or is perceived as mocking authority -- as hanging out with "State enemies" -- had better be careful. But this latest development is quite troubling, I must say. This is the normalization of everything that has been going on since 9/11. Randy is a sort of 21st century Diogenes who is confronting authority and pointing out corruption. This subpoena sends a chilling message. It's a double whammy for Randy because, in the eyes of the US government, he is a media figure hanging out with the wrong media figure [Julian Assange].

Dennis Bernstein: Could you say a little bit about what your work was and what you tried to do with your expose?

Thomas Drake: My experience was quite telling, in terms of how far the government will go to try to destroy someone's life. The attempt by the government to silence me was extraordinary. They threw everything they had at me, all because I spoke the truth. I spoke up about abuse of power, I spoke up about the mass surveillance regime. My crime was that I made the choice to go to the media. And the government was not just coming after me, they were sending a really chilling message to the media: If you print this, you are also under the gun.

Dennis Bernstein: We have heard the charges again and again, that this was a Russian hack. What was the source? Let's trace it back as best we can.

Thomas Drake: In this hyper-inflated, politicized environment, it is extremely difficult to wade through the massive amount of disinformation on all sides. Hacking is something all modern nation-states engage in, including the United States, including Russia. The challenge here is trying to figure out who the players are, whose ox is being gored, and who is doing the goring.

From all accounts, Trump was duly elected. Now you have the Mueller investigation and the House investigation. Where is this all leading? The US intelligence agency hasn't done itself any favors. The ICA provides no proof either, in terms of allegations that the Russians "hacked" the election. We do have the evidence disclosed by Reality Winner that maybe there was some interference. But the hyper-politicization is making it extraordinarily difficult.

The advantage that intelligence has is that they can hide behind what they are doing. They don't actually have to tell the truth, they can shade it, they can influence it and shape it. This is where information can be politicized and used as a weapon. Randy has found himself caught up in these investigations by virtue of being a media figure and hanging out with "the wrong people."

Dennis Bernstein: It looks like the Russiagaters in Congress are trying to corner Randy. All his life he has spoken truth to power. But what do you think the role of the press should be?

Thomas Drake: The press amplifies just about everything they focus on, especially with today's 24-hour, in-your-face social media. Even the mainstream media is publishing directly to their webpages. You have to get behind the cacophony of all that noise and ask, "Why?" What are the intentions here?

I believe there are still enough independent journalists who are looking further and deeper. But clearly there are those who are hell-bent on making life as difficult as possible for the current president and those who are going to defend him to the hilt. I was not surprised at all that Trump won. A significant percentage of the American electorate were looking for something different.

Dennis Bernstein : Well, if you consider the content of those emails .Certainly, the Clinton folks got rid of Bernie Sanders.

Thomas Drake: That would have been an interesting race, to have Bernie vs. Trump. Sanders was appealing, especially to young audiences. He was raising legitimate issues.

Dennis Bernstein: In Clinton, they had a known quantity who supported the national security state.

Thomas Drake: The national security establishment was far more comfortable having Clinton as president. Someone central to my own case, General Michael Hayden, just a couple days ago went apoplectic because of a tweet from Trump taking on the mainstream media. Hayden got over 100,000 likes on his response. Well, Hayden was central to what we did in deep secrecy at the highest levels of government after 9/11, engaging in widespread surveillance and then justifying it as "raw executive authority."

Now you have this interesting dynamic where the national security establishment is effectively undermining a duly elected president of the United States. I recognize that Trump is vulnerable, but these types of investigations often become highly politicized. I worry that what is really happening is being sacrificed on the altar of entertainment and the stage of political theater.

What is happening to Randy is symptomatic of a larger trend. If you dare speak truth to power, you are going to pay the price. Is Randy that much of a threat, just because he is questioning authority? Are we afraid of the press? Are we afraid of having the uncomfortable conversations, of dealing with the inconvenient truths about ourselves?

Dennis J Bernstein is a host of "Flashpoints" on the Pacifica radio network and the author of Special Ed: Voices from a Hidden Classroom . You can access the audio archives at www.flashpoints.net .

orwell

"Raw Executive Authority" means Totalitarianism/Fascism.

exiled off mainstreet , December 7, 2017 at 4:23 pm

Yeah, it is definitely a way of describing the concept of fascism without using the word. The present Yankee regime seems to be quite far along that road, and the full-on types seem to be engaged in a coup to eliminate those they fear may not be as much in the fascist deep-state bag.

Jerry Alatalo , December 7, 2017 at 3:34 pm

It is highly encouraging to know that a great many good and decent men and women Americans are 100% supportive of Mr, Randy Credico as he prepares for his testimony before the House Intelligence Committee. Remember all those standing right there beside you, speak what rightly needs to be spoken, and make history Mr. Credico!

jaycee , December 7, 2017 at 3:56 pm

The intensification of panic/hysteria was obviously triggered by the shock election of Trump. Where this is all heading is on display in Australia, as the government is writing legislation to "criminalise covert and deceptive activities of foreign actors that fall short of espionage but are intended to interfere with our democratic systems and processes or support the intelligence activities of a foreign government." The legislation will apparently be accompanied by new requirements of public registration of those deemed "foreign agents". (see http://www.wsws.org/en/articles/2017/12/07/auch-d07.html ).

This will be an attack on free speech, free thought, and political freedoms, justified by an orchestrated hysteria which ridiculously assumes a "pure" political realm (i.e. the "homeland") under assault by impure foreign agents and their dirty ideas. Yes, that is a fascist construct and the liberal establishment will see it through, not the alt-right blowhards.

mike k , December 7, 2017 at 5:49 pm

How disgusting to have to live today in the society so accurately described by Orwell in 1984. It was a nice book to read, but not to live in!

john wilson , December 8, 2017 at 5:48 am

Actually Mike, the book was a prophesy but you aren't seen nothing yet. You me and the rest of the posters here may well find ourselves going for a visit to room 101 yet.

fudmier , December 7, 2017 at 4:42 pm

Those who govern (527 of them) at the pleasure of the constitution are about to breach the contract that entitles them to govern. Limiting the scope of information allowed to those who are the governed, silencing the voices of those with concerns and serious doubts, policing every word uttered by those who are the governed, as well as abusing the constitutional privilege of force and judicial authority, to deny peaceful protests of the innocents is approaching the final straw.

The governors and their corporate sponsors have imposed on those the governors govern much concern. Exactly the condition that existed prior to July 4, 1776, which elicited the following:

When in the course of human events, it becomes necessary for one people to dissolve the Political bands which connected them with another, and to assume among the Powers of the Earth, the separate and equal Station to which the laws of nature and of Nature's God entitle them, a decent Respect to the Opinions of Mankind requires that they should declare the causes which impel them to the separation.

I submit the actions and intentions of those who govern that are revealed and discussed in this article https://consortiumnews.com/2017/12/07/russia-gates-reach-into-journalism/ should be among the list of impels that support the next declaration.

Al Pinto , December 7, 2017 at 5:23 pm

Those who govern (527 of them and the puppet master oligarch behind them) will make certain that there's no support for the next declaration. There's no respect to the opinions of the mankind, what matters is keeping the current status quo in place and further advance it by silencing the independent media.

Maybe when the next "Mother of all bubbles" come, there's an opportunity for the mankind to be heard, but it's doubtful. What has taken place during the last bubble is that the rich has gotten richer and the poor, well, you know the routine.

https://usawatchdog.com/mother-of-all-bubbles-too-big-to-pop-peter-schiff/

mike k , December 7, 2017 at 5:53 pm

Truth is he enemy of coercive power. Lies and secrecy are essential in leading the sheeple to their slaughter.

john wilson , December 8, 2017 at 5:44 am

Perhaps the one good thing about Trumps election is that its shows democracy is still just about alive and breathing in the US, because as is pointed out in this article, Trump was never expected to win and those who lost are still in a state of shock and disbelief.

Trump's election has also shown us in vivid technicolour, just what is really going on in the deep state. Absolutely none of this stuff would have come out had Clinton won and anything there was would have been covered up as though under the concrete foundation of a tower block. However, Trump still has four years left and as a British prime minister once said, "a week is a long time in politics". Well four more years of Trump is a hell of a lot longer so who knows what might happen in that time.

One things for sure: the Neocons, the deep state, and all the rest of the skunks that infest Washington will make absolutely sure that future elections will go the way as planned, so perhaps we should celebrate Trump, because he may well be the last manifestation of the democracy in the US.

Christene Bartels , December 8, 2017 at 9:57 am

In the end, what will bring this monstrously lumbering "Russia-gate" dog and pony show crashing down is that stupid, fake Fusion GPS dossier that was commissioned, paid for, and disseminated by Team Hillary and the DNC. Then, as with the sinking of the Titanic, all of the flotsam and jetsam floating within its radius of destruction will go down with it. What will left to pluck from the lifeboats afterwards is anyone's guess. All thanks to Hillary.

Apparently, Santa isn't the only one making a list and checking it twice this year. He's going to have to share the limelight with Karma.

[Dec 10, 2017] blamePutin continues to be the media's dominant hashtag. Vladimir Putin finally confesses his entire responsibility for everything bad that has ever happened since the beginning of time

Highly recommended!
Dec 10, 2017 | off-guardian.org

by VT

The decline of the falsely self-described "quality" media outlet The Guardian/Observer into a deranged fake news site pushing anti-Russian hate propaganda continues apace. Take a look at this gem :

The Russian president, Vladimir Putin, has accused prominent British businessman Bill Browder of being a "serial killer" – the latest extraordinary attempt by the Kremlin to frame one of its most high-profile public enemies.

But Putin has not been reported anywhere else as making any recent statement about Browder whatever, and the Observer article makes no further mention of Putin's supposed utterance or the circumstances in which it was supposedly made.

As the rest of the article makes clear, the suspicions against Browder were actually voiced by Russian police investigators and not by Putin at all.

The Observer fabricated a direct quote from the Russian president for their propaganda purposes without any regard to basic journalistic standards. They wanted to blame Putin personally for the suspicions of some Russian investigators, so they just invented an imaginary statement from him so they could conveniently do so.

What is really going on here is the classic trope of demonisation propaganda in which the demonised leader is conflated with all officials of their government and with the targeted country itself, so as to simplify and personalise the narrative of the subsequent Two Minutes Hate to be unleashed against them.

When, as in this case, the required substitution of the demonised leader for their country can't be wrung out of the facts even through the most vigorous twisting, a disreputable fake news site like The Guardian/Observer is free to simply make up new, alternative facts that better fit their disinformative agenda. Because facts aren't at all sacred when the official propaganda line demands lies.

In the same article, the documents from Russian investigators naming Browder as a suspect in certain crimes are first "seen as" a frame-up (by the sympathetic chorus of completely anonymous observers yellow journalism can always call on when an unsupported claim needs a spurious bolstering) and then outright labelled as such (see quote above) as if this alleged frame-up is a proven fact. Which it isn't.

No evidence is required down there in the Guardian/Observer journalistic gutter before unsupported claims against Russian officials can be treated as unquestionable pseudo-facts, just as opponents of Putin can commit no crime for the outlet's hate-befuddled hacks.

The above falsifications were brought to the attention of the Observer's so-called Readers Editor – the official at the Guardian/Observer responsible for "independently" defending the outlet's misdeeds against outraged readers – who did nothing. By now the article has rolled off the site's front page, rendering any possible future correction nugatory in any case.

Later in the same article Magnitsky is described as having been Browder's "tax lawyer" a standard trope of the Western propaganda narrative about the case. Magnitsky was actually an accountant .

A trifecta of fakery in one article! That makes crystal clear what the Guardian meant in this article , published at precisely the same moment as the disinformation cited above, when it said:

"We know what you are doing," Theresa May said of Russia. It's not enough to know. We need to do something about it.

By "doing something about it" they mean they're going to tell one hostile lie about Russia after another.


michaelk says November 26, 2017

https://www.theguardian.com/news/2017/nov/26/big-issue-who-will-step-in-after-bullies-have-silenced-dissenters

From the 'liberal' Guardian/Observer wing of the rightwing bourgeois press, spot the differences with the article in the Mail on Sunday by Nick Robinson?

michaelk says November 26, 2017
http://www.dailymail.co.uk/debate/article-5117723/Nick-Robinson-Putin-using-fake-news-weaken-West.html

This thing seems to have been cobbled together by a guy called Nick Robinson. The same BBC Nick Robinson that hosts the Today Programme? I dunno, one feels really rather depressed at how low our media has sunk.

michaelk says November 23, 2017
I think huge swathes of the media, in the eyes of many people, have never really recovered from the ghastly debacle that was their dreadful coverage of the reasons for the illegal attack on Iraq.

The journalists want us to forget and move on, but many, many, people still remember. Nothing happened afterwards. There was no tribunal to examine the media's role in that massive international crime against humanity and things actually got worse post Iraq, which the attack on Libya and Syria illustrates.

rtj1211 says November 29, 2017
Exactly: in my opinion there should be life sentences banning scribblers who printed lies and bloodthirsty kill, kill, kill articles from ever working again in the media.

Better still, make them go fight right now in Yemen. Amazing how quickly truth will spread if journalists know they have a good chance of dying if they print lies and falsehoods ..

michaelk says November 23, 2017
At a time when the ruling elite, across virtually the entire western world, is losing it; it being, political legitimacy and the breakdown of any semblance of a social contract between the ruled and the rulers the Guardian lurches even further to the political right . amazing, though not really surprising. The Guardian's role appears to be to 'coral' radical and leftist ideas and opinions and 'groom' the educated middle class into accepting their own subjugation.

The Guardian's writers get so much, so wrong, so often it's staggering and nobody gets the boot, except for the people who allude to the incompetence at the heart of the Guardian. They fail dismally on Trump, Brexit and Corbyn and yet carry on as if everything is fine and dandy. Nothing to complain about here, mover along now.

I suppose it's because they are actually media aristocrats living in a world of privilege, and they, as members of the ruling elite, look after one another regardless of how poorly they actually perform. This is typical of an elite that's on the ropes and doomed. They choose to retreat from grubby reality into a parallel world where their own dogmas aren't challenged and they begin to believe their propaganda is real and not an artificial contruct. This is incredibly dangerous for a ruling elite because society becomes brittle and weaker by the day as the ruling dogmas become hollow and ritualized, but without traction in reality and real purpose.

The Guardian is a bit like the Tory government, lost and without any real ideas or ideals. The slow strangulation of the CIF symbolizes the crisis of confidence at the Guardian. A strong and confident ruling class welcomes criticism and is ready to brush it all off with a smile and a shrug. When they start running scared and pretending there is no dissent or opposition, well, this is a sign of decadence and profound weakness. They are losing the battle of ideas and the battle of solutions to our problems. All that really stands between them and a social revolution is a thin veneer of 'authority' and status, and that's really not enough anymore.

All our problems are pathetically and conviniently blamed on the Russians and their Demon King and his vast army of evil Trolls. It's like a political version of the Lord of the Rings.

WeatherEye says November 21, 2017
Don't expect the Guardian to cover the biggest military build-up (NATO) on Russia's borders since Hitler's 1941 invasion.

John Pilger has described the "respectable" liberal press (Guardian, NYT etc) as the most effective component of the propaganda system, precisely BECAUSE it is respectable and trusted. As to why the Guardian is so insistent in demonising Russia, I would propose that is integrates them further with a Brexit-ridden Tory government. Its Blairite columnists prefer May over Corbyn any day.

rtj1211 says November 29, 2017
The Guardian is now owned by Neocon Americans, that is why it is demonising Russia. Simple as that.
WeatherEye says November 29, 2017
Evidence?
Harry Stotle says November 21, 2017
The Guardian is trying to rescue citizens from 'dreadful dangers that we cannot see, or do not understand' – in other words they play a central role in 'the power of nightmares' https://www.youtube.com/embed/LlA8KutU2to
rtj1211 says November 21, 2017
So Russians cannot do business in America but Americans must be protected to do business in Russia?

If you look at Ukraine and how US corporations are benefitting from the US-funded coup, you ask what the US did in Russia in the 1990s and the effect it had on US business and ordinary Russian people. Were the two consistent with a common US template of economic imperialism?

In particular, you ask what Bill Browder was doing, his links to US spying organisations etc etc. You ask if he supported the rape of Russian State assets, turned a blind eye to the millions of Russians dying in the 1990s courtesy of catastrophic economic conditions. If he was killing people to stay alive, he would not have been the only one. More important is whether him making $100m+ in Russia needed conditions where tens of millions of Russians were starving .and whether he saw that as acceptable collateral damage ..he made a proactive choice, after all, to go live in Moscow. It is not like he was born there and had no chance to leave ..

I do not know the trurh about Bill Browder, but one thing I do know: very powerful Americans are capable of organising mass genocide to become rich, so there is no possible basis for painting all American businessmen as philanthropists and all Russians as murdering savages ..

michaelk says November 21, 2017
It's perfectly possible, in fact the norm historically, for people to believe passionately in the existence of invisible threats to their well-being, which, when examined calmly from another era, resemble a form of mass-hysteria or collective madness. For example; the religious faith/dogma that Satan, demons and witches were all around us. An invisible, parallel, world, by the side of our own that really existed and we were 'at war with.' Satan was our adversary, the great trickster and disseminator of 'fake news' opposed to the 'good news' provided by the Gospels.

What's remarkable, disturbing and frightening is how closely our media resemble a religious cult or the Catholic Church in the Middle Ages. The journalists have taken on a role that's close to that of a priesthood. They function as a 'filtering' layer between us and the world around us. They are, supposedly, uniquely qualified to understand the difference between truth and lies, or what's right and wrong, real news and propaganda. The Guardian actually likes this role. They our the guardians of the truth in a chaotic world.

This reminds one of the role of the clergy. Their role was to stand between ordinary people and the 'complexities' of the Bible and separate the Truths it contained from wild and 'fake' interpretations, which could easily become dangerous and undermine the social order and fundamental power relationships.

The big challenge to the role of the Church happened when the printing press allowed the ordinary people to access the information themselves and worst still when the texts were translated into the common language and not just Latin. Suddenly people could access the texts, read and begin to interpret and understand for themselves. It's hard to imagine that people were actually burned alive in England for smuggling the Bible in English translation a few centuries ago. That's how dangerous the State regarded such a 'crime.'

One can compare the translation of the Bible and the challenge to the authority of the Church and the clergy as 'guardians of the truth' to what's happeing today with the rise of the Internet and something like Wikileaks, where texts and infromation are made available uncensored and raw and the role of the traditional 'media church' and the journalist priesthood is challenged.

We're seeing a kind of media counter-reformation. That's why the Guardian turned on Assange so disgracefully and what Wikileaks represented.

WeatherEye says November 21, 2017
A brilliant historical comparison. They're now on the legal offensive in censoring the internet of course, because in truth the filter system is wholly vulnerable. Alternative media has been operating freely, yet the majority have continued to rely on MSM as if it's their only source of (dis)information, utilizing our vast internet age to the pettiness of social media and prank videos. Marx was right: capitalist society alienates people from their own humanity. We're now aliens, deprived of our original being and floating in a vacuum of Darwinist competition and barbarism. And we wonder why climate change is happening?
tutisicecream says November 21, 2017
Apparently we are "living in disorientating times" according to Viner, she goes on to say that "championing the public interest is at the heart of the Guardian's mission".

Really? How is it possible for her to say that when many of the controversial articles which appear in the Guardian are not open for comment any more. They have adopted now a view that THEIR "opinion" should not be challenged, how is that in the public interest?

In the Observer on Sunday a piece also appeared smearing RT entitled: "MPs defend fees of up to £1,000 an hour to appear on 'Kremlin propaganda' channel." However they allowed comments which make interesting reading. Many commenter's saw through their ruse and although the most vociferous critics of the Graun have been banished, but even the mild mannered ones which remain appear not the buy into the idea that RT is any different than other media outlets. With many expressing support for the news and op-ed outlet for giving voice to those who the MSM ignore – including former Guardian writers from time to time.

Why Viner's words are so poisonous is that the Graun under her stewardship has become a agitprop outlet offering no balance. In the below linked cringe worthy article there is no mention of RT being under attack in the US and having to register itself and staff as foreign agents. NO DEFENCE OF ATTACKS ON FREEDOM OF THE PRESS by the US state is mentioned.

Surely this issue is at the heart of championing public interest?

https://www.theguardian.com/world/2017/nov/18/mps-kremlin-propaganda-channel-rt#comments

The fact that it's not shows clearly the fake Guardian/Observer claim and their real agenda.

WE ARE DEFINITELY LIVING IN DISORIENTATION TIMES and the Guardian/Observer are leading the charge.

tutisicecream says November 21, 2017
Correction: DISORIENTATING TIMES
Peter says November 21, 2017
For the political/media/business elites (I suppose you could call them 'the Establishment') in the US and UK, the main problem with RT seems to be that a lot of people are watching it. I wonder how long it will be before access is cut. RT is launching a French-language channel next month. We are already being warned by the French MSM about how RT makes up fake news to further Putin's evil propaganda aims (unlike said MSM, we are told). Basically, elites just don't trust the people (this is certainly a constant in French political life).
Jim says November 21, 2017
It's not just that they don't allow comments on many of their articles, but even on the articles where CiF is enabled, they ban any accounts that disagree with their narrative. The end result is that Guardianistas get the false impression everyone shares their view and that they are in the majority. The Guardian moderators are like Scientology leaders who banish any outsiders for fear of influencing their cult members.
BigB says November 20, 2017
Everyone knows that Russia-gate is a feat of mass hypnosis, mesmerized from DNC financed lies. The Trump collusion myth is baseless and becoming dangerously hysterical: but conversely, the Clinton collusion scandal is not so easy to allay. Whilst it may turn out to be the greatest story never told: it looks substantive enough to me. HRC colluded with Russian oligarchy to the tune of $145m of "donations" into her slush fund. In return, Rosatom gained control of Uranium One.

A curious adjunct to this corruption: HRC opposed the Magnitsky Act in 2012. Given her subsequent rabid Russophobia: you'd have thought that if the Russians (as it has been spun) arrested a brave whistleblowing tax lawyer and murdered him in prison – she would have been quite vocal in her condemnation. No, she wanted to make Russia great again. It's amazing how $145m can focus ones attention away from ones natural instinct.

[Browder and Magnitsky were as corrupt as each other: the story that the Russians took over Browder's hedge fund and implicated them both in a $230m tax fraud and corruption scandal is as fantastical as the "Golden Shower" dossier. However, it seems to me Magnitsky's death was preventable (he died from complications of pancreatitis, for which it seems he was initially refused treatment ) ]

So if we turn the clock back to 2010-2013, it sure looks to me as though we have a Russian collusion scandal: only it's not one the Guardian will ever want to tell. Will it come out when the FBI 's "secret" informant (William D Cambell) testifies to Congress sometime this week? Not in the Guardian, because their precious Hillary Clinton is the real scandal here.

jag37777 says November 20, 2017
Browder is a spook.
susannapanevin says November 20, 2017
Reblogged this on Susanna Panevin .
Eric Blair says November 20, 2017
This "tactic" – a bold or outrageous claim made in the headline or in the first few sentences of a piece that is proven false in the very same article – is becoming depressingly common in the legacy media.

In other words, the so-called respectable media knowingly prints outright lies for propaganda and clickbait purposes.

labrebisgalloise says November 20, 2017
I dropped a line to a friend yesterday saying "only in a parallel universe would a businessman/shady dealer/tax evader such as Browder be described as an "anti-corruption campaigner."" Those not familiar with the history of Browder's grandfather, after whom a whole new "deviation" in leftist thinking was named, should look it up.
Eric Blair says November 20, 2017
Hey, MbS is also an "anti-corruption" campaigner! If the media says so it must be true!
Sav says November 20, 2017
Some months ago you saw tweets saying Russophobia had hit ridiculous levels. They hadn't seen anything yet. It's scary how easily people can be brainwashed.

The US are the masters of molesting other nations. It's not even a secret what they've been up to. Look at their budgets or the size of the intelligence buildings. Most journalists know full well of their programs, including those on social media, which they even reported on a few years back. The Guardian run stories by the CIA created and US state funded RFE/RL & then tell us with a straight face that RT is state propaganda which is destroying our democracy.

A Petherbridge says November 20, 2017
Well said – interesting to know what the Guardian is paid to run these stories funded by this arm of US state propaganda.
bevin says November 20, 2017
The madness spreads: today The Canary has/had an article 'proving' that the 'Russians' were responsible for Brexit, Trump, etc etc.

Then there is the neo-liberal 'President' of the EU charging that the extreme right wing and Russophobic warmongers in the Polish government are in fact, like the President of the USA, in Putin's pocket..

This outbreak is reaching the dimensions of the sort of mass hysteria that gave us St Vitus' dance. Oh and the 'sonic' terrorism practised against US diplomats in Havana, in which crickets working for the evil one (who he?) appear to have been responsible for a breach in diplomatic relations. It couldn't have happened to a nicer empire.

Admin says November 21, 2017
The Canary is publishing mainstream russophobia?

[Dec 10, 2017] Neoliberlaism is barbarism

Dec 10, 2017 | www.defenddemocracy.press

"It's barbarism. I see it coming masqueraded under lawless alliances and predetermined enslavements. It may not be about Hitler's furnaces, but about the methodical and quasi-scientific subjugation of Man. His absolute humiliation. His disgrace"

Odysseas Elytis, Greek poet, in a press conference on the occasion of receiving the Nobel Prize (1979)

[Dec 09, 2017] MIT Professor Angrist Publishes Obviously Misleading Analysis of Uber Driver Economics....With Uber Chief Economist as Co-Autho

Notable quotes:
"... Uber and Lyft are fraudulent schemes based on selling false hope to desperate drivers on one hand, while promising investors the 'opportunity' of getting in on the ground-floor of a new, and 'disruptive technology', sure to become a profitable monopoly, and so make a fortune when it they take it public. ..."
"... new and disruptive technology ..."
"... It's not a good job, it's not a good investment, it's not a 'new and disruptive technology', it's a scam, and anyone trying to sell any portion of it is a fraud. ..."
"... I think it's worse than a scam. It's a scam on the drivers and users, but I suspect that the investors know just what is up: destroy the taxi market, supplant it with Uber/Lyft, and enjoy your monopoly rents forever. Libertarianism indeed! That's the ground floor they're getting in on: entrepreneurial feudalism. ..."
"... Most of the litigation regarding Uber drivers is predicated on proving an employment relationship, contrary to Uber's assertion that the drivers are independent contractors. ..."
"... These drivers are overworked, underpaid, deceived, exploited employees of uber all but in name, the independent contractor nonsense is bulls***. Tell me how this is a win for the driver?? ..."
"... The assumption goes further than that. If you are depreciating an asset (wearing out your car), that's a cost. Replacing tires more often, paying for a commercial car rider (which Uber riders are supposed to do but Uber does not enforce) are all costs that need to be included even if the driver owns his car outright. ..."
"... That depreciation and upwardly trending running costs are ommited in the analysis seems to me to be gross incompetence or willful deception by the authors. ..."
"... That is my buddy in Seattle's experience with Lyft. He got laid off from his tech job and started driving after a lengthy unsuccessful job search but has no illusions about the "gig economy", doing it mostly just to get out of the house. The other day he told be he'd driven over 4 hours for slightly over $50. That's below the Seattle minimum wage and that's before accounting for his expenses. ..."
"... People may like the cheap fares, but that's only because they are heavily subsidized by flushing VC down the toilet and drivers working basically at a loss once expenses are considered. ..."
"... I'm not a frequent Uber user, but when I do I ask the driver what it's like. All say that it's much harder to make money now than it used to be. One driver actually attributed that to the ouster of Kalanick, on the belief that Kalanick had been ousted because he was pro-driver. (I didn't argue). That same driver told me he was getting $8 of my $22 Friday night fare. ..."
"... So, I think The Point with Uber it that it is mostly a political research project. What those VC investors actually pay for is to test to what extent they can get away with undercutting wages, how agressive and blatant one can cut corners on legal compliance, what the consequences for doing this are in different regions. What are the stakeholders? How should these be managed/manipulated? ..."
"... When a ride is requested the customer knows where they are going and about how much it will cost. Uber and Lyft have the same information. But the driver only gets a customer rating and an estimated time to pick up, and 10-15 seconds to decide if they will accept the ride. They are not allowed to call the customer and ask for the destination. If they cancel the ride, they are punished. When the driver shows up, the customer has up to five minutes to get in the vehicle before the driver can cancel on that person, and five minutes is a horrible waste of time to someone who is compensated pennies per minute for waiting. The driver has no idea how much the customer is actually paying (which is often a violation of state laws requiring full disclosure of fares). Drivers have no information, a very unfair economic reality. ..."
"... The companies are praying that elimination of drivers via automated vehicles will solve their financial problems, however I suspect that these companies are going to learn a hard lesson about the true cost of maintaining a fleet of hi tech vehicles. ..."
"... Out in San Francisco proper the number of ridehailing vehicles with expired registrations has increased dramatically. Savvy taxi drivers and ridehailing drivers are earning less across the board. Drivers are coming from San Diego to drive in the SF Bay Area. Plateless toll evasion on the toll bridges has skyrocketed since ridehailing came on the scene. ..."
Dec 09, 2017 | www.nakedcapitalism.com

MK , December 8, 2017 at 6:20 am

In Buffalo last weekend for a family event. Tried Uber and Lyft around 7 pm Saturday from our hotel in Cheektowaga to get to Town of Tonawanda. Not one single car available on either service. Call to taxi dispatch, taxi at our hotel in less than 10 minutes.

Uber and Lyft absolutely failed in that scenario and left a poor impression for what would have been our first rideshare trip.

Watt4Bob , December 8, 2017 at 7:36 am

I drove a taxi for many years, and I now work in IT for a group of auto dealers.

Last week, one of the general sales managers at work explained to me that people are ' selling ' cars to us in order to get out from under the expense of payments. Many of these people are 'up-side-down' in their loans, meaning they owe more than the car is worth. These folks are having to pay us to take the car off their hands, for example one customer paid us $8,000 to ' buy ' his car.

Now understand that this is only part of the potential cost of attempting to make part of a living by driving for Uber or Lyft.

You've wasted a year, making much less money than promised, you put 40K miles on your car instead of the average 20K, and you end up with a car that isn't worth nearly what you owe on it.

So now you've wised up to the fact that this is not a real 'opportunity', you've damaged your financial situation and you're worse off than you were before.

That nice car that was going to help you make a living is now a weight holding you down, it's hard for you to even look at it, and you can't afford to pay someone to 'buy' it from you.

Uber and Lyft are fraudulent schemes based on selling false hope to desperate drivers on one hand, while promising investors the 'opportunity' of getting in on the ground-floor of a new, and 'disruptive technology', sure to become a profitable monopoly, and so make a fortune when it they take it public.

It's not a good job, it's not a good investment, it's not a ' new and disruptive technology ', it's a scam, and anyone trying to sell any portion of it is a fraud.

Thuto , December 8, 2017 at 8:12 am

Watt4Bob, my sentiments exactly, see my comment below.

Wukchumni , December 8, 2017 at 8:19 am

I've only taken Uber a few times, and when a Cuban-American fellow in Miami picked us up in his $40k new SUV and told us how Uber was going to be his way out of the rat race, I thought along the same lines as you, this is never going to work.

Martin Finnucane , December 8, 2017 at 10:29 am

It's not a good job, it's not a good investment, it's not a 'new and disruptive technology', it's a scam, and anyone trying to sell any portion of it is a fraud.

I think it's worse than a scam. It's a scam on the drivers and users, but I suspect that the investors know just what is up: destroy the taxi market, supplant it with Uber/Lyft, and enjoy your monopoly rents forever. Libertarianism indeed! That's the ground floor they're getting in on: entrepreneurial feudalism.

Also, maybe that the way investment tends to work.

Watt4Bob , December 8, 2017 at 11:40 am

It's a scam on the drivers and users, but I suspect that the investors know just what is up: destroy the taxi market, supplant it with Uber/Lyft, and enjoy your monopoly rents forever.

Anybody who has been following this discussion here at NC knows that is the play, as it has been sold to investors, however, there is very little evidence that it will work to investors benefit outside of a profitable IPO.

IMHO, that IPO has always been the end game.

As has been pointed out previously, it will be very hard, maybe impossible to drive enough of the taxi industry out of business to create that monopoly, and thus make the IPO look enticing.

My bet would be that Uber and Lyft miss that mark by a wide margin, and go down in history as a foolish misadventure on the part of investors.

As the number of disappointed investors, and ex-drivers mounts up, it will be harder and harder to recruit new 'sub-contractors' and I wouldn't rule out a class-action suit by drivers, investors, or both.

Anon , December 8, 2017 at 1:32 pm

As the number of disappointed investors, and ex-drivers mounts up, it will be harder and harder to recruit new 'sub-contractors' and I wouldn't rule out a class-action suit by drivers, investors, or both.

Probably not from the drivers -- Uber drivers for the last several years (~2013 or so, I think?) have been subject to an arbitration clause with a class action waiver. There is an opt-out provision (most likely in place only to support the ridiculous argument that the class action waiver doesn't violate Section 7 of the NLRA because of the right, under Section 7, to refrain from participating in concerted activity) but no doubt the vast majority of drivers have not opted out and are probably unaware of it. The numerous class actions against Uber have either involved drivers who stopped working for Uber prior to their implementation of arbitration or have tried to attack the enforceability of the arbitration clause. Unfortunately, those arguments haven't been, and the pending ones are unlikely to be, very successful. The argument involving Section 7 of the NLRA is currently pending before SCOTUS, but based on oral arguments, this looks likely to result in another 5-4 partisan split in favor of employers.

Watt4Bob , December 8, 2017 at 3:13 pm

The argument involving Section 7 of the NLRA is currently pending before SCOTUS, but based on oral arguments, this looks likely to result in another 5-4 partisan split in favor of employers.

Ah, yes, which brings up another matter;

Q. When is an employer not an employer

A. any time it matters to the 'employed'.

Anon , December 8, 2017 at 3:50 pm

Most of the litigation regarding Uber drivers is predicated on proving an employment relationship, contrary to Uber's assertion that the drivers are independent contractors.

You are correct that asserting any rights under the NLRA will require proving a common-law employment relationship, which is unfortunately a more restrictive standard than the FLSA's broad "suffer or permit to work" standard (and used by many state laws).

This is actually being investigated by the NLRB, who has consolidated numerous charges filed by Uber drivers into a single investigation in the San Francisco region .

Unsurprisingly, Uber's response has been to hire Littler and Gibson Dunn to stonewall the investigation by playing games like ignoring NLRB administrative subpoenas, requiring the NLRB to petition a district court for an order enforcing the subpoenas. The order the NLRB sought was eventually granted by the court , but this game managed to delay the proceedings for several months. And with the NLRB now under complete Republican control, both on the GC and Board side, it's hard to have hopes for a positive outcome for the drivers.

Knifecatcher , December 8, 2017 at 11:42 am

And there are even worse possible scenarios than making less money than expected. A friend of mine used a small inheritance ($5k or so) as a down payment to buy a new-ish car, with the idea of driving for Lyft. The hope was that he would at least make enough money to pay the note on his off-hours and have a more modern / reliable / fuel efficient car to get to his other 2-3 jobs. My friend is very much part of the precariat, so this felt like a win from his perspective.

This went on for a couple of months or so and things went more or less according to his meager expectations, so he was happy. Until he got rear ended in his nice new car. The car was totaled, the guy who hit him uninsured. His cut rate insurance company paid off the car at 2k or so less than he owed on it. Of course he had no gap coverage to cover that, and his down payment is long gone. I let him borrow an old pickup until he was able to get the insurance sorted out and arrange another beater so he didn't lose his other job(s).

Damn the "sharing economy" to hell.

Louis Fyne , December 8, 2017 at 1:14 pm

Absolutely this!

In addition to the obvious costs (fuel) and abstract costs (depreciation), drivers have a non-zero chance of death, injury, or plain old fender benders. And I'd bet most drivers don't take that into account.

Zero workers comp, zero disability, and Uber's collision insurance has a high deductible that guarantees risk is shifted onto its drivers, but for the long-tail crashes.

Not to mention drivers have only a vague idea what demand is like at any given time, while Uber HQ has 100% perfect information on the level of demand and its algos can make a reasonable guess as to the near-term expected demand.

Norbert Haering , December 8, 2017 at 7:50 am

The biased Research that you take apart here, is part of a wider and worrying phenomenon. Uber Money is dominating economic Research on ride-hauling platforms. Uber is contracting with many top-economists with their close links to prestigous publication channels. Even reputable journals publish the resulting PR as if it was science. Critical Researchers have no chance to compete, because they will not get the exclusive Uber-data, which Uber-loving researchers like Angrist and Levitt can work with.

There is an article in German Business newspaper "Handelsblatt" on this, http://www.handelsblatt.com/my/unternehmen/handel-konsumgueter/von-uber-finanzierte-studien-public-relations-oder-wissenschaft/20364132.html?ticket=ST-1630133-4TdJOLrZkvGWS3rsDDPg-ap

which is translated and slightly extended here:

http://norberthaering.de/en/home/32-english/news/920-uber-research

Rosario , December 8, 2017 at 12:40 pm

Yep, it already works in politics: https://www.npr.org/sections/money/2012/01/06/144737864/forget-stocks-or-bonds-invest-in-a-lobbyist

From Uber's perspective, why not game academia as well to help build the social values they desire. Further proof that, despite the libertarian truisms, markets are absolutely a product of politics and society rather than a natural phenomenon.

Thuto , December 8, 2017 at 8:09 am

The embedded assumption for this analysis is that the average uber driver owns their car outright (i.e. no vehicle finance/ lease repayments) and is available to work during peak demand hours. This idealised "be your own boss, set your own hours and make lots of money" myth has been shown up to be marketing fluff to attract gullible drivers who aren't savvy enough to see through the obfuscated numbers uber presents at its driver recruitment seminars. I'd wager that depreciation and dead miles, because they bite ever so silently by piling on hour by hour, mile by mile without seemingly affecting earnings dropping down into drivers "bottom lines", aren't ever mentioned at such seminars. IOW, drivers naively believe that their net earnings are 75%, when they're anything but.

In my neck of the woods the situation is even more dire because uber has partnered with South African banks and car dealerships to offer leases to unsuspecting drivers seduced by the marketing cool aid and exaggerated earnings potential, with lease terms transferring the bulk (read all) of the transaction risk to the driver. This has the effect of immediately exploding the "work part time/set your own hours" myth because said drivers are now tethered to uber (and have their free time rapaciously confiscated) in order to make their monthly repayments to the banks. With obligations to the banks on a monthly basis top of mind, asset down time becomes the bane of most of these drivers tenures with uber, with dead mile upon dead mile driven in the hope of positioning oneself close enough to areas of peak demand (leading to oversupply in such areas), artificially boosting supply for uber while wearing out both asset and driver.

These drivers are overworked, underpaid, deceived, exploited employees of uber all but in name, the independent contractor nonsense is bulls***. Tell me how this is a win for the driver??

Yves Smith Post author , December 8, 2017 at 8:28 am

The assumption goes further than that. If you are depreciating an asset (wearing out your car), that's a cost. Replacing tires more often, paying for a commercial car rider (which Uber riders are supposed to do but Uber does not enforce) are all costs that need to be included even if the driver owns his car outright.

Thuto ,