inside job - see it NOW while you can

[Dave Stratman]

Re: inside job - see it NOW while you can

Hey DS,

Very thought-provoking commentary. I've been thinking about it on and off all day.

Here are a few things I'd like to throw in the ring for consideration:

Are "workers" and "owners" interests really diametrically opposed in a world of pension-fund socialism? Ultimately in a world where CALPERS or the Ontario Teacher's Fund can fund massive investments is there not some overlap between owners' and workers' interests? After all investment is ultimately a conversation between generations. Investment is entirely necessary, but this quickly raises the issue of the distribution of returns that pits present workers against past retirees, quite apart from the perennial issue of workers versus owners. I think this cuts across class lines and yet is a permanent condition.

I don't mean to suggest either that workers rights as owner/investors/pension-holders are equally matched with the rights of capital. The more and more outrageous skew in incomes, especially as it relates to the rise of FIRE, make it plainly an unequal contest. But I do wonder whether it's a matter of degree rather than kind. I think Canada, for instance, has done relatively well because there is still some effective pushback against the interests of investors or owners, ensuring that there's a more equitable distribution of the fruits of both labour and capital. This has a lot to do with both higher unionisation rates and a belief that government power can effectively act as a needed counterweight against the interests of private capital.

In other words, I tend to view the present crisis not as a crisis of capitalism per se but as a crisis of finance capitalism, in other words, a crisis brought on by mindless de-regulation of banking twinned with globalisation and propelled forward by the corrupting influence of the dollar standard. I would agree that the results look very much like a "class war," indeed are a "class war," but I think this analysis is not in the end pointing to something that is a permanent condition a priori. I would vote with Henry George I suppose: if you can adjust for income inequality through progressive taxation, discourage rent-seeking activity by taxing away its benefits and still have all the benefits of an entrepreneurial, vibrant free-market economy then I'm all for capitalism.

Hi, oddlots--Thanks for your comments and very interesting questions.

Regarding pensions, is this a place where workers and owners have allied interests? I confess I've never thought about it before in terms of CALPERS and similar pension funds. Certainly an important motivation in the US in replacing defined-benefit pensions with IRAs and other defined-contribution schemes was to get the working class invested in the stock market and encourage workers to identify with capitalism, pinning their hopes for a comfortable retirement on corporate proftiability and the fortunes of the market.

But I would say that the commonality of interests with owners that union pension funds appear to create are

1) Superficial: The negative characteristics of capitalism go very deep and can't be overcome with this alliance of convenience, as I'll explain later.

2) A perennial source of union corruption. Two of the larger union pension funds, the Teamsters and the United Mine Workers, are poster children for union corruption. The Teamsters pension fund, with its investments in Las Vegas casinos and less savory entertainments, was thoroughly mobbed-up. The UMW invested much of its members' hard-won pension money in coal mines. It soon began to identify its interests with the BOA (Bituminous Operators Association)--the owners--and to work against its members interests. (I don't mean to suggest that there is anything corrupt about CALPERS or the Ontario Teachers Fund, just that this has been a temptation to which officials in some unions have succombed.)

3) Part of a larger pattern of union collaboration with the class enemy. For a variety of reasons--the undesirability of Communism and seeming lack of an alternative, the power of the owner class and its government, etc.--unions have long abandoned any revolutionary roots they might have had. Instead they identify their interests with the profitability of the company. (I'm speaking of union officials and structures here, not the members.) Unions will fight very hard to get recognition and a contract. Once that contract is in hand, the role of union officials is to enforce it. They thus become an arm of management. It becomes in the union's interest to demobilize workers and undermine worker solidarity and initiative, the better to control them. The unions function much like insurance companies: you pay us your dues and we'll negotiate a contract for you, deal with the company, protect your job (as much as possible...but these are hard times and we have to be realistic...) (The Canadian UAW broke away from the US UAW decades ago because it thought the US had abandoned any ethic of class struggle.) In 1971 the US was swept by wildcat strikes--that is, unauthorized strikes in effect against the union and the company--because the rank-and-file had become fed-up with the class collaborationist approach. After the Machinists crossed the air controllers' picket lines in 1981, the unions went after the rank-and-file to whip them back into line. The AFL-CIO undermined or broke all the major strikes of the 1980s and '90s--PATCO, Hormel, Staley, Detroit News, Caterpillar, etc.--even as they signed contracts which drastically cut (often by 50%) wages and benefits for new hires ["two-tier" contracts, designed to split the workforce along generational lines] and in other ways cut the standard of living of workers and weakened their ability to resist. As I've mentioned before, there were fewer strikes in 2009 than in any other years since 1947 when reporting began.

On the question of whether capitalism, even with income inequality adjusted through progressive taxation, etc., is a desirable system, I would have to disagree for several reasons:

--Capitalism and democracy are incompatible. In capitalist society, money is power--and most people don't have any. Even with income inequality ameliorated, capital still holds the whip.

--Freedom for the capitalist means wage-slavery for the worker. Workers are dependent for their livelihood on the good-will and profitability of the owners, doing work over which they have no or very little control, and which--especially if it is factory production work--has been de-skilled as far as possible and robbed of any human interest. Productive activity should be a source of human fulfillment, not a source of boredom and misery.

--The continuance of capitalism means that the fruits of human labor, such as technological progress, are used to further enslave workers. Where is the Leisure Society that we were assured in the 1960s would come with automation? Instead of more leisure time, millions of jobs have been replaced or de-skilled by machines, while workers are sped-up to keep pace. New electronic devices are used to keep professionals tied constantly to their office and to keep the public under surveillance. Rather than gaining an abundance of leisure time, we are increasingly divided into the unemployed and those who have to work two or more low-pay jobs to support their families.

--Capitalism can only remain in power by attacking those things about us which are most human: our understanding of ourselves and each other and our tendency to form bonds of solidarity and mutual aid with other human beings. This is why we are constantly set against each other and made to compete with each other or even to fear each other: because the solidarity of workers is a very dangerous thing to any ruling elite and is to be broken at all costs. This is why we are lied to constantly. This is why "the news" has been reduced to sound bites and infotainment. For our rulers to stay in power, we must never understand what's really happening.

--The rulers are now attacking all those things which had humanized capitalism to some extent. "Austerity" in Europe, for example, is intended to dismantle social democracy and replace it with raw, unfettered, American-style capitalism. I agree that Canada does appear to be a more humane, less unequal, more livable society than the US, but it isn't clear that it will be permitted to remain that way.

The place where I personally see the ugliest side of capitalism--I mean domestically, never mind the savagery of US foreign policy--is in the schools. The simple fact is that our young people have more talent than the capitalist system can use and higher aspirations than it can fulfill. To make them accept their place in a contracting social order, the dreams and talents and self-confidence of millions of children must be crushed. This is what lies behind the education reform movement led by the Business Roundtable and embraced by the Bush and now the Obama Administration.

I'm sorry, oddlots, I didn't mean to deliver such a rant. Thanks for raising some important questions.

[oddlots]

Re: inside job - see it NOW while you can

Rant? You make me blush. (Look me up on the Political Abyss thread. It'll make you feel way better.)

Some thoughts on the above:

Regarding pensions, is this a place where workers and owners have allied interests? I confess I've never thought about it before in terms of CALPERS and similar pension funds. Certainly an important motivation in the US in replacing defined-benefit pensions with IRAs and other defined-contribution schemes was to get the working class invested in the stock market and encourage workers to identify with capitalism, pinning their hopes for a comfortable retirement on corporate proftiability and the fortunes of the market.

There's a nest of issues here that are worth teasing apart.

I think you're right that the push for Wall Street to get its hands on pension fund monies is entirely suspect, as anything Wall Street does is (or should be.) But I think the reason is rather prosaic greed rather than the motivation to get workers to "identify with capitalism." (Barry Ritholtz suggested that the tag-line for Goldman Sachs' recently announced PR blitz should be "Like we care what you think." *)

I also agree with your suspicions regarding the push to eliminate defined-benefit pensions but would also point out that there is a real problem with defined benefits: in a world of very low returns for safe investments (think t-bills) generating the returns needed is fiendishly difficult. I seem to recall during the auto-bailouts that there are massive liabilities on the car companies from these defined benefit plans, in part exacerbated by automation which means there are even fewer workers paying into the plan to support retirees. So to my mind here's a set-up (defined benefits) that pits worker against worker. It might be that management can be blamed for this. Some of the most outrageous corporate malfeasance I've seen centers on, for instance, private equity firms buying companies and plundering pension funds by making the argument that the plans were "overfunded" and taking the funds as performance bonuses. But I suspect that there is a real, fundamental problem here - how to fund retirement - that will remain with us even if we were somehow to overcome the class conflict you are talking about.

Another aspect of this problem is something that I've been trying to put into words for some time. It's either profound or completely banal. You tell me.

When you are doubtful about the project of workers "pinning their hopes on the market" I think you are partially implicitly reacting to something about money that is rarely talked about: units of currency are not equally valuable. The first 40 k in one's retirement account is not the same as the next 40k, or the next. In other words, the funds that are sufficient for subsistence are inordinately more important than the funds that will allow you to own a yacht. What the argument for both worker stock incentive plans and private IRA fail to take stock of is the fact that risk tolerance is a function of income. Below a certain level of net worth you have no business owning risky assets.

It reminds me of the junior level employees of Enron who were way overexposed to the company through the stock plans when it all blew up. The kind of market boosterism that sees this worker participation as an unalloyed extension of the market's ability to change peoples lives are being too modest. Likewise the market boosting neoliberal politicians who thought that everyone should own a home or that everyone should own stocks weren't doing anyone any favours (obviously.) But it's not just because the markets in home loans and stocks is largely rigged. It's because these investments have the potential to send someone into destitution if their savings and incomes are below a certain level.

I bring this up because, here again, we see something that would be a perrenial problem even if we were to solve the class issue somehow. In other words, the class analysis fails to capture an aspect of what's going on here in an important way.

Pushing it one step further, I think actually the market does provide a model that solves some of the issues raised above. Or putting it the other way, I think some of the problems stem precisely from the market being subverted. Think of the Hussman piece you quoted above. What he is angry about is that there is a perfectly good model - bankruptcy - for what to do in the case of failed institutions that is being subverted precisely in the name of preserving capitalism against a supposedly socialist option. It's the same when Michael Hudson criticises the government for not letting the housing market clear.

So at least some of the things that anger you about capitalism could, to my mind, be solved by more capitalism ironically. In other words, while I share much of your outrage about the current mess I haven't seen yet a convincing argument that the problem is inherent to capitalism rather than to a particular, debased and corrupted instantiation of it.

You wrote a lot more but this bit is the only one I've had time to chew on so far.

* Personally I liked "GS: putting the douche in fiduciary."

[ThePythonicCow]

Re: inside job - see it NOW while you can

This enumeration of various groups misses a fundamental question. What are the goals of the groups? Some of the groups named are simply attributes people might have in common--cat owners, dads, etc.--and are not organized into self-conscious entities with specific goals

True enough. Some of the groups I listed are rather amorphous, with little common purpose. I was over compensating -- I really had in mind to list such groups as the Illuminati, the Rothschild bloodline, the Zionists, the CFR and Trilateral Commission, ..., but figured that would go over like a lead balloon here. So I listed cat owners instead.

The laws and lawmakers, the police, the courts, the military are all instruments in the hands of those who hold power, ... the Knights of The Roundtable, ... the Trilateral Commission, ..., the ruling class, ...

Yes - those sorts of groups.

A bit of very obvious evidence that these entities--the government and the corporate CEOs and the bankers and the warmakers--that is, the ruling class--know very well that their interests conflict with the public's is the extent of systematic lying they engage in.

Yes, these entities often well understand that their interests conflict with the public's perceived interest. My point was rather that these entities still think they are doing what is right or necessary, by their own view of the world.

"Class warfare" is between the owners and workers

Yes -- your words are clearer and more accurate than mine were on the meaning of this term.

At the heart of society there is a conflict over goals and values. Working people in general value solidarity, equality, and rule from below. Capitalists and other elites value competition, inequality, and rule from above. The class war is about money to some extent, but it is about much more. It is a struggle over the direction of society and the goals and measure of human life. It is a struggle over what it means to be a human being.

I could argue that the conflict is more complex than just "owners" versus "workers." More and varied groups are involved, with diverse conflicting goals. But that argument would be an unfortunate distraction from a more important point.

I could enthusiastically agree that "it is a struggle over what it means to be a human being," but I would risk being superficially conciliatory and again miss a more important point.

We need to get beyond viewing individual life as a struggle between competing human interests. We need to get beyond viewing corporate, national or other group existence as a competition for conflicting interests, precious resources and the transient loyalties (or at least acquiescence or subservience) of individuals. Scarcity and conflict are a weak basis for a strong and healthy spiritual life.

Yes, physical life is finite. Yes, resources are limited. But in our better moments, such limitations are secondary details, not the defining life force.

Would that we assume responsibility for our own actions and that we support and honor the spirit in all life. Would that we arrange our organizations to aid us in these endeavors.

an active humanizing force with goals fundamentally opposed to the goals and values of capitalism

Yes.

[ThePythonicCow]

Re: inside job - see it NOW while you can

That's why I think focusing on the dynamic of class war is crucial.

Could it be (I'm guessing here) that your motivation for focusing on class warfare is similar to what mine was for focusing on "conspiracy theories" (who shot JFK, Arkanicide, 9/11, ...)? It's like one of the early steps of a AA Twelve Step program or one of the Seven Stages of Grief, realizing that "aw crap, this is seriously messed up."

a quote from Marx that I greatly admire: "The philosphers have only contemplated the world; the point, however, is to change it."

Ah - but change to what?

Whenever I hear someone (other than myself ... I seldom subject myself to such scrutiny) point out the essential conflicts or evils of the present, a nagging voice in the back of my head cautions me to beware what proposal, what change, they will offer instead.

[vinoveri]

Re: inside job - see it NOW while you can

Ah - but change to what?

Whenever I hear someone (other than myself ... I seldom subject myself to such scrutiny) point out the essential conflicts or evils of the present, a nagging voice in the back of my head cautions me to beware what proposal, what change, they will offer instead.

All is vanity and most is done in vain my friend.

"The whole modern world has divided itself into Conservatives and Progressives. The business of Progressives is to go on making mistakes. The business of the Conservatives is to prevent the mistakes from being corrected."^[

http://en.wikipedia.org/wiki/G._K._Chesterton

[Dave Stratman]

Re: inside job - see it NOW while you can

Yes, these entities often well understand that their interests conflict with the public's perceived interest. My point was rather that these entities still think they are doing what is right or necessary, by their own view of the world.

It's not clear what you mean by perceived here: perceived by whom? Are you agreeing with my point that things that we experience as problems--e.g., unemployment, poverty, war--are for the rulers solutions? Then yes, these conflicts are only a matter of perception, though rather difficult matters of perception for those who are jobless, poor, or being bombed.

On the question whether "the entities" think that what they are doing is necessary and right by their own view of the world, I agree. This doesn't mean that they do not engage in all sorts of conscious lying, manipulation, disinformation to get their way. But they--the US rulers, the Zionists, the Nazis of Hitler's era--conceive of themselves as the good guys. They are the source of civilization and enlightenment and therefore will stop at nothing to impose their rule, whether the unlucky recipients of their attentions are workers, Palestinians, or Jews and Slavs.

I could enthusiastically agree that "it is a struggle over what it means to be a human being," but I would risk being superficially conciliatory and again miss a more important point.

We need to get beyond viewing individual life as a struggle between competing human interests. We need to get beyond viewing corporate, national or other group existence as a competition for conflicting interests, precious resources and the transient loyalties (or at least acquiescence or subservience) of individuals. Scarcity and conflict are a weak basis for a strong and healthy spiritual life.

Yes, physical life is finite. Yes, resources are limited. But in our better moments, such limitations are secondary details, not the defining life force.

I'm afraid we are getting dangerously close to agreement here. Let me try to sort this out a bit further.

Capitalism is not only an economic system. It is a system of human relations and class control. Because it is a system of class domination, it must present human relations and life in society as a zero sum game. To take a key example, there must be scarcity; otherwise how could elites justify inequality and ensure obedience?

For example, the US produces a gigantic amount of surplus wealth, enough that, if it were distributed more equitably, all Americans could be materially comfortable and secure. But this would be a disaster for the rulers. They already discovered from the experience of the 1960s that people who feel secure become rebellious and hard to control. Give people an inch and they'll take a foot. (France's near-revolution in May of '68 came when the French working class was near the peak of its post-war prosperity.)

So vast amounts of wealth must be destroyed--through wars, billion-dollar salaries for bank presidents, giveaways to the banks and insurers, etc.--otherwise inequality and social discipline would collapse.

This has been clear throughout capitalism's history: The whip of hunger is necessary to get people to work in soul-destroying jobs. Capitalism requires masses of desperately poor people as a source of cheap labor. The Enclosure Acts of 19th century England, the "breaking the iron rice bowl" in China in the 1980s (which deprived small farmers of social support and drove tens of millions off the land), NAFTA in 1994: these and others are examples of governments driving small farmers off the land to be a source of cheap labor in the cities.

I agree that "We need to get beyond viewing individual life as a struggle between competing human interests," but I would point out that this struggle and the competing interests are not simply a matter of perception, unless you think unemployment, poverty, and war are figments of our imagination, which I am sure you don't. They are painfully real.

To achieve this goal we need to establish a social system that is not a zero-sum society, a world in which your loss is not my gain. Such a world is not possible in the capitalist system, in which competition and inequality are key drivers.

I don't know if there's a term for the opposite of a zero-sum society. Workers in Solidarnosc told me in Poland in 1990 that their dream had been to establish a Solidarity Society. Maybe that expresses it. But the point is to establish a society which encourages us to find our fulfillment through our commitments to our fellow human beings rather than in getting ahead of them.

Would that we assume responsibility for our own actions and that we support and honor the spirit in all life. Would that we arrange our organizations to aid us in these endeavors.

Amen.

But, at the risk here of raining on the spiritual side of things, let me point out that corporations never assume responsibility for their actions (unless forced) and will never "honor the spirit in all life." To them workers are a cost of production to be eliminated if possible; the human and natural environment are a mere garbage dump.

[Dave Stratman]

Re: inside job - see it NOW while you can

I think you're right that the push for Wall Street to get its hands on pension fund monies is entirely suspect, as anything Wall Street does is (or should be.) But I think the reason is rather prosaic greed rather than the motivation to get workers to "identify with capitalism."

Congress first passed ERISA--the Employee Retirement Income Security Act--the first sweeping act of pension reform by the federal government, in 1974. I don't know enough about the history of the act to demonstrate that it was part of the ruling class assault on working people that was launched in 1972, but the nature of the act--to establish retirement schemes that put the fate of retirees into the hands of individual worekrs and how successfully they saved and invested--and its timing and context strongly suggest that it was part of the business counteroffensive against labor.

I can't show the motivation of individual corporations, of course, that opted to eliminate their defined-benefit plans. But corporations always have two powerful motivators behind their actions: profit and control. These motivations are usually not in conflict, and they aren't in this instance. But control of the workforce is always a powerful factor in corporate behavior; it can be quite misleading to think what's going on is simply greed.

I seem to recall during the auto-bailouts that there are massive liabilities on the car companies from these defined benefit plans, in part exacerbated by automation which means there are even fewer workers paying into the plan to support retirees. So to my mind here's a set-up (defined benefits) that pits worker against worker.

I'm not sure if this is true. My understanding (which could be wrong) is that defined benefit plans aren't funded out of workers' contributions but out of company profits, so the replacement of workers by machines doesn't affect the company's pension fund.

But I suspect that there is a real, fundamental problem here - how to fund retirement - that will remain with us even if we were somehow to overcome the class conflict you are talking about.

We could only overcome class conflict with a revolution and creation of a classless society. That would also solve the retirement problem.

Another aspect of this problem is something that I've been trying to put into words for some time. It's either profound or completely banal. You tell me.

When you are doubtful about the project of workers "pinning their hopes on the market" I think you are partially implicitly reacting to something about money that is rarely talked about: units of currency are not equally valuable. The first 40 k in one's retirement account is not the same as the next 40k, or the next. In other words, the funds that are sufficient for subsistence are inordinately more important than the funds that will allow you to own a yacht. What the argument for both worker stock incentive plans and private IRA fail to take stock of is the fact that risk tolerance is a function of income. Below a certain level of net worth you have no business owning risky assets.

It reminds me of the junior level employees of Enron who were way overexposed to the company through the stock plans when it all blew up. The kind of market boosterism that sees this worker participation as an unalloyed extension of the market's ability to change peoples lives are being too modest. Likewise the market boosting neoliberal politicians who thought that everyone should own a home or that everyone should own stocks weren't doing anyone any favours (obviously.) But it's not just because the markets in home loans and stocks is largely rigged. It's because these investments have the potential to send someone into destitution if their savings and incomes are below a certain level.

Not banal. Profound.

I bring this up because, here again, we see something that would be a perrenial problem even if we were to solve the class issue somehow. In other words, the class analysis fails to capture an aspect of what's going on here in an important way.

Pushing it one step further, I think actually the market does provide a model that solves some of the issues raised above. Or putting it the other way, I think some of the problems stem precisely from the market being subverted. Think of the Hussman piece you quoted above. What he is angry about is that there is a perfectly good model - bankruptcy - for what to do in the case of failed institutions that is being subverted precisely in the name of preserving capitalism against a supposedly socialist option. It's the same when Michael Hudson criticises the government for not letting the housing market clear.

So at least some of the things that anger you about capitalism could, to my mind, be solved by more capitalism ironically. In other words, while I share much of your outrage about the current mess I haven't seen yet a convincing argument that the problem is inherent to capitalism rather than to a particular, debased and corrupted instantiation of it.

The reason that the problems of capitalism can't be solved by more capitalism is that capitalism is not merely an economic system but a system of human relations and class control. Greed, inequality, and treating human beings as disposable are endemic to it. Economic and governmental power in capitalist society are in the hands of the capitalists.

Hussman was outraged when he discovered that profits were privatized and losses were socialized during the banking crisis. He was outraged because he is a very principled man. He was surprised--or at least wanted the system to work the way it claims to--because he is an economist and takes too seriously capitalism's claims to be purely an economic system. The corporations have been raping the human and natural environment for centuries. Why shouldn't they rape the public purse as well?

Capitalism is a rigged game. There is no such thing as a "free market." The market wil always be subverted by those who have the power to do so if it is in their interest.

[Dave Stratman]

Re: inside job - see it NOW while you can

Could it be (I'm guessing here) that your motivation for focusing on class warfare is similar to what mine was for focusing on "conspiracy theories" (who shot JFK, Arkanicide, 9/11, ...)? It's like one of the early steps of a AA Twelve Step program or one of the Seven Stages of Grief, realizing that "aw crap, this is seriously messed up."

I focus on class war because I think it is--or rather can be--the best framwork for understanding the world and for changing it. Class analysis can be a sterile, stultifying approach. In my book, We CAN Change the World: The Real Meaning of Everyday Life, I propose a new understanding of class war that shows that the conflict goes far beyond economics and is a struggle over the goals and direction of society and over what it means to be a human being.

I came to class analysis because I desperately wanted a better undertanding of the world than what I had grown up with and a way of working to change it. I grew up Catholic in Cincinnati, had a Jesuit education (St. Xavier H.S. and Xavier U.), and, at least in my high school years, was a Goldwaterite conservative.

In 1967 while in graduate school at UNC, my wife and I visited Cincinnati. We were at a party with a guy I had gone to XU with. He had just returned from Vietnam and was bragging about torturing Vietnamese. This fellow had been president of the Catholic Men's Sodality at XU.

I was already beginning to question Catholicism and the war. This conversation was very upsetting to me and made me question things all the more. When I returned to campus, I received a flyer about Vietnam. I began to read everything I could about the war. Then a fellow grad student refused the draft. With about thirty other students I accompanied him to the Raleigh induction center. (It was my first political demonstration.) This fellow's courage (he went to jail for three years) was a profound experience for me.

I did a great deal of reading to make up my mind about the Church and left it at the end of that summer and never looked back. I read a lot of Marx, Lenin, Mao, and others, and for a time thought that Communism was right in theory if wrong in practice.

By the end of 1975 I had rejected Marxism in theory as well as practice. My book is an effort to demolish Marxism in theory as well as to propose a revolutionary alternative.

Ah - but change to what?

Whenever I hear someone (other than myself ... I seldom subject myself to such scrutiny) point out the essential conflicts or evils of the present, a nagging voice in the back of my head cautions me to beware what proposal, what change, they will offer instead.

Well, that's the big question, isn't it? And, as I've said elsewhere, it is the great question that we--I mean the people of the world--confront, since the communist alternative to capitalism turned out so badly. And of course you are right to be cautious about any proposals for change.

One big question is why communism failed. Why is it that two systems that claimed to be so different ended up essentially the same: class societies in which a small elite held all the cards?

My answer is that capitalism and communism are based on the same paradigm of human development--the same view of human beings. In this paradigm, economic development is the basis of human development; ordinary people are the passive victims or beneficiaries of the actions of elites, in a history driven by economic forces. You can't get democracy out of this paradigm.

Marx accepted the capitalist idea that human beings are driven by individual self-interest and that class war is driven by the opposing self-interests of the opposing classes.

I propose a quite different understanding of what the conflict in society is all about and a different paradigm for human development. The key elements of what I propose are that most people have values and goals opposed to those of capitalism and communism; that, far from being passive, most people, in the little piece of the world they think they can control--which might be just their relations with their wife or husband or children, their students or co-workers, their friends or neighbors--try to create relations based on love and trust and mutual support; that these efforts in their everyday lives constitute an effort to change the world; that the most personal acts of kindness and the most public and collective acts of revolution are on a continuum of struggle to change the world; that it is the irrepressible struggle of people to humanize the world rather than the forces of economic or technological development that drives history; and that ordinary people, rather than intellectuals or a revolutionary party, are the source of the idea of a new society and of the values that should shape it.

Incidentally, Cow, I've never commented before that I like very much your subscript, "Most people are good--some people aren't."

[oddlots]

Re: inside job - see it NOW while you can

We could only overcome class conflict with a revolution and creation of a classless society. That would also solve the retirement problem.

That would be quite a trick, but you have to admit the precedents aren't good. I think you'll run into problems with items one and two before you ever get to the prosaic issue of retirement.

But let me ask how would that solve the retirement problem? When I said that investment is a conversation between generations I mean that, in broad strokes, the jobs of the younger generation are funded out of the investments of the older generation. It's a question of time-preference. As far as I can understand it, this will always be the case and - as the issue of defined benefit plans suggests - this is sufficient in itself to create "classes" of - in this case - workers who are pitted against each other. Disregarding the problematic terms "revolution" and "classless society," what makes you think this power problem is simply going to disappear?

The reason that the problems of capitalism can't be solved by more capitalism is that capitalism is not merely an economic system but a system of human relations and class control. Greed, inequality, and treating human beings as disposable are endemic to it. Economic and governmental power in capitalist society are in the hands of the capitalists.

I would posit that any "system" treats humans as disposable when push comes to shove. The virtue of markets is that they distribute power downwards - compared, for instance, with a centralised bureaucracy - and provide feedback in a relatively efficient way compared to others. And because markets deal in money this means the society is shot-through with this freedom. (You can choose to spend your money on your children's education rather than on wide-screen TVs. I actually think this is profoundly important and is not ultimately vulnerable to critiques about oppressive consumerist pressure.)

This can be subverted in a myriad of ways and we are greeted with a Bosch-like panorama of this every time we've opened the newspaper for the last several years. But I really don't understand how you could fail to recognise that there is far more freedom even in the debased form of capitalist society we are living with than anything a revolution could promise.

Hussman was outraged when he discovered that profits were privatized and losses were socialized during the banking crisis. He was outraged because he is a very principled man. He was surprised--or at least wanted the system to work the way it claims to--because he is an economist and takes too seriously capitalism's claims to be purely an economic system. The corporations have been raping the human and natural environment for centuries. Why shouldn't they rape the public purse as well?

Capitalism is a rigged game. There is no such thing as a "free market." The market wil always be subverted by those who have the power to do so if it is in their interest.

My point in bringing up the Hussman piece was to point out that, by citing him, you are appealing to "market justice." Making him out to be an unwitting dupe now seems a bit rich. But besides that I don't understand why you would cite corporations as opposed to humans as doing the raping above. Socialist (that is, non-capitalist) governments and industry have a particularly appalling record when it comes to the environment. What on earth would make you think that a non-capitalist regime would somehow break the mold?

But returning to Husmman again for a second, the beauty of his solution is that, again, it provides feedback or justice in a way that is non-centralised and unprejudiced. I think you are right to appeal to this model as the touchstone. That it has been subverted is the problem. That there will always be attempts to subvert it - i.e., no "free market" - is obviously not an argument against it. How could it be? It would be like saying that fraud is inevitable so we should save ourself the expense of having a financial crime unit. (And come to think of it, we've tried that and it hasn't worked out so well.)

But generally DS I'm kind of mystified by your faith in people. You're not oblivious to the problems with union-based power or obviously ownership based power. Why on earth do you think all these issues could somehow be dispensed with once a "classless society" is somehow established via "revolution?" What would that even look like?

[srivatsan]

Re: inside job - see it NOW while you can

Nice movie, and one of my friends appreciated more than she thought. Few thoughts: The movie danced around the words Fraud, Ponzi than actually stating it more than 1 time. They could have looked on to the reason why none of them showed remorse per se ... "its religion.. Its heresy to speak otherwise once bought in..." Some of the books seen in the interview were kinda disturbing... like Beyond Greed and Fear. Interesting one... I think one movie that's more of a "funny take" is "The Other Guys"..

methinks this one, once it becomes more widely diseminated, will become a
"limited engagement"

http://www.sonyclassics.com/insidejob/

it really ought to be shown on 60minutes once a month until the next election!

comments?

[Dave Stratman]

Re: inside job - see it NOW while you can

That would be quite a trick, but you have to admit the precedents aren't good. I think you'll run into problems with items one and two before you ever get to the prosaic issue of retirement.

But let me ask how would that solve the retirement problem? When I said that investment is a conversation between generations I mean that, in broad strokes, the jobs of the younger generation are funded out of the investments of the older generation. It's a question of time-preference. As far as I can understand it, this will always be the case and - as the issue of defined benefit plans suggests - this is sufficient in itself to create "classes" of - in this case - workers who are pitted against each other. Disregarding the problematic terms "revolution" and "classless society," what makes you think this power problem is simply going to disappear?

As I have mentioned before, I believe that the great task that confronts us now is to construct a workable vision of a society based on principles of democracy, equality, and mutual aid, and then fight to make that vision reality.

It's true that the precedents aren't good, but that does not mean that a profound rethinking and reordering of human society are not necessary. I refuse to believe that we live in the best of all possible worlds.

In fact there are precedents--moments in history when great numbers of people have succeeded, in defiance of frightening odds, in establishing society on a new and liberating basis--from which we have much to learn.

The most profound social transformation in history took place in Spain from 1936-39. When Franco's "Army of Africa" rose up against the Republic in Spain in July, 1936, the bourgeois Republic refused to arm the workers against the Falangist rebellion. Workers in Barcelona and elsewhere raided sporting goods shops and arsenals and, without military training and poorly armed, defeated the Francoist uprising in Barcelona and Madrid and other major cities. Workers put over three-quarters of industrial Barcelona under workers self-management. Revolution swept rural Catalonia, Aragon, and other regions. "In the more thoroughly anarchist areas, particularly among the agrarian collectives, money was eliminated and the means of life were allocated strictly according to need rather than work, following the traditional precepts of a libertarian communist society. As the BBC-Granada television documentary puts it: 'The ancient dream of a collective society without profit or property was made reality in the villages of Aragon....All forms of production were owned by their community, run by their workers.'" (Murray Bookchin, To Remember Spain: The Anarchist and Syndicalist Revolution of 1936. p. 43)

(Unfortunately the anarchist organizations, blinded by their own theories, refused to take up the power that the workers and peasants had offered them; instead they put the reins back in the hands of the bourgeois Republic. Fronting for the USSR and the Communist Party of Spain, the Republican government (which Anarchist leaders joined) slowly liquidated the revolution and imprisoned or assassinated anarchist peasant and worker activists.)

I would posit that any "system" treats humans as disposable when push comes to shove. The virtue of markets is that they distribute power downwards - compared, for instance, with a centralised bureaucracy - and provide feedback in a relatively efficient way compared to others. And because markets deal in money this means the society is shot-through with this freedom. (You can choose to spend your money on your children's education rather than on wide-screen TVs. I actually think this is profoundly important and is not ultimately vulnerable to critiques about oppressive consumerist pressure.)

There's been enough discussion on the Lifetime Saving for Retirement a Sham! Say It Ain't So .... thread to make clear that the notion that this society is "shot through with freedom" is not realistic, to put it in the mildest terms. For a great many people the choice is not between saving for their children's education or a wide-screen TV but between food and heat. Retirement? Fuhgeddaboudit.

My point in bringing up the Hussman piece was to point out that, by citing him, you are appealing to "market justice." Making him out to be an unwitting dupe now seems a bit rich. But besides that I don't understand why you would cite corporations as opposed to humans as doing the raping above. Socialist (that is, non-capitalist) governments and industry have a particularly appalling record when it comes to the environment. What on earth would make you think that a non-capitalist regime would somehow break the mold?

I didn't really make John Hussman out to be an unwitting dupe. I merely pointed out the limitations of his vision. I point to corporations rather than to people generally because corporations are bound by law to seek profit, and they do anything they can to get it.

Your point about the appalling record of Socialist governments vis-a-vis the environment is very much worth considering.

I made the point elsewhere on this thread that the problem is not just capitalism. Socialism and Communism offer no real alternative. Why is it that capitalism and Communism, that claim to be so different, could end up so much the same; that is, class societies in which a privileged elite holds the money and the cards?

My answer is that these societies are based on the same paradigm and view of human development. In this paradigm, economic development is the basis of human development; ordinary people are the passive victims or beneficiaries of the actions of elites in a history driven by economic development and technological change.

In this paradigm also the chief costs of production taken into account are labor and materials. The social costs of production, such as damage to the environment and the health of future generations, are ignored. In a word, in societies based upon the economic paradigm, human beings are a mere cost of production and the environment is merely a garbage dump.

Again, we need a deep re-thinking to create a society not based upon a paradigm which requires constant expansion and that uses GDP and profits as the appropriate measures of human achievement.

But generally DS I'm kind of mystified by your faith in people. You're not oblivious to the problems with union-based power or obviously ownership based power. Why on earth do you think all these issues could somehow be dispensed with once a "classless society" is somehow established via "revolution?" What would that even look like?

I think generally one can have faith in the people or faith in the system. You can't have both.

My "transformation," so to speak, that gave me such faith in people, came when my daughter began school in Boston in the first year of school desegregation. I was pulled into that conflict by other parents who were opposed to the busing but very upset at the violence. Blacks and white parents and children were being manipulated against each other by the most powerful forces in the city: the politicians, the media, the Church.

After a series of meetings in people's livingrooms, ten black and ten white parents managed to form an organization, Better Education Together, to intervene in the crisis. We said that as parents we felt trapped between two bad forces--a Boston School Committee that had delivered inferior education to all our children, black and white, for years, and a Federal Court that was making it worse. We said that the issue in the schools is not race but education, and that we were determined to fight together for our kids. We printed up literature with pictures of four black and four white parents, explaining what we were about, and we were able to go into every neighborhood in a city that was engaged in violent racial conflict--South Boston, Roxbury, Jamaica Plain, Hyde Park, Brighton--with our message. On more than one occasion people would say to us with tears in their eyes, 'I'm so happy to see this. I though nobody felt this way but me."

What changed me in this whole experience was to discover that the white and black working class people of the city were so much better than I (with my college professor, leftist background) expected them to be. They were so much better than the institutions that affected them. (You can read this story in Ch. 1 of my book, which is online at We CAN Change The World: The Real Meaning Of Everyday Life )

Reflecting on two years of experiences in that conflict led me to reject Marxism and to boil my experiences down to this thought: Capitalism is the most dynamic system in history and it is based on the principle of competition. The logic of this system is that we should each be trying to screw each other all the time; the world should be a loveless and savage place. But you can easily see that most people, in the little piece of the world that they feel they can control--which may be just with their husband or wife or children, their friends or co-workers--most people try to create relationships based on love and trust and mutual support; they try, in other words, to create relationships that are the opposite of capitalism and "the market." Of course, they are not always successful in creating these relationships; their effort is in the face of a profoundly hostile culture, which attacks equal and loving relationships in a million ways. But to the extent that people have any mutually supportive, equal relationships in their lives, they have created them by struggle against capitalist relations. They succeeed in spite of the system, not because of it.

This means that, far from being passive, most people are already engaged in a struggle to create a better world. When they gain more confidence in themselves and each other, they build strikes and movements. When they gain sufficient confidence, they make revolutions. The most personal acts of kindness and the most public and collective acts of revolutionary struggle are on a continuum of effort to humanize the world.

To get to your questions re union-based or owner-based power: power relations in our society are designed to encourage hierarchical, authoritarian relations which treat human beings as a means to an end. In the instances you cite, it is not surprising that this is how things turn out; they could hardly turn out different. This is why I believe we can and must create a system that is based on a different model and which encourages and nourishes the best of the human spirit, not its darkest side.

I have to thank you once again, oddlots, for asking such searching questions and for giving me the opportunity to mouth off.

[BuckarooBanzai]

Re: inside job - see it NOW while you can

My answer is that capitalism and communism are based on the same paradigm of human development--the same view of human beings. In this paradigm, economic development is the basis of human development; ordinary people are the passive victims or beneficiaries of the actions of elites, in a history driven by economic forces. You can't get democracy out of this paradigm.

Marx accepted the capitalist idea that human beings are driven by individual self-interest and that class war is driven by the opposing self-interests of the opposing classes.

I propose a quite different understanding of what the conflict in society is all about and a different paradigm for human development. The key elements of what I propose are that most people have values and goals opposed to those of capitalism and communism; that, far from being passive, most people, in the little piece of the world they think they can control--which might be just their relations with their wife or husband or children, their students or co-workers, their friends or neighbors--try to create relations based on love and trust and mutual support; that these efforts in their everyday lives constitute an effort to change the world; that the most personal acts of kindness and the most public and collective acts of revolution are on a continuum of struggle to change the world; that it is the irrepressible struggle of people to humanize the world rather than the forces of economic or technological development that drives history; and that ordinary people, rather than intellectuals or a revolutionary party, are the source of the idea of a new society and of the values that should shape it.

For the love of Pete, what on earth are you talking about. Honestly, if you think that capitalism and communism have one single thing in common, you don't understand the first thing about capitalism. Which is OK, because no one currently alive on this planet has actually seen real, free market capitalism in action, as the last vestiges of it were wiped out in 1913. What isn't OK is, you are living in denial, as you're still a Marxist. Everything you've written is positively infested with Marxist code words and reconstructed Marxist ideology. You really want to stop being a Marxist? Start by accepting the fact that Marxism is the written dogma of the religion of nihilism, and take the necessary drastic steps required to free your mind from the yawning abyss of nothingness that it represents.

[oddlots]

Re: inside job - see it NOW while you can

Hey DS,

Lots to think about there.

Tried to formulate several responses but they all got a little off track.

Fundamentally I think there's something going on in markets that is profound and that you are not taking into account.

The example I would give is housing.

Michael Hudson makes a very convincing case that, when it comes to assessing the well-being of the economy / community, what matters with housing is the percent of disposable income dedicated to shelter and how it's trending. It's not about ownership obviously. For the vast majority of people for the vast majority of their lives they are not owners at all, but mortgagees. "Ownership" is a kind of fetish that obscures what's going on. (As a wise poster once stated here, for the vast majority of people the best argument for owning real-esate is that you can't pay rent with a social security cheque.)

So When Michael Hudson points out that the Fed is intentionally not allowing the Housing Market to clear I think he's not merely feigning a belief in market economics. I think he genuinely believes that this is an indictment of the Fed. And I think he's right: the trail of corruption follows the trail of intentional market distortions. This is true in his argument going up and down. He's decried the low interest rate policy that created the real estate bubble that has accelerated the hollowing out of the middle class saying it's inconceivable that they didn't know a bubble would be the outcome.

My point with the above is that I think Hudson recognises that price is actually quite a profound kind of mechanism.

A bit sketchy obviously.... I'll come back to it.

zzz

[Dave Stratman]

Re: inside job - see it NOW while you can

For the love of Pete, what on earth are you talking about. Honestly, if you think that capitalism and communism have one single thing in common, you don't understand the first thing about capitalism. Which is OK, because no one currently alive on this planet has actually seen real, free market capitalism in action, as the last vestiges of it were wiped out in 1913. What isn't OK is, you are living in denial, as you're still a Marxist. Everything you've written is positively infested with Marxist code words and reconstructed Marxist ideology. You really want to stop being a Marxist? Start by accepting the fact that Marxism is the written dogma of the religion of nihilism, and take the necessary drastic steps required to free your mind from the yawning abyss of nothingness that it represents.

Capitalism and Communism have nothing in common? You've got to be kidding.
--Are they not both class societies, in which a small elite holds the money and the power?
--Do they not both view economic development as the goal of society? (Cf. Lenin's famous line, "Communism is the Soviet power plus electrification of the whole country."<sup>)
--Do they not both treat human beings as a means to an end?
--Do they not both treat the natural environment as a garbage dump?
--Are they not both survellance societies, in which technological change is used to make humans more disposable and controllable?
--The commonalities between Chinese Communism and capitalism are even more far-reaching and obvious. In fact the challenge there is to find the differences between them. Do you ever wonder why these supposed mortal enemies are such great collaborators? No, of course you don't.


But I see that you don't think real capitalism exists and hasn't since 1913. You remind me of Marxists I have argued with. When I say to them that Marxism has failed as a revolutionary theory, they respond, "It's never been tried."

So did real capitalism end in the US with the creation of the Federal Reserve--a private institution whose role, after all, is to help manage things for the capitalists? Or was it the income tax that stripped the system of its purity?</sup>

Life was so much better in the times of the Robber Barons, wasn't it, when there were none of these nasty regulations restraining the purity of the market, and the railroad trusts could get all the land they could use for free from the federal government? If you didn't want to eat tainted meat or be poisoned with phoney medicines, well, no one was making you eat meat or take those medicines, were they? Those were the days!

[Dave Stratman]

Re: inside job - see it NOW while you can

Hey DS,

Lots to think about there.

Tried to formulate several responses but they all got a little off track.

Fundamentally I think there's something going on in markets that is profound and that you are not taking into account.

The example I would give is housing.

Michael Hudson makes a very convincing case that, when it comes to assessing the well-being of the economy / community, what matters with housing is the percent of disposable income dedicated to shelter and how it's trending. It's not about ownership obviously. For the vast majority of people for the vast majority of their lives they are not owners at all, but mortgagees. "Ownership" is a kind of fetish that obscures what's going on. (As a wise poster once stated here, for the vast majority of people the best argument for owning real-esate is that you can't pay rent with a social security cheque.)

So When Michael Hudson points out that the Fed is intentionally not allowing the Housing Market to clear I think he's not merely feigning a belief in market economics. I think he genuinely believes that this is an indictment of the Fed. And I think he's right: the trail of corruption follows the trail of intentional market distortions. This is true in his argument going up and down. He's decried the low interest rate policy that created the real estate bubble that has accelerated the hollowing out of the middle class saying it's inconceivable that they didn't know a bubble would be the outcome.

My point with the above is that I think Hudson recognises that price is actually quite a profound kind of mechanism.

A bit sketchy obviously.... I'll come back to it.

zzz

Hi, oddlots--

I think what you've given here is just more evidence that there are no "free markets." Markets are instruments of elite rule. They turn them on and off, modify them with tariffs, let them clear or not, goose them with cheap money and low interest rates, and do a dozen other things as best suits their advantage. (Hudson himself points out that what is meant by the phrase "free markets" has radically changed. It used to mean, "markets free of the burden of rentier extractions." It now seems to mean banksters free to do any goddamn thing they want and at public expense.)

If this is the case, then the faith in "free markets" and free market capitalism is merely that: an empty faith that is quite disconnected from reality. Free market capitalism is an ideology akin to neo-liberalism and "the Washington model." It has been used for some time to subjugate and strip less powerful economies of their resources--e.g., Chile, Poland, Russia--at times of radical transition in the interests of international banksters and other powerful elites. (See Naomi Klein, The Shock Doctrine) It is now being used to strip the American people of their wealth and their rights.

The question has frequently been posed on this site, "Why aren't Americans out in the streets like people in Greece, France, etc.?" There are many factors involved in the answer to this question. I think one key factor is the power in the US of free market ideology, which seems to justify all that the banksters and politicians have done. Some very intelligent and thoughtful people seem to have swallowed this ideology hook, line, and sinker.

If markets are always subject to manipulation by the powerful, it suggests that the real problem we have to confront is the one of power: Who holds controlling power in our society? What ends are they using this power to achieve? Do these ends serve the needs of ordinary people and of future generations?

The answers to these questions have become increasingly clear. Power is in the hands of Wall Street, the corporatocracy, and the war-makers. They are using this power to tighten their control over us in myriad ways, even as they suck more and more wealth from society. These ends do not serve us or our chiidren or our grandchildren, and there is no reason to think that the goals of the sociopaths in charge are about to change.

This suggests to me that power must be taken from their hands.