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The Secular Stagnation as an Immanent Feature of Post-2008 Neoliberalism

Image courtesy of Koren Shadmi (What’s Behind a Rise in Ethnic Nationalism? Maybe the Economy - The New York Times, Oct 14, 2016)
News Neoliberalism as a New Form of Corporatism Recommended Links GDP as a false measure of a country economic output Ethno-linguistic and "Cultural" Nationalism as antidote to Neoliberalism Chronic Unemployment Redistribution of wealth up as the essence of neoliberalism
Forthcoming slow motion collapse of global neoliberal empire led by the USA Anti-globalization movement Why Peak Oil Threatens the International Monetary System Brexit as the start of the reversal of neoliberal globalization Immigration, wage depression and free movement of workers Economics of Peak Energy Upward Redistribution of Wealth
Identity politics as diversion of attention from social inequality Neoliberalism war on labor The Great Transformation Eroding Western living standards Immigration, wage depression and free movement of workers Greece debt enslavement Ukraine debt enslavement
Neoliberal rationality Neoliberal "New Class" as variant of Soviet Nomenklatura The fiasco of suburbia Quite coup Casino Capitalism Lawrence Summers Oil glut fallacy
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Russia oil production Helicopter Ben: Arsonist Turned into Firefighter Financial Quotes Casino Capitalism Dictionary Financial Humor Humor Etc

Introduction

Secular stagnation is a term proposed by Keynesian economist Alvin Hansen back in the 1930s to explain the USA dismal economic performance during this period. The period in which sluggish growth and output, and employment levels well below potential, coincide with a problematically low (even negative) real interest rates even in the face of the extraordinarily easy monetary policy. Later a similar phenomenon occurred in Japan. that's why it is often called called Japanification of the economy.  Secular stagnation returned to the USA in full force after the financial crisis of 2008 (so called The Long Recession), so this is the second time the USA society experience the same socio-economic phenomenon. 

Formally it can be defined as any stagnation that lasts substantially longer then the business cycle (and dominates the business cycle induced variations of economic activities), the suppression of economic performance for a long (aka secular) period. It also can be viewed as the crisis of demand, when demand became systemically weak (which under neoliberalism is ensured by redistribution of wealth up).

The global stagnation we are experiencing is the logical result of the dominance of neoliberalism and a sign of its crisis an a ideology. It is somewhat similar to the crisis of Bolshevik's ideology in the USSR in 60th when everybody realized that the existing society cannot fulfill the key promise of higher living standards. And that over centralization of economic life naturally leads to stagnation.  The analogy does not ends here, but this point is the most important.

Neoliberalism replaced over-centralization (with iron fist one party rule) with over-financialization (with iron fist rule of financial oligarchy), with generally the same result as for the economy ( In other words neoliberalism like bolshevism is equal to economic stagnation; extremes meet).  The end of cheap oil did not help iether. In a sense neoliberalism might be viewed as the elite reaction to the end of cheap oil, when it became clear that there are not enough cookies for everyone.

This growth in the financial sector's profits has not been an accident; it is the result of  engineered shift in the elite thinking, which changed government policies. The central question of politics is, in my view, "Who has a right to live and who does not".  In the answer to this question, neoliberal subscribes to Social Darwinism: ordinary citizens should be given much less rather than more social protection. Such  policies would have been impossible in 50th and 60th (A Short History of Neo-liberalism)

In 1945 or 1950, if you had seriously proposed any of the ideas and policies in today's standard neo-liberal toolkit, you would have been laughed off the stage at or sent off to the insane asylum. At least in the Western countries, at that time, everyone was a Keynesian, a social democrat or a social-Christian democrat or some shade of Marxist.

The idea that the market should be allowed to make major social and political decisions; the idea that the State should voluntarily reduce its role in the economy, or that corporations should be given total freedom, that trade unions should be curbed and citizens given much less rather than more social protection--such ideas were utterly foreign to the spirit of the time. Even if someone actually agreed with these ideas, he or she would have hesitated to take such a position in public and would have had a hard time finding an audience.

And this change in government polices was achieved in classic Bolsheviks coup d'état way, when yoiu first create the Party of "professional neoliberal revolutionaries". Who then push for this change and "occupy" strategic places like economics departments at the universities, privately funded think tanks, MSM, and then subvert one or both major parties.  The crisis of "New Deal Capitalism" helped, but without network of think tanks and rich donors, the triumph of neoliberalism in the USA would have been impossible:

...one explanation for this triumph of neo-liberalism and the economic, political, social and ecological disasters that go with it is that neo-liberals have bought and paid for their own vicious and regressive "Great Transformation". They have understood, as progressives have not, that ideas have consequences. Starting from a tiny embryo at the University of Chicago with the philosopher-economist Friedrich von Hayek and his students like Milton Friedman at its nucleus, the neo-liberals and their funders have created a huge international network of foundations, institutes, research centers, publications, scholars, writers and public relations hacks to develop, package and push their ideas and doctrine relentlessly.

Most economists are acutely aware of the increasing role in economic life of financial markets, institutions and operations and the pursuit of prifits via excotic instruments such as derivatives (all this constituted  financialization). This dominant feature of neoliberalism has huge the re-distributional implications, huge effects on the US economy, international dimensions and monetary system, depth and longevity of financial crises and unapt policy responses to them.

They have built this highly efficient ideological cadre because they understand what the Italian Marxist thinker Antonio Gramsci was talking about when he developed the concept of cultural hegemony. If you can occupy peoples' heads, their hearts and their hands will follow.

I do not have time to give you details here, but believe me, the ideological and promotional work of the right has been absolutely brilliant. They have spent hundreds of millions of dollars, but the result has been worth every penny to them because they have made neo-liberalism seem as if it were the natural and normal condition of humankind. No matter how many disasters of all kinds the neo-liberal system has visibly created, no matter what financial crises it may engender, no matter how many losers and outcasts it may create, it is still made to seem inevitable, like an act of God, the only possible economic and social order available to us.  

Neoliberalism naturally leads to secular stagnation due to redistribution of wealth up. which undermines purchasing power of the 99%, or more correctly 99.9 of the population. In the USA this topic became hotly debated theme in establishment circles after Summers speech in 2013.  Unfortunately it was suppressed in Presidential campaign of 2016. Please note that Sanders speaks about Wall Street shenanigans, but not about ideology of neoliberalism.  No candidates tried to address this problem of "self-colonization" of the USA, which is probably crucial to "making America great again" instead of continued slide into what is called "banana republic" coined by American writer O. Henry (William Sydney Porter 1862–1910). Here is how Wikipedia described the term:

Banana republic or banana state is a pejorative political science term for politically unstable countries in Latin America whose economies are largely dependent on exporting a limited-resource product, e.g. bananas. It typically has stratified social classes, including a large, impoverished working class and a ruling plutocracy of business, political, and military elites.[1] This politico-economic oligarchy controls the primary-sector productions to exploit the country's economy.[2]

... ... ...

In economics, a banana republic is a country operated as a commercial enterprise for private profit, effected by a collusion between the State and favoured monopolies, in which the profit derived from the private exploitation of public lands is private property, while the debts incurred thereby are a public responsibility.

This topic is of great importance to the US elite because the USA is the citadel of  neoliberalism. It also suggest that the natural way neoliberal economic system based on increasing of the level of inequality (redistribution of wealth up) should behave: after the initial economic boom (like in case of steroids use) caused by  financialization of economy (as well as dissolution of the USSR), helped by off-shoring of manufacturing, the destructive effects of this temporary boost come into foreground. Redistribution of wealth up increases inequality which after a certain delay starts to undercuts domestic demand. It also tilts the demand more toward conspicuous consumption (note the boom of luxury cars sales in the USA).  

But after  inequality reaches certain critical threshold  the economy faces extended period of low growth reflecting persistently weak private demand (purchasing power of lower 90% of population).  People who mostly have low level service economy jobs (aka MC-jobs) can't buy that much.  Earlier giants of American capitalism like Ford understood that, but Wall Street sharks do not and does not want.  They operate under principle "Après nous le déluge" ("After us, the deluge").

An economic cycle enters recession when total spending falls below expected by producers and they realize that production level is too high relative to demand. What we have under neoliberalism is Marx's crisis of overproduction on a new level. At this level it is intrinsically connected with the parasitic nature of complete financialization of the economy. The focus on monetary policy and the failure to enact fiscal policy options is the key structural defect of neoliberalism ideology and can't be changed unless neoliberal ideology is abandoned. Which probably will not happen unless another huge crisis hits the USA. That might not happen soon.  Bolshevism lasted more then 70 years. If we assume that the "age of neoliberalism" started at 1973 with Pinochet coup d'état in Chile, neoliberalism as a social system is just 43 years old (as of 2016). It still has some "time to live"(TTL) in zombies state due to the principle first formulated by Margaret Thatcher as TINA ("There Is No Alternative") -- the main competitor, bolshevism, was discredited by the collapse of the USSR and China leadership adoption of neoliberalism. While Soviet leadership simply abandoned the sinking ship and became Nouveau riche in a neoliberal society that followed, Chinese elite managed to preserved at least outer framework of the Marxist state and the political control of the Communist party (not clear for how long). But there was a neoliberal transformation of Chinese economy, initiated, paradoxically, by the Chinese Communist Party.

Currently, no other ideology, including old "New Deal" ideology can  compete with neoliberal ideology, although things started to change with Sanders campaign in the USA on  the left and Trump campaign on the right. Most of what we see as a negative reaction to neoliberalism in Europe generally falls into the domain of cultural nationalism.    

The 2008 financial crisis, while discrediting neoliberalism as an ideology (in the same way as WWII discredited Bolshevism), was clearly not enough for the abandonment of this ideology. Actually neoliberalism proved to be remarkably resilient after this crisis. Some researchers claim that it entered "zombie state" and became more bloodthirsty and ruthless.

There is also religious overtones of neoliberalism which increase its longevity (similar to Trotskyism, and neoliberalism can be called "Trotskyism for rich"). So, from a small, unpopular sect with virtually no influence, neo-liberalism has become the major world religion with its dogmatic doctrine, its priesthood, its law-giving institutions and perhaps most important of all, its hell for heathen and sinners who dare to contest the revealed truth.  Like in most cults adherents became more fanatical believers after the prophecy did not materialized. The USA elite tried partially alleviate this problem by resorting to military Keynesianism as a supplementary strategy. But while military budget was raised to unprecedented levels, it can't reverse the tendency. Persistent high output gap is now a feature of the US economy, not a transitory state.

But there is another factor in play here: combination of peak (aka "plato" ;-) oil and established correlation of  the speed of economic growth and prices on fossil fuels and first of all on oil. Oil provides more than a third of the energy we use on the planet every day, more than any other energy source (How High Oil Prices Will Permanently Cap Economic Growth - Bloomberg). It is dominant fuel for transport and in this role it is very difficult to replace. 

That means that a substantial increase of price of oil acts as a fundamental limiting factor for economic growth. And "end of cheap oil" simply means that any increase of supply of oil to support growing population on the planet and economic growth now requires higher prices. Which naturally undermine economic growth, unless massive injection of currency are instituted. that probably was the factor that prevented slide of the US economy into the recession in 2009-2012.  Such a Catch-22.

Growth dampening potential of over $100-a-barrel oil is now a well established factor. Unfortunately, the reverse is not true. Drop of oil price to below $50 as happened in late 2014 and first half of 2015 did not increase growth rate of the USA economy. It might simply prevented it from sliding it into another phase of Great Recession. Moreover when  economies activity drops, less oil is needed.  Enter permanent stagnation.

Also there is not much oil left that can be profitably extracted at prices below $80. So the current oil price slump is a temporary phenomenon, whether it was engineered, or is a mixture of factors including temporary overcapacity . Sooner or later oil prices should return to level "above $80", as only at this level of oil price capital expenditures in new production make sense. That des not mean that oil prices can't be suppressed for another year or even two, but as Herbert Stein aptly noted   "If something cannot go on forever, it will stop,"

 The alien spaceship landing

Imagine the alien spaceship landed somewhere in the world. There would be denial, disbelief, fear, and great uncertainty for the future. World leaders would struggle to make sense of the events. The landing would change everything.

The secular stagnation (aka "end of permanent growth") is a very similar event.  This also is the event that has potential to change everything, but it is much more prolonged in time and due to this less visible ("boiling frog effect").  Also this is not a single event, but a long sequence of related events that probably might last several decades (as Japan had shown) or even centuries. The current "Great Recession" might be just a prolog to those events. It is clearly incompatible with capitalism as a mode of production, although capitalism as a social system demonstrated over the years tremendous adaptability and it is too early to write it down completely.  Also no clear alternatives exists. 

A very slow recovery and the secular stagnation is characteristic of economies suffering from a balance-sheet recession (aka crisis of overproduction), as forcefully argued by Nomura’s Richard Koo and other economists. The key point is that private investment is down, not because of “policy uncertainty” or “increased regulation”, but because business-sector expectations about future profitability have become dramatically depressed — and rationally so — in a context characterized by heavy indebtedness (of both households and corporations). As businesses see the demand falls they scale down production which creates negative feedback look and depresses demand further. 

The key point is that private investment is down, not because of “policy uncertainty” or “increased regulation”, but because business-sector expectations about future profitability have become dramatically depressed — and rationally so — in a context characterized by heavy indebtedness (of both households and corporations). As businesses see the demand falls they scale down production which creates negative feedback look and depresses demand further.   

Five  hypothesis about the roots of secular stagnation

There are at least five different hypothesis about the roots of secular stagnation:

Summers’s remarks and articles were followed by an explosion of debate concerning “secular stagnation”—a term commonly associated with Alvin Hansen’s work from the 1930s to ’50s, and frequently employed in Monthly Review to explain developments in the advanced economies from the 1970s to the early 2000s.2 Secular stagnation can be defined as the tendency to long-term (or secular) stagnation in the private accumulation process of the capitalist economy, manifested in rising unemployment and excess capacity and a slowdown in overall economic growth. It is often referred to simply as “stagnation.” There are numerous theories of secular stagnation but most mainstream theories hearken back to Hansen, who was Keynes’s leading early follower in the United States, and who derived the idea from various suggestions in Keynes’s General Theory of Employment, Interest and Money (1936).

Responses to Summers have been all over the map, reflecting both the fact that the capitalist economy has been slowing down, and the role in denying it by many of those seeking to legitimate the system. Stanford economist John B. Taylor contributed a stalwart denial of secular stagnation in the Wall Street Journal. In contrast, Paul Krugman, who is closely aligned with Summers, endorsed secular stagnation on several occasions in the New York Times. Other notable economists such as Brad DeLong and Michael Spence soon weighed in with their own views.3

Three prominent economists have new books directly addressing the phenomena of secular stagnation.4 It has now been formally modelled by Brown University economists Gauti Eggertsson and Neil Mehrotra, while Thomas Piketty’s high-profile book bases its theoretical argument and policy recommendations on stagnation tendencies of capitalism. This explosion of interest in the Summers/Krugman version of stagnation has also resulted in a collection of articles and debate, edited by Coen Teulings and Richard Baldwin, entitled Secular Stagnation: Facts, Causes and Cures.5

Seven years after “The Great Financial Crisis” of 2007–2008, the recovery remains sluggish. It can be argued that the length and depth of the Great Financial Crisis is a rather ordinary cyclical crisis. However, the monetary and fiscal measures to combat it were extraordinary. This has resulted in a widespread sense that there will not be a return to “normal.” Summers/Krugman’s resurrection within the mainstream of Hansen’s concept of secular stagnation is an attempt to explain how extraordinary policy measures following the 2007–2008 crisis merely led to the stabilization of a lethargic, if not comatose, economy.

But what do these economists mean by secular stagnation? If stagnation is a reality, does their conception of it make current policy tools obsolete? And what is the relationship between the Summers/Krugman notion of secular stagnation and the monopoly-finance capital theory?

... ... ...

In “secular stagnation,” the term “secular” is intended to differentiate between the normal business cycle and long-term, chronic stagnation. A long-term slowdown in the economy over decades can be seen as superimposed on the regular business cycle, reflecting the trend rather than the cycle.

In the general language of economics, secular stagnation, or simply stagnation, thus implies that the long-run potential economic growth has fallen, constituting the first pillar of MISS. This has been most forcefully argued for by Robert Gordon, as well as Garry Kasparov and Peter Thiel.6 Their argument is that the cumulative growth effect of current (and future) technological changes will be far weaker than in the past. Moreover, demographic changes place limits on the development of “human capital.” The focus is on technology, which orthodox economics generally sees as a factor external to the economy and on the supply-side (i.e., in relation to cost). Gordon’s position is thus different than that of moderate Keynesians like Summers and Krugman, who focus on demand-side contradictions of the system.

In Gordon’s supply-side, technocratic view, there are forces at work that will limit the growth in productive input and the efficiency of these inputs. This pillar of MISS emphasizes that it is constraints on the aggregate supply-side of the economy that have diminished absolutely the long-run potential growth.

The second pillar of MISS, also a supply-side view, goes back at least to Joseph Schumpeter. To explain the massive slump of 1937, Schumpeter maintained there had emerged a growing anti-business climate. Moreover, he contended that the rise of the modern corporation had displaced the role of the entrepreneur; the anti-business spirit had a repressive effect on entrepreneurs’ confidence and optimism.7 Today, this second pillar of MISS has been resurrected suggestively by John B. Taylor, who argues the poor recovery is best “explained by policy uncertainty” and “increased regulation” that is unfavorable to business. Likewise, Baker, Bloom, and Davis have forcefully argued that political uncertainty can hold back private investment and economic growth.8

Summers and Krugman, as Keynesians, emphasize a third MISS pillar, derived from Keynes’s famous liquidity trap theory, which contends that the “full-employment real interest rate” has declined in recent years. Indeed, both Summers and Krugman demonstrate that real interest rates have declined over recent decades, therefore moving from an exogenous explanation (as in pillars one and two) to a more endogenous explanation of secular stagnation.9 The ultimate problem here is lack of investment demand, such that, in order for net investment to occur at all, interest rates have to be driven to near zero or below. Their strong argument is that there are now times when negative real interest rates are needed to equate saving and investment with full employment.

However, “interest rates are not fully flexible in modern economies”—in other words, market-determined interest rate adjustments chronically fail to achieve full employment. Summers contends there are financial forces that prohibit the real interest rate from becoming negative; hence, full employment cannot be realized.10

Some theorists contend that there has been demographic structural shifts increasing the supply of saving, thus decreasing interest rates. These shifts include an increase in life expectancy, a decrease in retirement age, and a decline in the growth rate of population.

Others, including Summers, point out that stagnation in capital formation (or accumulation) can be attributed to a decrease in the demand for loanable funds for investment. One mainstream explanation offered for this is that today’s new technologies and companies, such as Google, Microsoft, Amazon, and Facebook, require far less capital investment. Another hypothesis is that there has been an important decrease in the demand for loanable funds, although they argue this is due to a preference for safe assets. These factors can function together to keep the real interest rate very low. The policy implication of secular low interest rates is that monetary policy is more difficult to implement effectually; during a recession, it is weakened and can even become ineffectual.

Edward Glaeser, focusing on “secular joblessness,” places severe doubt on the first pillar of MISS, but then makes a very important additional argument. Glaeser rejects the notion that there has been a slowdown in technological innovation; innovation is simply “unrelenting.” Likewise, he is far less concerned with secular low real interest rates, which may be far more cyclical. “Therefore,” contends Glaeser, “stagnation is likely to be temporary.”

Nonetheless, Glaeser underscores secular joblessness, and thus the dysfunction of U.S. labor markets constitutes a fourth pillar of MISS: “The dysfunction in the labour market is real and serious, and seems unlikely to be solved by any obvious economic trend.” Somehow, then, the problem is due to a misfit of skills or “human capital” on the side of workers, who thus need retraining. “The massive secular trend in joblessness is a terrible social problem for the US, and one that the country must try to address” with targeted policy.11 Glaeser’s argument for the dysfunction of U.S. labor markets is based on recession-generated shocks to employment, specifically of less-skilled U.S. workers. After 1970, when workers lost their job, the damage to human capital became permanent. In short, when human capital depreciates due to unemployment, overall abilities and “talent” are “lost” permanently. This may be because the skills required in today’s economy need to be constantly practiced to be retained. Thus, there is a ratchet-like effect in joblessness caused by recessions, whereby recession-linked joblessness is not fully reversed during recoveries—and all this is related to skills (the human capital of the workers), and not to capital itself. According to Glaeser, the ratchet-like effect of recession-linked joblessness is further exacerbated by the U.S. social-safety net, which has “made joblessness less painful and increased the incentives to stay out of work.”12

Glaeser contends that, if his secular joblessness argument is correct, the macroeconomic fiscal interventions argued for by Summers and Krugman are off-base.13 Instead, the safety net should be redesigned in order to encourage rather than discourage people from working. Additionally, incentives to work need to be radically improved through targeted investments in education and workforce training.14 Such views within the mainstream debate, emphasizing exogenous factors, are generally promoted by freshwater (conservative) rather than saltwater (liberal) economists. Thus, they tend to emphasize supply-side or cost factors.

The fifth pillar of MISS contends that output and productivity growth are stagnant due to a failure to invest in infrastructure, education, and training. Nearly all versions of MISS subscribe to some version of this, although there are both conservative and liberal variations. Barry Eichengreen underscores this pillar and condemns recent U.S. fiscal developments that have “cut to the bone” federal government spending devoted to infrastructure, education, and training.

The fifth pillar of MISS necessarily reflects an imbalance between public and private investment spending. Many theorists maintain that the imbalance between public and private investment spending, hence secular stagnation, “is not inevitable.” For example, Eichengreen contends if “the US experiences secular stagnation, the condition will be self-inflicted. It will reflect the country’s failure to address its infrastructure, education and training needs. It will reflect its failure to…support aggregate demand in an effort to bring the long-term unemployed back into the labour market.”15

The sixth pillar of MISS argues that the “debt overhang” from the overleveraging of financial firms and households, as well as private and public indebtedness, are a serious drag on the economy. This position has been argued for most forcefully by several colleagues of Summers at Harvard, most notably Carmen Reinhart and Kenneth Rogoff.16 Atif Mian and Amir Sufi also argue that household indebtedness was the primary culprit causing the economic collapse of 2007–2008. Their policy recommendation is that the risk to mortgage borrowers must be reduced to avoid future calamities.17

As noted, the defenders of MISS do not necessarily support a compatibility between the above six pillars: those favored by conservatives are supply-side and exogenous in emphasis, while liberals tend towards demand-side and endogenous ones. Instead, most often these pillars are developed as competing theories to explain the warrant of some aspect of secular stagnation, and/or to defend particular policy positions while criticizing alternative policy positions. However, the concern here is not whether there is the possibility for a synthesis of mainstream views. Rather, the emphasis is on how partial and separate such explanations are, both individually and in combination.

Neoliberal economy actually needs bubbles to function

As Krugman said "We now know that the economic expansion of 2003-2007 was driven by a bubble. You can say the same about the latter part of the 90s expansion; and you can in fact say the same about the later years of the Reagan expansion, which was driven at that point by runaway thrift institutions and a large bubble in commercial real estate." In other words blowing bubbles is the fundamental way neoliberal economy functions, not an anomaly.

As much as the USA population is accustomed to hypocrisy of the ruling elite and is brainwashed by MSM, this news, delivered to them personally by the crisis of 2008 was too much for them not question the fundamentals (A Primer on Neoliberalism):

Of course, the irony that those same institutions would now themselves agree that those “anti-capitalist” regulations are required is of course barely noted. Such options now being considered are not anti-capitalist. However, they could be described as more regulatory or managed rather than completely free or laissez faire capitalism, which critics of regulation have often preferred.

But a regulatory capitalist economy is very different to a state-based command economy, the style of which the Soviet Union was known for. The points is that there are various forms of capitalism, not just the black-and-white capitalism and communism. And at the same time, the most extreme forms of capitalism can also lead to the bigger bubbles and the bigger busts.

In that context, the financial crisis, as severe as it was, led to key architects of the system admitting to flaws in key aspects of the ideology.

At the end of 2008, Alan Greenspan was summoned to the U.S. Congress to testify about the financial crisis. His tenure at the Federal Reserve had been long and lauded, and Congress wanted to know what had gone wrong. Henry Waxman questioned him:

[Greenspan’s flaw] warped his view about how the world was organized, about the sociology of the market. And Greenspan is not alone. Larry Summers, the president’s senior economic advisor, has had to come to terms with a similar error—his view that the market was inherently self-stabilizing has been “dealt a fatal blow.” Hank Paulson, Bush’s treasury secretary, has shrugged his shoulders with similar resignation. Even Jim Cramer from CNBC’s Mad Money admitted defeat: “The only guy who really called this right was Karl Marx.” One after the other, the celebrants of the free market are finding themselves, to use the language of the market, corrected.

Raj Patel, Flaw PDF formatted document, The Value of Nothing, (Picador, 2010), pp.4, 6-7

Now for the second time in history, the challenge is to save capitalism from itself

Now for the second time in history, the challenge is to save capitalism from itself: to recognize the great strengths of open, competitive markets while rejecting the extreme capitalism and unrestrained greed that have perverted so much of the global financial system in recent times. It took such a statesman as Franklin Delano Roosevelt to rebuild American capitalism after the Great Depression. New Deal policies allowed to rebuild postwar domestic demand, to engineer the Marshall Plan to rebuild Europe and to set in place the Bretton Woods system to govern international economic engagement.

With the abolishment of those policies blowing of one bubble after another, each followed by a financial crisis  became standard chain of the events. Since 1973 we already have a half-dozen bubbles following by economic crisis. It started with  Savings and loan crisis which partially was caused by the deregulation of S&Ls in 1980, by the Depository Institutions Deregulation and Monetary Control Act signed by President Jimmy Carter on March 31, 1980, an important step is a series that eliminated regulations initially designed to prevent lending excesses and minimize failures.

To hide this unpleasant fact neoliberals resort to so called the Great Neoliberal Lie:

What is neoliberalism

The fallacious and utterly misleading argument that the global economic crisis (credit crunch) was caused by excessive state spending, rather than by the reckless gambling of the deregulated, neoliberalized financial sector.

Just as with other pseudo-scientific theories and fundamentalist ideologies, the excuse that "we just weren't fundamentalist enough last time" is always there. The neoliberal pushers of the establishment know that pure free-market economies are as much of an absurd fairytale as 100% pure communist economies, however they keep pushing for further privatizations, tax cuts for the rich, wage repression for the ordinary, and reckless financial sector deregulations precisely because they are the direct beneficiaries of these policies. Take the constantly widening wealth gap in the UK throughout three decades of neoliberal policy. The minority of beneficiaries from this ever widening wealth gap are the business classes, financial sector workers, the mainstream media elite and the political classes. It is no wonder at all that these people think neoliberalism is a successful ideology. Within their bubbles of wealth and privilege it has been. To everyone else it has been an absolute disaster.

Returning to a point I raised earlier in the article; one of the main problems with the concept of "neoliberalism" is the nebulousness of the definition. It is like a form of libertarianism, however it completely neglects the fundamental libertarian idea of non-aggression. In fact, it is so closely related to that other (highly aggressive) US born political ideology of Neo-Conservatism that many people get the two concepts muddled up. A true libertarian would never approve of vast taxpayer funded military budgets, the waging of imperialist wars of aggression nor the wanton destruction of the environment in pursuit of profit.

Another concept that is closely related to neoliberalism is the ideology of minarchism (small stateism), however the neoliberal brigade seem perfectly happy to ignore the small-state ideology when it suits their personal interests. Take the vast banker bailouts (the biggest state subsidies in human history) that were needed to save the neoliberalised global financial sector from the consequences of their own reckless gambling, the exponential growth of the parasitic corporate outsourcing sector (corporations that make virtually 100% of their turnover from the state) and the ludicrous housing subsidies (such as "Help to Buy and Housing Benefits) that have fueled the reinflation of yet another property Ponzi bubble.

The Godfather of neoliberalism was Milton Friedman. He made the case that illegal drugs should be legalised in order to create a free-market drug trade, which is one of the very few things I agreed with him about. However this is politically inconvenient (because the illegal drug market is a vital source of financial sector liquidity) so unlike so many of his neoliberal ideas that have consistently failed, yet remain incredibly popular with the wealthy elite, Friedman's libertarian drug legalisation proposals have never even been tried out.

The fact that neoliberals are so often prepared to ignore the fundamental principles of libertarianism (the non-aggression principle, drug legalisation, individual freedoms, the right to peaceful protest ...) and abuse the fundamental principles of small state minarchism (vast taxpayer funded bailouts for their financial sector friends, £billions in taxpayer funded outsourcing contracts, alcohol price fixing schemes) demonstrate that neoliberalism is actually more like Ayn Rand's barmy (greed is the only virtue, all other "virtues" are aberrations) pseudo-philosophical ideology of objectivism  than a set of formal economic theories.

The result of neoliberal economic theories has been proven time and again. Countries that embrace the neoliberal pseudo-economic ideology end up with "crony capitalism", where the poor and ordinary suffer "austerity", wage repression, revocation of labor rights and the right to protest, whilst a tiny cabal of corporate interests and establishment insiders enrich themselves via anti-competitive practices, outright criminality and corruption and vast socialism-for-the-rich schemes.

Neoliberal fanatics in powerful positions have demonstrated time and again that they will willingly ditch their right-wing libertarian and minarchist "principles" if those principles happen to conflict with their own personal self-interest. Neoliberalism is less of a formal set of economic theories than an error strewn obfuscation narrative to promote the economic interests, and  justify the personal greed of the wealthy, self-serving establishment elite.
 

Bubbles as the neoliberal tool for wealth redistribution

The 1930s, a well researched period of balance-sheet recession, provides some interesting perspective despite large historical distance.  Roosevelt was no socialist, but his New Deal did frighten many businesses, especially large business which BTW attempted a coupe to remove him from is position. Fortunately for Roosevelt CIA did not exist yet.  And New Deal  government projects has been much bigger and bolder, then anything Obama ever tried, because Obama administration was constrained in its action by dominant neoliberal thinking. Like regulatory capture, which is an immanent feature of neoliberalism,  there is also less known and less visible ideological capture of the government. Which also makes neoliberalism more similar to bolshevism as this ideological capture and related inability of the USSR elite to modernize the economy on some "mixed" principles, when over-centralization stopped working. It, along with the collapse of the ideology,  probably was one of the main reasons of the collapse of the USSR.  Chinese leadership managed to do this and introduced "new economic policies"(NEP). 

Uner New deal regime when public investment and hence aggregate demand expanded, the economy started to grow anyway. Roosevelt did have a vision and he did convince the electorate about the way to go. Cheap optimism of Reagan, or even audacity of hope "Obama style" were not enough. After all, as Francis Bacon may remind us: “Hope is a good breakfast, but it is a bad supper” (Apophthegms, 1624).

Obama/Bernanke-style attempts to stimulate growth by pure injection of cheap money in this environment not only inflate new bubbles instead of old one, with which the fighting starts. They also lead to massive redistribution of wealth that makes the problem even worse:

Paul Krugman tells us that Larry Summers joined the camp concerned about secular stagnation in his I.M.F. talk last week, something that I had not picked up from prior coverage of the session. This is good news, but I would qualify a few of the points that Krugman makes in his elaboration of Summers' remarks.

First, while the economy may presently need asset bubbles to maintain full employment (a point I made in Plunder and Blunder: The Rise and Fall of the Bubble Economy), it doesn't follow that we should not be concerned about asset bubbles. The problem with bubbles is that their inflation and inevitable deflation lead to massive redistribution of wealth.

Larry Summers was the first establishment economist who conceded that this is the fact (Wikipedia)

... Larry Summers presented his view during November 2013 that secular (long-term) stagnation may be a reason that U.S. growth is insufficient to reach full employment: "Suppose then that the short term real interest rate that was consistent with full employment [i.e., the "natural rate"] had fallen to negative two or negative three percent. Even with artificial stimulus to demand you wouldn't see any excess demand. Even with a resumption in normal credit conditions you would have a lot of difficulty getting back to full employment."[13][14]

Robert J. Gordon wrote in August 2012:

"Even if innovation were to continue into the future at the rate of the two decades before 2007, the U.S. faces six headwinds that are in the process of dragging long-term growth to half or less of the 1.9 percent annual rate experienced between 1860 and 2007. These include demography, education, inequality, globalization, energy/environment, and the overhang of consumer and government debt. A provocative 'exercise in subtraction' suggests that future growth in consumption per capita for the bottom 99 percent of the income distribution could fall below 0.5 percent per year for an extended period of decades".[15]

One hypothesis is that high levels of productivity greater than the economic growth rate are creating economic slack, in which fewer workers are required to meet the demand for goods and services. Firms have less incentive to invest and instead prefer to hold cash. Journalist Marco Nappolini wrote in November 2013:

 "If the expected return on investment over the short term is presumed to be lower than the cost of holding cash then even pushing interest rates to zero will have little effect. That is, if you cannot push real interest rates below the so-called short run natural rate [i.e., the rate of interest required to achieve the growth rate necessary to achieve full employment] you will struggle to bring forward future consumption, blunting the short run effectiveness of monetary policy...Moreover, if you fail to bring it below the long run natural rate there is a strong disincentive to increase fixed capital investment and a consequent preference to hold cash or cash-like instruments in an attempt to mitigate risk. This could cause longer-term hysteresis effects and reduce an economy's potential output."[13] 

Cost of energy as a defining new factor

The cost of energy is probably another reason of secular stagnation along with excessive public and private debt. Rising cost of energy is deadly for capitalism.  Here are some comments that might clarify the situation:

raskolnikov:

This is the biggest crybaby column Krugman's ever written. He should be ashamed of himself and return his Nobel prize immediately. Has he ever put down Keynes long enough to read a little Marx?  Here's Robert Brenner summing it up in 2009:

 What mainly accounts for the long-term weakening of the real economy is a deep, and lasting, decline of the rate of return on capital investment since the end of the 1960s.

The failure of the rate of profit to recover is all the more remarkable, in view of the huge drop-off in the growth of real wages over the period.

The main cause, though not the only cause, of the decline in the rate of profit has been a persistent tendency to overcapacity in global manufacturing industries."

 There's more, too. Instead of siding with crackpot Summers, Krugman should expand his research and be of some use to us all.

Kievite

I am not sure that it is correct to think about public debt as internal debt. It's all about energy.

That means that public debt is to a large extent foreign due to unalterable oil consumption (and related trade deficits). And that completely changes the situation unless you are the owner of the world reserve currency.

But even in the latter case (exorbitant privilege as Valéry Giscard d'Estaing called it ) you can expect attacks on the status of the currency as world reserve currency. The growth is still supported via militarization, forced opening of foreign markets (with military force, if necessary) and conversion of the state into national security state. But as Napoleon admitted "You can do anything with bayonets except sit on them"

One positive thing about high public (and to a large extent foreign owned) debt in the USA is that it undermines what Bacevich called "new American militarism" (http://www.amazon.com/The-New-American-Militarism-Americans/dp/0195173384). Bacevich argues that this is distinct political course adopted by the "defense intellectuals," the evangelicals, and the neocons. And they will never regret their failed efforts such as Iraq invasion.

From Amazon review:

=== Quote ===

Bacevich clearly links our present predicaments both at home and abroad to the ever greater need for natural resources, especially oil from the Persian Gulf. He demolishes all of the reasons for our bellicosity based on ideals and links it directly to our insatiable appetite for oil and economic expansion. Naturally, like thousands of writers before him, he points out the need for a national energy policy based on more effective use of resources and alternative means of production.

=== End of Quote ==

Heinberg's Five Axioms of Sustainability

As Heinberg explained fossil fuels, primarily oil, permeate every aspect of our modern culture - from agriculture to cities and a long-term perspective. In the age of almost 7 billion people demanding more and more of limited resources, the media, politicians and governments tend to only report short-term perspectives and ignore Heinberg's Five Axioms of Sustainability to the extent that these concepts are taboo to be spoken, discussed or thought (Heinberg, Richard (2007) Five Axioms of Sustainability):

1. (Tainter’s Axiom): Any society that continues to use critical resources unsustainably will collapse.

Exception: A society can avoid collapse by finding replacement resources.

Limit to the exception: In a finite world, the number of possible replacements is also finite.

...

2. (Bartlett’s Axiom): Population growth and/or growth in the rates of consumption of resources cannot be sustained.

...

3. To be sustainable, the use of renewable resources must proceed at a rate that is less than or equal to the rate of natural replenishment.

...

4. To be sustainable, the use of non-renewable resources must proceed at a rate that is declining, and the rate of decline must be greater than or equal to the rate of depletion.

The rate of depletion is defined as the amount being extracted and used during a specified time interval (usually a year) as a percentage of the amount left to extract.

...

5. Sustainability requires that substances introduced into the environment from human activities be minimized and rendered harmless to biosphere functions.

In cases where pollution from the extraction and consumption of non-renewable resources that has proceeded at expanding rates for some time threatens the viability of ecosystems, reduction in the rates of extraction and consumption of those resources may need to occur at a rate greater than the rate of depletion. 

Archaeologist Joseph Tainter, in his classic study The Collapse of Complex Societies (1988), demonstrated that collapse is a frequent if not universal fate of complex societies and argued that collapse results from declining returns on efforts to support growing levels of societal complexity using energy harvested from the environment.  Jared Diamond’s popular book Collapse: How Societies Choose to Fail or Succeed (2005) similarly  makes the argument that collapse is the common destiny of societies that ignore resourse constraints. This axiom defines sustainability by the consequences of its absence—that is, collapse.

Historical periods of stagnation in the United States

Adapted from Wikipedia

Excluding the current, there were two period of stagnation in the USA history:

Construction of structures, residential, commercial and industrial, fell off dramatically during the depression, but housing was well on its way to recovering by the late 1930s.[17]

The depression years were the period of the highest total factor productivity growth in the United States, primarily to the building of roads and bridges, abandonment of unneeded railroad track and reduction in railroad employment, expansion of electric utilities and improvements wholesale and retail distribution.[17]

The war created pent up demand for many items as factories that once produced automobiles and other machinery converted to production of tanks, guns, military vehicles and supplies. Tires had been rationed due to shortages of natural rubber; however, the U.S. government built synthetic rubber plants. The U.S. government also built synthetic ammonia plants, aluminum smelters, aviation fuel refineries and aircraft engine factories during the war.[17] After the war commercial aviation, plastics and synthetic rubber would become major industries and synthetic ammonia was used for fertilizer. The end of armaments production free up hundreds of thousands of machine tools, which were made available for other industries. They were needed in the rapidly growing aircraft manufacturing industry.[18]

The memory of war created a need for preparedness in the United States. This resulted in constant spending for defense programs, creating what President Eisenhower called the military-industrial complex.

U.S. birth rates began to recover by the time of World War II, and turned into the baby boom of the postwar decades. A building boom commenced in the years following the war. Suburbs began a rapid expansion and automobile ownership increased.[17]

High-yielding crops and chemical fertilizers dramatically increased crop yields and greatly lowered the cost of food, giving consumers more discretionary income. Railroad locomotives switched from steam to diesel power, with a large increase in fuel efficiency. Most importantly, cheap food essentially eliminated malnutrition in countries like the United States and much of Europe.

Many trends that began before the war continued:

Researchers who contributed to understating secular stagnation

One of the first researchers who clearly attributed secular stagnation problem to neoliberalism was Alan Nasser, Professor Emeritus of Political Economy and Philosophy at The Evergreen State College. In his September 22, 2005 paper  ECONOMIC LAWS, STRUCTURAL TENDENCIES, SECULAR STAGNATION THEORY, AND THE FATE OF NEOLIBERALISM  he pointed out the key features of secular stagnation long before Summers started to understand the problem  and even befor the economic crash of 2008 ;-)

September 22, 2005 | alannasser.org

Alan Nasser Invited presentation, University of Lille,

"We have now grown used to the idea that most ordinary or natural growth processes (the growth of organisms, or popu- lations of organisms or, for example, of cities) is not merely limited, but self-limited, i.e. is slowed down or eventually brought to a standstill as a consequence of the act of growth itself. For one reason or another, but always for some reason, organisms cannot grow indefinitely, just as beyond a certain level of size or density a population defeats its own capacity for further growth."

Sir Peter Medawar, The Revolution of Hope

"A business firm grows and attains great strength, and afterwards perhaps stagnates and decays; and at the turning point there is a balancing or equilibrium of the forces of life and decay. And as we reach to the higher stages of our work, we shall need ever more and more to think of economic forces as those which make a young man grow in strength until he reaches his prime; after which he gradually becomes stiff and inactive, till at last he sinks to make room for other and more vigorous life."

Alfred Marshall, Principals of Economics (1890)

"Though Keynes's 'breakdown theory is quite different from Marx's, it has an important feature in common with the latter: in both theories, the breakdown is motivated by causes inherent to the working of the economic engine, not by the action of factors external to it."

Joseph Schumpeter, Ten Great Economists

In this paper I shall address two major issues. Firstly, I shall discuss the implications for economic theory of a conception of economic laws widely at variance with the empiricist and/or positivist account of what laws are, how they are discovered, and how they are related to theory. At the same time, I will reject one cornerstone of anti-positivist thought, namely the idea that one cannot provide an account of laws that is fundamentally the same for the natural and the social sciences. Thus, I shall argue that an anti-positivist account of laws is entirely compatible with a conception of scientific laws that applies to both the "hard" (natural) and the "soft" (social) sciences. I shall defend this position by showing its application to economics and economic laws. In doing so, I will compare and contrast both natural-scientific (primarily physical) laws and social-scientific (primarily economic) laws. Secondly, I will argue that perhaps the most significant economic law descriptive of mature capitalism is the law of secular stagnation. The latter states that it is the natural tendency of a developed, industrialized capitalist economy to default to a state of chronic excess capacity and underconsumption. And this is itself a result of the tendency in advanced capitalism for the economic surplus (roughly, the difference between the Gross Domectic Product and the cost of producing the GDP) to grow at a rate more rapid than the growth of profitable industrial investment opportunities. In the course of my discussion I will use the United States as a paradigm case, Much as Marx attempted to identify the underlying features of the accumulation process by reference to England during the Industrial Revulution.

This has in fact been the state of global capital since the end of the "Golden Age" and the commencement of the age of globalized Reaganism/Thatcherism, i.e. the Age of Neoliberalism. I date the transition as commencing in 1973, the last year of post-War Keynesian growth rates in the USA. In fact, I will argue, neoliberal economic policy exacerbates capitalism'a tendency to stagnation. Let me begin with an account of economic laws.

LAWS, GENERATIVE MECHANISMS AND TENDENCIES

On the Humean or radical empiricist (positivist) account of laws, the latter are descriptions of observed regularities. Presumably, the scientist observes a "constant conjunction" of different kinds of happening, and infers from the regularity of the conjunction that the latter could not be merely accidental, and so concludes that the observed pattern of regularities must be nomological or law-like. 'Sodium chloride dissolves in water' and 'Metal expands when heated' would be simple examples of the results of this account of how laws of nature are discovered.

That this empiricist account is flawed becomes evident when we consider full-fledged laws of a genuine natural science, e.g. physics. I emphasize that laws are components of theories, which themselves are constitutive of established scientific disciplines, such as physics, chemistry, and biology. In fact, the two "laws" mentioned at the end of the preceding paragraph are not laws of physics at all. Among the genuine laws of physics is, e.g., 'Falling bodies near the surface of the earth accelerate at a constant rate.' This law is certainly not established by the observation of repeated conjunctions of events. On the contrary, actually observed falling bodies in "open systems", that is, in the circumstances of everyday life, conspicuously fail to conform to this law. Yet this is not taken to refute the law. For the law describes the behavior of bodies in a vacuum, that is to say, in a "closed system", one created by the scientist, typically in a laboratory situation. Philosophers of science have tended to ignore the distinction between regularities observed only in closed systems, and conjunctions observed in everyday life, which, as such, have no value as contributions to scientific knowledge. These philosophers have, accordingly, written as if the regularities in question were features of open systems, of nature. This confusion impedes our understanding of all types of laws, from physical to economic.

This failure –until relatively recently- of philosophers of science to properly attend to the importance of laboratory work in the acquisition of scientific knowledge is due to the fact that these philosophers have focused almost exclusively on science as established theory, i.e. as a way of representing the world. They had ignored how these theories were actually established. That is, they paid little attention to experiment, which is a way of intervening in the world. This inattention to what happens in closed systems created in the laboratory led thinkers to miss the importance of the concept of tendencies or dispositions in grasping the concept of a law of science. Let us dwell on this point and its relation to economic laws.

It is not that our knowledge of natural laws is not based on observed regularities. The point, rather, is that these regularities are not found in nature. They are found in closed systems, elaborately designed experimental circumstances found in laboratories. Yet, we correctly believe that what we learn in experimental situations gives us knowledge that is not confined to these situations. We believe that what we learn from observations of repeated patterns in experiments gives us not only knowledge of the behavior of objects in laboratory circumstances, but also knowledge of these same (kinds of) objects as they behave in nature, in the open systems of everyday life. But scientifically significant repeated patterns are not found in the world of daily life. This raises profound epistemological and ontological questions.

The most significant epistemological question arises from the following consideration: Were it not for the intervention of the experimenter, closed-system regularities would not obtain. Hence, the experimenter is a causal agent of the pattern of regularities observed in the laboratory. It is these contrived conjunctions which we invoke to justify our belief in (usually causal) laws. And while these regularities are the (partial) result of the intervention of the experimenter, we do not believe that the experimenter in any way originates the laws whose existence is attested to by the contrived regularities. The question therefore arises: What justifies our (correct) belief that knowledge obtained in closed laboratory systems designed by an agent applies also in open systems, i.e. in nature, which of course is not designed by scientists and does not evidence the regularities found under designed experimental circumstances?

I want to suggest that this question comes to the same as the following question: What must nature be like, and what must experiment reveal, in order for experimental knowledge to be able to be legitimately extended to the world outside of the laboratory, i.e. to nature? Note that this is a Realist question: it asks what we must presuppose about the constitution of the world in order that our experimentally-based scientific beliefs be justified. This is the precise Realist counterpart to Kant's Idealist question: What must we presoppose our minds –as opposed to nature or the world- to be like in order for scientific knowledge to be possible? I will argue that the answer to our Realist question provides the conceptual resources to elucidate the general nature of economic laws and economic theory, and the nature of the subject matter investigated by economists.

I will argue that since we believe that what we learn by experimental observation justifies our claim to knowledge of the experimental objects as they behave in nature, we must assume that these objects possess natural structures, similar to what Aristotle and the scholastics called "natures" or "essences." A natural structure must be conceived as what Critical Realists call a generative mechanism (hereafter, GM). The latter is a specific mode of material organization. What GMs generate are tendencies or dispositions to behave in characteristic ways. The statement that a physical thing or a social institution or structure tends to generate characteristic regularities is a statement of a law. The natural structure of salt, expressed in chemistry as HCl, is such that when it is mixed with water, whose natural structure or organization is expressed as H2O, it tends to dissolve. Gases tend to expand when heated and falling bodies near the surface of the earth tend to accelerate at a constant rate. These are statements of chemical and physical laws. We shall see that precisely the same kind of analysis can be made of laws in economics.

Tendencies are not the same as trends. The latter are merely observed regularities; there need be no implication that an underlying structural feature of the thing in question generates the regularity. This feature of laws is reflected in ordinary language in non-scientific contexts: we might say "He has a tendency to exaggerate." We mean that a disposition to exaggerate is a natural expression of his underlying character. We do not usually mean that he exaggerates whenever it is possible for him to exaggerate. This is part of the meaning of 'tendency.' Thus, tendencies can exist without being exercised. This happens when, e.g. salt is not mixed with water. Salt's nomological tendency to dissolve in water remains its categorical property even in the absence of circumstances in which its tendency to dissolve can be exercised. In addition, tendencies can be exercised without being realized. This is the case in the natural sciences when we observe, in non-laboratory situations, falling bodies accelerating at different rates. Indeed, no falling body in open systems is observed to accelerate at a constant or the same rate. But of course this is not taken to falsify the law of falling bodies. In nature, GMs continue to act in their characteristic ways without producing the patterned outcomes observable in closed experimental systems. This is so because in nature a multiplicity of GMs combine, interact and collide such as to result in the (scientifically irrelevant) flux of phenomena of the everyday world. The realization of a natural tendency can, in other words, be offset by counteracting forces. Thus, empiricism's mistake is to fail to recognize that GMs operate independent of the effects they generate. That is, GMs endure and go on acting (in the way that experimental closure enables us to identify) in nature, i.e. in open systems, where patterned regularities do not prevail. Statements about tendencies are not equivalent, salva veritate, to statements about their effects. Laws may exist and exercise their tendencies or powers even though no Humean "constant conjunctions" are observed. (This would be the case if it happened that the practice of creating closed experimental conditions had never been engaged in, i.e. in a world without science.)

LAWS, GENERATIVE MECHANISMS AND TENDENCIES IN ECONOMICS

GMs are not confined to the natural world. Natural structures are not the only structures there are. Plainly, there are humanely constructed structures. Capitalism is one such structure. Structures of this kind, GMs, that are dynamic by nature, i.e. which are characteristically diachronic, be they natural or socially constituted, share the same ontology. This should not be confused with the radical empiricist (positivist) claim that the natural and the social sciences share the same method. Clearly they do not: closed experimental situations exist but are not typical i istic outcomes ceteris paribus, ie. other things being equal, i.e. ceteris absentibus, other things being absent. When we identify the tendency of a thing, we specify what will happen, as a matter of course, if interfering conditions are absent. That is the point of vacuums in the closed systems created in laboratory experiments: they permit exercised tendencies, i.e. tendencies in operation, to be realized. If we want to know what gases tend to do when acted upon by heat, we eliminate all potential counteracting forces by creating a vacuum in the chamber, so that both gas and heat can express their natures unimpeded.

Thus, implicit in both physical- and social-scientific practice is the crucial distinction between the exercise and the realization (or manifestation) of a tendency. This distinction is essential to structural analysis in economics because of the impossibility of creating the social equivalent of a vacuum in the social sciences, which deal with the open systems of everyday life, where a great many forces and tendencies collide. Accordingly, just as the law of the tendency of falling bodies to accelerate at a constant rate is not falsified by the failure of falling bodies to behave accordingly in open systems, so too, e.g., the law of the tendency of the growth of productive capacity to outpace the growth of profitable investment opportunities -the thesis of secular stagnation theory- is not undermined by the remarkable growth rates of the Golden Age. In both cases, the presence of offsetting factors prevents the structurally generated tendency from being realized or manifested. I argue that the same can be said for any putative economic law.

In social science –and this is most conspicuous in economics, the most theoretically developed of the human sciences- we compensate for the absence of experimentally closed systems by constructing their functional equivalent, which we might call, in terms redolent of Weber, an ideal-typical theoretical model. It is an unfortunate habit (perhaps a tendency in the above-elaborated sense…) of mainstream economists to employ these models as if they described the open-system observable facts of economic life. This is, I suspect, a consequence of the economic empiricist's mistake referred to above, namely to think that GMs, if they must be spoken of at all, are to be conceived as reducible to their effects. (Recall Hume's claim, inspired by his reading of Newton, to expunge all notions of "power", "generation" and "production" from his analyses.) But, as noted above, GMs in both the social and the natural sciences employ unrealistic models, i.e. models which do not pretend to offer the equivalent of a photographic representation of the world. In both natural-scientific experiments and social-scientific ideal-type models, an attempt is made to abstract from the nonessential. We seek to place the spotlight of theory on what is necessary to the situation, system or institution under investigation, and to prescind from the arbitrary and accidental. In economics we seek to identify those features of capitalism that make it what it is. This enables us to identify capitalism's distinct and characteristic tendencies, and to describe what will happen as a result of the exercise of these tendencies, ceteris absentibus.

That there are such tendencies seems to me to be uncontroversial. We all know, for example, that cyclical downturns are not mere empirical contingencies of capitalist development, but structurally generated tendencies which follow inexorably from the specific mode of organization (structure) of capitalism. And like all tendencies, their realization can be offset, as we have seen above, by counteracting factors, such as fiscal and monetary policy. Other examples would be what Marx called the tendencies of capital to concentrate and centralize. The tendency, and corresponding law, with which I will be primarily concerned in this paper is constitutive of the theory of secular stagnation, and is far more likely than the immediately foregoing examples to generate controversy. I refer to the tendency of mature capitalism to suffer from a chronic paucity of profitable industrial investment opportunities, relative to the great magnitude of its investable surplus. Let us look more closely at this tendency.

THE THEORY OF SECULAR STAGNATION

It is worth mentioning that the view that the continuous accumulation of capital is both essential to the normal development of capitalist societies and essentially self-limiting was held by virtually all of the major modern political economists, in the form of one version or another of the doctrine of the falling rate of profit. Adam Smith explained the secular decline of the profit rate by the increasing abundance of capital in a developing capitalist society. Ricardo and Mill believed that the rate of profit would be depressed by the diminishing productivity of the land which would drive up the price of wage goods and therefore of the wages of labor, and so drive down the profits of capital. Marx pointed to the increasing capital-intensity of industry and the paucity of working-class purchasing power relative to the productive capacity of the economy, as the principal threat to the profit rate. And Keynes held that in mature capitalist economies the "marginal efficiency of capital", i.e. the expected rate of return (over cost) on an additional unit of a given capital asset, would tend to decline. All these thinkers had an at least intuitive appreciation of the fact that the growth of capital tends to be terminally self-limiting. (It is worth citing a remark of Joseph Shumpeter at this point:

"Though Keynes's 'breakdown theory is quite different from Marx's, it has an important feature in common with the latter: in both theories, the breakdown is motivated by causes inherent to the working of the economic engine, not by the action of factors external to it.")

In my estimation, no one understood the underlying dynamics of the tendency to stagnation better than the Polish economist Michal Kalecki, who is known to have developed the essentials of Keynes's General Theory before Keynes himself (and to have produced far more elegant mathematical formulations thereof). Perhaps the best way to understand Kalecki's thought is to see him as having argued that certain features of a not-yet-mature industrializing economy persist after the process of industrialization has been accomplished, with the effect that the developed capitalist economy is saddled with a problem of chronic excess capacity. Let me sketch this train of thought.

In the course of their natural growth capitalist economies reach a level of industrial development characterizable as maturity, a point beyond which growth must either cease, or be sustained by exogenous (in a sense to be elucidated below) means. Straight away we are confronted with a rejection of an assumption that is implicit in mainstream neoclassical theory, viz. that both the supply and the demand curves shift, virtually automatically, to the right. On the stagnationist conceptualization of growth or development, the process of development is not everlasting, but rather is at some point accomplished. There is the period, industrialization, during which the economy is developing, and which culminates in a (finally) industrialized or developed infrastructure. At this stage there will have been built up, or "accumulated", a complement of plant and equipment in steel production, machine tools, power stations, transport systems, etc., that is capable of satisfying a level of consumption demand consistent with the moral limits of a reasonably civilized style of life, the constraints imposed by a finite fund of natural resources, and, most importantly for stagnation theory, the limited possibilities of what Marx called "expanded reproduction" imposed by the accumulation process itself.

This account point can be expanded as follows. During any period of industrialization, the growth of the capital goods industry (hereafter, following Marx, Department I, or DI) must outpace the growth of the consumption goods industries (hereafter, again following Marx, Department II, or DII). Indeed, it belongs to the nature of the process of industrialization that the demand for the output of DI cannot be a function of the behavior of consumption demand; during industrialization, investment demand is both rapid and relatively autonomous. For if the principal project is to develop the means of production, then a disproportionate share of national wealth must be devoted to investment/accumulation at the expense of consumption. Strategic capital goods such as transport and communications networks and steel mills cannot be built bit by bit. This is clear with respect to railroads (Recall Keynes's remark that "Two pyramids are better than one, and two masses for the dead better than one; but two railroads from London to York are not necessarily better than one."), but perhaps not as clear with respect to steel facilities.

Suppose 1) that the efficient production of steel requires equipment with the capacity to produce 200,000 tons of steel, and 2) that demand turns out to be for 300,000 tons. The investor has two alternatives, either to forgo an extra market or to take a chance and add another 200.000 tons. On the second alternative, the one virtually assured in a period of (rapid) industrialization, the manufacturer is left with a surplus capacity of 100,000 tons. Here we see, writ small, a crucial source of two basic tendencies of capitalist development, the unrelenting pressure to expand markets, and the tendency to overproduction of a specific kind, namely the overproduction of capital goods, the tendency to overaccumulation. Each of these tendencies is the basis of a corresponding law of economics: Wherever we find a competitive, profit-driven market economy, we must also find a system-driven tendency to expand markets, and: Wherever we find a competitive, profit-driven market economy, we must also find a system-driven tendency for the growth of productive capacity to outpace the growth of effective demand.

As we have seen, all the major classical political economists anticipated the stationary state; they all assumed that the period of development or industrialization would come to an end. Basic industries would be in place, and DI would be capable of meeting all the replacement and expansion demands of DII. Prescinding for the moment from the emergence of new industries, DI would no longer be a source of substantial expansion demand for its own output; most of DI's internal expansion demand would be extinct.

But this is not th hread of classical (and perhaps neoclassical) theory contains the assurance that the capitalist economy provides a mechanism that in the long run counteracts the tendency of the demand for the products of DI to peter out. As one might expect, this is the price mechanism, which brings about, in the circumstances described above, a falling rate of profit (or interest) and thereby a simultaneous check on accumulation and spur to consumption. The causal chain is simple: the fall of the profit rate would lower capital's share of national income, i.e. it would transfer income from capital to labor. Thus, the demand gap created by the sharp waning of DI's expansion demand would be made up by the increase in consumption demand, which would of course mean an expansion in the demand for the output of DII. Moreover, an immediate expansion of DII at the expense of DI in order to assure a rapid transition out of the stationary state would be entirely feasible given the adaptability of certain key industries in DI to new market conditions resulting from the newly-expanded purchasing power of the working class. The construction of new factories could, for example, yield to the construction of new homes.

The theoretical elegance of this scenario is impressive -almost inspirational- but, alas for illusions, the price mechanism does not work this way. For the above-mentioned transfer in national income from capital to labor is supposed to happen when industrialization comes to an end by virtue of its having been accomplished. But from the capitalists' perspective, it is as if nothing counts as industrialization coming to an end. New industries, for example, can create a situation functionally equivalent to industrialization. "Accumulate, accumulate, that is Moses and the prophets."

We have at this point arrived at a picture of a developed capitalist economy which is in a state of permanent industrialization. Excess capacity prevails and working-class income is stagnant or declining. Interestingly, this has in fact been the state of both the U.S. and the global economy since 1973. According to the foregoing analysis, this reflects the fact that the U.S. and global economies are now instances not merely of the exercise of the law of the tendency of mature capitalism to stagnate, but of its realization. To put it differently: these economies are now in their natural state.

But important questions immediately arise. Why are these economies in their natural state now? And if there is a structurally generated tendency for capitalist economies to stagnate, how shall we account for the historically unprecedented growth rates of the Golden Age? I have barely sketched an outline of a response to these challenges above: if there is indeed a tendency for capitalism to stagnate, then there must have been in operation during the Golden Age what I called "counteracting forces and tendencies" which had spent themselves by the mid-1970s. In the absence of new offsetting forces, the tendency to stagnate has, as we should expect, re-asserted itself. These claims require further elaboration, and it is to this task that I now turn.

SECULAR STAGNATION AND TRANSFORMATIONAL GROWTH

In order to account for the actual pattern of capitalist growth in the context of stagnation theory, we must reflect on the kind of growth required by capitalist economic arrangements. Mainstream theory does not distinguish between kinds of growth if and when it addresses the specific requirements of capitalist growth at all. This is, I believe, a serious error. I will begin by introducing the notion of transformational growth, which transforms the entire way of life of society and absorbs exceptionally large amounts of the investible surplus. My point shall be that a capitalist economy cannot sustain growth merely by producing more and more different types of widgets, in the absence of pervasive structural change. Growth sustained in the latter manner is transformational growth.

We are forced to introduce the concept of transformational growth for reasons related to my earlier discussion of the structural features of mature capitalism which generates a chronic tendency to stagnation. I will now embellish this analysis. It should be clear that capitalism cannot grow in the way in which a balloon grows: its growth cannot leave its proportions intact, i.e. such that there are no new products and no new processes of production. This is to say that a capitalist economy either undergoes transformational growth or it stagnates. The argument is as follows.

Investment expands productive capacity, which in turn requires that demand increase at the same rate as potential production. Without the required rate of demand growth, underutilization/excess capacity will discourage further investment or capital accumulation and the result will of course be stagnation. Let us not address this issue in the manner of the neoclassical economist, who seems to assume that both supply and demand curves can be counted on to perennially shift to the right (absent, of course, undue government interference). But this quaint assumption is belied by the enormous literature on the development and indispensability to capitalism of the marketing and advertising industries, which we might view as massive efforts to counteract Keynes's declining marginal propensity to consume by deliberately creating among the consuming masses a full panoply of "manufactured" consumption desires. These considerations point to the need constantly to exogenously stimulate consumption demand in order to narrow the demand gap generated by the tendency to overaccumulation. But they do not yet establish the need to generate a broad, nation-wide pattern of demand required by structural change and transformational growth.

What is needed at this point are concrete examples of the generators of transformational growth, and of exactly how these generators accomplish one of the fundamental features of transformational growth, the mobilization and coordination of the economic resources of the entire country into a grand national project which stimulates demand not merely for this and that consumption good, but for crucial commodities and institutions such as oil, steel rubber, and other primary products, and communication and transportation facilities. What this requires are what Paul Baran and Paul Sweezy termed, in their influential Monopoly Capital (Monthly Review Press, 1966), "epoch-making innovations". Edward Nell and Robert Heilbroner have characterized these same innovations as "transformative innovations". Let me approach transformative innovations by looking at the tendency to stagnation from yet another perspective, one which focuses on the role of competition as a major force behind the growth of both investment and consumption.

Competition reduces the need for investment by tending to increase both productivity and savings. Let us see how this happens. As a result of competition business is under continuous pressure to cut costs and produce more efficiently. To the extent that business succeeds in these respects, productive potential is increased. At the same time, competition also requires business to hold down wages and salaries and to pay out dividend and profit income relatively sparingly. Together, these pressures hold back both worker and capitalist consumption. The result is a tendency for productive capacity to expand faster than consumption. This means that there is no reason for investment to grow, for capital to achieve the required rate of accumulation, unless there are major pressures transforming the way people live. In the absence of such pressures, we may expect stagnation.

There are two dimensions of transformative innovations which are in fact two aspects of the same phenomenon. One dimension is solely technological, and the other points to changes in a population's entire way of life. Neither of these is part of a process of steady, balloon-like growth, nor is either automatically, or normally, generated by the fundamental capitalist dynamics identified by the mainstream textbooks. For this reason I have called the stimulus imparted by these innovations 'exogenous'. Let us look first at the technological dimension of transformative innovation.

This can be identified, after the owl of Minerva has spread its wings, by reflecting on some of the requirements of ideal-typical capitalism. Neoliberals correctly remind us that the bottom line is of course "freedom", primarily the freedom of capital to roam the world seeking markets, sources of cheap labor and investment opportunities. Microecenomic textbooks in fact tend to assume the perfect mobility of both capital and labor.

Let us focus on sources of power, which became especially important after the industrial revolution. Technological development resulted in the virtually total replacement of human and animal muscle power by inanimate sources of power, mainly water and steam. But reliance on water as a source of power places extreme limits on the mobility of capital, and hence on the possibilities of capitalist growth. Water power is site-specific, and the number of rivers and streams is limited. Moreover, the water had to be fast-running and productive facilities had to be located as far downstream as possible. And of course water power is only seasonally available. These restraints alone place an intolerable obstacle to the free and ongoing accumulation of capital. Here we find an overwhelming incentive to switch from water to steam power. This constitutes a huge stimulus to the accumulation of capital on a national scale.

Capitalism requires sources of power that are independent of nature and can be applied constantly wherever they are needed. And these are precisely what steam power made possible. It was now possible to set up productive facilities virtually anywhere; a major fetter to the accumulation of capital was removed. The universal mobility required by capital was now much more fully realized. At this point I want to emphasize that this technological /economic transformation was necessarily accompanied by profound social and cultural changes. For the steam engine's reduction of the seasonality of water power made possible a feature of work that is increasingly common on a global scale: the emergence of modern year-round work habits. With this change comes a dramatic transformation of our notions (and practices) of work and leisure, with all the consequences these have for the felt experience of everyday life. That is an instance of the second dimension of transformative innovation, i.e. its introduction of dramatic cultural changes, changes in the way populations live.

Much the same can be said for the subsequent shift to electrical power, which makes possible trolley cars, refrigerators (as opposed to what used to be called, in the U.S., "ice boxes"), ranges, toasters, radios, washing machines, fans, et al.

The railroad too is a transformative innovation par excellence. Consider the spectacular effects of railroad expansion: internal transport costs are sharply reduced; both new products and new geographical areas are brought into commercial markets; it is now possible to deliver exports to port with unprecedented efficiency, thereby encouraging the extensive development of the export sector; and impetus is provided to the development of the coal, iron and engineering industries. As with the steam engine, these technological and economic benefits wee necessarily accompanied by profound social and cultural changes. The railroads changed the way of life of the people by binding them as never before. The possibility now existed for mass production, mass consumption and indeed mass culture.

And of course the establishment of a national rail network absorbed massive amounts of investible capital, thereby spurring sustainable growth and offsetting the realization of the economic law that capitalist economies tend to stagnate. Apropos: in the latter third of the nineteenth century, railroad investment in the U.S. amounted to more than all investment in manufacturing industries.

And who can doubt that the transformative effects of the introduction of the automobile were epoch-making? The expansion of the automobile industry was the single most important force in the economic expansion of the 1920s. Car production increased threefold during this decade. (The automobile industry produced 12.7% of all manufactured output, employed 7.1% of all manufacturing workers, and paid 8.7% of all industrial wages.) Immediately after World War II the auto industry continued what was to be its breakneck expansion, and the possibilities created thereby constituted what was perhaps the most extensive transformation of the country's way of life in its history.

Consider the stimulus to capital accumulation and employment constituted by the following, each and all a consequence of the increasing automobilization of American society and culture: the migration of the population from the central city to the suburbs and exurbs (first made possible by the streetcar, before the major streetcar operations were bough and then quickly dismantled by the auto companies); the need for surfaced roads, road construction and maintenance, highway construction and maintenance (which had already accounted for 2% of GDP in 1929); the suburbanization of America, with the attendant construction of housing, schools, hospitals, workplaces, and more; the growth of shopping malls; the expansion of the credit industry; the spread of hotels and motels; and of course the growth of the tourism/travel industry. Never before had any population's way of living been transformed so profoundly in so short a period of time. And of course no one has failed to recognize that Americans' main symbol of their most precious possession, their personal freedom/liberty, is their ability to drive, solo, cars that have increasingly come to resemble tanks. Americans' liberty, embodied in the automobile, has become, literally, a commodity.

The long-term growth of the U.S. economy cannot be adequately explained or described without reference to these transformative innovations. None of these are required by the models of capital accumulation found in neoclassical, Keynesian or Marxian growth theory. After the civil war, growth in the last third of the nineteenth century was spurred primarily by the railroads. This stimulus fizzled, as railroad expansion began to slow down, around 1907, when, in spite of extensive electrification of urban (and even some rural) areas, the U.S. economy began a stretch of slow growth, which lasted until the outbreak of World War I. After the end of the War, the economy experienced a brief slump, which was followed by a period of fairly sustained expansion in the 1920s. The latter, as we have seen, was spurred mainly by the growth of the automobile industry. But the rate of growth of the automobile industry slowed down after 1926, and with it the rate of growth of almost all other manufacturing industries. And wages and employment had not risen as rapidly as production, productivity or profits.

In fact, the economic situation in the U.S. at the end of the 1920s bore a remarkable resemblance to the current economic situation in America. After 1926 overcapacity emerged in many key industries, the most significant of these being automobiles, textiles, and residential construction. Contractionary forces are cumulative: excess capacity caused business confidence to decline, with resulting cutbacks in spending on productive capacity in the consumer durables and capital goods industries. The economy was intensely unsound at the end of the 1920s, and the indications at the time were clear. Consumer demand was held down by a steadily growing inequality of income. Thus, an increasing percentage of total purchases were financed by credit in order to foster purchases of consumer durables. About seventy-five percent of all cars were sold on credit. Accordingly, both home mortgages and installment debt grew rapidly. This was the extension of a trend that had begun as early as 1922, when total personal debt began rising faster than disposable income. Thus, underconsumption and traces of excess capacity, key indicators of stagnationist forces, were in effect from the very beginning of the "roaring '20s". These tendencies became increasingly foregrounded over the course of the decade.

Excess capacity in key manufacturing industries was displacing workers from capital-intensive, technologically advanced sectors to industries relatively devoid of technological advance, i.e. service industries such as trade, finance and government. With capital unable to find sufficiently profitable investment opportunities in high-productivity industries, rampant speculative activity ensued, fostered by the growing concentration of income and therefore savings during the decade. More than two thirds of all personal savings was held by slightly over two percent of all families. The wanton optimism of the 1920s led those with substantial savings to want to get richer quickly, and with little effort. The stock market bubble that materialized at the end of the decade seemed to justify the expectations that fortunes could be made overnight in real estate and the stock market. When investors acted on these expectations, the existing bubble became bigger and hence more fragile. To those familiar with the current state of the U.S. economy, the present situation presents itself as history repeating itself -contra Marx- yet again as farce.

FROM GREAT DEPRESSION TO GOLDEN AGE TO NEOLIBERALISM

The mounting instabilities of the economy of the 1920s led to a Depression that was unresponsive to the Roosevelt administration's elevenfold increase in government spending. When U.S. entry into World War II finally brought about a resumption of growth, there was nonetheless an abiding fear among economists that once War spending ceased, the forces and tendencies that had generated the Depression might reassert themselves and exceptionally slow growth could resume. Instead, much to the surprise of many economists, American capitalism began the most sustained period of expansion in its entire history. The period from 1947 to 1973 has come to be called "The Golden Age", and appears, on the face of it, to be a fatal anomaly with respect to secular stagnation theory. After all, if the causes of the Great Depression were structural, and the exogenous stimulus provided by the War was what produced a resumption of growth, how was it possible that the economy, in the absence of powerful exogenous stimulus, exhibited an historically unprecedented period of long-term growth?

I have suggested that sustained national (as opposed to intra-national regional) growth has been engendered by the emergence of transformative innovations, and it is this kind of consideration that I believe offers the most plausible explanation both of Golden-Age expansion and of the petering out of this growth period and the resumption of (global) stagnation. Five stimuli to long-term growth were set in motion after the War, and these were for the most part exogenous in the sense indicated, and essentially limited. I will construe these stimuli as forces counteracting the tendency to stagnation. Once most of these stimuli had spent their potential, stagnationist tendencies re-asserted themselves, and overinvestment became evident once again. With profitable industrial investment opportunities in short supply, the economic surplus was invested instead in what became a vast proliferation of financial instruments. When the bubble created by this process finally burst, it was replaced with a housing bubble. Indeed a variety of bubbles, in financial assets, in housing, in credit, and a substantially overvalued dollar now threaten an historically unparalleled reassertion of the tendency to stagnation. But let us look first at the counteracting forces.

After the War, and as a result of wartime rationing, Americans had accumulated a very large fund of savings, and the time had come when these could finally be spent. This accounted for an immediate surge of consumption spending which temporarily averted the onset of recession. But the effectiveness of this source of spending was soon spent. What truly impelled the sustained growth of the Golden Age was 1) the resumption of a vast expansion of the automobile industry, and with it the stimulation of the broad range of investment and employment opportunities discussed above in connection with automobilization; 2) large-scale economic aid to Europe, which stimulated export demand; 3) a nationwide process of suburbanization, which, in tandem with the expansion of auto production, expanded significantly the demand for the output of every other major industry; 4) the emergence of what president Eisenhower christened the "military-industrial" complex, which provided additional stimulus to the industries most vulnerable to economic instability, the industries of DI, the capital goods sector; and finally 5) the steady and growing expansion of business and especially consumer credit, which in recent years has assumed elephantine proportions.

Three of these factors bear the two most important features of epoch-making innovations. The expansion of the auto industry, suburbanization, and the ever-increasing expansion and extension of credit all absorb massive amounts of investible surplus, and transform the mode of life of the entire population. In so doing they impart a massive push to the macro-growth process. The first two of these have their initial direct effect on investment. The third factor, the growing importance of credit, affects both investment and consumption, but the long-term trend of the credit industry in the U.S., evident now in hindsight, is much more significant in relation to consumption. There is now in the States a credit bubble of menacing proportions, with consumers now in debt to the tune of about107% of disposable income. The Marshall Plan (number 2 above) affected mainly and directly investment and employment, with boosts to consumption following thereupon. By the mid- to late-1970s, the employment-generating capacity of the military had declined. Washington determined, in the light of the defeat in Vietnam, that hi-tech warfare, which is of course technology- rather than labor-intensive, must replace traditional forms of subversion and aggression, in order to render less likely a repeat of the "Vietnam Syndrome."

It is worth mentioning that the military-industrial complex and the vast extension of consumer credit were what constituted what Joan Robinson called "bastard Keynesianism" in the United States. Recall that Keynes had insisted that fiscal and monetary policy were necessary but not sufficient conditions for avoiding stagnation. The tendency to stagnation could be offset for the long run only if some key industries were nationalized, and income redistributed. Nationalization would allow the State to offset lagging demand by providing cheap inputs to the private sector, thereby enabling lower prices. And redistributing income would transfer liquidity from those who had more than they could either consume or invest to those whose consumption demand was severely constrained.

American policymakers saw it as their challenge to reap the effects of nationalization and redistribution without actually nationalizing industries or redistributing income. The solution was ingenious: the military-industrial complex would be the functional equivalent of state-owned industries, and would, as noted above, stimulate the demand for the output of those very firms that produced capital goods. And the extension of consumer credit would allow working people to mortgage future years' incomes and spend more without a corresponding increase in either their private or their social wage.

As mentioned earlier, these forces counteracting the tendency to stagnation were all inherently limited and temporary. By the late 1960s, the automobile industry had achieved maturity, suburbanization had been accomplished, and aid to Europe had not only long ended, but had apparently created for America the economic equivalent of Frankenstein's monster. Europe and Japan were now formidable threats to U.S. economic hegemony. (Germany, for example, has overtaken the U.S. as an exporter of capital goods.) These three colossal absorbers of surplus were now no longer in operation. In the mid-1960s social spending had overtaken military spending as the larger share of government spending. And credit had begun to function as a supplement to declining real income, rather than a further addition to growing income.

These combined developments rendered the post-War counters to the realization of the tendency to stagnation obsolete. The result was the onset of stagnation not only in the U.S. but also worldwide. In America there has been overcapacity in autos, steel, shipbuilding and petrochemicals since the mid- to late-1970s.

This general picture is widely reflected in the business press. Business Week noted that "..supply outpaces demand everywhere, sending prices lower, eroding corporate profits and increasing layoffs" (Jan. 25, 1999, p. 118). The former chairman of General Electric claimed that "..there is excess capacity in almost every industry" (The New York Times, Nov. 16, 1997, p. 3). The Wall Street Journal noted that "..from cashmere to blue jeans, silver jewelry to aluminum cans, the world is in oversupply" (Nov. 30, 1998, p. A17). And The Economist fretted that " the gap between sales and capacity is "at its widest since the 1930s" (Feb. 20, 1999, p. 15). At this time excess capacity in steel is exceeding twenty percent, in autos it has fluctuated around 30%. And these figures look good in comparison to unused capacity numbers in the "industries of the future" of the "New Economy", semiconductors and telecommunications. Not long ago, ninety-seven percent of fibre optic capacity was idle.

MAINSTREAM ECONOMICS AND STAGNATION THEORY

Let us begin with the indisputable fact that the regime of neoliberalism has brought with it a substantial decline in economic growth. The most widely cited study on this issue, produced for the IECD by Angus Maddison, shows that the annual rate of growth of real global GDP fell from 4.9% in 1950-1973 to 3 % in 1973-1998, a drop of 39 %. Theoretical commitments can guide perception: neoliberal economists either denied or ignored the decline in global growth because of their reliance on Say's Law, that it is not possible for total demand to fall below full-capacity supply over the long run. In my earlier remarks I offered an explanation of sluggish growth rates since 1973. Many orthodox economics have done something similar: they have offered explanations of the initial rise in excess capacity. But what has not been explained is why global supply did not eventually adjust itself to the slower rate of demand growth, with the result that in the mid-1970s the global economy would enter a period of sluggish expansion. And it is worth mentioning that even Keynesian macro-theory is inadequate in this regard. It assumes that slow growth in aggregate demand will result in a proportionate decline in the growth of aggregate supply through its effect upon investment and therefore productivity.

An adequate explanation of the sustained character of excess capacity can be constructed from insights from Schumpeter, Marx and the contemporary economist James Crotty. The analysis that follows should be understood within the framework of the version of secular stagnation theory sketched above.

Before the shift to neoliberal policies by Jimmy Carter, Reagan and Thatcher, the global economy was already subject to downward pressures on demand growth resulting from two oil price shocks and the restrictive macro policy imposed in response to oil-price induced inflation. These impediments to demand growth were exacerbated by neoliberal policies. In combination, these forces led to a sharp rise in excess capacity in globally competing industries. At the same time competitive pressures were further intensified by the reduction of the market power of national oligopolies caused by the removal of protectionist barriers to the free movement of goods and money across national boundaries. Accordingly, competitive pressures between nations rose dramatically. In this context, normal stagnationist tendencies operated to further constrain global demand growth and further reproduce industrial capacity faster than either neoclassical or Keynesian theory could comprehend.

The Achilles Heel of neoclassical theory with respect to its inability to account for the persistence of overcapacity during the neoliberal period is its account of competition. So-called "perfect competition" is alleged to lead to maximum efficiency and the elimination of excess capacity. This claim appears inconsistent with the history of real-world, pre- and post-oligopolistic competition. Textbook-like competition has led to periodic market gluts or overproduction crises, price wars, plummeting profits, unbearable debt burdens and violent labor relations. Neoclassical theory banishes these demons with the aid of two assumptions which appear designed explicitly to make them impossible. The first assumption claims that production cost per unit rises rapidly as output increases, and the second that exit from low-profit industries is free or costless. If these assumptions were indeed true, then pure competition could not be shown to have stagnation- or depression-inducing effects. But these assumptions are, I shall suggest, false.

I will begin with the least plausible of these two assumptions. It states that there is free or costless exit from low-profit industries. But productive assets are typically immobile or irreversible, i.e., they are not liquid, and this forces a sizeable loss in the value of a firm's capital should it choose to leave an unprofitable industry. Whether they are sold on a second-hand market or reallocated to a different industry, productive assets will lose substantial value. Capital flowing out of the aerospace industry has been found to sell for one third of its replacement cost. Insolvent telecom firms in the U.S. have sold their assets for 20 cents on the dollar. And isn't this what one would expect? For it is usually poor profit prospects and/or great excess capacity that heighten a firm's incentive to leave an industry. But it is precisely those circumstances which deeply depress the price of industry-specific assets on the second-hand market, since the supply of these assets grows even as the demand for them has collapsed.

Before I turn to the slightly more plausible (yet still false) assumption -that unit production cost rises dramatically as output increases- I will outline the corollary of neoclassical theory itself which neoclassical economists seek to evade by introducing this assumption. The theory tells us that pure competition will force price down until it covers marginal cost. Now if unit production cost remained constant irrespective of the output level, then marginal production cost and average production cost per unit would be equal. When perfect competition forces price to equal marginal cost, total revenue will be equal to total production cost. But in this case there will be no revenue left over either to pay the "fixed" cost of maintaining capital stock in the face of depreciation or obsolescence, or to pay interest and/or dividends to investors. Thus, perfect competition is seen to cause the representative firm to suffer, in each production period, a loss that is equal to fixed costs. Keeping in mind that most important global industries have huge fixed costs, no industry could long survive the consequences of intense competition.

We seem to have found a tendency to stagnation or complete system breakdown where we would least expect to find it - in neoclassical theory itself. But the theory claims to have a response to this embarrassment. It simply denies the claim that appears to entail the undesired consequence, namely the claim that unit production cost remains constant no matter what the output level. Armed now with the (false) assumption that unit production cost rises rapidly as production increases, the conclusion is drawn that marginal cost and price are greater than average unit production cost. Thus, in equilibrium, the gap between price and average production cost is sufficiently large to cover all fixed costs. Let competition be as fierce as you wish, the typical firm will not lose money. Voila!

I have claimed that each of the rescuing assumptions discussed above is false. What would realistic assumptions about marginal cost and the reversibility of invested capital look like? To answer this question we must recognize the distinctive character of the dominant industries of global trade and investment. These industries include steel, autos, aircraft, shipbuilding, petrochemicals, consumer durables, electronics, semiconductors and banking. Studies of this type of industry suggest that marginal cost does not typically rise with output, with the rare exception of cases when the industry is producing near full capacity output. Marginal cost behaves as we would expect in cases of economies of scale: it remains constant or declines as capacity utilization rises. It follows that if free competition forces price to equal marginal cost in these industries, we should count on an ensuing wave of bankruptcies. Here again we see that neoclassical theory, corrected for unrealistic assumptions, seems to commit us to conceptualize mature capitalism as subject to the law of an inherent tendency to stagnation or worse.

The issue I am focusing on here turns on the dynamics of unrestricted competition among oligopolies in the context of economies of scale. The importance of economies of scale underscores the crucial similarity of all the dominant industries, including the new information-technology and telecommunications (ITC) industries. I stress this point because influential neoclassical economists have wanted to claim a significant difference, with respect to overcapacity problems, between the ITC industries and the other dominant industries. For purposes of explaining the persistence of excess capacity under neoliberalism, we want to remember that as scale economies grow, marginal costs fall as fixed costs per unit rise. Thus, the greater the economies of scale, the more destructive becomes the marginal cost pricing required by intense competition. With this in mind, we can more easily see that 1) these dynamics in especially conspicuous operation in the ITC industries, and 2) that such differences as there are between ITC and the other dominant oligopolies are insignificant for the analysis of secular stagnation theory, and of capitalist growth in general.

The key issue right now, recall, is the highly destructive consequences of the tendency of free competition among dominant industries to force price to equal marginal cost. That this is the case is easier to see in the ITC sector than in the other dominant industries. This is because in ITC marginal cost is often close to zero. Producing another copy of software or adding another customer to eBay is virtually costless. This has led many mainstream economists to argue that ITC industries are exempt from the laws of the neoclassical theory of perfect competition. Since ITC firms have marginal costs much lower than their large fixed costs, the argument goes, the possession of at least temporary monopoly power is the only guarantee of an incentive to produce anything at all. Without monopoly pricing power prices will be competed down to marginal cost and fixed costs will be unable to be covered. Thus, the motor of the "new economy" is said to be the constant pursuit of monopoly power. But, contrary to the neoclassical claim, none of this distinguishes significantly between ITC and other key industries. The drive to monopoly power is characteristic of all large corporations in the present age.

As Paul Sweezy argued in his Marshall Lectures, the typical firm in an oligopolized industry strives to be a monopolist. Each firm does this individually, and they all do it collectively. Individual firms seek monopoly status through the sales effort, where the firm's product is put forth as the best in the industry and as different from all the others. Firms within the same industry seek to approach monopoly status by collusion with respect to pricing policy, especially by agreeing to refrain from cutthroat price competition. For reasons developed at length above, therefore, all dominant firms, whether old- or new-economy operations, will tend to achieve monopoly status and to be chronically saddled with excess capacity.

A SCANDALOUSLY BRIEF LOOK AT SLOW-GROWTH CAPITALISM

We are in the midst of another unparalleled period of historical capitalism. Since the onset of stagnation, the median wage in the States has not changed at all for the vast majority of wage workers. Over the past six quarters the gowth of wage income has been negative. A brief sketch of the state of the U.S. economy toward the end of last year highlights features whose most plausible explanation may lie in the fact of secular stagnation. If stagnation theory is accurate, what follows is precisely what we would expect to find. The current state of the U.S. and the global economy is best understood, I believe, against the background too briefly elaborated above. Here is a picture of the U.S. economy today. The key to a healthy economy is job- and income-creating investment in capital goods, which in turn generates a virtuous cycle of further growth in investment, jobs and income. Ominously, the investment, growth, employment and income pictures are unprecedentedly dismal.

Compared to cyclical recoveries between 1949 and 1973, recoveries during the neoliberal period have been weak. Indeed, one or two of the post-1973 upturns has been weaker than some downturns during the Golden Age. Since the stock market collapse of four years ago, the situation has worsened. Growth rates since 2000 have been half their previous average. Even this weak performance required historically unprecedented fiscal and monetary stimulus: 13 rate cuts, three tax cuts, massive government deficits and record growth in money and credit.

Official figures mask the economy's most serious problems. Growth figures are annualized by U.S. statisticians. Thus, the much-touted 7.1% growth rate in the third quarter of 2003 was the one that would emerge after twelve months if the current trend were to continue. The same growth rate would have been reported in the eurozone as 1.8%. This is an uncommonly weak performance.

Investment data are equally misleading. Since the mid-1990s the Bureau of Economic Analysis (BEA) has adjusted upward actual business dollar outlays on computers and related equipment to take into account quality improvements (faster processors, bigger hard drives, more memory). BEA calls this "hedonic adjustment." Accordingly, the BEA estimates that business high-tech investment quadrupled between 1996 and 2002, from $70.9 to $283.7. But in actual dollars spent, the increase was only from $70.9 billion to $74.2 billion, very low by historic standards. The high-tech boom was both greatly exaggerated and misleading. After all, neither profits nor wages are taken in "hedonically adjusted" dollars.

The difference between real and hedonic outlays explains what would otherwise be a paradoxical feature of the years 2000-2003: government was reporting big increases in high-tech investment, while manufacturers were bemoaning declining sales.

Hedonic pricing has accounted for a steadily rising percentage of all reported capital investment. But if we look at actual dollars spent, we find that since 1998 the growth rate of business fixed investment has actually been declining. Real capital investment has in fact not been this weak since the Great Depression.

The fudging of investment figures also obscures the sorry state of the jobs market. The Commerce Department's figures on nonresidential investment for the third and fourth quarters of 2003 reported increases of, respectively, 12.8 and 9.6%. A closer look reveals that the "adjusted" hi-tech sector is the only bright spot, with production and capacity rising, respectively, 24.6% and 11.1% over the past year. But hi-tech is not where significant jobs increases are found. Employment in hi-tech has declined steadily through the so-called "recovery" since its 2001 peak.

In non-hi-tech manufacturing, where investment figures are not adjusted, production from January 2003 to January 2004 rose only 0.9%, while capacity actually declined -0.2%. This represents a record nineteen-straight-month decline in mainline manufacturing capacity. Since it is mainline manufacturing which employs almost 95% of all manufacturing workers, it comes as no surprise that for the first time since the Great Depression the economy has gone more than three years without creating any jobs.

The jobs crisis is even worse than it appears. Here again statistical sleight-of-hand, this time by the Bureau of Labor Statistics (BLS), obscures economic reality. Based on data gathered employing the "net birth/death adjustment," BLS announced in April, 2004, that the long-awaited jobs recovery had finally arrived. Nonfarm payrolls had allegedly surged by a whopping 308,000 in March, 2004. The birth/death model uses business deaths to "impute" employment from business births. Thus, as more businesses fail, more new jobs are imputed to have materialized through business births. This improbable statistical artefact accounts for about half of the reported 308,000 March, 2004 payroll increase.

The birth/death model is based on statistics covering 1998-2002. This was a period of explosive telecom and dot.com startups, quite unlike today's flat economic landscape. Thus, two thirds of the 947,000 new jobs BLS "imputed" for March-May, 2004, were never actually counted by BLS and never reported by any firm.

BlS's household and establishment surveys tell a more sobering story. March employment by private industry actually fell by 175,000, and the number of self-employed workers declined by 288,000. Without the simultaneous increase of 439,000 government jobs, the March job announcement would have been a calamity. And both average weekly hours and total hours worked declined markedly, even as (according to the dubious birth/death findings) the work force increased. This is the first time in U.S. history that net job growth has been negative 26 months into a recovery.

The wage and salary picture has also set grim records. During the current recovery, wage and salary growth has actually been negative, at -0.6%, in contrast to the average increase of 7.2% characteristic of this point into each of the other eight post-War recoveries. In fact, median family income in the post-War period exhibits an ominous trend. From 1947 to 1967, real median family income rose by 75%. But since 1967, it has grown by only 30%.

Labor's losses have been capital's gain: since the peak of the last recovery, in the first quarter of 2001, corporate profits have risen 62.2%, compared to the average of 13.9% at the same point in the last eight recoveries. Never in American history has any recorded recovery had such a lopsided balance in the distribution of income gains between labor and capital.

Given the dismal investment, wage/salary and employment pictures, how has it been possible for consumption to have risen to 71% of GDP in the early nineties, from its prior post-War average of 66%? The answer is a growth rate of consumer debt never seen before in America. For the first time ever, in March 2001, overall debt levels (mortgage debt plus consumer debt, mainly credit card debt and car loans) rose above annual disposable income. And from 2001 to 2004 consumer debt rose from 101% to 116% of disposable income. In the first half of 2004, consumer borrowing has been at its highest ever. It has declined slightly in the meantime. So has consumer spending. Should Americans decide to significantly increase their saving and service debts, while lowering correspondingly their consumption expenditures, the global economy could experience a major disruption.

Up until very recently, consumers had stepped up their borrowing to compensate for slowing income growth. Thus, such growth as the U.S. has experienced in recent years has been almost entirely consumption- and debt-driven. More fundamentally, it has been bubble-driven, fueled principally by bubbles in home values and credit.

Since the collapse of stock market/hi-tech bubbles in 2001, the illusory "wealth effect" has been sustained, and consumer spending thereby encouraged, by another bubble, the enormous inflation of house prices. The biggest increase in household debt came from home mortgage debt, especially home mortgage refinancing. With mortgage rates low and home prices rising, households' home equity ballooned. Bloated home equity then provided rising collateral to underwrite still more borrowing.

What makes this especially problematic is that over the last ten years, the average family has suffered under large increases in health premiums, housing costs, tuition fees and child care costs. As a result, households' and individuals' margin of protection against insolvency has dramatically declined. Filings for personal bankruptcy are approaching a record high.

There are indications that these weaknesses and imbalances in the economy are reaching a critical mass. The mortgage refi boom has fizzled, and consumer spending is beginning to decline. Two years ago the Fed's quarterly Beige Book reported a disturbing shift in the composition of credit spending: more and more families are using their credit cards to finance spending on essentials, such as food and energy.

It is no exaggeration to say that both the U.S. economy and the global economy are hugely dependent on the American consumer's increasing willingness to spend more than (s)he makes. (Imported goods have been a rising proportion of all goods purchased here.) Thus, a decline in U.S. consumer spending portends further declines in investment, jobs and income. From January to July of 2004, consumer spending rose at an annual rate of 2.8%, down from 3.3% in 2003 and 3.1 % in 2002. For perspective, during the boom years 1999-2000, growth rates were 5.1% and 4.7%.

Spending on consumer durables is the most significant indicator of healthy growth, and the drastically lower spending in this area is cause for alarm: spending for consumer durables was down to $23.5 billion in the first seven months of this year, in contrast to $71 billion on 2003 and $58 billion in 2002.

Should consumer spending continue to decline, the economy faces the genuine likelihood of a severe recession. Of course not a single American politician addresses this issue.

What is required is a shift from bubble-, debt-, and consumption-driven growth to investment- and income-driven growth. This in turn necessitates a decline in Americas principal export, jobs. Domestic job growth, a higher minimum wage, tax cuts aimed predominantly at low- and middle-income families, a sharp reduction in defense spending and a redirection of these funds to long-neglected and pressing social needs such as health care reform, the provision of universal pre-school, and across-the-board repair and upgrading of America's deteriorated infrastructure of roads, highways,tunnels and bridges, all these should be at the forefront of a Democratic administration's agenda. The restoration of infrastructure is especially labor intensive, and would generate an enormous number of productive jobs. And as a national project spearheaded by government initiative, government would emerge as a major employer.

All this si entirely incompatible with the overwhelming neoliberal bent of even the most "liberal" political leaders. It was after all Bill Clinton who urinated on the grave of Franklin Roosevelt when he proclaimed "the end of welfare as we know it".

As unfashionable as it is to suggest such a thing at a conference of economists, the only hope for the world's majority seems to be the revival of the kinds of mass movements witnessed here in May of 1968, and throughout the world during the 1960s. And time may be short.

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Alan Nasser is Professor emeritus of Political Economy and Philosophy at The Evergreen State College. His book, The “New Normal”: Persistent Austerity, Declining Democracy and the Globalization of Resistance will be published by Pluto Press in 2013. If you would like to be notified when the book is released, please send a request to nassera@evergreen.edu

Thomas Palley » Blog Archive » Explaining Stagnation Why it Matters

John Bellamy Foster and Fred Magdoff clearly identify stagnation in their 2009 book The Great Financial Crisis: Causes and Consequences (HERE). They conclude with a section titled “Back to the real economy: the stagnation problem” and they write:

“It was the reality of economic stagnation beginning in the 1970s, as heterodox economists Ricardo Belliofiore and Joseph Halevi have recently emphasized, that led to the emergence of “the new financialized capitalist regime,” a kind of “paradoxical financial Keynesianiasm” whereby demand in the economy was stimulated primarily “thanks to asset-bubbles” (Foster and Magdoff, p.129).”

My own 2009 New America Foundation report, “America’s Exhausted Paradigm: Macroeconomic Causes of the Financial Crisis and Great Recession”, concluded (HERE):

“The bottom line is macroeconomic failure rooted in America’s flawed economic paradigm is the ultimate cause of the financial crisis and Great Recession…. Now, there is a grave danger that policymakers only focus on financial market reform and ignore reform of America’s flawed economic paradigm. In that event, though the economy may stabilize, it will likely be unable to escape the pull of economic stagnation. That is because stagnation is the logical next stage of the existing paradigm.”

That report became a core chapter in my 2012 book, From Financial Crisis to Stagnation, the blurb for which reads (HERE):

“The U.S. economy today is confronted with the prospect of extended stagnation. This book explores why…. Financial deregulation and the house price bubble kept the economy going by making ever more credit available. As the economy cannibalized itself by undercutting income distribution and accumulating debt, it needed larger speculative bubbles to grow. That process ended when the housing bubble burst. The earlier post–World War II economic model based on rising middle-class incomes has been dismantled, while the new neoliberal model has imploded. Absent a change of policy paradigm, the logical next step is stagnation. The political challenge we face now is how to achieve paradigm change.”

The big analytical difference between Foster and Magdoff and myself is that they see stagnation as inherent to capitalism whereas I see it as the product of neoliberal economic policy. Foster and Magdoff partake of the Baran-Sweezy tradition that recommends deeper socialist transformation. I use a structural Keynesian framework that recommends reconstructing the income and demand generation mechanism via policies that include rebuilding worker bargaining power, reforming globalization, and reining in corporations and financial markets.

Larry Summers’ story of serial bubbles delaying stagnation has substantial similarities with both accounts but he avoids blaming either capitalism or neoliberalism. That is hardly surprising as Summers has been a chief architect of the neoliberal system and remains committed to it, though he now wants to soften its impact. Instead, he appeals to the black box of “secular stagnation” as ultimate cause and suggests fiscal policies that would ameliorate the demand shortage problem. However, those policies would not remedy the root cause of stagnation as they leave the economic architecture unchanged.

Though Summers and Krugman are relative late-comers to the stagnation hypothesis, they have still done a great public service by drawing attention to it. Now that stagnation has been identified, the real debate can begin.

The questions are what caused stagnation and what must be done to restore shared prosperity? There is no guarantee we will answer those questions correctly (my prior is mainstream economists will continue their track record of getting it wrong). But it is absolutely certain we will not get the right answer if we do not ask the right question. So thank you Larry Summers and Paul Krugman for putting stagnation on the table. Let the debate begin.

This entry was posted on Monday, February 24th, 2014 at 12:53 pm and is filed under Economics, U.S. Policy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Summers makes the idea of secular stagnation mainstream

Larry Summers (“Why Stagnation May Prove To Be The New Normal,” The Financial Times, December 15, 2013)  suggested the current "lack of demand" is not anomaly but a feature of the current sociao-economic system.  He suggested that we have been in the throes of stagnation for a long while, but that has been obscured by years of serial asset price bubbles. His article produced great public debate and marked the point when the idea became mainstream. The debate began with Summers’ speech to the IMF’s Fourteenth Annual Research Conference in Honor of Stanley Fisher. Summers noted that the panic of 2008 was “an event that in the fall of 2008 and winter of 2009 … appeared, by most of the statistics—GDP, industrial production, employment, world trade, the stock market—worse than the fall of 1929 and the winter of 1930. …”

Tha means the major defeat for “stabilization policies” that were supposed to smooth the capitalist industrial cycle and abolish panics. And the problem preceeds the 2008 panic itself.

The highly misleading unemployment rate calculated by the U.S. Department of Labor notwithstanding, there has been a massive growth in long-term unemployment in the U.S. in the wake of the crisis, as shown by the declining percentage of the U.S. population actually working.

The current situation also refute the key tenet of neoclassical economy (which is pseudo-religious doctrine, so that only increase fanatic devotion of its well-paid adherents). Neoclassical economists insisted that since a “free market economy” naturally tends toward an equilibrium with full employment of both workers and machines, the economy should should quickly return to “full employment” after a recession. This is not the case. See also Secular Stagnation Lawrence H. Summers

There were several uncessful attempts to explaint his situation from neoclassical positions. In Secular Stagnation, Coalmines, Bubbles, and Larry Summers - NYTimes.com Paul Krugman  emphasized the liquidity trap – zero lower bound to interest rates which supposedly prevents spending from reaching a level sufficient for full employment.

Larry’s formulation of our current economic situation is the same as my own. Although he doesn’t use the words “liquidity trap”, he works from the understanding that we are an economy in which monetary policy is de facto constrained by the zero lower bound (even if you think central banks could be doing more), and that this corresponds to a situation in which the “natural” rate of interest – the rate at which desired savings and desired investment would be equal at full employment – is negative.

And as he also notes, in this situation the normal rules of economic policy don’t apply. As I like to put it, virtue becomes vice and prudence becomes folly. Saving hurts the economy – it even hurts investment, thanks to the paradox of thrift. Fixating on debt and deficits deepens the depression. And so on down the line.

This is the kind of environment in which Keynes’s hypothetical policy of burying currency in coalmines and letting the private sector dig it up – or my version, which involves faking a threat from nonexistent space aliens – becomes a good thing; spending is good, and while productive spending is best, unproductive spending is still better than nothing.

Larry also indirectly states an important corollary: this isn’t just true of public spending. Private spending that is wholly or partially wasteful is also a good thing, unless it somehow stores up trouble for the future. That last bit is an important qualification. But suppose that U.S. corporations, which are currently sitting on a huge hoard of cash, were somehow to become convinced that it would be a great idea to fit out all their employees as cyborgs, with Google Glass and smart wristwatches everywhere. And suppose that three years later they realized that there wasn’t really much payoff to all that spending. Nonetheless, the resulting investment boom would have given us several years of much higher employment, with no real waste, since the resources employed would otherwise have been idle.

OK, this is still mostly standard, although a lot of people hate, just hate, this kind of logic – they want economics to be a morality play, and they don’t care how many people have to suffer in the process.

But now comes the radical part of Larry’s presentation: his suggestion that this may not be a temporary state of affairs.

2. An economy that needs bubbles?

We now know that the economic expansion of 2003-2007 was driven by a bubble. You can say the same about the latter part of the 90s expansion; and you can in fact say the same about the later years of the Reagan expansion, which was driven at that point by runaway thrift institutions and a large bubble in commercial real estate.

So you might be tempted to say that monetary policy has consistently been too loose. After all, haven’t low interest rates been encouraging repeated bubbles?

But as Larry emphasizes, there’s a big problem with the claim that monetary policy has been too loose: where’s the inflation? Where has the overheated economy been visible?

So how can you reconcile repeated bubbles with an economy showing no sign of inflationary pressures? Summers’s answer is that we may be an economy that needs bubbles just to achieve something near full employment – that in the absence of bubbles the economy has a negative natural rate of interest. And this hasn’t just been true since the 2008 financial crisis; it has arguably been true, although perhaps with increasing severity, since the 1980s.

One way to quantify this is, I think, to look at household debt. Here’s the ratio of household debt to GDP since the 50s:

There was a sharp increase in the ratio after World War II, but from a low base, as families moved to the suburbs and all that. Then there were about 25 years of rough stability, from 1960 to around 1985. After that, however, household debt rose rapidly and inexorably, until the crisis struck.

So with all that household borrowing, you might have expected the period 1985-2007 to be one of strong inflationary pressure, high interest rates, or both. In fact, you see neither – this was the era of the Great Moderation, a time of low inflation and generally low interest rates. Without all that increase in household debt, interest rates would presumably have to have been considerably lower – maybe negative. In other words, you can argue that our economy has been trying to get into the liquidity trap for a number of years, and that it only avoided the trap for a while thanks to successive bubbles.

And if that’s how you see things, when looking forward you have to regard the liquidity trap not as an exceptional state of affairs but as the new normal.

3. Secular stagnation?

How did this happen? Larry explicitly invokes the notion of secular stagnation, associated in particular with Alvin Hansen (pdf).  He doesn’t say why this might be happening to us now, but it’s not hard to think of possible reasons.

Back in the day, Hansen stressed demographic factors: he thought slowing population growth would mean low investment demand. Then came the baby boom. But this time around the slowdown is here, and looks real.

Think of it this way: during the period 1960-85, when the U.S. economy seemed able to achieve full employment without bubbles, our labor force grew an average 2.1 percent annually. In part this reflected the maturing of the baby boomers, in part the move of women into the labor force.

This growth made sustaining investment fairly easy: the business of providing Americans with new houses, new offices, and so on easily absorbed a fairly high fraction of GDP.

Now look forward. The Census projects that the population aged 18 to 64 will grow at an annual rate of only 0.2 percent between 2015 and 2025. Unless labor force participation not only stops declining but starts rising rapidly again, this means a slower-growth economy, and thanks to the accelerator effect, lower investment demand.

By the way, in a Samuelson consumption-loan model, the natural rate of interest equals the rate of population growth. Reality is a lot more complicated than that, but I don’t think it’s foolish to guess that the decline in population growth has reduced the natural real rate of interest by something like an equal amount (and to note that Japan’s shrinking working-age population is probably a major factor in its secular stagnation.)

There may be other factors – a Bob Gordonesque decline in innovation, etc.. The point is that it’s not hard to think of reasons why the liquidity trap could be a lot more persistent than anyone currently wants to admit.

4. Destructive virtue

If you take a secular stagnation view seriously, it has some radical implications – and Larry goes there.

Currently, even policymakers who are willing to concede that the liquidity trap makes nonsense of conventional notions of policy prudence are busy preparing for the time when normality returns. This means that they are preoccupied with the idea that they must act now to head off future crises. Yet this crisis isn’t over – and as Larry says, “Most of what would be done under the aegis of preventing a future crisis would be counterproductive.”

He goes on to say that the officially respectable policy agenda involves “doing less with monetary policy than was done before and doing less with fiscal policy than was done before,” even though the economy remains deeply depressed. And he says, a bit fuzzily but bravely all the same, that even improved financial regulation is not necessarily a good thing – that it may discourage irresponsible lending and borrowing at a time when more spending of any kind is good for the economy.

Amazing stuff – and if we really are looking at secular stagnation, he’s right.

Of course, the underlying problem in all of this is simply that real interest rates are too high. But, you say, they’re negative – zero nominal rates minus at least some expected inflation. To which the answer is, so? If the market wants a strongly negative real interest rate, we’ll have persistent problems until we find a way to deliver such a rate.

One way to get there would be to reconstruct our whole monetary system – say, eliminate paper money and pay negative interest rates on deposits. Another way would be to take advantage of the next boom – whether it’s a bubble or driven by expansionary fiscal policy – to push inflation substantially higher, and keep it there. Or maybe, possibly, we could go the Krugman 1998/Abe 2013 route of pushing up inflation through the sheer power of self-fulfilling expectations.

Any such suggestions are, of course, met with outrage. How dare anyone suggest that virtuous individuals, people who are prudent and save for the future, face expropriation? How can you suggest steadily eroding their savings either through inflation or through negative interest rates? It’s tyranny!

But in a liquidity trap saving may be a personal virtue, but it’s a social vice. And in an economy facing secular stagnation, this isn’t just a temporary state of affairs, it’s the norm. Assuring people that they can get a positive rate of return on safe assets means promising them something the market doesn’t want to deliver – it’s like farm price supports, except for rentiers.

Oh, and one last point. If we’re going to have persistently negative real interest rates along with at least somewhat positive overall economic growth, the panic over public debt looks even more foolish than people like me have been saying: servicing the debt in the sense of stabilizing the ratio of debt to GDP has no cost, in fact negative cost.

I could go on, but by now I hope you’ve gotten the point. What Larry did at the IMF wasn’t just give an interesting speech. He laid down what amounts to a very radical manifesto. And I very much fear that he may be right.

Supplement 1: Of Flying Cars and the Declining Rate of Profit (reprint)

Of Flying Cars and the Declining Rate of Profit - The Baffler

David Graeber

A secret question hovers over us, a sense of disappointment, a broken promise we were given as children about what our adult world was supposed to be like. I am referring not to the standard false promises that children are always given (about how the world is fair, or how those who work hard shall be rewarded), but to a particular generational promise—given to those who were children in the fifties, sixties, seventies, or eighties—one that was never quite articulated as a promise but rather as a set of assumptions about what our adult world would be like. And since it was never quite promised, now that it has failed to come true, we’re left confused: indignant, but at the same time, embarrassed at our own indignation, ashamed we were ever so silly to believe our elders to begin with.

Where, in short, are the flying cars? Where are the force fields, tractor beams, teleportation pods, antigravity sleds, tricorders, immortality drugs, colonies on Mars, and all the other technological wonders any child growing up in the mid-to-late twentieth century assumed would exist by now? Even those inventions that seemed ready to emerge—like cloning or cryogenics—ended up betraying their lofty promises. What happened to them?

We are well informed of the wonders of computers, as if this is some sort of unanticipated compensation, but, in fact, we haven’t moved even computing to the point of progress that people in the fifties expected we’d have reached by now. We don’t have computers we can have an interesting conversation with, or robots that can walk our dogs or take our clothes to the Laundromat.

As someone who was eight years old at the time of the Apollo moon landing, I remember calculating that I would be thirty-nine in the magic year 2000 and wondering what the world would be like. Did I expect I would be living in such a world of wonders? Of course. Everyone did. Do I feel cheated now? It seemed unlikely that I’d live to see all the things I was reading about in science fiction, but it never occurred to me that I wouldn’t see any of them.

At the turn of the millennium, I was expecting an outpouring of reflections on why we had gotten the future of technology so wrong. Instead, just about all the authoritative voices—both Left and Right—began their reflections from the assumption that we do live in an unprecedented new technological utopia of one sort or another.

The common way of dealing with the uneasy sense that this might not be so is to brush it aside, to insist all the progress that could have happened has happened and to treat anything more as silly. “Oh, you mean all that Jetsons stuff?” I’m asked—as if to say, but that was just for children! Surely, as grown-ups, we understand The Jetsons offered as accurate a view of the future as The Flintstones offered of the Stone Age.

Surely, as grown-ups, we understand The Jetsons offered as accurate a view of the future as The Flintstones did of the Stone Age.

Even in the seventies and eighties, in fact, sober sources such as National Geographic and the Smithsonian were informing children of imminent space stations and expeditions to Mars. Creators of science fiction movies used to come up with concrete dates, often no more than a generation in the future, in which to place their futuristic fantasies. In 1968, Stanley Kubrick felt that a moviegoing audience would find it perfectly natural to assume that only thirty-three years later, in 2001, we would have commercial moon flights, city-like space stations, and computers with human personalities maintaining astronauts in suspended animation while traveling to Jupiter. Video telephony is just about the only new technology from that particular movie that has appeared—and it was technically possible when the movie was showing. 2001 can be seen as a curio, but what about Star Trek? The Star Trek mythos was set in the sixties, too, but the show kept getting revived, leaving audiences for Star Trek Voyager in, say, 2005, to try to figure out what to make of the fact that according to the logic of the program, the world was supposed to be recovering from fighting off the rule of genetically engineered supermen in the Eugenics Wars of the nineties.

By 1989, when the creators of Back to the Future II were dutifully placing flying cars and anti-gravity hoverboards in the hands of ordinary teenagers in the year 2015, it wasn’t clear if this was meant as a prediction or a joke.

The usual move in science fiction is to remain vague about the dates, so as to render “the future” a zone of pure fantasy, no different than Middle Earth or Narnia, or like Star Wars, “a long time ago in a galaxy far, far away.” As a result, our science fiction future is, most often, not a future at all, but more like an alternative dimension, a dream-time, a technological Elsewhere, existing in days to come in the same sense that elves and dragon-slayers existed in the past—another screen for the displacement of moral dramas and mythic fantasies into the dead ends of consumer pleasure.

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Might the cultural sensibility that came to be referred to as postmodernism best be seen as a prolonged meditation on all the technological changes that never happened? The question struck me as I watched one of the recent Star Wars movies. The movie was terrible, but I couldn’t help but feel impressed by the quality of the special effects. Recalling the clumsy special effects typical of fifties sci-fi films, I kept thinking how impressed a fifties audience would have been if they’d known what we could do by now—only to realize, “Actually, no. They wouldn’t be impressed at all, would they? They thought we’d be doing this kind of thing by now. Not just figuring out more sophisticated ways to simulate it.”

That last word—simulate—is key. The technologies that have advanced since the seventies are mainly either medical technologies or information technologies—largely, technologies of simulation. They are technologies of what Jean Baudrillard and Umberto Eco called the “hyper-real,” the ability to make imitations that are more realistic than originals. The postmodern sensibility, the feeling that we had somehow broken into an unprecedented new historical period in which we understood that there is nothing new; that grand historical narratives of progress and liberation were meaningless; that everything now was simulation, ironic repetition, fragmentation, and pastiche—all this makes sense in a technological environment in which the only breakthroughs were those that made it easier to create, transfer, and rearrange virtual projections of things that either already existed, or, we came to realize, never would. Surely, if we were vacationing in geodesic domes on Mars or toting about pocket-size nuclear fusion plants or telekinetic mind-reading devices no one would ever have been talking like this. The postmodern moment was a desperate way to take what could otherwise only be felt as a bitter disappointment and to dress it up as something epochal, exciting, and new.

In the earliest formulations, which largely came out of the Marxist tradition, a lot of this technological background was acknowledged. Fredric Jameson’s “Postmodernism, or the Cultural Logic of Late Capitalism” proposed the term “postmodernism” to refer to the cultural logic appropriate to a new, technological phase of capitalism, one that had been heralded by Marxist economist Ernest Mandel as early as 1972. Mandel had argued that humanity stood at the verge of a “third technological revolution,” as profound as the Agricultural or Industrial Revolution, in which computers, robots, new energy sources, and new information technologies would replace industrial labor—the “end of work” as it soon came to be called—reducing us all to designers and computer technicians coming up with crazy visions that cybernetic factories would produce.

End of work arguments were popular in the late seventies and early eighties as social thinkers pondered what would happen to the traditional working-class-led popular struggle once the working class no longer existed. (The answer: it would turn into identity politics.) Jameson thought of himself as exploring the forms of consciousness and historical sensibilities likely to emerge from this new age.

What happened, instead, is that the spread of information technologies and new ways of organizing transport—the containerization of shipping, for example—allowed those same industrial jobs to be outsourced to East Asia, Latin America, and other countries where the availability of cheap labor allowed manufacturers to employ much less technologically sophisticated production-line techniques than they would have been obliged to employ at home.

From the perspective of those living in Europe, North America, and Japan, the results did seem to be much as predicted. Smokestack industries did disappear; jobs came to be divided between a lower stratum of service workers and an upper stratum sitting in antiseptic bubbles playing with computers. But below it all lay an uneasy awareness that the postwork civilization was a giant fraud. Our carefully engineered high-tech sneakers were not being produced by intelligent cyborgs or self-replicating molecular nanotechnology; they were being made on the equivalent of old-fashioned Singer sewing machines, by the daughters of Mexican and Indonesian farmers who, as the result of WTO or NAFTA–sponsored trade deals, had been ousted from their ancestral lands. It was a guilty awareness that lay beneath the postmodern sensibility and its celebration of the endless play of images and surfaces.

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Why did the projected explosion of technological growth everyone was expecting—the moon bases, the robot factories—fail to happen? There are two possibilities. Either our expectations about the pace of technological change were unrealistic (in which case, we need to know why so many intelligent people believed they were not) or our expectations were not unrealistic (in which case, we need to know what happened to derail so many credible ideas and prospects).

Most social analysts choose the first explanation and trace the problem to the Cold War space race. Why, these analysts wonder, did both the United States and the Soviet Union become so obsessed with the idea of manned space travel? It was never an efficient way to engage in scientific research. And it encouraged unrealistic ideas of what the human future would be like.

Could the answer be that both the United States and the Soviet Union had been, in the century before, societies of pioneers, one expanding across the Western frontier, the other across Siberia? Didn’t they share a commitment to the myth of a limitless, expansive future, of human colonization of vast empty spaces, that helped convince the leaders of both superpowers they had entered into a “space age” in which they were battling over control of the future itself? All sorts of myths were at play here, no doubt, but that proves nothing about the feasibility of the project.

Some of those science fiction fantasies (at this point we can’t know which ones) could have been brought into being. For earlier generations, many science fiction fantasies had been brought into being. Those who grew up at the turn of the century reading Jules Verne or H.G. Wells imagined the world of, say, 1960 with flying machines, rocket ships, submarines, radio, and television—and that was pretty much what they got. If it wasn’t unrealistic in 1900 to dream of men traveling to the moon, then why was it unrealistic in the sixties to dream of jet-packs and robot laundry-maids?

In fact, even as those dreams were being outlined, the material base for their achievement was beginning to be whittled away. There is reason to believe that even by the fifties and sixties, the pace of technological innovation was slowing down from the heady pace of the first half of the century. There was a last spate in the fifties when microwave ovens (1954), the Pill (1957), and lasers (1958) all appeared in rapid succession. But since then, technological advances have taken the form of clever new ways of combining existing technologies (as in the space race) and new ways of putting existing technologies to consumer use (the most famous example is television, invented in 1926, but mass produced only after the war.) Yet, in part because the space race gave everyone the impression that remarkable advances were happening, the popular impression during the sixties was that the pace of technological change was speeding up in terrifying, uncontrollable ways.

Alvin Toffler’s 1970 best seller Future Shock argued that almost all the social problems of the sixties could be traced back to the increasing pace of technological change. The endless outpouring of scientific breakthroughs transformed the grounds of daily existence, and left Americans without any clear idea of what normal life was. Just consider the family, where not just the Pill, but also the prospect of in vitro fertilization, test tube babies, and sperm and egg donation were about to make the idea of motherhood obsolete.

Humans were not psychologically prepared for the pace of change, Toffler wrote. He coined a term for the phenomenon: “accelerative thrust.” It had begun with the Industrial Revolution, but by roughly 1850, the effect had become unmistakable. Not only was everything around us changing, but most of it—human knowledge, the size of the population, industrial growth, energy use—was changing exponentially. The only solution, Toffler argued, was to begin some kind of control over the process, to create institutions that would assess emerging technologies and their likely effects, to ban technologies likely to be too socially disruptive, and to guide development in the direction of social harmony.

While many of the historical trends Toffler describes are accurate, the book appeared when most of these exponential trends halted. It was right around 1970 when the increase in the number of scientific papers published in the world—a figure that had doubled every fifteen years since, roughly, 1685—began leveling off. The same was true of books and patents.

Toffler’s use of acceleration was particularly unfortunate. For most of human history, the top speed at which human beings could travel had been around 25 miles per hour. By 1900 it had increased to 100 miles per hour, and for the next seventy years it did seem to be increasing exponentially. By the time Toffler was writing, in 1970, the record for the fastest speed at which any human had traveled stood at roughly 25,000 mph, achieved by the crew of Apollo 10 in 1969, just one year before. At such an exponential rate, it must have seemed reasonable to assume that within a matter of decades, humanity would be exploring other solar systems.

Since 1970, no further increase has occurred. The record for the fastest a human has ever traveled remains with the crew of Apollo 10. True, the commercial airliner Concorde, which first flew in 1969, reached a maximum speed of 1,400 mph. And the Soviet Tupolev Tu-144, which flew first, reached an even faster speed of 1,553 mph. But those speeds not only have failed to increase; they have decreased since the Tupolev Tu-144 was cancelled and the Concorde was abandoned.

None of this stopped Toffler’s own career. He kept retooling his analysis to come up with new spectacular pronouncements. In 1980, he produced The Third Wave, its argument lifted from Ernest Mandel’s “third technological revolution”—except that while Mandel thought these changes would spell the end of capitalism, Toffler assumed capitalism was eternal. By 1990, Toffler was the personal intellectual guru to Republican congressman Newt Gingrich, who claimed that his 1994 “Contract With America” was inspired, in part, by the understanding that the United States needed to move from an antiquated, materialist, industrial mind-set to a new, free-market, information age, Third Wave civilization.

There are all sorts of ironies in this connection. One of Toffler’s greatest achievements was inspiring the government to create an Office of Technology Assessment (OTA). One of Gingrich’s first acts on winning control of the House of Representatives in 1995 was defunding the OTA as an example of useless government extravagance. Still, there’s no contradiction here. By this time, Toffler had long since given up on influencing policy by appealing to the general public; he was making a living largely by giving seminars to CEOs and corporate think tanks. His insights had been privatized.

Gingrich liked to call himself a “conservative futurologist.” This, too, might seem oxymoronic; but, in fact, Toffler’s own conception of futurology was never progressive. Progress was always presented as a problem that needed to be solved.

Toffler might best be seen as a lightweight version of the nineteenth-century social theorist Auguste Comte, who believed that he was standing on the brink of a new age—in his case, the Industrial Age—driven by the inexorable progress of technology, and that the social cataclysms of his times were caused by the social system not adjusting. The older feudal order had developed Catholic theology, a way of thinking about man’s place in the cosmos perfectly suited to the social system of the time, as well as an institutional structure, the Church, that conveyed and enforced such ideas in a way that could give everyone a sense of meaning and belonging. The Industrial Age had developed its own system of ideas—science—but scientists had not succeeded in creating anything like the Catholic Church. Comte concluded that we needed to develop a new science, which he dubbed “sociology,” and said that sociologists should play the role of priests in a new Religion of Society that would inspire everyone with a love of order, community, work discipline, and family values. Toffler was less ambitious; his futurologists were not supposed to play the role of priests.

Gingrich had a second guru, a libertarian theologian named George Gilder, and Gilder, like Toffler, was obsessed with technology and social change. In an odd way, Gilder was more optimistic. Embracing a radical version of Mandel’s Third Wave argument, he insisted that what we were seeing with the rise of computers was an “overthrow of matter.” The old, materialist Industrial Society, where value came from physical labor, was giving way to an Information Age where value emerges directly from the minds of entrepreneurs, just as the world had originally appeared ex nihilo from the mind of God, just as money, in a proper supply-side economy, emerged ex nihilo from the Federal Reserve and into the hands of value-creating capitalists. Supply-side economic policies, Gilder concluded, would ensure that investment would continue to steer away from old government boondoggles like the space program and toward more productive information and medical technologies.

But if there was a conscious, or semi-conscious, move away from investment in research that might lead to better rockets and robots, and toward research that would lead to such things as laser printers and CAT scans, it had begun well before Toffler’s Future Shock (1970) and Gilder’s Wealth and Poverty (1981). What their success shows is that the issues they raised—that existing patterns of technological development would lead to social upheaval, and that we needed to guide technological development in directions that did not challenge existing structures of authority—echoed in the corridors of power. Statesmen and captains of industry had been thinking about such questions for some time.

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Industrial capitalism has fostered an extremely rapid rate of scientific advance and technological innovation—one with no parallel in previous human history. Even capitalism’s greatest detractors, Karl Marx and Friedrich Engels, celebrated its unleashing of the “productive forces.” Marx and Engels also believed that capitalism’s continual need to revolutionize the means of industrial production would be its undoing. Marx argued that, for certain technical reasons, value—and therefore profits—can be extracted only from human labor. Competition forces factory owners to mechanize production, to reduce labor costs, but while this is to the short-term advantage of the firm, mechanization’s effect is to drive down the general rate of profit.

For 150 years, economists have debated whether all this is true. But if it is true, then the decision by industrialists not to pour research funds into the invention of the robot factories that everyone was anticipating in the sixties, and instead to relocate their factories to labor-intensive, low-tech facilities in China or the Global South makes a great deal of sense.

As I’ve noted, there’s reason to believe the pace of technological innovation in productive processes—the factories themselves—began to slow in the fifties and sixties, but the side effects of America’s rivalry with the Soviet Union made innovation appear to accelerate. There was the awesome space race, alongside frenetic efforts by U.S. industrial planners to apply existing technologies to consumer purposes, to create an optimistic sense of burgeoning prosperity and guaranteed progress that would undercut the appeal of working-class politics.

These moves were reactions to initiatives from the Soviet Union. But this part of the history is difficult for Americans to remember, because at the end of the Cold War, the popular image of the Soviet Union switched from terrifyingly bold rival to pathetic basket case—the exemplar of a society that could not work. Back in the fifties, in fact, many United States planners suspected the Soviet system worked better. Certainly, they recalled the fact that in the thirties, while the United States had been mired in depression, the Soviet Union had maintained almost unprecedented economic growth rates of 10 percent to 12 percent a year—an achievement quickly followed by the production of tank armies that defeated Nazi Germany, then by the launching of Sputnik in 1957, then by the first manned spacecraft, the Vostok, in 1961.

It’s often said the Apollo moon landing was the greatest historical achievement of Soviet communism. Surely, the United States would never have contemplated such a feat had it not been for the cosmic ambitions of the Soviet Politburo. We are used to thinking of the Politburo as a group of unimaginative gray bureaucrats, but they were bureaucrats who dared to dream astounding dreams. The dream of world revolution was only the first. It’s also true that most of them—changing the course of mighty rivers, this sort of thing—either turned out to be ecologically and socially disastrous, or, like Joseph Stalin’s one-hundred-story Palace of the Soviets or a twenty-story statue of Vladimir Lenin, never got off the ground.

After the initial successes of the Soviet space program, few of these schemes were realized, but the leadership never ceased coming up with new ones. Even in the eighties, when the United States was attempting its own last, grandiose scheme, Star Wars, the Soviets were planning to transform the world through creative uses of technology. Few outside of Russia remember most of these projects, but great resources were devoted to them. It’s also worth noting that unlike the Star Wars project, which was designed to sink the Soviet Union, most were not military in nature: as, for instance, the attempt to solve the world hunger problem by harvesting lakes and oceans with an edible bacteria called spirulina, or to solve the world energy problem by launching hundreds of gigantic solar-power platforms into orbit and beaming the electricity back to earth.

The American victory in the space race meant that, after 1968, U.S. planners no longer took the competition seriously. As a result, the mythology of the final frontier was maintained, even as the direction of research and development shifted away from anything that might lead to the creation of Mars bases and robot factories.

The standard line is that all this was a result of the triumph of the market. The Apollo program was a Big Government project, Soviet-inspired in the sense that it required a national effort coordinated by government bureaucracies. As soon as the Soviet threat drew safely out of the picture, though, capitalism was free to revert to lines of technological development more in accord with its normal, decentralized, free-market imperatives—such as privately funded research into marketable products like personal computers. This is the line that men like Toffler and Gilder took in the late seventies and early eighties.

In fact, the United States never did abandon gigantic, government-controlled schemes of technological development. Mainly, they just shifted to military research—and not just to Soviet-scale schemes like Star Wars, but to weapons projects, research in communications and surveillance technologies, and similar security-related concerns. To some degree this had always been true: the billions poured into missile research had always dwarfed the sums allocated to the space program. Yet by the seventies, even basic research came to be conducted following military priorities. One reason we don’t have robot factories is because roughly 95 percent of robotics research funding has been channeled through the Pentagon, which is more interested in developing unmanned drones than in automating paper mills.

A case could be made that even the shift to research and development on information technologies and medicine was not so much a reorientation toward market-driven consumer imperatives, but part of an all-out effort to follow the technological humbling of the Soviet Union with total victory in the global class war—seen simultaneously as the imposition of absolute U.S. military dominance overseas, and, at home, the utter rout of social movements.

For the technologies that did emerge proved most conducive to surveillance, work discipline, and social control. Computers have opened up certain spaces of freedom, as we’re constantly reminded, but instead of leading to the workless utopia Abbie Hoffman imagined, they have been employed in such a way as to produce the opposite effect. They have enabled a financialization of capital that has driven workers desperately into debt, and, at the same time, provided the means by which employers have created “flexible” work regimes that have both destroyed traditional job security and increased working hours for almost everyone. Along with the export of factory jobs, the new work regime has routed the union movement and destroyed any possibility of effective working-class politics.

Meanwhile, despite unprecedented investment in research on medicine and life sciences, we await cures for cancer and the common cold, and the most dramatic medical breakthroughs we have seen have taken the form of drugs such as Prozac, Zoloft, or Ritalin—tailor-made to ensure that the new work demands don’t drive us completely, dysfunctionally crazy.

With results like these, what will the epitaph for neoliberalism look like? I think historians will conclude it was a form of capitalism that systematically prioritized political imperatives over economic ones. Given a choice between a course of action that would make capitalism seem the only possible economic system, and one that would transform capitalism into a viable, long-term economic system, neoliberalism chooses the former every time. There is every reason to believe that destroying job security while increasing working hours does not create a more productive (let alone more innovative or loyal) workforce. Probably, in economic terms, the result is negative—an impression confirmed by lower growth rates in just about all parts of the world in the eighties and nineties.

But the neoliberal choice has been effective in depoliticizing labor and overdetermining the future. Economically, the growth of armies, police, and private security services amounts to dead weight. It’s possible, in fact, that the very dead weight of the apparatus created to ensure the ideological victory of capitalism will sink it. But it’s also easy to see how choking off any sense of an inevitable, redemptive future that could be different from our world is a crucial part of the neoliberal project.

At this point all the pieces would seem to be falling neatly into place. By the sixties, conservative political forces were growing skittish about the socially disruptive effects of technological progress, and employers were beginning to worry about the economic impact of mechanization. The fading Soviet threat allowed for a reallocation of resources in directions seen as less challenging to social and economic arrangements, or indeed directions that could support a campaign of reversing the gains of progressive social movements and achieving a decisive victory in what U.S. elites saw as a global class war. The change of priorities was introduced as a withdrawal of big-government projects and a return to the market, but in fact the change shifted government-directed research away from programs like NASA or alternative energy sources and toward military, information, and medical technologies.

Of course this doesn’t explain everything. Above all, it does not explain why, even in those areas that have become the focus of well-funded research projects, we have not seen anything like the kind of advances anticipated fifty years ago. If 95 percent of robotics research has been funded by the military, then where are the Klaatu-style killer robots shooting death rays from their eyes?

Obviously, there have been advances in military technology in recent decades. One of the reasons we all survived the Cold War is that while nuclear bombs might have worked as advertised, their delivery systems did not; intercontinental ballistic missiles weren’t capable of striking cities, let alone specific targets inside cities, and this fact meant there was little point in launching a nuclear first strike unless you intended to destroy the world.

Contemporary cruise missiles are accurate by comparison. Still, precision weapons never do seem capable of assassinating specific individuals (Saddam, Osama, Qaddafi), even when hundreds are dropped. And ray guns have not materialized—surely not for lack of trying. We can assume the Pentagon has spent billions on death ray research, but the closest they’ve come so far are lasers that might, if aimed correctly, blind an enemy gunner looking directly at the beam. Aside from being unsporting, this is pathetic: lasers are a fifties technology. Phasers that can be set to stun do not appear to be on the drawing boards; and when it comes to infantry combat, the preferred weapon almost everywhere remains the AK-47, a Soviet design named for the year it was introduced: 1947.

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The Internet is a remarkable innovation, but all we are talking about is a super-fast and globally accessible combination of library, post office, and mail-order catalogue. Had the Internet been described to a science fiction aficionado in the fifties and sixties and touted as the most dramatic technological achievement since his time, his reaction would have been disappointment. Fifty years and this is the best our scientists managed to come up with? We expected computers that would think!

Overall, levels of research funding have increased dramatically since the seventies. Admittedly, the proportion of that funding that comes from the corporate sector has increased most dramatically, to the point that private enterprise is now funding twice as much research as the government, but the increase is so large that the total amount of government research funding, in real-dollar terms, is much higher than it was in the sixties. “Basic,” “curiosity-driven,” or “blue skies” research—the kind that is not driven by the prospect of any immediate practical application, and that is most likely to lead to unexpected breakthroughs—occupies an ever smaller proportion of the total, though so much money is being thrown around nowadays that overall levels of basic research funding have increased.

Yet most observers agree that the results have been paltry. Certainly we no longer see anything like the continual stream of conceptual revolutions—genetic inheritance, relativity, psychoanalysis, quantum mechanics—that people had grown used to, and even expected, a hundred years before. Why?

Part of the answer has to do with the concentration of resources on a handful of gigantic projects: “big science,” as it has come to be called. The Human Genome Project is often held out as an example. After spending almost three billion dollars and employing thousands of scientists and staff in five different countries, it has mainly served to establish that there isn’t very much to be learned from sequencing genes that’s of much use to anyone else. Even more, the hype and political investment surrounding such projects demonstrate the degree to which even basic research now seems to be driven by political, administrative, and marketing imperatives that make it unlikely anything revolutionary will happen.

Here, our fascination with the mythic origins of Silicon Valley and the Internet has blinded us to what’s really going on. It has allowed us to imagine that research and development is now driven, primarily, by small teams of plucky entrepreneurs, or the sort of decentralized cooperation that creates open-source software. This is not so, even though such research teams are most likely to produce results. Research and development is still driven by giant bureaucratic projects.

What has changed is the bureaucratic culture. The increasing interpenetration of government, university, and private firms has led everyone to adopt the language, sensibilities, and organizational forms that originated in the corporate world. Although this might have helped in creating marketable products, since that is what corporate bureaucracies are designed to do, in terms of fostering original research, the results have been catastrophic.

My own knowledge comes from universities, both in the United States and Britain. In both countries, the last thirty years have seen a veritable explosion of the proportion of working hours spent on administrative tasks at the expense of pretty much everything else. In my own university, for instance, we have more administrators than faculty members, and the faculty members, too, are expected to spend at least as much time on administration as on teaching and research combined. The same is true, more or less, at universities worldwide.

The growth of administrative work has directly resulted from introducing corporate management techniques. Invariably, these are justified as ways of increasing efficiency and introducing competition at every level. What they end up meaning in practice is that everyone winds up spending most of their time trying to sell things: grant proposals; book proposals; assessments of students’ jobs and grant applications; assessments of our colleagues; prospectuses for new interdisciplinary majors; institutes; conference workshops; universities themselves (which have now become brands to be marketed to prospective students or contributors); and so on.

As marketing overwhelms university life, it generates documents about fostering imagination and creativity that might just as well have been designed to strangle imagination and creativity in the cradle. No major new works of social theory have emerged in the United States in the last thirty years. We have been reduced to the equivalent of medieval scholastics, writing endless annotations of French theory from the seventies, despite the guilty awareness that if new incarnations of Gilles Deleuze, Michel Foucault, or Pierre Bourdieu were to appear in the academy today, we would deny them tenure.

There was a time when academia was society’s refuge for the eccentric, brilliant, and impractical. No longer. It is now the domain of professional self-marketers. As a result, in one of the most bizarre fits of social self-destructiveness in history, we seem to have decided we have no place for our eccentric, brilliant, and impractical citizens. Most languish in their mothers’ basements, at best making the occasional, acute intervention on the Internet.

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If all this is true in the social sciences, where research is still carried out with minimal overhead largely by individuals, one can imagine how much worse it is for astrophysicists. And, indeed, one astrophysicist, Jonathan Katz, has recently warned students pondering a career in the sciences. Even if you do emerge from the usual decade-long period languishing as someone else’s flunky, he says, you can expect your best ideas to be stymied at every point:

You will spend your time writing proposals rather than doing research. Worse, because your proposals are judged by your competitors, you cannot follow your curiosity, but must spend your effort and talents on anticipating and deflecting criticism rather than on solving the important scientific problems. . . . It is proverbial that original ideas are the kiss of death for a proposal, because they have not yet been proved to work.

That pretty much answers the question of why we don’t have teleportation devices or antigravity shoes. Common sense suggests that if you want to maximize scientific creativity, you find some bright people, give them the resources they need to pursue whatever idea comes into their heads, and then leave them alone. Most will turn up nothing, but one or two may well discover something. But if you want to minimize the possibility of unexpected breakthroughs, tell those same people they will receive no resources at all unless they spend the bulk of their time competing against each other to convince you they know in advance what they are going to discover.

In the natural sciences, to the tyranny of managerialism we can add the privatization of research results. As the British economist David Harvie has reminded us, “open source” research is not new. Scholarly research has always been open source, in the sense that scholars share materials and results. There is competition, certainly, but it is “convivial.” This is no longer true of scientists working in the corporate sector, where findings are jealously guarded, but the spread of the corporate ethos within the academy and research institutes themselves has caused even publicly funded scholars to treat their findings as personal property. Academic publishers ensure that findings that are published are increasingly difficult to access, further enclosing the intellectual commons. As a result, convivial, open-source competition turns into something much more like classic market competition.

There are many forms of privatization, up to and including the simple buying up and suppression of inconvenient discoveries by large corporations fearful of their economic effects. (We cannot know how many synthetic fuel formulae have been bought up and placed in the vaults of oil companies, but it’s hard to imagine nothing like this happens.) More subtle is the way the managerial ethos discourages everything adventurous or quirky, especially if there is no prospect of immediate results. Oddly, the Internet can be part of the problem here. As Neal Stephenson put it:

Most people who work in corporations or academia have witnessed something like the following: A number of engineers are sitting together in a room, bouncing ideas off each other. Out of the discussion emerges a new concept that seems promising. Then some laptop-wielding person in the corner, having performed a quick Google search, announces that this “new” idea is, in fact, an old one; it—or at least something vaguely similar—has already been tried. Either it failed, or it succeeded. If it failed, then no manager who wants to keep his or her job will approve spending money trying to revive it. If it succeeded, then it’s patented and entry to the market is presumed to be unattainable, since the first people who thought of it will have “first-mover advantage” and will have created “barriers to entry.” The number of seemingly promising ideas that have been crushed in this way must number in the millions.

And so a timid, bureaucratic spirit suffuses every aspect of cultural life. It comes festooned in a language of creativity, initiative, and entrepreneurialism. But the language is meaningless. Those thinkers most likely to make a conceptual breakthrough are the least likely to receive funding, and, if breakthroughs occur, they are not likely to find anyone willing to follow up on their most daring implications.

Giovanni Arrighi has noted that after the South Sea Bubble, British capitalism largely abandoned the corporate form. By the time of the Industrial Revolution, Britain had instead come to rely on a combination of high finance and small family firms—a pattern that held throughout the next century, the period of maximum scientific and technological innovation. (Britain at that time was also notorious for being just as generous to its oddballs and eccentrics as contemporary America is intolerant. A common expedient was to allow them to become rural vicars, who, predictably, became one of the main sources for amateur scientific discoveries.)

Contemporary, bureaucratic corporate capitalism was a creation not of Britain, but of the United States and Germany, the two rival powers that spent the first half of the twentieth century fighting two bloody wars over who would replace Britain as a dominant world power—wars that culminated, appropriately enough, in government-sponsored scientific programs to see who would be the first to discover the atom bomb. It is significant, then, that our current technological stagnation seems to have begun after 1945, when the United States replaced Britain as organizer of the world economy.

Americans do not like to think of themselves as a nation of bureaucrats—quite the opposite—but the moment we stop imagining bureaucracy as a phenomenon limited to government offices, it becomes obvious that this is precisely what we have become. The final victory over the Soviet Union did not lead to the domination of the market, but, in fact, cemented the dominance of conservative managerial elites, corporate bureaucrats who use the pretext of short-term, competitive, bottom-line thinking to squelch anything likely to have revolutionary implications of any kind.

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If we do not notice that we live in a bureaucratic society, that is because bureaucratic norms and practices have become so all-pervasive that we cannot see them, or, worse, cannot imagine doing things any other way.

Computers have played a crucial role in this narrowing of our social imaginations. Just as the invention of new forms of industrial automation in the eighteenth and nineteenth centuries had the paradoxical effect of turning more and more of the world’s population into full-time industrial workers, so has all the software designed to save us from administrative responsibilities turned us into part- or full-time administrators. In the same way that university professors seem to feel it is inevitable they will spend more of their time managing grants, so affluent housewives simply accept that they will spend weeks every year filling out forty-page online forms to get their children into grade schools. We all spend increasing amounts of time punching passwords into our phones to manage bank and credit accounts and learning how to perform jobs once performed by travel agents, brokers, and accountants.

Someone once figured out that the average American will spend a cumulative six months of life waiting for traffic lights to change. I don’t know if similar figures are available for how long it takes to fill out forms, but it must be at least as long. No population in the history of the world has spent nearly so much time engaged in paperwork.

In this final, stultifying stage of capitalism, we are moving from poetic technologies to bureaucratic technologies. By poetic technologies I refer to the use of rational and technical means to bring wild fantasies to reality. Poetic technologies, so understood, are as old as civilization. Lewis Mumford noted that the first complex machines were made of people. Egyptian pharaohs were able to build the pyramids only because of their mastery of administrative procedures, which allowed them to develop production-line techniques, dividing up complex tasks into dozens of simple operations and assigning each to one team of workmen—even though they lacked mechanical technology more complex than the inclined plane and lever. Administrative oversight turned armies of peasant farmers into the cogs of a vast machine. Much later, after cogs had been invented, the design of complex machinery elaborated principles originally developed to organize people.

Yet we have seen those machines—whether their moving parts are arms and torsos or pistons, wheels, and springs—being put to work to realize impossible fantasies: cathedrals, moon shots, transcontinental railways. Certainly, poetic technologies had something terrible about them; the poetry is likely to be as much of dark satanic mills as of grace or liberation. But the rational, administrative techniques were always in service to some fantastic end.

From this perspective, all those mad Soviet plans—even if never realized—marked the climax of poetic technologies. What we have now is the reverse. It’s not that vision, creativity, and mad fantasies are no longer encouraged, but that most remain free-floating; there’s no longer even the pretense that they could ever take form or flesh. The greatest and most powerful nation that has ever existed has spent the last decades telling its citizens they can no longer contemplate fantastic collective enterprises, even if—as the environmental crisis demands— the fate of the earth depends on it.

What are the political implications of all this? First of all, we need to rethink some of our most basic assumptions about the nature of capitalism. One is that capitalism is identical with the market, and that both therefore are inimical to bureaucracy, which is supposed to be a creature of the state.

The second assumption is that capitalism is in its nature technologically progressive. It would seem that Marx and Engels, in their giddy enthusiasm for the industrial revolutions of their day, were wrong about this. Or, to be more precise: they were right to insist that the mechanization of industrial production would destroy capitalism; they were wrong to predict that market competition would compel factory owners to mechanize anyway. If it didn’t happen, that is because market competition is not, in fact, as essential to the nature of capitalism as they had assumed. If nothing else, the current form of capitalism, where much of the competition seems to take the form of internal marketing within the bureaucratic structures of large semi-monopolistic enterprises, would come as a complete surprise to them.

Defenders of capitalism make three broad historical claims: first, that it has fostered rapid scientific and technological growth; second, that however much it may throw enormous wealth to a small minority, it does so in such a way as to increase overall prosperity; third, that in doing so, it creates a more secure and democratic world for everyone. It is clear that capitalism is not doing any of these things any longer. In fact, many of its defenders are retreating from claiming that it is a good system and instead falling back on the claim that it is the only possible system—or, at least, the only possible system for a complex, technologically sophisticated society such as our own.

But how could anyone argue that current economic arrangements are also the only ones that will ever be viable under any possible future technological society? The argument is absurd. How could anyone know?

Granted, there are people who take that position—on both ends of the political spectrum. As an anthropologist and anarchist, I encounter anticivilizational types who insist not only that current industrial technology leads only to capitalist-style oppression, but that this must necessarily be true of any future technology as well, and therefore that human liberation can be achieved only by returning to the Stone Age. Most of us are not technological determinists.

But claims for the inevitability of capitalism have to be based on a kind of technological determinism. And for that very reason, if the aim of neoliberal capitalism is to create a world in which no one believes any other economic system could work, then it needs to suppress not just any idea of an inevitable redemptive future, but any radically different technological future. Yet there’s a contradiction. Defenders of capitalism cannot mean to convince us that technological change has ended—since that would mean capitalism is not progressive. No, they mean to convince us that technological progress is indeed continuing, that we do live in a world of wonders, but that those wonders take the form of modest improvements (the latest iPhone!), rumors of inventions about to happen (“I hear they are going to have flying cars pretty soon”), complex ways of juggling information and imagery, and still more complex platforms for filling out of forms.

I do not mean to suggest that neoliberal capitalism—or any other system—can be successful in this regard. First, there’s the problem of trying to convince the world you are leading the way in technological progress when you are holding it back. The United States, with its decaying infrastructure, paralysis in the face of global warming, and symbolically devastating abandonment of its manned space program just as China accelerates its own, is doing a particularly bad public relations job. Second, the pace of change can’t be held back forever. Breakthroughs will happen; inconvenient discoveries cannot be permanently suppressed. Other, less bureaucratized parts of the world—or at least, parts of the world with bureaucracies that are not so hostile to creative thinking—will slowly but inevitably attain the resources required to pick up where the United States and its allies have left off. The Internet does provide opportunities for collaboration and dissemination that may help break us through the wall as well. Where will the breakthrough come? We can’t know. Maybe 3D printing will do what the robot factories were supposed to. Or maybe it will be something else. But it will happen.

About one conclusion we can feel especially confident: it will not happen within the framework of contemporary corporate capitalism—or any form of capitalism. To begin setting up domes on Mars, let alone to develop the means to figure out if there are alien civilizations to contact, we’re going to have to figure out a different economic system. Must the new system take the form of some massive new bureaucracy? Why do we assume it must? Only by breaking up existing bureaucratic structures can we begin. And if we’re going to invent robots that will do our laundry and tidy up the kitchen, then we’re going to have to make sure that whatever replaces capitalism is based on a far more egalitarian distribution of wealth and power—one that no longer contains either the super-rich or the desperately poor willing to do their housework. Only then will technology begin to be marshaled toward human needs. And this is the best reason to break free of the dead hand of the hedge fund managers and the CEOs—to free our fantasies from the screens in which such men have imprisoned them, to let our imaginations once again become a material force in human history.


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[May 24, 2020] The world is entering the period of instability and turbulence

May 24, 2020 | www.moonofalabama.org

karlof1 , May 24 2020 20:52 utc | 29

...China's Foreign Minister Yang Yi held a lengthy presser providing detailed answers to many differing questions. The topic of "Wolf Diplomacy" is in the news today and was asked about by CNN:

" Cable News Network : We've seen an increasingly heated 'war of words' between China and the US. Is 'wolf warrior' diplomacy the new norm of China's diplomacy?

Wang Yi : I respect your right to ask the question, but I'm afraid you're not framing the question in the right way. One has to have a sense of right and wrong. Without it, a person cannot be trusted, and a country cannot hold its own in the family of nations .

... ... ...

"The world is undergoing changes of a kind unseen in a century and full of instability and turbulence. Confronted by a growing set of global challenges, we hope all countries will realize that humanity is a community with a shared future. We must render each other more support and cooperation, and there should be less finger-pointing and confrontation. We call on all nations to come together and build a better world for all." [My Emphasis]

... ... ...

[May 24, 2020] The Black Death Killed Feudalism. What Does COVID-19 Mean for Capitalism - FPIF by John Feffer

Notable quotes:
"... The coronavirus crisis has thrown the global economy into cardiac arrest, and now you are acutely aware of the very markets that you had previously just assumed would function as normal. The first indication was the precipitous drop in the stock market that took place in late February. Then, as the United States began to enter quarantine, the labor market collapsed and hundreds of millions of people were suddenly out of work. Shortages in a few key commodities -- masks, ventilators, toilet paper -- began to appear. ..."
Apr 29, 2020 | fpif.org

How will the coronavirus transform the relationship between state and market? A look at oil, food, and finance.


You pay little attention to the systems of your body -- circulatory, digestive, pulmonary -- unless something goes wrong.

These automatic systems ordinarily go about their business, like unseen clockwork, while you think about a vexing problem at work, drink your morning cup of coffee, walk up and down stairs, and head out to your car to begin your morning commute. If you had to focus your attention on breathing, pushing blood through your veins, and metabolizing food, you'd have no time or energy to do anything else. The body abhors the micromanaging of the mind.

The same applies to the world's markets. They whir away in the background of your life, providing loans to your business, coffee beans to your nearby supermarket, labor to build your house, gas to fill your car. You take all of these markets for granted. All you have to concern yourself with is earning enough money to gain access to these goods and services. That's what it means to live in a modern economy. The days of hunting and gathering, of complete self-sufficiency, are long past.

And then, in a series of sickening shifts, the markets go haywire. As with a heart attack, you no longer can take the optimal performance of these systems for granted.

The coronavirus crisis has thrown the global economy into cardiac arrest, and now you are acutely aware of the very markets that you had previously just assumed would function as normal. The first indication was the precipitous drop in the stock market that took place in late February. Then, as the United States began to enter quarantine, the labor market collapsed and hundreds of millions of people were suddenly out of work. Shortages in a few key commodities -- masks, ventilators, toilet paper -- began to appear.

It is one of the central tenets of laissez-faire capitalism that markets behave like automatic systems, that an "invisible hand" regulates supply and demand. Market fundamentalists believe that the less the government interferes with these automatic systems, the better. They argue, to the contrary, that markets should increasingly take over government functions: a privatized post office, for instance, or Social Security accounts subjected to the stock market.

Market fundamentalists are like Christian Scientists. They refuse government intervention just as the faithful reject medical intervention. Much like God's grace, the invisible hand operates independent of human plan.

Then something happens, like a pandemic, which tests this faith. States around the world are now spending trillions of dollars to intervene in the economy: to bail out banks, save businesses, help out the unemployed. Countries are imposing export controls on key commodities. As in wartime, governments are directing manufacturers to produce critical goods to fill an unexpected demand for greater supply.

These are emergency interventions. The market fundamentalist looks forward to the day when stay-at-home restrictions are lifted, people go back to work, the stock market barrels back into bull mode, and the invisible hand, with perhaps a few Band-aids across the knuckles, returns to its job.

But some pandemics fundamentally alter the economy. In such emergencies, people realize that an economy is constructed and thus can be reconstructed. Are we now at just such a moment in world history? Will the coronavirus permanently transform the relationship between the state and the market?

Let's take a look at three key markets -- oil, food, and finance -- to measure the impact of the pandemic and the prospects for transformation.

Oil

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In 2007, Ecuadorian President Rafael Correa offered to forgo digging for oil beneath the Yasuni national park in exchange for $3.6 billion from the international community. No one took him up on the offer.

When the U.S. price of oil went below zero last week, I immediately thought of Correa's offer. The mainstream scoffed at the Ecuadorian leader back in 2007. How on earth could you possibly propose to keep oil under the earth? The world economy runs on fossil fuels. You might as well ask your kid to keep her Halloween candy uneaten in the back of the cupboard.

Today, however, the world is glutted with oil. The global recession has radically reduced the need for oil and gas.

In the United States, transportation absorbs nearly 70 percent of oil consumption. With airplanes grounded, fewer trains and busses in operation, and highways uncongested, the demand for oil has dropped precipitously. Businesses, too, are using less energy. It's not just oil. Companies devoted to pumping natural gas out of shale deposits are filing for bankruptcy as their market value drops precipitously: the price of a share of fracking giant Whiting Petroleum fell from $150 a couple years ago to 67 cents on March 31.

It's gotten to the point that you almost can't give away the stuff.

After all, if you somehow found yourself with a bunch of barrels of oil, where would you store it? Oil-storage tanks in the United State are near capacity. "Oil supertankers are looking like petroleum paparazzi, crowding the Los Angeles shoreline, either as floating storage or waiting on some kind of turn in sentiment," Brian Sullivan writes at CNBC . "With prices higher in coming months, for now it pays to sit on oil and hope to sell it for more money down the pipeline."

Oil-producing nations, after years of boosting their supplies, finally agreed in mid-April to cut production by 10 percent -- about 10 million gallons a day. In other words, they are deciding to leave oil in the ground. Now, however, it doesn't even qualify as a half-measure, since demand has dropped by 35 percent. The oil producers are awaiting the end of recession, when the quarantined go back to work, and everyone jumps on their transport of choice to make up for lost travel. They are awaiting a return to normal.

But the market for fossil fuels is not normal. The notion that the invisible hand will steer economies in a sustainable direction is hogwash. We are long past the moment when we should have paid Correa and everyone else to leave the oil and gas in the ground and move toward a world powered entirely by clean energy. The market treats the environment either as a commodity like any other or as an "externality" that doesn't factor into the final price of goods and services. That is so nineteenth century.

Climate change demands an intervention into the energy markets with restrictions on production, subsidies for clean energies like solar, and government purchases of electric cars. Returning to "normal" after the pandemic is not a viable option.

Food

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Like the oil exporters, food producers in the United States are restricting production as well.

In Delaware and Maryland, chicken producers are euthanizing two million chickens because the processing plants don't have enough workers. Sickness and death in these facilities, which has caused closures that are disrupting the supply chain, has prompted Trump to classify such plants as "critical infrastructure" that needs to remain open. Meanwhile, thousands of acres of fruits and vegetables are rotting in the fields in Florida because of the suspension of bulk food sales to schools, theme parks, and restaurants. The shortage of pickers -- often migrant laborers whose mobility has been restricted -- is complicating harvests.

Unlike oil, however, the overall demand for food remains high. The grocery business is booming . Food banks are overwhelmed by a surge unlike any in recent decades. The U.S. Department of Agriculture ordinarily could swoop in and buy up surplus production -- as it did for soybean growers during the trade war with China -- for use in food banks and other distribution programs. But as with so many other government agencies in the Trump era, the USDA has been slow to act , despite repeated pleas from growers and governors.

The pandemic is highlighting all the problems that have long plagued the food supply. First, there is the mismatch between supply and demand. Around 820 million people globally didn't have enough to eat in 2018, a figure that had been rising for three years in a row, and contrasts with another rising number: the 672 million obese people in the world. In the United States, fully 40 percent of food goes to waste every year. So, obviously the invisible hand does a pretty poor job of achieving market equilibrium.

Second, despite a growing movement to eat locally and seasonally, the food system still eats up a huge amount of energy. The problem lies not so much with bananas arriving by cargo ship, which is relatively efficient, but with perishable items delivered by plane . And it's what we eat, rather than where the products come from, that matters most. "Regardless of whether you compare the footprint of foods in terms of their weight (e.g. one kilogram of cheese versus one kilogram of peas); protein content; or calories, the overall conclusion is the same," writes Hannah Ritchie. "Plant-based foods tend to have a lower carbon footprint than meat and dairy. In many cases a much smaller footprint."

Third, because of economies of scale and abysmal labor practices, food in the industrialized world is too often grown by agribusiness, processed by transnational corporations, and picked or handled by workers who don't even make close to a living wage.

Returning to this kind of food system after the pandemic fades would be truly unappetizing. The livable wage campaign must spread to the countryside, meat substitutes must get an additional lift through government and institutional purchases, and innovative programs like the Too Good to Go app in Europe -- which sells extra restaurant and supermarket food at a discount -- must be brought to the United States to cut down on food waste and get meals to those in need.

Finance global-financial-crisis-capitalism-globalization-finance

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The financial crisis of 2008-2009 exposed the fragility and fundamental inequality of the global financial system. But all along the invisible hand has been pickpocketing poor Peter to pay prosperous Paul. Bankers, stockbrokers, and financial gurus have constructed a casino-like system that occasionally doles out a few pennies to the people playing the slots even as it enriches the house -- the top 1-2 percent -- at every turn.

The most outrageous part of this scheme is that the financial crisis demonstrated just how bad the financiers were at their own game. Not only did they not go to prison for illegal activities, they were with a few exceptions not even punished economically for their market failures. They were either too big, too rich, or too powerful for the government to allow them to fail.

In The New Yorker , Nick Paumgarten quotes a prominent investment banker at a bond fund:

"In the financial crisis, we won the war but lost the peace." Instead of investing in infrastructure, education, and job retraining, we emphasized, via a central-bank policy of quantitative easing (what some people call printing money), the value of risk assets, like stocks. "We collectively fell in love with finance," he said.

After the last financial crisis, the wealthy, who are heavily invested in the stock market, did quite well, while everyone else took a hit. Explains Colin Schultz in Smithsonian magazine: "While families hovering around the average net worth lost 36 percent over the past decade -- dropping from $87,992 in 2003 to $56,335 in 2013 -- people in the top 95th percentile actually gained 14 percent in the same tumultuous period -- going from $740,700 in 2003 to $834,100 in 2013."

The Trump administration is clearly in love with finance. Even before the pandemic hit, Trump's tax reform provided the top six U.S. banks with $32 billion in savings . That's more than what the 2008 bank bailout provided (and remember, banks mostly paid back those earlier loans). The stock market also benefited from an unprecedented upswing in stock buybacks -- $2 trillion combined in 2018 and 2019 -- that enriched shareholders at the expense of workers.

The $2 trillion in initial stimulus funds that the U.S. government is providing this time around has gone to individuals (those Trump-signed checks in the mail), small businesses (except when it went to big businesses), hospitals, and unemployed workers. There's also money for farmers, schools, food stamps, and (alas) the Pentagon. Future rounds of stimulus spending might include infrastructure, more aid to states and localities, and funds for smaller banks.

There's not much enthusiasm, at least publicly, to bail out Wall Street. Stock buybacks were explicitly excluded from the stimulus package. Meanwhile, the stock market has begun to climb out of the basement in the last couple weeks, largely on the strength of the news of all this new money being pumped into the economy.

But just as the tax bill was a covert giveaway to financial institutions, so have been several of the administration's pandemic responses. Quantitative easing, by which the Federal Reserve buys bonds and mortgage-backed securities, has increased the amount of liquidity available to financial institutions.

In the latest effort, the Fed announced that it will buy $500 billion in corporate bonds, but without any of the strings attached to other assistance such as limits on stock buybacks or executive compensation. The banks are even nickel and diming people by seizing stimulus check deposits to cover overdrawn accounts.

Out of a total pie of around $6 trillion in potential stimulus spending, banks and major corporations are well-placed to grab the lion's share. Writes Nomi Prins at TomDispatch:

In the end, according to the president, that could mean $4.5 trillion in support for big banks and corporate entities versus something like $1.4 trillion for regular Americans, small businesses, hospitals, and local and state governments. That 3.5 to 1 ratio signals that, as in 2008, the Treasury and the Fed are focused on big banks and large corporations, not everyday Americans.

Invisible hand? Hardly. That's the very visible hand of government tilting the financial markets even more in favor of the rich. As for the invisible enrichment that goes on beneath the surface, otherwise known as corruption, the Trump administration has gutted the oversight mechanisms that could bring those abuses to light.

It's time to end America's love affair with finance. That means, in the short term, higher taxes on the very rich, limitations on CEO pay built into all bailouts, and reviving all the reasonable proposals for reforming the financial sector that were either left out of or didn't get full implemented in the Dodd-Frank Wall Street Reform and Consumer Protection Act passed in the wake of the last financial crisis.

Post-Pandemic Economics

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The Black Death depopulated Europe, killing as much as 60 percent of the population in the middle of the fourteenth century. Feudalism depended on lots of peasants working the land to support the one percent of that era. By carrying off so many of these workers, the Black Death made a major contribution to eroding the foundations of the dominant economic system of the time.

The coronavirus will not kill anywhere near as many people as the Black Death did. But it may well contribute to exposing the failures of "free markets" and the scandal of governments intervening in the economy on behalf of this era's one percent. The pandemic is already, thanks to huge stimulus packages, undermining the "small government" canard. A state apparatus deliberately hobbled by the Trump administration -- after earlier "reforms" by both parties -- did a piss-poor job of dealing with this crisis. That doesn't bode well for dealing with the even larger challenge of climate change.

The short-term fixes described above in the oil, food, and finance sectors are necessary but insufficient. They shift the balance more toward the government and away from the "free" market. They're not unlike the New Deal: reforming capitalism to save capitalism. But this pandemic is pointing to an even more fundamental transformation, to a new definition of economics.

The tweaking of markets to achieve optimal performance is much like the rejiggering of earth-centric models of the universe that took place in the Middle Ages. These models became more and more complex to account for new astronomical discoveries. Then along came Copernicus with a heliocentric model that accounted for all the new data. It took some time, however, for the old model to lose favor, despite its obvious failures.

The global economy remains market-centered, even though the evidence has been mounting that these markets are failing us and the planet. Tweaking this model isn't good enough. We need a new Copernicus who will provide a new theory that fits our unfolding reality, a new environment-centered economics that can maximize not profit but the well-being of living things. John Feffer is the director of Foreign Policy In Focus.

[May 24, 2020] Trump is mostly concerned with giving handouts to the MIC because he thinks "the economy" is based on jobs in the MIC since that is what they tell him is where US manufacturing is now based

May 24, 2020 | www.moonofalabama.org

Piotr Berman , May 23 2020 19:01 utc | 7

Trump is mostly concerned with giving handouts to the MIC because he thinks "the economy" is based on jobs in the MIC since that is what they tell him is where US manufacturing is now based.
Posted by: Kali | May 23 2020 18:16 utc | 2

To a degree, it is true. However, the problem with MIC as an economic stimulant is rather pitiful multiplier effect. For starters, the costs are hopelessly bloated. Under rather watchful Putin, Russia does its piece of arms race at a very small fraction of American costs. By the same token, pro-economy effects of arms spending in USA are seriously diluted -- the spending is surely there, but the extend of activity is debatable For example, in aerospace, there is a big potential for civilian applications of technologies developed for the military. Scant evidence in Boeing that should be a prime beneficiary. The fabled toilet seat (that cost many thousands of dollars) similarly failed to find civilian applications. Civilians inclined to overpriced toilets, like Mr. Trump himself, rely on low-tech methods like gold-plating.

A wider problem is shared by entire GOP: aversion to any government programs, and least of all industry promoting programs, that could benefit ordinary citizens. This is the exclusive domain of the free market! Once you refuse to consider that, only MIC remains, plus some boondogles like interstate highways. Heaven forfend to improve public transit or to repair almost-proverbial crumbling dams and bridges.


Charles D , May 23 2020 19:19 utc | 11

We have to ask cui bono - who benefits from a new nuclear arms race? General Electric, Boeing, Honeywell International, Lockheed Martin, Northrop Grumman et al. No one else really. Since these corporations also own the Congress and have zillions to fund Trump's re-election, they will probably get the go-ahead to spend the rest of the world into oblivion.
vk , May 23 2020 19:42 utc | 12
Apart from the obvious fact that the MIC is the only viable engine of propulsion of the American "real economy" (a.k.a. "manufacturing"), there's the more macabre fact that, if we take Trump's administration first military papers into consideration, it seems there's a growing coterie inside the Pentagon and the WH that firmly believes MAD can be broken vis-a-vis China.

Hence the "Prompt Global Strike" doctrine (which is taking form with the commission of the new B-21 "Raider" strategic bomber, won by Northrop Grumman), the rise of the concept of "tactical nukes" (hence the extinction of the START, and the Incirlik Base imbroglio post failed coup against Erdogan) and, most importantly, the new doctrine of "bringing manufacture back".

The USA is suffering from a structural valorization problem. The only way out is finding new vital space through which it can initiate a new cycle of valorization. The only significant vital space to be carved out in the 21st Century is China, with its 600 million-sized middle class (the world's largest middle class, therefore the world's largest potential consumer market). It won two decades with the opening of the ex-Soviet vital space, but it was depleted in the 2000s, finally exploding in 2006-2008.

How many decades does the Americans think they can earn by a hypothetical unilateral destruction of China?

DontBelieveEitherPr , May 23 2020 19:58 utc | 15
Having a treaty that limits power (in this case nuclear) on the same level for the US and any other country is simply totally against the ideology of US Superority/Exeptionalism.
That seems to be the driving (psychological and ideological) factor behind this charade.
And like this sick ideology always ends: It too will backfire.

@gepay: another problem is people that disagree with Bernhard on COVID, but then use this disagreement to not read his artciles anymore.
So many people only want to read what they want to hear, and run away at the first real different view.
The narcissism, that our neoliberal societies inducded in its people the last decade shows.. And seeing both sides and everything in between is not possible anymore for a majority it seems.
And living in a bubble is so comforting and easy in todays world. On MSM and on Alt Media alike.

bevin , May 23 2020 20:33 utc | 19
"...that may well fit Trump's plans of pushing all arms control regimes into oblivion."
It's not just arms control regimes, as the WHO business showed. This is the Roy Cohn agenda showing up again- the old GOP objection to the UN and all other international organisations. It is pure ideology-the US has gained immensely from dominating the organisations of which it is a part, leaving them makes no sense at all.

As to 'spending China to oblivion". This only works when every Pentagon dollar spent forces China or Russia to spend a dollar themselves. In such a contest the richest country wins. But that only works in the context of pre-nuclear warfare. With the nuclear deterrent it becomes possible to opt out of all the money wasting nonsense represented by the Pentagon budget, sit back and say, as the Chinese diplomat evidently did, "Just try it."
Which adds up to the conclusion that it is wholly irrational of the United States to denounce treaties designed to reduce the likelihood of nuclear weapons being used: it is to the advantage of Washington that other powers, potential rivals, are forced to build up conventional forces because they are bound by treaty not to rely on nuclear weapons.
So, again: pure ideology designed for domestic consumption and advanced by the most reactionary elements in American society- the Jesse Helms good ol' boys who make the neo-cons look almost human.

Piotr Berman , May 23 2020 20:38 utc | 21
He likes economic war (against everybody), they want actual war. Laguerre | May 23 2020 20:17 utc

Trump has a primitive mercantile mind. There is nothing inherently wrong about mercantilism, but a primitive version of anything tends to be mediocre at best. Thus he loves war that give profit, like Yemen where natives are bombed with expensive products made in USA (and unfortunately, also UK, France etc., but the bulk goes to USA). Then he loves wars the he thinks will give profit, like "keeping oil fields in Syria". Some people told him that oil fields are profitable (although they can go bankrupt just like casinos).

Privately, I think that Trump wanted to make a war with Iran, but the generals explained him what kind of disaster that would be.

One difference is that Democrats are aligned with uber Zionist of slightly less rabid variety than Republicans. A bit like black bears vs grizzlies. Unfortunately, like in the animal kingdom, when the push comes to shove, black bears defer to grizzlies, so on the side of Palestinians etc. there is no difference.

Jen , May 23 2020 21:17 utc | 24
Billingslea's "spending ... into oblivion" statement reflects the belief, still widespread among US neocon political / military elites, that the Soviet Union was brought down and destroyed by its attempts to keep up with US military spending throughout the 1980s. This alone tells us how steeped in past fantasy the entire US political and military establishment must be. Compared to Rip van Winkle, these people are comatose.

Spending the enemy into oblivion may be "tried and true" practice but only when the enemy is much poorer than yourself in arms production and in one type of weapons manufacture. That certainly does not apply to either Russia or China these days. Both nations think more strategically and do not waste precious resources in parading and projecting military power abroad, or rely almost exclusively on old, decaying technologies and a narrow mindset obsessed with always being top dog in everything.

[May 24, 2020] A lockdown in rgw USA seems to be justified on the basis of the fact that even if you are middle aged, the chances of hospitalization are still around 5 percent, and in the US going to the hospital for a several weeks can leave you bankrupt.

May 24, 2020 | www.unz.com

128 , says: Show Comment May 21, 2020 at 12:53 pm GMT

A lockdown in a lot of places seems to be justified on the basis of the fact that even if you are middle aged, the chances of hospitalization are still around 5 percent, and in the US going to the hospital for a week or weeks can leave you bankrupt.
A123 , says: Show Comment May 21, 2020 at 1:36 pm GMT
@AP The interesting & important thing to note is that fatalities are heavily tied to the related factors of pre-existing conditions and advanced age. For example:

https://www.statista.com/statistics/1107913/number-of-coronavirus-deaths-in-sweden-by-age-groups/

With CQ/AZ/ZN available everywhere, the bulk of the economy could reopen immediately with or without masks. Given that psychology is important, odds are mask wearing will make the restart more effective. However, masks provide partial protection at most.

PEACE

Bert , says: Show Comment May 21, 2020 at 5:34 pm GMT
@utu Epidemiology uses R0 for an initial reproductive rate when a pathogen first invades a naive host population. Re is the designation for later when immunity begins to exist and, for human beings in the current pandemic, host behavior changes.

https://www.cebm.net/covid-19/when-will-it-be-over-an-introduction-to-viral-reproduction-numbers-r0-and-re/

[May 24, 2020] US anti-china crusade started

May 24, 2020 | www.theamericanconservative.com

After the Soviet collapse thirty years ago, that order expanded its jurisdiction. Proponents sought to subsume the old Eastern Bloc, including perhaps Russia itself, into the American sphere. And they wanted to do so firmly on Washington's terms. Even as the country began to deindustrialize and growth slowed, American leadership developed a taste for fresh crusades in the Middle East; exotic savagery, went the subtext, had to be brought finally to heel. China was a rising force, but its regime would inevitably crater or democratize. Besides, Beijing was a peaceful trading partner of the United States.

2008, 2016 and 2020 -- the financial crisis, Trump's election and now the Coronavirus and its reaction -- have been successive gut punches to this project, a hat trick which may seal its demise. Ask anyone attempting to board an international flight, or open a new factory in China, or get anything done at the United Nations: the world is de-globalizing at a speed almost as astonishing as it integrated. Post-Covid, U.S.-China confrontation is not a choice. It's a reality. The liberal international order is not lamentable. It's already dead.

This was the argument made by Bannon. It had other backers, of course, within both the academy and an emerging foreign policy counter-establishment loathe to repeat the mistakes of the past thirty years. But coming from the former top political advisor to the sitting president of the United States, it was provocative stuff. Bannon articulated a perspective which seemed to be on the tip of the foreign policy world's tongue. And it riled people up. The most fulsome rebuttal to the zeitgeist was perhaps The Jungle Grows Back , tellingly written by Robert Kagan, an Iraq War architect. The peripheral world was dangerous brush; the United States was the machete.

Trumpian nationalism has chugged along for nearly three years since -- stripped, some might say, of its Bannonite flair and intelligence. The most hysterical prophecies of what the president might do -- that he might withdraw from the geriatric North Atlantic Treaty Organization, for instance -- have not come to pass. Trump has howled and roared, true: but so far, his most disruptive foreign policy maneuver has been escalation against Iran.


MPC 3 days ago

It's very good to hear the right getting a little humility in them now and talking less empire, more multilateralism. Trump has been way too concerned with his MAGA personality cult to understand the value of humility.

The world's a big place. The reality is, America first will more and more mean working together with other nations for mutual benefit, and often their gain will indirectly be to our own also.

kouroi MPC 3 days ago
Working more and more, yes. This is why US is undercutting Germany's competitiveness, by blocking a cheap source of energy via NS2...

As Bush said, you are either with us or against us. Nothing has changed and nothing will change, but it will become uglier. If it were to desire multi-polarity, the US would tolerate not only states, like KSA, where the Royals own everything, but also states, like Iran, or Cuba, where the people (through the government/state) owns assets (land and productive facilities). But the US does not tolerate such type of multi-polarity, not open to US "investment" and ownership (bought with fiat money).

Cold War II started in 2007, with Putin. Popcorn & beer lads!

MPC kouroi 3 days ago
It does seem like there's a creeping idea, not just on dissident internet sites now like before, that the Russian rivalry is a luxury of the past. Even the liberals are going to have to reconcile with liberal hegemony not being workable and settle for something less. Owing to distance and mutual interest (common rivals Britain and Germany) Russia and America had a long history of friendship before the Cold war.

I sadly agree about the predatory nature of much of America does. I think it really is a reflection of partially, imperial arrogance, but even moreso a matter of who runs the country. Oligarchy is poorly checked in modern America. Maybe we can hope for a humbled oligarchy, at least.

DUNK Buhari2 2 days ago
Trump is indeed an empty suit and a demagogue, but he ran on a decent nationalist platform (probably thanks to Bannon, who is almost certainly a closeted gay. No joke... a deep-in-the-closet, self-hating gay. The navy can change a man, and he's a fraud in other ways: see Eric Striker's article "International Finance's Anti-China Crusade"). Trump does have an absurd ego, and he probably figured becoming president would impress Ivanka too.

Also, the Uyghurs are not totally innocent victims... Some of them are US-financed revolutionaries and some of them have committed terrorism: see Godfree Roberts at Unz Review: "China and the Uyghurs" (January 10, 2019) and Ajit Singh at The Grayzone: "Inside the World Uyghur Congress: The US-backed right-wing regime change network seeking the 'fall of China'" (March 5, 2020). Some of our pathetic propagandists make it seem like they're in concentration camps, but there is objective reporting that suggests it's more like job training programs and anti-jihad classes. Absurd lies have certainly been told about North Korea and many other countries, so be skeptical.

kirthigdon 3 days ago
Yeah, let's get that hate on for China - why they're as bad as Russia, Iran and Venezuela put together and there are so many more of them. Especially a lot are available right here in the US and have lots of restaurants that can be boycotted. Not that many Venezuelan restaurants around. Seriously, can Americans get over this childishness? When the US closes down its 800+ overseas bases and withdraws its fleet to its own shores instead of Iran's and China's, then maybe Americans will be entitled to complain about someone else's imperialism.
Collin Reid 3 days ago
Most of anti-China stuff Hawley, much like Trump, claims always feels empty populism for WWC voters.

1) It is reasonable to be against our Middle East endeavors and not be so anti-China.
2) I still don't understand how it is China fault for stealing manufacturing jobs when it is the US private sector that does it. (And Vietnam exist, etc.) So without Charles Koch and Tim Cook behind this trade stuff, it feels like empty populism.
3) The most obvious point on China to me is how little they do use military measures for their 'imperialism.'

One problem with all this populism emptiness, is there is a lot issues with China to work on:
1) This virus could have impact economies in Africa and South America a lot where the nations have to renegotiate their loans to China. I have no idea how this goes but there will be tensions here. Imperialism is tough in the long run.
2) There are nations banding together on China's reaction to the virus and it seems reasonable that US joining them would be more effective than Trump's taunting.
3) To prove Trump administration incompetence, I have no idea how he is not turning this crisis into more medical equipment and drugs manufacturing. (My guess is this both takes a lot of work and frankly a lot of manufacturing plants have risks of spreads so noone wants to invest.)

Feral Finster Collin Reid 3 days ago
Apparently it is now a form of aggression, imperialism, even, to work for lower wages than a comparable American worker.

I can understand some protectionist measures. But acting as if these measures were a response to an unprovoked attack is hyperventilating.

DUNK Collin Reid 2 days ago
Hawley is a "fake populist" according to Eric Striker's article "International Finance's Anti-China Crusade" and I just saw fake-patriot airhead Pete Hegseth claim China wants to destroy our civilization, on fake populist Tucker Carlson's show. It's well-established that Fox News and the GOP are still neocons and fake patriots... after all, the Trump administration is run by Jared Kushner, a protégé of Rupert Murdoch and Bibi Netanyahu.
dbjm 3 days ago
Hawley's speech on the Senate floor yesterday deserves much more criticism than it gets here. This article from Reason does a good job breaking down the speech and pointing out what's right AND wrong about it:

https://reason.com/2020/05/...

Collin Reid Kessler 2 days ago
What if there is reduced wars and civil wars n the world today than ever. (So say anytime before 1991?) I get all the Middle East & African Wars but look at the rest of the world. When in history have the major West Europe powers not had a major war in 75 years. After issues of post Cold War East Europe is probably more peaceful than ever. Look at South America. In the 1970s the Civil Wars raged in all those nations. Or the Pacific Rim? Japan, China, and other nations are fighting with Military right now.

This is certainly less than perfect but the number of people (per million) dieing in wars and civil wars are at historic lows.

kouroi Collin Reid 2 days ago
The fall of Soviet Union and weakening of Russia allowed US and Western Europe to attack Serbia in 1990s. A stronger Russia wouldn't have allowed that to happen (who's trying to get Crimea from Russia's control now?). But with US aggressiveness and bellicosity (including nuclear posture) at Russia's borders do not bode well.

But it is true, less important people are dying now...

chris chuba 3 days ago
Chinese imperialism? Uh ... other than shaking trees and drumming up fear can I get like one example of that.

Taiwan, part of China since the 1500's and they are have not issued any new threats since 1949.

Hong Kong - stolen from China and now reluctantly given back with lots of conditions. If they deserve the right of independence through referendum I'm all for it as long as we apply this standard uniformly including parts of Texas, San Diego, New Mexico, Arizona, any place that has a large foreign population will do.

DUNK chris chuba 2 days ago
Yeah, "Chinese imperialism" is complete nonsense, just like the claim that they definitely originated the coronavirus, caused Americans to be under house arrest, and caused a depression. In fact, the origin of the virus is far from clear, and it wasn't China who hyped up and exaggerated the danger and wrecked the economy. It was our superficial corporate media and government that did that (perhaps deliberately)... the same people who are desperately trying to deflect blame onto the CCP. The same people who have been mismanaging and ruining America for decades in order to enrich themselves.
Gregtown 3 days ago
Should we all start reading Chomsky books again?

"Neoliberal democracy. Instead of citizens, it produces consumers. Instead of communities, it produces shopping malls. The net result is an atomized society of disengaged individuals who feel demoralized and socially powerless."

Sidney Caesar Gregtown 3 days ago • edited
Most people would be well served to read Chomsky a first time.
However, it should be noted, Chomsky's critiques of neoliberalism aren't grounded in nationalism, xenophobia, and racism. So a lot of TAC readers (and especially writers) may be disappointed.
Gregtown Sidney Caesar 3 days ago
Ha...sadly true.

I just pulled On Anarchism off my bookshelf. Time to revisit my early 20's.

Tradcon 3 days ago
Hawley seems like the natural choice for the potential future of the GOP, that is a post-fusionist or post-liberal GOP. However the one thing that worries me is his foreign policy. He talks the talk, but I'm having trouble to see if he walks the walk. As Mills noted he didn't vote to end support for the genocidal war in Yemen, a war that serves purely the interests of Saudi Arabia and not our own. He has criticized David Petraeus before, but its important not to be fooled by just rhetoric. While accepting he'll be better than any Tom Cotton or (god forbid) Nikki Haley in 2024, his foreign policy needs to be examined more until then.
stevek9 3 days ago
Our response to the epidemic was 100% 'made in China'. The entire 'Western World' decided to copy Beijing. If that doesn't establish a new level of leadership for China, I don't know what would. I'm surprised this is not more widely recognized. You can run down the many parallels, including the pathetic photo-op attempt by the West to build those emergency hospitals (Nightingale in the UK, Javits Center, etc. all across the US), which were just to show 'hey we can build hospitals in a few weeks also' ... never mind they could never, and were never used for anything at all.
Kiyoshi01 3 days ago
At this point, Hawley is all talk. Further, much of his talking amounts to little more than expressing resentment. I agree that the US needs to follow a more nationalist pathway, which involved making itself less dependent on its chief geopolitical rival. But accomplishing this is going to require more than bashing China and asserting that cosmopolitan Americans are traitors. At this point, Hawley has no positive program to offer. Giving paid speeches that vilify coastal elites and China is not a political plan.

Further, I agree that we're probably moving away from the universalist order that's guided much of our thinking since the 1990s. But isolationism is not the answer. We need to begin building a multilateral order that takes full account of China's rise as a worthy rival. This means that we need to develop a series of smaller-scale agreements with strategic partners. The TPP is a good example of such an agreement. But where is the call to revive it?

Lastly, I find the article's reference to China's treatment of gays and lesbians to be curious. I'd first note that using the term "homosexual" in reference to people is generally viewed as an offensive slur. Further, China's treatment of gay people isn't so bad, and tends to be better than what Hawley's evangelical supporters would afford. Moreover, China is a multi-ethnic country. It's program in Xinjiang has more to do with maintaining political order than a desire to repress non-Han people.

MPC Kiyoshi01 2 days ago
The general chest puffing nature of the American right makes it hard for them to understand that America might need to work with other countries at a deep level, and not as vassals either.
DUNK MPC 2 days ago
It doesn't seem like they're able to understand anything, or learn anything.
Barry_II Kiyoshi01 11 hours ago
". We need to begin building a multilateral order that takes full account
of China's rise as a worthy rival. This means that we need to develop a
series of smaller-scale agreements with strategic partners. The TPP is a
good example of such an agreement. But where is the call to revive it?"

The thing is that the post-WWII liberal international order was good for things like that.
Trump and the GOP quite deliberately destroyed it. Before that, the US would have the trust of many other governments; now they don't trust the US - even if Biden is elected, the next Trump is on the way.

KevinS 3 days ago • edited
"We benefit if countries that share our opposition to Chinese imperialism -- countries like India and Japan, Vietnam, Australia and Taiwan -- are economically independent of China, and standing shoulder to shoulder with us,"

OK....then can someone explain why Hawley opposed the TPP, which was designed to accomplish just this. The TPP was supposed to create trading relationships between these countries and the United States in the context of an agreement that excluded China. In this instance people like Hawley were advancing China's position and interests (I suspect simply because it was a treaty negotiated under Obama, which apparently was enough to make it bad).

Kiyoshi01 KevinS 3 days ago
Probably because Hawley seems more interested in demagoguery than accomplishing anything productive. Never mind that 95% of the people who voted for him probably couldn't find Japan or Vietnam on a map.
kouroi KevinS 2 days ago
TPP was not geared against China as a blanket thing, as an entire exclusion of China. The perfidy of TPP was that it was against any economic interactions with State Owned Enterprises (didn't mention the origin, didn't have to). The ultimate goal wasn't to isolate China but to force privatization of said SOEs, preferably run from Wall Street.

Private property good and = Democracy; State property bad = Authoritarianism, dictatorship, etc. It is a fallacy here somewhere, cannot really put my finger on it...

calidus 3 days ago
Except this is all lies. On each chance to actually do something Hawley has sided with international corporations, as a good conservative will always do. Fixing globalism will never come form the right, this is all smoke and mirrors for the religious right, aka the rubes. And they are perpetual suckers and will keep buying into this crap as our nation is hollowed out and raided by the rich. And that, is TRUE conservatism.
TheSnark 3 days ago
"Now we must recognize that the economic system designed by Western policy makers at the end of the Cold War does not serve our purposes in this new era," proclaimed Sen. Josh Hawley, R-Missouri. "And it does not meet our needs for this new day." He continued, perhaps too politely: "And we should admit that multiple of its founding premises were in error."

The "error" in the founding premises of the post-WWII economic system was that it assumed that the US would act in a responsible manner. Instead we have run huge budget deficits and borrowed the difference from foreigners, randomly invading other countries, undermined the institutions we set up, bullied smaller countries rather than working with them, and abused our control of the financial system.

No, that old economic system served our interests very well, as long as we respected the institutions we set up and kept our own house in order. We haven't been doing any of that for at least 20 years.

Kiyoshi01 Amicus Brevis 2 days ago
Let's bear in mind that the Republican leader of the Senate married into a wealthy Chinese family that makes its money from hauling Chinese exports to our shores and the shores of other developed nations.

This is all just hollow bravado meant to appeal to the right's nativist base.

Amicus Brevis Kiyoshi01 2 days ago • edited
I am not into the thinking that everyone whose politics I don't support is acting in bad faith. We are talking about the actions of literally millions of people. Accusing this or that person of acting in bad faith because of personal interest is just dirty politics dressed up as perceptiveness. I am not accusing any specific person of acting in bad faith, although some of the people who pushed opening up to China because more business in China would create a class of people who would eventually push for Democracy there, were indeed acting in bad faith. They wanted access to cheap labor with no rights.

Yet, no doubt many of them actually believed the propaganda, because it supposedly happened in South Korea, Taiwan and other places. And especially the ones who switched the line to "globalism" when it was clear that the supposed indigenous pressures for Democracy did not materialize also acted in bad faith. I only assume that some of were because once I understood the rationale of the CCCP it was clear to me that China was radically different, and there is no way that so many of those guys who are smarter and more knowledgeable about political systems than me, did not figure it out. But I am not going to behave as if it the Republicans alone who were pushing either of these two false messages.

phreethink 2 days ago
Criticizing China for "imperialism" is the height of hypocrisy on multiple levels. First, the United States has engaged in economic imperialism, sometimes enforced with military intervention, for a hundred years. Read Smedley Butler's "War is a Racket" if you doubt that. Second, this is the same guy who voted against our proxy war in Yemen. Third, one could very reasonably argue that China is simply applying the lessons it learned at the hands of Western imperialists since 1800s..

It's good that SOME Republicans are at least giving lip service to the idea of bringing back manufacturing in this country. But you have to thank Trump for that, not the GOP establishment. The offshoring of American manufacturing as part of "free trade" was strongly supported (if not led) by the GOP going back to the 1980s.

DUNK phreethink 2 days ago
And check out John Perkins's books ("Confessions of an Economic Hit Man", etc.) for up-to-date information. It's obviously true that criticizing China for "imperialism" is ridiculously hypocritical but people like Senator Hawley know they can get away with it because they understand how propaganda works on the dumbed-down masses.

They understand doublethink, repetition, appeal to patriotism, appeal to racism, appeal to fear, etc. People like Rupert Murdoch do this every day... poorly, but well enough to be effective on a lot of people.

Incidentally, the Republicans may talk about bringing manufacturing back to the US but they're actually planning on shifting it to India (see Eric Striker's article "International Finance's Anti-China Crusade").

[May 23, 2020] Underscoring 'Grotesque Nature of Unequal Sacrifice,' Richest Americans Have Added $434 Billion in Wealth Since Pandemic Hit

May 23, 2020 | www.commondreams.org

America's billionaires saw their combined net worth soar by $434 billion between March 18 and May 19 while the coronavirus pandemic killed tens of thousands of people and ravaged the U.S. economy, forcing more than 30 million out of work.

That's according to a new analysis released Thursday by Americans for Tax Fairness (ATF) and the Institute for Policy Studies (IPS) titled " Tale of Two Crises: Billionaires Gain as Workers Feel Pandemic Pain ."

The report shows that the five wealthiest billionaires in the U.S. -- Jeff Bezos of Amazon, Bill Gates of Microsoft, Mark Zuckerberg of Facebook, Warren Buffett of Berkshire Hathaway, and Larry Ellison of Oracle -- saw their collective wealth grow by a total of $75.5 billion between March 18 and May 19, a 19% jump.

Bezos -- the world's richest man -- saw his wealth jump by nearly $35 billion in the two-month period. Yet even as Bezos' fortune continues to grow, Amazon announced last week that it will not extend $2-an-hour hazard pay for warehouse workers beyond the end of May.

[May 22, 2020] Battle Covid-19, Not Medicare for All: Doctors Demand Hospital Industry Stop Funding Dark Money Lobby Group

May 22, 2020 | www.commondreams.org

A progressive organization of 23,000 physicians from across the U.S. demanded Thursday that the American Hospital Association (AHA) divest completely from a dark-money lobbying group that has spent millions combating Medicare for All and instead devote those financial resources to the fight against Covid-19 and to better support for patients and healthcare workers.

Dr. Adam Gaffney, president of Physicians for a National Health Program (PNHP), said in a statement that "the Covid-19 pandemic has stretched hospitals' resources to the limit, and the AHA should not waste precious member hospitals' funds lobbying against universal health coverage" as a member of the Partnership for America's Health Care Future (PFAHCF).

Because Medicare for All would provide a lifeline to hospitals in underserved areas that have been hit hard by Covid-19, Gaffney argued, the AHA "cannot claim to represent hospitals while also opposing a single-payer system that would keep struggling hospitals open." The AHA represents around 5,000 hospitals and other healthcare providers in the U.S.

As Common Dreams reported earlier this month, public health officials are accusing the Trump administration of directing billions of dollars in Covid-19 hospital bailout funds to high-revenue providers while restricting money to hospitals that serve low-income areas.

Tenet Healthcare, an investor-owned hospital company that has donated hundreds of thousands to PFAHCF, has received $345 million in Covid-19 bailout funds, Axios reported last month.

"The AHA should immediately leave the PFAHCF," Gaffney said, "and redirect that money to supporting patients and frontline healthcare workers."

"As physicians, we can no longer tolerate a health system that puts profits ahead of patients and public health," Gaffney added. "It's time for health professionals to hold accountable the organizations that claim to represent us."

Formed in the summer of 2018 by an alliance of pharmaceutical, insurance, and hospital lobbyists with the goal of countering the push for universal healthcare, PFAHCF's anti-Medicare for All " army " has grown rapidly since its founding, with the AHA joining the fray in 2019.

As The Intercept reported last October, the for-profit hospital industry has played an "integral role" in the corporate fight against single-payer.

[May 22, 2020] Dear Corporate America Take Your Job Shove It by Charles Hugh Smith

May 22, 2020 | www.zerohedge.com

Authored by Charles Hugh Smith via OfTwoMinds blog,

Dear Corporate America: maybe you remember the old Johnny Paycheck tune? Let me refresh your memory: take this job and shove it.

Put yourself in the shoes of a single parent waiting tables in a working-class cafe with lousy tips, a worker stuck with high rent and a soul-deadening commute --one of the tens of millions of America's working poor who have seen their wages stagnate and their income becoming increasingly precarious / uncertain while the cost of living has soared.

Unemployment and the federal stimulus bonus of $600 a week are far more than your regular wages, including tips. Exactly why do you want to go back to your miserable job and low pay? Why wouldn't you take time off and enjoy life a little, which is what you've been wanting to do for years?

Indeed--why not? The pandemic is giving many permission to get what they always wanted. Consider these examples:

1. The Federal Reserve has always pined for the power to bail out the top .01% / the New Nobility the way they deserve, with unlimited money-printing and the Fed being able to buy every rigged, fraudulent asset spewed by the New Nobility's financial and corporate predators and parasites.

Yee-haw, the pandemic genie granted your wish: there's no limits on how many trillions you can shove into the greedy maw of the top .01%, and bail out every single one of their predatory, exploitive, legalized looting bets that went south.

2. Local officials always wanted to commandeer some motels and shove the homeless into them, to clear the sidewalks and parks and then claim "homeless problem solved." Presto, your wish has been granted.

3. Central government authorities have always resented all those pesky civil liberties restraints on their unquenchable desires to control every tiny aspect of life, public and private, and now--voila, the doors to Petty Authoritarian Heaven have opened. Question our authority? A tenner in the gulag for you, Doubter of All That Is Great and Good.

4. Restaurant owners who on camera always have to say how much they love their customers and business, never mind the money, who secretly have come to loathe their over-entitled, self-absorbed, dilettante customers and are sick and tired of the soaring rent, business licenses, insurance, payroll taxes and costs of ingredients.

You know what, pal? Here's the keys, you can re-open whatever the heck you want, I'm outta here. I've been secretly wishing I could get out from underneath this crushing burden and get my life back. Yes, it was exciting way back when, but now it's nothing but an endless grind that wasn't making money even before the pandemic.

5. Since the financiers, Big Tech mini-gods and stock buyback crowd have looted and pillaged their way to immense fortunes by lying, cheating, conniving and gaming, why not follow the money just like the predators and parasites at the top of the heap?

Indeed, why not fudge the application for a federal small business loan and use the "free money" to lease that shiny new Rolls Royce you always desired? Well, haven't the authorities been begging us to borrow and spend like there's no tomorrow?

6. Dear Corporate America: maybe you remember the old Johnny Paycheck tune? Let me refresh your memory: take this job and shove it, I ain't working here no more. If there's a will, there's a way, and I'm stepping off the rat race merry-go-round, thank you very much. You can find some other sucker to do your dirty work and BS work, all for the greater glory and wealth of your New Nobility shareholders. I'm outta here. So I won't get rich, that dream died a long time ago. What I'm interested in now is getting my life back.

The pandemic might not follow the Central Casting script of a V-shaped return to debt-serf, BS-work wonderfulness. Everyone who was sick and tired of their pre-pandemic life and the endless exploitation has had time to think things over, and some consequential percentage of them will welcome "good-bye to all that" and others will decide not to go back, even if that is still an option.

It's called opting out, and it has always characterized the end of imperial pretensions, pillaging, propaganda and predation. Financial parasites, beware the second-order effects of your overweening dominance and limitless greed.

My recent books:

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[May 22, 2020] With 36 Million Newly Out of Work, Trump Says He s Willing to Let Boosted Unemployment Benefits Expire

Notable quotes:
"... Washington Post ..."
May 22, 2020 | www.commondreams.org

President Donald Trump told Republican senators during a private lunch Tuesday that he is willing to let expanded unemployment benefits expire at the end of July, a decision that would massively slash the incomes of tens of millions of people who have lost their jobs due to the Covid-19 crisis.

The Washington Post reported Tuesday that the president "privately expressed opposition to extending a weekly $600 boost in unemployment insurance for laid-off workers affected by the coronavirus pandemic, according to three officials familiar with his remarks."

House Democrats passed legislation last week that would extend the beefed-up unemployment benefits through January of 2021 as experts and government officials -- including Federal Reserve chair Jerome Powell -- warn the U.S. unemployment rate could soon reach 25%. The unemployment insurance boost under the CARES Act is set to expire on July 31, even as many people have yet to receive their first check.

"With nearly 1 in 5 Americans out of work, Donald Trump's plan is to cut off the boost to unemployment benefits and shower his wealthy buddies with more tax cuts," Sen. Ron Wyden (D-Ore.), one of the architects of the unemployment insurance expansion, told HuffPost . "This is the worst economic crisis in 100 years and Donald Trump is doubling down on Herbert Hoover's economic playbook and pushing workers to risk their health for his political benefit."

Sen. Lindsey Graham (R-S.C.) -- who declared earlier this month that Congress will only extend the boosted unemployment insurance "over our dead bodies" -- said after the private lunch that Trump believes the benefits are "hurting the economic recovery." Graham was one of several Republican senators who opposed the initial expansion of unemployment benefits as too generous.

An analysis released last week by the Hamilton Project, an initiative of the Brookings Institution, found that expanded unemployment benefits offset "roughly half of lost wages and salaries in April." Unemployment insurance has "been essential to families, and is vital for keeping the economy from cratering further," the authors of the analysis noted.

Ernie Tedeschi, a former Treasury Department economist, estimated that "come July 31, if the emergency UI top-up isn't extended, unemployed workers will effectively get a pay cut of 50-75% overnight."

"It's increasingly looking like there won't be enough labor demand to hire them all back at that point," Tedeschi tweeted.

The latest Labor Department statistics showed that more than 36 million people in the U.S. have filed jobless claims since mid-March as mass layoffs continue in the absence of government action to keep workers on company payrolls. Despite the grim numbers, the Post 's Jeff Stein reported Tuesday that the White House is " predicting a swift economic recovery " as it resists additional efforts to provide relief to frontline workers and the unemployed.

On top of rejecting an extension of enhanced unemployment insurance, Trump last month publicly voiced opposition to another round of direct stimulus payments, instead advocating a cut to the tax that funds Social Security and Medicare.

[May 22, 2020] McDonald's Workers Strike Across US to Demand Better Protections From Covid-19

May 22, 2020 | www.commondreams.org

Demanding McDonald's prioritize public health and worker safety over profits, hundreds of employees at the fast food chain went on strike Wednesday, a day before the company was set to hold its annual shareholders' meeting.

Instead of distributing dividends to its shareholders, the striking employees are calling for the company to use its massive profits to pay for safety and financial protections for workers, scores of whom have contracted Covid-19 in at least 16 states so far.

Employees and strike organizers at the fair wage advocacy group Fight for $15 are demanding hazard pay during the pandemic of "$15X2," paid sick leave, sufficient protective gear for workers, and company-wide policy of closing a restaurant for two weeks when an employee becomes infected, with workers being fully paid.

The strike is taking place at stores in at least 20 cities. Fight for $15 and the SEIU, which is also supporting the action, say it's the first nationwide coordinated effort targeting the company since the coronavirus pandemic began in March.

[May 21, 2020] The neoliberal globalization myth fostered the delusion of labour in which Western societies could prosper from the ideas and computer startups, while the dirty work of actually making things is left to low-wage countries. One result: a drastic shortage of face masks

Notable quotes:
"... In France, confinement has been generally well accepted as necessary, but that does not mean people are content with the government -- on the contrary. Every evening at eight, people go to their windows to cheer for health workers and others doing essential tasks, but the applause is not for President Macron. ..."
"... What we have witnessed is the failure of what used to be one of the very best public health services in the world. It has been degraded by years of cost-cutting. In recent years, the number of hospital beds per capita has declined steadily. Many hospitals have been shut down and those that remain are drastically understaffed. Public hospital facilities have been reduced to a state of perpetual saturation, so that when a new epidemic comes along, on top of all the other usual illnesses, there is simply not the capacity to deal with it all at once. ..."
"... The neoliberal globalization myth fostered the delusion that advanced Western societies could prosper from their superior brains, thanks to ideas and computer startups, while the dirty work of actually making things is left to low-wage countries. One result: a drastic shortage of face masks. The government let a factory that produced masks and other surgical equipment be sold off and shut down. Having outsourced its textile industry, France had no immediate way to produce the masks it needed. ..."
"... In late March, French media reported that a large stock of masks ordered and paid for by the southeastern region of France was virtually hijacked on the tarmac of a Chinese airport by Americans, who tripled the price and had the cargo flown to the United States. There are also reports of Polish and Czech airport authorities intercepting Chinese or Russian shipments of masks intended for hard-hit Italy and keeping them for their own use. ..."
"... The Covid–19 crisis makes it just that much clearer that the European Union is no more than a complex economic arrangement, with neither the sentiment nor the popular leaders that hold together a nation. For a generation, schools, media, politicians have instilled the belief that the "nation" is an obsolete entity. But in a crisis, people find that they are in France, or Germany, or Italy, or Belgium -- but not in "Europe." The European Union is structured to care about trade, investment, competition, debt, economic growth. Public health is merely an economic indicator. For decades, the European Commission has put irresistible pressure on nations to reduce the costs of their public health facilities in order to open competition for contracts to the private sector -- which is international by nature. ..."
"... Scapegoating China may seem the way to try to hold the declining Western world together, even as Europeans' long-standing admiration for America turns to dismay. ..."
"... The countries that have suffered most from the epidemic are among the most indebted of the EU member states, starting with Italy. The economic damage from the lockdown obliges them to borrow further. As their debt increases, so do interest rates charged by commercial banks. They turned to the EU for help, for instance by issuing eurobonds that would share the debt at lower interest rates. This has increased tension between debtor countries in the south and creditor countries in the north, which said nein . Countries in the eurozone cannot borrow from the European Central Bank as the U.S. Treasury borrows from the Fed. And their own national central banks take orders from the ECB, which controls the euro. ..."
"... The great irony is that "a common currency" was conceived by its sponsors as the key to European unity. On the contrary, the euro has a polarizing effect -- with Greece at the bottom and Germany at the top. And Italy sinking. But Italy is much bigger than Greece and won't go quietly. ..."
"... A major paradox is that the left and the Yellow Vests call for economic and social policies that are impossible under EU rules, and yet many on the left shy away from even thinking of leaving the EU. For over a generation, the French left has made an imaginary "social Europe" the center of its utopian ambitions. ..."
"... Russia is a living part of European history and culture. Its exclusion is totally unnatural and artificial. Brzezinski [the late Zbigniew Brzezinski, the Carter administration's national security adviser] spelled it out in The Great Chessboard : The U.S. maintains world hegemony by keeping the Eurasian landmass divided. ..."
"... But this policy can be seen to be inherited from the British. It was Churchill who proclaimed -- in fact welcomed -- the Iron Curtain that kept continental Europe divided. In retrospect, the Cold War was basically part of the divide-and-rule strategy, since it persists with greater intensity than ever after its ostensible cause -- the Communist threat -- is long gone. ..."
"... The whole Ukrainian operation of 2014 [the U.S.–cultivated coup in Kyiv, February 2014] was lavishly financed and stimulated by the United States in order to create a new conflict with Russia. Joe Biden has been the Deep State's main front man in turning Ukraine into an American satellite, used as a battering ram to weaken Russia and destroy its natural trade and cultural relations with Western Europe. ..."
"... I think France is likelier than Germany to break with the U.S.–imposed Russophobia simply because, thanks to de Gaulle, France is not quite as thoroughly under U.S. occupation. Moreover, friendship with Russia is a traditional French balance against German domination -- which is currently being felt and resented. ..."
"... "Decades of indoctrination in the ideology of "Europe" has instilled the belief that the nation-state is a bad thing of the past. The result is that people raised in the European Union faith tend to regard any suggestion of return to national sovereignty as a fatal step toward fascism. This fear of contagion from "the right" is an obstacle to clear analysis which weakens the left and favors the right, which dares be patriotic." ..."
"... Since WWII the US has itself been occupied by tyrants, using Russophobia to demand power as fake defenders. ..."
"... " French philosophy .By constantly attacking, deconstructing, and denouncing every remnant of human "power" they could spot, the intellectual rebels left the power of "the markets" unimpeded, and did nothing to stand in the way of the expansion of U.S. military power all around the world " ..."
"... From her groundbreaking work on the NATO empire's sickening war on sovereign Serbia, the dead end of identity politics and trans bathroom debates, to her critique of unfettered immigration and open borders, and her dismissal of the absurd Russsiagate baloney, better than anyone else, Johnstone has kept her intellect carefully honed to the real genuine kitchen table bread and butter issues that truly matter. She recognized before most of the world's scholars the perils of rampant inequality and saw the writing on the wall as to where this grotesque economic system is taking us all: down a dystopian slope into penury and police-state heavy-handedness, with millions unable to come up with $500 for an emergency car repair or dental bill. ..."
"... The mask competition and fiasco shows the importance of a country simply making things in their own country, not on the other side of the world, it's not nationalism it's just a better way to logistically deliver reliable products to the citizens. ..."
"... Some hold that they never departed, but mutated tools including CFA zones and "intelligence" relations in furtherance of "changing" to remain qualitatively the same. Just as "The United States of America" is a system of coercive relations not synonymous with the political geographical area designated "The United States of America", the colonialism of former and present "colonial powers" continues to exist, since the "independence" of the colonised was always, and continues to be, framed within linear systems of coercive relations, facilitated by the complicity of "local elites" on the basis of perceived self-interest, and the acquiescence of "local others" for myriad reasons. ..."
"... After reading Circle in the Darkness, I have ordered and am now reading her books on Hillary Clinton (Queen of Chaos) and the Yugoslav wars (Fool's Crusade), which are very worthwhile and important. I would recommend that her many articles over the years, appearing in such publications such as In These Times, Counterpunch and Consortium News, be reprinted and published together as an anthology. Through Circle in the Darkness, we have Diana Johnstone's "Life", but it would be good also to have her "Letters". ..."
"... Mr. de Gaulle like other "leaders" of colonial powers did understand that the moment of overt coercive relations of colonialism had passed and that colonialism to remain qualitatively the same, required covert coercive relations facilitated by the complicity of local "elites" on the basis of perceived self-interest. ..."
May 21, 2020 | consortiumnews.com

In France, confinement has been generally well accepted as necessary, but that does not mean people are content with the government -- on the contrary. Every evening at eight, people go to their windows to cheer for health workers and others doing essential tasks, but the applause is not for President Macron.

Macron and his government are criticized for hesitating too long to confine the population, for vacillating about the need for masks and tests, or about when or how much to end the confinement. Their confusion and indecision at least defend them from the wild accusation of having staged the whole thing in order to lock up the population.

What we have witnessed is the failure of what used to be one of the very best public health services in the world. It has been degraded by years of cost-cutting. In recent years, the number of hospital beds per capita has declined steadily. Many hospitals have been shut down and those that remain are drastically understaffed. Public hospital facilities have been reduced to a state of perpetual saturation, so that when a new epidemic comes along, on top of all the other usual illnesses, there is simply not the capacity to deal with it all at once.

The neoliberal globalization myth fostered the delusion that advanced Western societies could prosper from their superior brains, thanks to ideas and computer startups, while the dirty work of actually making things is left to low-wage countries. One result: a drastic shortage of face masks. The government let a factory that produced masks and other surgical equipment be sold off and shut down. Having outsourced its textile industry, France had no immediate way to produce the masks it needed.

Meanwhile, in early April, Vietnam donated hundreds of thousands of antimicrobial face masks to European countries and is producing them by the million. Employing tests and selective isolation, Vietnam has fought off the epidemic with only a few hundred cases and no deaths.

You must have thoughts as to the question of Western unity in response to Covid–19.

In late March, French media reported that a large stock of masks ordered and paid for by the southeastern region of France was virtually hijacked on the tarmac of a Chinese airport by Americans, who tripled the price and had the cargo flown to the United States. There are also reports of Polish and Czech airport authorities intercepting Chinese or Russian shipments of masks intended for hard-hit Italy and keeping them for their own use.

The absence of European solidarity has been shockingly clear. Better-equipped Germany banned exports of masks to Italy. In the depth of its crisis, Italy found that the German and Dutch governments were mainly concerned with making sure Italy pays its debts. Meanwhile, a team of Chinese experts arrived in Rome to help Italy with its Covid–19 crisis, displaying a banner reading "We are waves of the same sea, leaves of the same tree, flowers of the same garden." The European institutions lack such humanistic poetry. Their founding value is not solidarity but the neoliberal principle of "free unimpeded competition."

How do you think this reflects on the European Union?

The Covid–19 crisis makes it just that much clearer that the European Union is no more than a complex economic arrangement, with neither the sentiment nor the popular leaders that hold together a nation. For a generation, schools, media, politicians have instilled the belief that the "nation" is an obsolete entity. But in a crisis, people find that they are in France, or Germany, or Italy, or Belgium -- but not in "Europe." The European Union is structured to care about trade, investment, competition, debt, economic growth. Public health is merely an economic indicator. For decades, the European Commission has put irresistible pressure on nations to reduce the costs of their public health facilities in order to open competition for contracts to the private sector -- which is international by nature.

Globalization has hastened the spread of the pandemic, but it has not strengthened internationalist solidarity. Initial gratitude for Chinese aid is being brutally opposed by European Atlanticists. In early May, Mathias Döpfner, CEO of the Springer publishing giant, bluntly called on Germany to ally with the U.S. -- against China. Scapegoating China may seem the way to try to hold the declining Western world together, even as Europeans' long-standing admiration for America turns to dismay.

Meanwhile, relations between EU member states have never been worse. In Italy and to a greater extent in France, the coronavirus crisis has enforced growing disillusion with the European Union and an ill-defined desire to restore national sovereignty.

Corollary question: What are the prospects that Europe will produce leaders capable of seizing that right moment, that assertion of independence? What do you reckon such leaders would be like?

The EU is likely to be a central issue in the near future, but this issue can be exploited in very different ways, depending on which leaders get hold of it. The coronavirus crisis has intensified the centrifugal forces already undermining the European Union. The countries that have suffered most from the epidemic are among the most indebted of the EU member states, starting with Italy. The economic damage from the lockdown obliges them to borrow further. As their debt increases, so do interest rates charged by commercial banks. They turned to the EU for help, for instance by issuing eurobonds that would share the debt at lower interest rates. This has increased tension between debtor countries in the south and creditor countries in the north, which said nein . Countries in the eurozone cannot borrow from the European Central Bank as the U.S. Treasury borrows from the Fed. And their own national central banks take orders from the ECB, which controls the euro.

What does the crisis mean for the euro? I confess I've lost faith in this project, given how disadvantaged it leaves the nations on the Continent's southern rim.

The great irony is that "a common currency" was conceived by its sponsors as the key to European unity. On the contrary, the euro has a polarizing effect -- with Greece at the bottom and Germany at the top. And Italy sinking. But Italy is much bigger than Greece and won't go quietly.

The German constitutional court in Karlsruhe recently issued a long judgment making it clear who is boss. It recalled and insisted that Germany agreed to the euro only on the grounds that the main mission of the European Central Bank was to fight inflation, and that it could not directly finance member states. If these rules were not followed, the Bundesbank, the German central bank, would be obliged to pull out of the ECB. And since the Bundesbank is the ECB's main creditor, that is that. There can be no generous financial help to troubled governments within the eurozone. Period.

Is there a possibility of disintegration here?

The idea of leaving the EU is most developed in France. The Union Populaire Républicaine, founded in 2007 by former senior functionary François Asselineau, calls for France to leave the euro, the European Union, and NATO.

The party has been a didactic success, spreading its ideas and attracting around 20,000 active militants without scoring any electoral success. A main argument for leaving the EU is to escape from the constraints of EU competition rules in order to protect its vital industry, agriculture, and above all its public services.

A major paradox is that the left and the Yellow Vests call for economic and social policies that are impossible under EU rules, and yet many on the left shy away from even thinking of leaving the EU. For over a generation, the French left has made an imaginary "social Europe" the center of its utopian ambitions.

" Europe" as an idea or an ideal, you mean.

Decades of indoctrination in the ideology of "Europe" has instilled the belief that the nation-state is a bad thing of the past. The result is that people raised in the European Union faith tend to regard any suggestion of return to national sovereignty as a fatal step toward fascism. This fear of contagion from "the right" is an obstacle to clear analysis which weakens the left and favors the right, which dares be patriotic.

Two and a half months of coronavirus crisis have brought to light a factor that makes any predictions about future leaders even more problematic. That factor is a widespread distrust and rejection of all established authority. This makes rational political programs extremely difficult, because rejection of one authority implies acceptance of another. For instance, the way to liberate public services and pharmaceuticals from the distortions of the profit motive is nationalization. If you distrust the power of one as much as the other, there is nowhere to go.

Such radical distrust can be explained by two main factors -- the inevitable feeling of helplessness in our technologically advanced world, combined with the deliberate and even transparent lies on the part of mainstream politicians and media. But it sets the stage for the emergence of manipulated saviors or opportunistic charlatans every bit as deceptive as the leaders we already have, or even more so. I hope these irrational tendencies are less pronounced in France than in some other countries.

I'm eager to talk about Russia. There are signs that relations with Russia are another source of European dissatisfaction as "junior partners" within the U.S.–led Atlantic alliance. Macron is outspoken on this point, "junior partners" being his phrase. The Germans -- business people, some senior officials in government -- are quite plainly restive.

Russia is a living part of European history and culture. Its exclusion is totally unnatural and artificial. Brzezinski [the late Zbigniew Brzezinski, the Carter administration's national security adviser] spelled it out in The Great Chessboard : The U.S. maintains world hegemony by keeping the Eurasian landmass divided.

But this policy can be seen to be inherited from the British. It was Churchill who proclaimed -- in fact welcomed -- the Iron Curtain that kept continental Europe divided. In retrospect, the Cold War was basically part of the divide-and-rule strategy, since it persists with greater intensity than ever after its ostensible cause -- the Communist threat -- is long gone.

I hadn't put our current circumstance in this context. US-backed, violent coup in Ukraine, 2014.

The whole Ukrainian operation of 2014 [the U.S.–cultivated coup in Kyiv, February 2014] was lavishly financed and stimulated by the United States in order to create a new conflict with Russia. Joe Biden has been the Deep State's main front man in turning Ukraine into an American satellite, used as a battering ram to weaken Russia and destroy its natural trade and cultural relations with Western Europe.

U.S. sanctions are particularly contrary to German business interests, and NATO's aggressive gestures put Germany on the front lines of an eventual war.

But Germany has been an occupied country -- militarily and politically -- for 75 years, and I suspect that many German political leaders (usually vetted by Washington) have learned to fit their projects into U.S. policies. I think that under the cover of Atlantic loyalty, there are some frustrated imperialists lurking in the German establishment, who think they can use Washington's Russophobia as an instrument to make a comeback as a world military power.

But I also think that the political debate in Germany is overwhelmingly hypocritical, with concrete aims veiled by fake issues such as human rights and, of course, devotion to Israel.

We should remember that the U.S. does not merely use its allies -- its allies, or rather their leaders, figure they are using the U.S. for some purposes of their own.

What about what the French have been saying since the G–7 session in Biarritz two years ago, that Europe should forge its own relations with Russia according to Europe's interests, not America's?

At G7 Summit in Biarritz, France, Aug. 26, 2019. (White House)

I think France is likelier than Germany to break with the U.S.–imposed Russophobia simply because, thanks to de Gaulle, France is not quite as thoroughly under U.S. occupation. Moreover, friendship with Russia is a traditional French balance against German domination -- which is currently being felt and resented.

Stepping back for a broader look, do you think Europe's position on the western flank of the Eurasian landmass will inevitably shape its position with regard not only to Russia but also China? To put this another way, is Europe destined to become an independent pole of power in the course of this century, standing between West and East?

At present, what we have standing between West and East is not Europe but Russia, and what matters is which way Russia leans. Including Russia, Europe might become an independent pole of power. The U.S. is currently doing everything to prevent this. But there is a school of strategic thought in Washington which considers this a mistake, because it pushes Russia into the arms of China. This school is in the ascendant with the campaign to denounce China as responsible for the pandemic. As mentioned, the Atlanticists in Europe are leaping into the anti–China propaganda battle. But they are not displaying any particular affection for Russia, which shows no sign of sacrificing its partnership with China for the unreliable Europeans.

If Russia were allowed to become a friendly bridge between China and Europe, the U.S. would be obliged to abandon its pretensions of world hegemony. But we are far from that peaceful prospect.

Patrick Lawrence, a correspondent abroad for many years, chiefly for the International Herald Tribune , is a columnist, essayist, author and lecturer. His most recent book is "Time No Longer: Americans After the American Century" (Yale). Follow him on Twitter @thefloutist . His web site is Patrick Lawrence . Support his work via his Patreon site .


Josep , May 19, 2020 at 02:04

It recalled and insisted that Germany agreed to the euro only on the grounds that the main mission of the European Central Bank was to fight inflation, and that it could not directly finance member states.

I once read a comment elsewhere saying that, back in 1989, both Britain (under Margaret Thatcher) and the US objected to German reunification. Since they could not stop the reunification, they insisted that Germany accept the incoming euro. A heap of German university professors jumped up and protested, knowing fully well what the game was: namely the creation of a banker's empire in Europe controlled by private bankers.

Thorben Sunkimat , May 20, 2020 at 13:45

France and Britain rejected the german reunification. The americans were supportive, even though they had their demands. Mainly privatisation of german public utilities. After agreeing to those demands the americans persuaded the british and pressured the french who agreed to german reunification after germany agreed to the euro.

So why did france want the euro?

The German central bank crashed the European economy after reunification with high interest rates. This was because of above average growth rates mainly in Eastern Germany. Main function of the Bundesbank is to keep inflation low, which is more important to them than anything else. Since Germany's D Mark was the leading currency in Europe the rest of Europe had to heighten their interest rates too, witch lead to great economic problems within Europe. Including France.

OlyaPola , May 21, 2020 at 05:30

"namely the creation of a banker's empire in Europe controlled by private bankers."

Resort to binaries (controlled/not controlled) is a practice of self-imposed blindness. In any interactive system no absolutes exist only analogues of varying assays since "control" is limited and variable. In respect of what became the German Empire this relationship predated and facilitated the German Empire through financing the war with Denmark in 1864 courtesy of the arrangements between Mr. von Bismark and Mr. Bleichroder. The assay of "control of bankers" has varied/increased subsequently but never attained the absolute.

It is true that finance capital perceived and continues to perceive the European Union as an opportunity to increase their assay of "control" – the Austrian banks in conjunction with German bank assigning a level of priority to resurrecting spheres of influence existing prior to 1918 and until 1945.

One of the joint projects at a level of planning in the early 1990's was development of the Danube and its hinterland from Regensburg to Cerna Voda/Constanta in Romania but this was delayed in the hope of curtailment by some when NATO bombed Serbia in 1999 (Serbia not being the only target – so much for honesty-amongst-theives.)

This project was resurrected in a limited form primarily downstream from Vidin/Calafat from 2015 onwards given that some states of the former Yugoslavia were not members of the European Union and some were within spheres of influence of "The United States of America".

As to France, "Vichy" and Europa also facilitated the resurrection of finance capital and increase in its assay of control after the 1930's, some of the practices of the 1940's still being subject to dispute in France.

mkb29 , May 18, 2020 at 16:33

I've always admired Diana Johnstone's clear headed analyses of world/European/U.S./ China/Israel-Palestine/Russia/ interactions and the motivation of its "players". She has given some credence to what as been known as French rationalism and enlightenment. (Albeit as an American expat) Think Descartes, Diderot, Sartre , and She loves France in her own rationalist-humanist way.

Linda J , May 18, 2020 at 13:21

I have admired Ms. Johnstone's work for quite awhile. This enlightening interview spurs me to get a copy of the book and to contribute to Consortium News.

Others may be interested in the two-part video discovered yesterday featuring Douglas Valentine's analysis of the CIA's corporate backers and their global choke-hold on governments and their influencers in every region of the world.

Part 1
see:youtu(dot)be/cP15Ehx1yvI

Part 2
see:youtu(dot)be/IYvvEn_N1sE

worldblee , May 18, 2020 at 12:26

Not many have the long distance perspective on the world, let alone Europe, that Diana Johnstone has. Great interview!

Drew Hunkins , May 18, 2020 at 11:03

"Decades of indoctrination in the ideology of "Europe" has instilled the belief that the nation-state is a bad thing of the past. The result is that people raised in the European Union faith tend to regard any suggestion of return to national sovereignty as a fatal step toward fascism. This fear of contagion from "the right" is an obstacle to clear analysis which weakens the left and favors the right, which dares be patriotic."

Bingo! A marvelous point indeed! Quick little example -- Bernard Sanders should have worn an American flag pin on his suit during the 2020 Dem primary campaign.

chris , May 18, 2020 at 04:46

A very good analysis. As an American who has relocated to Spain several years ago, I am always disappointed that discussions of European politics always assume that Europe ends at the Pyrenees. Admittedly, Spanish politics is very complicated and confusing. Forty years of an unreconstructed dictatorship have left their mark, but the country´s socialist, communist and anarchic currents never went away. I like to say that the country is very conservative, but at least the population is aware of what is going on.

Perhaps what Ms. Johnston says about the French being just worn out, with no stomach for more violent conflict also applies to the Spanish since their great ideological struggle is more recent. The American influence during the Transition (which changed little – as the expression goes: The same dog but with a different collar) was very strong, and remains so. Even so, there is popular support for foreign and domestic policies independent of American and neoliberal control, but by and large the political and economic powers are not on board. I do not think Spain is willing to make a break alone, but would align itself with an European shift away from American control.

As Ms. Johnston says, Europe currently lacks leaders willing to take the plunge, but we will see what the coming year brings.

Sam F , May 17, 2020 at 17:45

Thank you Diana, these are valuable insights. Since WWII the US has itself been occupied by tyrants, using Russophobia to demand power as fake defenders.

1. Waving the flag and praising the lord on mass media, claiming concern with human rights and "Israel"; while
2. Subverting the Constitution with large scale bribery, surveillance, and genocides, all business as usual nowadays.
In the US, the form of government has become bribery and marketing lies; it truly knows no other way.

It may be better that Russia and China keep their distance from the US and maybe even the EU:
1. The US and EU would have to produce what they consume, eventually empowering workers;
2. Neither the US nor EU are a political or economic model for anyone, and should be ignored;
3. Neither the US nor EU produces much that Russia and China cannot, by investing more in cars and soybeans.

It will be best for the EU if it also rejects the US and its "neolib" economic and political tyranny mechanisms:
1. Alliance with Russia and China will cause substantial gains in stability and economic strength;
2. Forcing the US to abandon its "pretensions of world hegemony" will soon yield more peaceful prospects; and
3. Isolating the US will force it to improve its utterly corrupt government and society, maybe 40 to 60 years hence.

Drew Hunkins , May 17, 2020 at 15:40

" French philosophy .By constantly attacking, deconstructing, and denouncing every remnant of human "power" they could spot, the intellectual rebels left the power of "the markets" unimpeded, and did nothing to stand in the way of the expansion of U.S. military power all around the world "

Brilliant. Exactly right. This was the progenitor to our contemporary I.D. politics which seems to be solely obsessed with vocabulary, semantics and non-economic cultural issues while rarely having a critique of corporate capitalism, militarism, massive inequality and Zionism. And it almost never advocates for robust economic populist proposals like Med4All, U.B.I., debt jubilee, and the fight for $15.

Drew Hunkins , May 17, 2020 at 15:10

The book is phenomenal. I posted a customer review over on Amazon for this stupendous work. Below is a copy of my review:

(5 stars) One of the most important intellects pens her magisterial lasting legacy
Reviewed in the United States on March 31, 2020

Johnstone's been an idol of mine ever since I started reading her in the 1990s. She's clearly proved her worthiness over the decades by bucking the mainstream trend of apologetics for corporate capitalism, neoliberalism, globalism and imperialistic militarism her entire career and this astonishing memoir details it all in what will likely be the finest book of 2020 and perhaps the entire decade.

Her writing style is beyond superb, her grasp of the overarching politico-socio-economic issues that have rocked the world over the past 60 years is as astute and spot-on as you will find from any global thinker. She's right up there with Michael Parenti, James Petras, John Pilger and Noam Chomsky as seminal figures who have documented and brought light to tens of thousands (millions?) of people across the globe via their writings, interviews and speaking engagements.

Johnstone has never been one to shy away from controversial topics and issues. Why? Simple, she has the facts and truth on her side, she always has. Circle in the Darkness proves all this and more, she marshals the documentation and lays it out as an exquisite gift for struggling working people around the world.

From her groundbreaking work on the NATO empire's sickening war on sovereign Serbia, the dead end of identity politics and trans bathroom debates, to her critique of unfettered immigration and open borders, and her dismissal of the absurd Russsiagate baloney, better than anyone else, Johnstone has kept her intellect carefully honed to the real genuine kitchen table bread and butter issues that truly matter. She recognized before most of the world's scholars the perils of rampant inequality and saw the writing on the wall as to where this grotesque economic system is taking us all: down a dystopian slope into penury and police-state heavy-handedness, with millions unable to come up with $500 for an emergency car repair or dental bill.

Whenever she comes out with a new article or essay I immediately drop everything and devour it, often reading it twice to let her wisdom really soak in. So too Circle of Darkness is an extremely well written beautiful work that will scream out to be re-read every few years by those with a hunger to know exactly what was going on since the Korean War era through today regarding liberal thought, neocon and neoliberal dominance with its capitalist global hegemony and the take over of Western governments by the parasitic financial elite.

There will never be another Diana Johnstone. Circle in the Darkness will stand as her lasting legacy to all of us.

Bob Van Noy , May 17, 2020 at 14:43

"As our circle of knowledge expands, so does the circumference of darkness surrounding it" ~Albert Einstein

Many Thanks CN, Patrick Lawrence, and Joe Lauria. Once again I must commend CN for picking just the appropriate response to our contemporary dilemma.

The quote above leads Diana Johnstone's new book and succinctly describes both the universe and our contemporary experience with our digital age. President Kennedy and Charles de Gaulle of France would agree that colonialism was past and that a new world (geopolitical) approach would become necessary, but that philosophy would put them against some great local and world powers. Each of them necessarily had different approaches as to how this might be accomplished. They were never allowed to present their specific proposals on a world stage. Let's hope a wiser population will once again "see" this possibility and find a way to resolve it

Aaron , May 17, 2020 at 14:18

Well over the span of all of those decades, the consistent, inexorable theme seems to be a trend of the rich getting richer and the poor getting poorer, a small number of individuals, not really states, gaining wealth and power, so everybody else fights over the crumbs, blaming this or that party, alliance, event or whatever, but behind it all there are two flower gardens, indeed the rich are all flowers of their golden garden, and the poor are all flowers of their garden.

It's like the Europeans and the 99 percent in America have all fallen for the myth of the American dream, that if we are just allowed more free, unfettered economic opportunity, it's just up to us to pick ourselves up by the bootstraps and become a billionaire.

The mask competition and fiasco shows the importance of a country simply making things in their own country, not on the other side of the world, it's not nationalism it's just a better way to logistically deliver reliable products to the citizens.

AnneR , May 17, 2020 at 13:42

Regarding French colonialism – as I recall the French were especially brutal in their forced withdrawal from Algeria, both toward Algerians in their homeland and to Algerians within France itself.

And the French were hardly willing, non-violent colonialists when being fought by the Vietnamese who wanted to be free of them (quite rightly so).

As for the French in Sub-Saharan Africa – they have yet to truly give up on their presumed right to have troops within these countries. They did not depart any of their colonies happily, willingly – like every other colonial power, including the UK.

And, as for WWII – she seems, in her reminiscences, to have mislaid Vichy France, the Velodrome roundups of French Jews, and so on ..

Ms Johnstone clearly has been looking backwards with rose-tinted specs on when it comes to France.

Randal Marlin , May 18, 2020 at 13:00

There may be some truth to AnneR's claim that Ms Johnstone has been looking with rose-tinted specs when it comes to France, but it is highly misleading for her to talk about "the French" regarding Algeria. I spent 1963-64 in Aix-en-Provence teaching at the Institute for American Universities and talked with some of the "pieds-noirs," (French born in Algeria).

After French President Charles de Gaulle decided to relinquish French control over Algeria, having previously reassured the colonial population that "Je vous ai compris" ("I have understood you"), there followed death threats to many French colonizers who had to flee Algeria immediately within 24 hours or get their throats slit – "La valise ou le cercueil" (the suitcase or the coffin).

In the fall of 1961, I saw Parisian police stations with machine-gun armed men behind concrete barriers, as an invasion by the colonial French paratroopers against mainland France was expected. The "Organisation Armée Secrète," OAS, (Secret Armed Organization) of the colonial powers, threatened at the time to invade Paris.

As an aside, giving a sense of the anger and passion involved, when the death of John F.Kennedy in November 1963 was announced in the historic, right-wing café in Aix, Les Deux Garçons, a huge cheer went up when the media announcer proclaimed "Le Président est assassinée. Only, that was because they thought de Gaulle was the president in question. A huge disappointment when they heard it was President Kennedy. To get a sense of the whole situation regarding France and Algeria I recommend Alistair Horne's "A Savage War of Peace."

OlyaPola , May 19, 2020 at 11:23

"They did not depart any of their colonies happily"

Some hold that they never departed, but mutated tools including CFA zones and "intelligence" relations in furtherance of "changing" to remain qualitatively the same. Just as "The United States of America" is a system of coercive relations not synonymous with the political geographical area designated "The United States of America", the colonialism of former and present "colonial powers" continues to exist, since the "independence" of the colonised was always, and continues to be, framed within linear systems of coercive relations, facilitated by the complicity of "local elites" on the basis of perceived self-interest, and the acquiescence of "local others" for myriad reasons.

Despite the "best" efforts of the opponents and partly in consequence of the opponents' complicity, the PRC and the Russian Federation like "The United States of America" are not synonymous with the political geographical areas designated as "The People's Republic of China and The Russian Federation", are in lateral process of transcending linear systems of coercive relations and hence pose existential threats to "The United States of America".

The opponents are not complete fools but the drowning tend to act precipitously including flailing out whilst drowning; encouraging some to dispense with rose- tinted glasses, despite such accessories being quite fashionable and fetching.

OlyaPola , May 20, 2020 at 04:32

" .. their colonies "

Perception of and practice of social relations are not wholly synonymous. A construct whose founding myths included liberty, egality and fraternity – property being discarded at the last moment since it was judged too provocative – experienced/experiences ideological/perceptual oxymorons in regard to its colonial relations, which were addressed in part by rendering their "colonies" department of France thereby facilitating increased perceptual dissonance.

Like many, Randal Marlin draws attention below to the perceptions and practices of the pied-noir, but omits to address the perceptions and practices of the harkis whom were also immersed in the proselytised notion of departmental France, and to some degree continue to be.

This understanding continues to inform the practices and problems of the French state.

Lolita , May 17, 2020 at 12:05

The analysis is very much inspired from "Comprendre l'Empire" by Alain Soral.

Dave , May 17, 2020 at 11:27

Do not fail to read this interview in its entirety. Ms Johnstone analyzes and describes many issues of national and global importance from the perspective of an USA expat who has spent most of her career in the pursuit of what may be termed disinterested journalism. Whether one agrees or disagrees in whole or in part the perspectives she presents, particularly those which pertain to the demise (hopefully) of the American Empire are worthy of perusal.

Remember that this is not a polemic; it's a memoir of a lifetime devoted to reporting and analyzing and discussion of most of the significant issues confronting global and national politics and their social ramifications. And a big thanks to Patrick Lawrence and Consortium News for posting the interview.

PEG , May 17, 2020 at 09:11

Diana Johnstone is one of the most intelligent, clear-minded and honest observers of international politics today, and her book "Circle in the Darkness" – which expands on the topics and insights touched on in this interview – is certainly among the best and most compelling books I have ever read, putting the events of the last 75 years into objective context and focus (normally something which only historians can do, if at all, generations after the fact).

After reading Circle in the Darkness, I have ordered and am now reading her books on Hillary Clinton (Queen of Chaos) and the Yugoslav wars (Fool's Crusade), which are very worthwhile and important. I would recommend that her many articles over the years, appearing in such publications such as In These Times, Counterpunch and Consortium News, be reprinted and published together as an anthology. Through Circle in the Darkness, we have Diana Johnstone's "Life", but it would be good also to have her "Letters".

Herman , May 17, 2020 at 09:00

Interesting comparison between the aspirations of De Gaulle and Putin.

"Having a sense of history, de Gaulle saw that colonialism had been a moment in history that was past. His policy was to foster friendly relations on equal terms with all parts of the world, regardless of ideological differences. I think that Putin's concept of a multipolar world is similar. It is clearly a concept that horrifies the exceptionalists."

Agree with Johnstone.

OlyaPola , May 19, 2020 at 11:55

"Having a sense of history, de Gaulle saw that colonialism had been a moment in history that was past. "

Mr. de Gaulle like other "leaders" of colonial powers did understand that the moment of overt coercive relations of colonialism had passed and that colonialism to remain qualitatively the same, required covert coercive relations facilitated by the complicity of local "elites" on the basis of perceived self-interest.

The exceptions to such strategies lay within constructs of settler colonialism which were addressed primarily through warfare – "The United States of America", Vietnam/Laos/Cambodia, Indonesia, Algeria, Kenya, Rhodesia, Mozambique, Angola refer – to facilitate such future strategies.

"I think that Putin's concept of a multipolar world is similar."

As outlined elsewhere the concept of a multi-polar world is not synonymous with the concept of colonialism except for the colonialists who consistently seek to encourage such conflation through myths of we-are-all-in-this-togetherness.

[May 20, 2020] This Is Despotism, Plain Simple - Of Power-Drunk Politicians Sociopathic Oligarchs

Notable quotes:
"... Yes it took parasites, sociopathic oligarchs and a power drunk national security state to bring us to our current state of affairs, but it also took the rest of us. For far too long we as a people have been apathetic, hoodwinked spectators to the life unfolding around us. Voting for "the lesser of two evils" for decade upon decade thinking it might be different this time. Putting up with the economic game that's been put in front of us, despite the fact that it demonstrably and systematically rewards and incentivizes predatory and destructive behavior. As a people, we have been superficial, indifferent and gleefully ignorant of reality. It's time to change all that. ..."
"... I think one reason mass media puts so much emphasis on voting at the national level is the owners of these propaganda channels know voting will change absolutely nothing. The oligarchy and national security state are fully in charge, and they're not going to allow the pesky rabble to get in the way of such a lucrative racket by voting. Getting those who are politically inclined to spend all their time and energy on a rigged and completely corrupt phantom democracy in D.C. is a great way to keep them busy with nonsense. It's also a perfect way to demoralize that portion of the population which understands it's just theater. If you can be convinced that voting at the national level is the only way to change things, you're much more likely to recede into apathy and become intentionally disengaged. This happens to a lot of people, but it's a big mistake. ..."
May 19, 2020 | www.zerohedge.com
Authored by Mike Krieger via Liberty Blitzkrieg blog, It's Time To Step Into The Arena

There's a passage in Teddy Roosevelt's famous 1910 "Citizenship in a Republic" speech I want to share with you today:

If a man's efficiency is not guided and regulated by a moral sense, then the more efficient he is the worse he is, the more dangerous to the body politic. Courage, intellect, all the masterful qualities, serve but to make a man more evil if they are merely used for that man's own advancement, with brutal indifference to the rights of others. It speaks ill for the community if the community worships those qualities and treats their possessors as heroes regardless of whether the qualities are used rightly or wrongly. It makes no difference as to the precise way in which this sinister efficiency is shown. It makes no difference whether such a man's force and ability betray themselves in a career of money-maker or politician, soldier or orator, journalist or popular leader. If the man works for evil, then the more successful he is the more he should be despised and condemned by all upright and far-seeing men. To judge a man merely by success is an abhorrent wrong; and if the people at large habitually so judge men, if they grow to condone wickedness because the wicked man triumphs, they show their inability to understand that in the last analysis free institutions rest upon the character of citizenship, and that by such admiration of evil they prove themselves unfit for liberty.

The above words strike me as a perfect description of the deep hole we find ourselves in presently throughout these United States of America. It takes a whole nation to screw things up as badly as we have, and boy have we ever.

Yes it took parasites, sociopathic oligarchs and a power drunk national security state to bring us to our current state of affairs, but it also took the rest of us. For far too long we as a people have been apathetic, hoodwinked spectators to the life unfolding around us. Voting for "the lesser of two evils" for decade upon decade thinking it might be different this time. Putting up with the economic game that's been put in front of us, despite the fact that it demonstrably and systematically rewards and incentivizes predatory and destructive behavior. As a people, we have been superficial, indifferent and gleefully ignorant of reality. It's time to change all that.

You can consider today's post a rallying cry to step into the arena. Stepping into the arena is often portrayed as becoming involved in national politics or some other large platform action, but I see it differently. If you think the only way to have a real impact is by voting or running for Congress, you're likely to give up and remain passive. The truth is your entire life can be repurposed to be an expression of increased kindness, wisdom and strength. It's the most impactful long-term action most of us can have on this earth, and anyone can do it.

Change yourself before trying to change the world. If enough people did this the world would change without you even trying.

-- Michael Krieger (@LibertyBlitz) May 15, 2020

I think what keeps a lot of people on the sidelines of a conscious life is an inability to intimately process the above. Many people discount the little things, the countless actions of daily existence that impact those around you and cumulatively make you who you are.

I think one reason mass media puts so much emphasis on voting at the national level is the owners of these propaganda channels know voting will change absolutely nothing. The oligarchy and national security state are fully in charge, and they're not going to allow the pesky rabble to get in the way of such a lucrative racket by voting. Getting those who are politically inclined to spend all their time and energy on a rigged and completely corrupt phantom democracy in D.C. is a great way to keep them busy with nonsense. It's also a perfect way to demoralize that portion of the population which understands it's just theater. If you can be convinced that voting at the national level is the only way to change things, you're much more likely to recede into apathy and become intentionally disengaged. This happens to a lot of people, but it's a big mistake.

When I look back at my life thus far, it was during my decade on Wall Street when I was the most ignorant and superficial . So focused on stroking my ego, making a bunch of money and career advancement, I lost a lot of who I am at my core during that time. I often wonder if that's the case for a lot of people who achieve conventional success within the current paradigm. It's fortunate I removed myself from that situation and began thinking more deeply about who I am and what really matters.

Stepping up and getting into the arena will mean something different for each of us, but the one word that keeps popping into my head is resilience. There are several clear ways to become more resilient. There's mental and emotional resiliency, there's financial resiliency and there's physical resiliency (where and how you live). I see all three as fundamentally important and functioning best when working together. Resiliency starts at the most basic level because if you and your family aren't resilient, then you won't be much use to anyone else. If the people of a community or nation lack resiliency it provides the perfect space for authoritarianism and evil to manifest and flourish.

Case in point, see the following comments by Alan Dershowitz during a recent interview.

"You have no right not to be vaccinated, you have no right not to wear a mask... If you refuse to be vaccinated the state has the right to take you to a dr's office & plunge a needle in your arm." @AlanDersh take on vaccines & masks is vile & un-American. pic.twitter.com/j2C1Rk3d7h

-- Robby Starbuck (@robbystarbuck) May 18, 2020

This is despotism plain and simple, and it's being expressed by a guy who still has considerable influence despite his many Jeffrey Epstein related controversies. It's going to take a resilient, courageous and ethical public to stand up to scoundrels like this and just say NO. No, you will not grab me, drag me off somewhere and inject something into my body without my consent. We've been passive spectators in the destruction of our society for far too long. It's time to both say no and to create something better.

When I walked away from New York City and Wall Street ten years ago it was clear what sort of trajectory the country was on, and it's only gotten worse since. We're now in the crucial period spanning 2020-2025 that will decide what the next several decades look like. The big battle for the future is here. Right now. If there's ever been a time in your life to step up, this is it.

* * *

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[May 20, 2020] Our government and much of our industry, especially defense and fintec, appear to be incapable of maneuver. They're justself-seeking individuals with no loyalty to each other, their clients, citizenry, or their country.

May 20, 2020 | www.unz.com

Godfree Roberts , says: Show Comment May 8, 2020 at 12:43 am GMT

@Harold Smith There is an innocuous military term, incapable of maneuver , to describe an army which is nothing more than a group of people in uniforms. They look like an army but, when things go bad, they prove incapable of responding in a disciplined, purposive manner. Arab armies come to mind.

Our government and much of our industry, especially defense and fintec, appear to be incapable of maneuver. They're justself-seeking individuals with no loyalty to each other, their clients, citizenry, or their country.

If we don't want to suffer an interim dystopia, we need to start work on a new constitution because the old one is worn out and we're going over a cliff.

I keep harping on China because they read our Constitution and foundation documents and, in 1950, drafted a 20th century constitution which is well worth reading. They've convened every 10 years since then and amended it to keep it current. For them, the constitution is a living document, not a totem, and they take it very seriously.

[May 19, 2020] White House Vaccine Czar Sells $12 Million Slug Of Moderna Options For Massive Profit

May 19, 2020 | www.zerohedge.com

Last night, as dozens of biotech companies rushed to issue stock following the massive spike in Moderna shares on some extremely preliminary trial results inspired the biggest short-squeeze in US equities since the beginning of May, we warned that Moderna shareholders might be in for a bruising "bait-and-switch" as reports about insider share sales emerged, and Moderna, along with dozens of other biotech companies the company, seized on the demand to issue more shares.

But it's not only Moderna's billionaire founder/CEO Stephane Bancel - once compared to a post-scandal Elizabeth Holmes - who stands to profit from the action: the White House's new vaccine czar also holds - or rather, held - more than 150,000 options contracts on Moderna shares worht more than $12 million, and had resisted pressure to divest them despite the blatant conflict of interest. We were joking yesterday when we speculated that he would probably be glad to exercise these options at current prices. But just as every joke contains a nugget of truth, that one turned out to be prophetic, too.

[May 19, 2020] The pretence that US and Europe have competent and resilient neoliberal political and economic structures is fake

May 19, 2020 | www.moonofalabama.org

karlof1 , May 18 2020 17:14 utc | 36

Alastair Crooke's in fine form today bringing Jung, Euripides, the Outlaw US Empire's Culture Wars, and Zionist Imperialism together to illustrate "Our Civilisational Quagmire" and the imperative of "Looking Truth in the Eye." But all that's initially hidden as he begins by intoning:

"First, the bottom line: If you don't solve the biology, the economy won't recover."

A Truth far too many mostly in the West don't seem capable of grasping:

"But the biology is not solved, and the tension of trying to point in opposite directions simultaneously is igniting a separate, raging political brushfire....

"The pretence that the U.S. and the global economy is about to snap back, as soon as virus mitigation is lifted; the pretence that Covid-19 is either a fake (just another 'flu); or, is 'over'; the pretence that U.S. and Europe have competent and resilient political and economic structures – and the pretence that once Covid is over, we will all return to a world, just as it was?"

I wrote awhile ago that the pandemic provided an opportunity to use an analytical tool known as the Franklin Reality Model to see the values and beliefs held by differing nations and their cultures and ideologies as it exposes them so graphically they cannot be hidden by any amount of spin or propaganda. The revelations provided my empirical basis for judging Trump's response specifically and the West's generally to be one of complete Moral Failure. And not just Trump, but Pelosi, Biden and the vast majority of Democrats, too--their shared Neoliberal ideology's Immoral basis and Parasitic nature being one of the main roots of the problem.


karlof1 , May 18 2020 17:29 utc | 39

Thomas Briggs @35--

I suggest you read this Atlantic article , "We Are Living in a Failed State: The coronavirus didn't break America. It revealed what was already broken." And either before or during, take a gander at this Real GDP graph that still understates the genuine amount of GDP shrinkage since parasitic financial "gains" are added to GDP instead of subtracted as a cost to the real economy. Essentially since GHW Bush's recession, the real economy of the Outlaw US Empire's shrunk about 1.5% annually or @45% overall with the vast majority of economic gains accruing to the top 10%. That grim reality is the #1 reason why Trump won in 2016, and why he stands a very good chance of losing in 2020--"It's the economy, stupid."

Nancy E. Sutton , May 18 2020 17:42 utc | 40
Re: Karl, did the 'West' (Anglo-Zionist world) buy (or actually promote) the 80's 'Greed is Good' line, and ignore what Greenspan supposedly learned..."I have found a flaw...I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms."

Even the average American might be able to see that 'socialism' (i.e., Social Security, et al) is better than 'trickle down'... to put it in simple terms. Neo-liberalism appears to be killing many of us right now. The problem, seems to me, is how to turn the light bulb on for Amerian non-voters... obviously Bernie would have 'had a heart attack' if he'd gotten the nomination.

[May 19, 2020] Will coronavirus fasten the end of "shareholde vlue" mantra?

May 19, 2020 | www.moonofalabama.org

Nancy E. Sutton , May 18 2020 17:42 utc | 40

Re: Karl, did the 'West' (Anglo-Zionist world) buy (or actually promote) the 80's 'Greed is Good' line, and ignore what Greenspan supposedly learned..."I have found a flaw...I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms."

Even the average American might be able to see that 'socialism' (i.e., Social Security, et al) is better than 'trickle down'... to put it in simple terms. Neo-liberalism appears to be killing many of us right now. The problem, seems to me, is how to turn the light bulb on for Amerian non-voters... obviously Bernie would have 'had a heart attack' if he'd gotten the nomination.

karlof1 , May 18 2020 18:38 utc | 54

Nancy E. Sutton @40--

Greenspan issued his belated and stupendously weak mea culpa long after the horse left the corral and had galloped several time around the planet. One vital component was already deeply emplaced prior to his tenure that allowed those entities to "protect" themselves--Regulatory Capture. Recall "Banking Crises" began to become regular occurrences during Reagan/Bush. One of Hudson's great contributions is looking into how political-economic theory was captured and transformed into just economic theory, which he castigates as "Junk Economics" in his book of that title. At his website, there're numerous essays that deal with that topic; out of the several dozen I might link to is this one from 2011 . Discovering how we were manipulated into the Neoliberal religion must be understood if we are to get out from under its boot, which is a tall task since millions must become informed, and the Neoliberals control the media. You asked How. My answer is for us to become informed such that we can inform others, which is why Hudson's written an excellent series of books that make it all easy to comprehend and transmit--I taught introductory college economics and know Hudson's works are vastly superior to the texts we used. The two pertinent books for debunking Neoliberalism are Killing the Host and J is for Junk Economics . For the overall historical perspective, his trilogy that begins with and forgive them their debts will be a must, the second book he says will be ready for publication by New Years.

[May 18, 2020] Farkas is definitely one of the fraudulent supporters of the Obama Russiagate witch hunt, but generally he is clueless pawn in a big and dirty gate played by Obama-Brennan tandem

May 18, 2020 | www.zerohedge.com

Atlantic Council senior fellow, Congressional candidate, and Russia conspiracy theorist Evelyn Farkas is desperately trying to salvage her reputation after recently released transcripts from her closed-door 2017 testimony to the House Intelligence Committee revealed she totally lied on national TV .

In March of 2017, Farkas confidently told MSNBC 's Mika Brzezinski: " The Trump folks, if they found out how we knew what we knew about the Trump staff dealing with Russians , that they would try to compromise those sources and methods, meaning we would not longer have access to that intelligence ."

https://www.youtube.com/embed/dCMF94FX530?start=25

Except, during testimony to the House, Farkas admitted she lied . When pressed by former Rep. Trey Gowdy (R-SC) on why she said 'we' - referring to the US government, Farkas said she "didn't know anything."

In short, she was either illegally discussing US intelligence matters with her "former colleagues," or she made the whole thing up.

Now, Farkas is in damage control mode - writing in the Washington Post that her testimony demonstrated "that I had not leaked intelligence and that my early intuition about Trump-Kremlin cooperation was valid.' She also claims that her comments to MSNBC were based on "media reports and statements by Obama administration officials and the intelligence community," which had "began unearthing connections between Trump's campaign and Russia."

Farkas is now blaming a 'disconcerting nexus between Russia and the reactionary right,' for making her look bad (apparently Trey Gowdy is part of the "reactionary right" for asking her who she meant by "we").

Attacks against me came first on Twitter and other social media platforms, from far-right sources. Forensics data I was shown suggested at least one entity had Russian ties . The attacks increased in quantity and ferocity until Fox News and Trump-allied Republicans -- higher-profile, and more mainstream, sources -- also criticized me .

...

Trump surrogates, including former campaign manager Corey Lewandowski , Donald Trump Jr. and Fox News hosts such as Tucker Carlson have essentially accused me of treason for being one of the "fraudulent originators" of the "Russia hoax." -Evelyn Farkas

She then parrots the Democratic talking point that the attacks she's received are part of Trump's larger "Obamagate" allegations - " a narrative that distracts attention from his administration's disastrous pandemic response and attempts to defect blame for Russian interference onto the Obama administration" (Obama told Putin to ' cut it out ' after all).

Meanwhile, Poor Evelyn's campaign staff has become " emotionally exhausted " after her Facebook, Twitter and Instagram accounts have been "overwhelmed with a stream of vile, vulgar and sometimes violent messages" in response to the plethora of conservative outlets which have called her out for Russia malarkey.

There is evidence that Russian actors are contributing to these attacks. The same day that right-wing pundits began pumping accusations, newly created Russian Twitter accounts picked them up. Within a day, Russian " disinformation clearinghouses " posted versions of the story . Many of the Twitter accounts boosting attacks have posted in unison, a sign of inauthentic social media behavior.

We assume Zero Hedge is included in said ' disinformation clearinghouses ' Farkas fails to expound on.

She closes by defiantly claiming "I wasn't silenced in 2017, and I won't be silenced now."

No Evelyn, nobody is silencing you. You're being called out for your role in the perhaps the largest, most divisive hoax in US history - which was based on faulty intelligence that includes crowdstrike admitting they had no proof of that Russia exfiltrated DNC emails, and Christopher Steele's absurd dossier based on his 'Russian sources.'


MrBoompi, 18 minutes ago

Lying is a common occurrence on MSNBC. Farkas was just showing her party she is qualified for a more senior position.

chubbar, 23 minutes ago

My opinion, based on zero facts, is that the lie she told was to Gowdy. She had to say she lied about having intelligence data or she'd be looking at a felony along with whomever she was talking to in the US gov't. You just know these cocksuckers in the resistance don't give a **** about laws or fairness, it's all about getting Trump. So they set up an informal network to get classified intelligence from the Obama holdovers out into the wild where these assholes could use it against Trump and the gov't operations. Treason. She needs to be executed for her efforts!

LetThemEatRand, 59 minutes ago

This whole thing reminds me of a fan watching their team play a championship game. If the ref makes a bad call and their team wins, they don't care. And if the ref makes a good call and their team loses, they blame the ref. No one cares about the truth or the facts. That in a nutshell is politics in the US. If you believe that anyone will "switch sides" or admit the ref made a bad call or a good call, you're smoking the funny stuff.

mtumba, 50 minutes ago

It's a natural response to a corrupt system.

When the system is wholly corrupt so that truth doesn't matter, what else is there to care about other than your side winning?

It's a travesty.

[May 17, 2020] The dark side of Obama's 'Rising Star' exposed

May 17, 2020 | www.youtube.com

God's Warrior , 3 weeks ago

44, the biggest fraudulent, groomed 'president' in USA history. Imagine if legal citizens knew the TRUTH about corruption within the political arena? Thank you, @TuckerCarlson

[May 17, 2020] The World is Round Shifting Supply Chains and a Fragmented World Order

May 17, 2020 | nationalinterest.org

... ... ...

Coronavirus has already begun to undermine the legitimacy of the European project in a greater manner that nationalist movements had hoped to achieve. European finance ministers have clashed over all EU nations sharing "corona bonds" debt, while France and Germany responded to Italy's request for ventilators with a refusal accompanied by closing their borders with Italy. At around the same time, the United States imposed a unilateral ban on commercial flights with the EU.

China's economic growth strategy and foreign policy aspirations are being frustrated in the wake of Coronavirus, as developing countries are likely to scrutinize China's Belt Road Initiative. Among Western policymakers anti-China sentiment is increasing. In the UK, there is mounting opposition to Huawei building its fifth-generation mobile networks. In late March, the United States abandoned its long-standing policy of maintaining a status quo vis a vis Taiwan. President Donald Trump signed into law The Taiwan Allies International Protection and Enhancement Initiative (TAIPEI) Act, which increases U.S. support for Taiwan and "alters" engagement with nations that undermine Taiwan's security or prosperity. Beijing responded that it would respond forcefully if the law was implemented, all the while China increases its military drills around Taiwan. This is increasingly likely to occur while the United States increasingly supports Hong Kong's independence movement and demonstrates willingness to confront China in the South China Seas. Similarly, Washington is likely to be drawn into a confrontation with North Korea as the collapse of North Korea's health system may threaten Kim Jong-un's regime leading him to militarily lash out.

The latest phase of globalization spearheaded by the West entailed that service economies were not responsible for the manufacture of the products they consumed. Instead, they depended upon outsourcing production of cheap goods in distant shores creating unprecedented levels of economic prosperity, which at its root was artificial. Liberal democracies did not reach "the end of history," where conflict was to be consigned to the dustbin of history, but could easily be unraveled by a virus emanating from a society it was reliant upon that did not share its norms. In a similar vein, the Roman Empire's apex contained the seeds of its decay as it had become overstretched and difficult to manage. The historian Edward Gibbon, in his 1776 book The Decline and Fall of the Roman Empire , notes that Romans had become weak and responded to the challenges of hyperinflation, civil wars and revolts by outsourcing their duties to defend their empire in far flung regions to "barbarian" mercenaries such as the Visigoths. Blowback occurred as these barbarians' increased economic production and their ability to conduct warfare, which led them, ultimately, to turn against their benefactors and sack the Roman Empire. Similarly, the West increased the prosperity of faraway nations and ironically, as a result their military assertiveness by being beholden to extended global supply chains. This along with the risk of globalization unravelling increases the prospects of inter-state and great power conflict. All it took was a virus to detonate the fuse that was shorter than anyone expected.

Barak Seener is the CEO of Strategic Intelligentia and a former Middle East Fellow at the Royal United Services Institute (RUSI). He is on Twitter at  @BarakSeener .

[May 16, 2020] In a Pandemic, Military Spending Is an Extravagant Waste by Conn Hallinan

Notable quotes:
"... The US has spent over $200 billion on antimissile systems, and once they come off the drawing boards, none of them work very well, if at all. ..."
May 16, 2020 | original.antiwar.com

In the very near future, countries are going to have to choose whether they make guns or vaccines

"There have been as many plagues as wars in history, yet plagues and wars take people equally by surprise."
~ Albert Camus, "The Plague"

Camus' novel of a lethal contagion in the North African city of Oran is filled with characters all too recognizable today: indifferent or incompetent officials, short sighted and selfish citizens, and lots of great courage. What not even Camus could imagine, however, is a society in the midst of a deadly epidemic pouring vast amounts of wealth into instruments of death.

Welcome to the world of the hypersonic weapons, devices that are not only superfluous, but which will almost certainly not work. They will, however, cost enormous amounts of money. At a time when countries across the globe are facing economic chaos, financial deficits, and unemployment at Great Depression levels, arms manufacturers are set to cash in big.

A Hypersonic Arms Race

Hypersonic weapons are missiles that go five times faster than sound – 3,800 mph – although some reportedly can reach speeds of Mach 20, 15,000 mph. They come in two basic varieties. One is powered by a high-speed scramjet. The other, launched from a plane or missile, glides to its target. The idea behind the weapons is that their speed and maneuverability will make them virtually invulnerable to anti-missile systems.

Currently there is a hypersonic arms race going on among China, Russia, and the U.S., and, according to the Pentagon, the Americans are desperately trying to catch up with its two adversaries.

Truth is the first casualty in an arms race.

In the 1950s, it was the "bomber gap" between the Americans and the Soviets. In the 1960s, it was the "missile gap" between the two powers. Neither gap existed, but vast amounts of national treasure were nonetheless poured into long-range aircraft and thousands of intercontinental ballistic missiles (ICBMs). The enormous expenditures on those weapons, in turn, heightened tensions between the major powers and on at least three occasions came very close to touching off a nuclear war.

In the current hypersonic arms race, "hype" is the operational word. "The development of hypersonic weapons in the United States," says physicist James Acton of the Carnegie Endowment for International Peace, "has been largely motivated by technology, not by strategy. In other words, technologists have decided to try and develop hypersonic weapons because it seems like they should be useful for something, not because there is a clearly defined mission need for them to fulfill."

They have certainly been "useful" to Lockheed Martin , the largest arms manufacturer in the world. The company has already received $3.5 billion to develop the Advanced Hypersonic Weapon (Arrow) glide missile, and the scramjet-driven Falcon Hypersonic Technology Vehicle (Hacksaw) missile.

The Russians also have several hypersonic missiles, including the Avangard glide vehicle, a missile said to be capable of Mach 20. China is developing several hypersonic missiles, including the DF-ZF, supposedly capable of taking out aircraft carriers.

"No Advantage Whatsoever"

In theory hypersonic missiles are unstoppable. In real life, not so much.

The first problem is basic physics: speed in the atmosphere produces heat. High speed generates lots of it. ICBMs avoid this problem with a blunt nose cone that deflects the enormous heat of re-entering the atmosphere as the missile approaches its target. But it only has to endure heat for a short time because much of its flight is in frictionless low earth orbit.

Hypersonic missiles, however, stay in the atmosphere their entire flight. That is the whole idea. An ICBM follows a predictable ballistic curve, much like an inverted U and, in theory, can be intercepted. A missile traveling as fast as an ICBM but at low altitude, however, is much more difficult to spot or engage.

But that's when physics shows up and does a Las Vegas: what happens on the drawing board stays on the drawing board.

Without a heat deflecting nose cone, high-speed missiles are built like big needles, since they need to decrease the area exposed to the atmosphere. Even so, they are going to run very hot. And if they try to maneuver, that heat will increase. Since they can't carry a large payload, they will have to be very accurate – but as a study by the Union of Concerned Scientists points out, that is "problematic."

According to the Union, an object traveling Mach 5 for a period of time "slowly tears itself apart during the flight." The heat is so great it creates a "plasma" around the craft that makes it difficult "to reference GPS or receive outside course correction commands."

If the target is moving, as with an aircraft carrier or a mobile missile, it will be almost impossible to alter the weapon's flight path to intercept it. And any external radar array would never survive the heat or else be so small that it would have very limited range. In short, you can't get from here to there.

Lockheed Martin says the tests are going just fine, but then Lockheed Martin is the company that builds the F-35, a fifth generation stealth fighter that simply doesn't work. It does, however, cost $1.5 trillion, the most expensive weapons system in US history. The company has apparently dropped the scramjet engine because it tears itself apart, hardly a surprise.

The Russians and Chinese claim success with their hypersonic weapons and have even begun deploying them. But Pierre Sprey, a Pentagon designer associated with the two very successful aircraft – the F-16 and the A-10 – told defense analyst Andrew Cockburn that he is suspicious of the tests.

"I very much doubt those test birds would have reached the advertised range had they maneuvered unpredictably," he told Cockburn. "More likely they were forced to fly a straight, predictable path. In which case hypersonics offer no advantage whatsoever over traditional ballistic missiles."

Guns or Vaccines

While Russia, China, and the US lead the field in the development of hypersonics, Britain, France, India, and Japan have joined the race too.

Why is everyone building them?

At least the Russians and the Chinese have a rationale. The Russians fear the US antimissile system might cancel out their ICBMs, so they want a missile that can maneuver. The Chinese would like to keep US aircraft carriers away from their shores.

But antimissile systems can be easily fooled by the use of cheap decoys, and the carriers are vulnerable to much more cost effective conventional weapons. In any case hypersonic missiles can't do what they are advertised to do.

For the Americans, hypersonics are little more than a very expensive subsidy for the arms corporations. Making and deploying weapons that don't work is nothing new. The F-35 is a case in point, but nevertheless, there have been many systems produced over the years that were deeply flawed.

The US has spent over $200 billion on antimissile systems, and once they come off the drawing boards, none of them work very well, if at all.

Probably the one that takes the prize is the Mark-28 tactical nuke, nicknamed the "Davy Crockett," and its M-388 warhead. Because the M-388 was too delicate to be used in conventional artillery, it was fired from a recoil-less rife with a range of 2.5 miles. Problem: if the wind was blowing in the wrong direction, the Crockett cooked its three-man crew. It was only tested once and found to be "totally inaccurate."

So, end of story? Not exactly. A total of 2,100 were produced and deployed, mostly in Europe.

While the official military budget is $738 billion, if one pulls all US defense related spending together, the actual cost for taxpayers is $1.25 trillion a year, according to William Hartung of the Center for International Policy. Half that amount would go a long way toward providing not only adequate medical support during the Covid-19 crisis – it would also pay jobless Americans a salary.

Given that there are more than 31 million Americans now unemployed and the possibility that numerous small businesses – restaurants in particular – will never reopen, building and deploying a new generation of weapons is a luxury the US and other countries cannot afford.

In the very near future, countries are going to have to choose whether they make guns or vaccines.

Foreign Policy In Focus columnist Conn Hallinan can be read at www.dispatchesfromtheedgeblog.wordpress.com and www.middleempireseries.wordpress.com .

[May 16, 2020] The next step from neoliberalisn can be neofeudalism

May 16, 2020 | www.moonofalabama.org

karlof1 , May 15 2020 19:04 utc | 9

And just in time, we have this essay, "How Biosecurity Is Enabling Digital Neo-Feudalism" by Pepe Escobar. Seven years ago, this prediction was made:

"In the worst-case scenario projected for a pandemic, Zylberman predicted that 'sanitary terror' would be used as an instrument of governance....

"Agamben did square the circle: it's not that citizens across the West have the right to health safety; now they are juridically forced (italics [Pepe's]) to be healthy. That, in a nutshell, is what biosecurity is all about.

"So no wonder biosecurity is an ultra-efficient governance paradigm. Citizens had it administered down their throats with no political debate whatsoever. And the enforcement, writes Agamben, kills 'any political activity and any social relation as the maximum example of civic participation.'"

Escobar's topic's been the subject of heated discussion here. How much of "reopening" in meant to combat the implied totalitarian potential? Perhaps an entire thread ought to be devoted? That such was a planned additional benefit of the COVID-19 attack seems very reasonable. Since it was thought of, discussed and had books published about it seems to indicate it ought to become a central topic at MoA.

[May 16, 2020] Putin's Call For A New System and the 1944 Battle Of Bretton Woods

Highly recommended!
Notable quotes:
"... Our Job in the Pacific ..."
"... "supposed the President was more literate, economically speaking." ..."
"... General Theory of Employment, Interest and Money ..."
"... "contemplates the dismantling of the British and Dutch empires." ..."
May 16, 2020 | off-guardian.org

On the one side, figures allied to American President Franklin Delano Roosevelt's vision for an anti-Imperial world order lined up behind FDR's champion Harry Dexter White while those powerful forces committed to maintaining the structures of a bankers' dictatorship (Britain was always primarily a banker's empire) lined up behind the figure of John Maynard Keynes[ 1 ].

John Maynard Keynes was a leading Fabian Society controller and treasurer of the British Eugenics Association (which served as a model for Hitler's Eugenics protocols before and during the war). During the Bretton Woods Conference, Keynes pushed hard for the new system to be premised upon a one world currency controlled entirely by the Bank of England known as the Bancor. He proposed a global bank called the Clearing Union to be controlled by the Bank of England which would use the Bancor (exchangeable with national currencies) and serve as unit of account to measure trade surpluses or deficits under the mathematical mandate of maintaining "equilibrium" of the system.

Harry Dexter White, on the other hand, fought relentlessly to keep the City of London out of the drivers' seat of global finance and instead defended the institution of national sovereignty and sovereign currencies based on long term scientific and technological growth.

Although White and FDR demanded that US dollars become the reserve currency in the new world system of fixed exchange rates, it was not done to create a "new American Empire" as most modern analysts have assumed, but rather was designed to use America's status as the strongest productive global power to ensure an anti-speculative stability among international currencies which entirely lacked stability in the wake of WWII.

Their fight for fixed exchange rates and principles of "parity pricing" were designed by FDR and White strictly around the need to abolish the forms of chaotic flux of the un-regulated markets which made speculation rampant under British Free Trade and destroyed the capacity to think and plan for the sort of long term development needed to modernize nation states. Theirs was not a drive for "mathematical equilibrium" but rather a drive to "end poverty" through REAL physical economic growth of colonies who would thereby win real economic independence.

As figures like Henry Wallace (FDR's loyal Vice President and 1948 3rd party candidate), Representative Wendell Wilkie (FDR's republican lieutenant and New Dealer), and Dexter White all advocated repeatedly, the mechanisms of the World Bank, IMF, and United Nations were meant to become drivers of an internationalization of the New Deal which transformed America from a backwater cesspool in 1932 to becoming a modern advanced manufacturing powerhouse 12 years later. All of these Interntional New Dealers were loud advocates of US-Russia –China leadership in the post war world which is a forgotten fact of paramount importance.

In his 1944 book Our Job in the Pacific , Wallace said:

It is vital to the United States, it is vital to China and it is vital to Russia that there be peaceful and friendly relations between China and Russia, China and America and Russia and America. China and Russia Complement and supplement each other on the continent of Asia and the two together complement and supplement America's position in the Pacific.

Contradicting the mythos that FDR was a Keynesian, FDR's assistant Francis Perkins recorded the 1934 interaction between the two men when Roosevelt told her:

"I saw your friend Keynes. He left a whole rigmarole of figures. He must be a mathematician rather than a political economist."

In response Keynes, who was then trying to coopt the intellectual narrative of the New Deal stated he had "supposed the President was more literate, economically speaking."

In his 1936 German edition of his General Theory of Employment, Interest and Money , Keynes wrote:

For I confess that much of the following book is illustrated and expounded mainly with reference to the conditions existing in the Anglo Saxon countries. Nevertheless, the theory of output as a whole, which is what the following book purports to provide, is much more easily adapted to the conditions of a totalitarian state.

While Keynes represented the "soft imperialism" for the "left" of Britain's intelligentsia, Churchill represented the hard unapologetic imperialism of the Old, less sophisticated empire that preferred the heavy fisted use of brute force to subdue the savages. Both however were unapologetic racists and fascists (Churchill even wrote admiringly of Mussolini's black shirts) and both represented the most vile practices of British Imperialism.

FDR's Forgotten Anti-Colonial Vision Revited

FDR's battle with Churchill on the matter of empire is better known than his differences with Keynes whom he only met on a few occasions. This well documented clash was best illustrated in his son/assistant Elliot Roosevelt's book As He Saw It (1946) who quoted his father:

I've tried to make it clear that while we're [Britain's] allies and in it to victory by their side, they must never get the idea that we're in it just to help them hang on to their archaic, medieval empire ideas I hope they realize they're not senior partner; that we are not going to sit by and watch their system stultify the growth of every country in Asia and half the countries in Europe to boot.

[ ]

The colonial system means war. Exploit the resources of an India, a Burma, a Java; take all the wealth out of these countries, but never put anything back into them, things like education, decent standards of living, minimum health requirements – all you're doing is storing up the kind of trouble that leads to war. All you're doing is negating the value of any kind of organizational structure for peace before it begins.

Writing from Washington in a hysteria to Churchill, Foreign Secretary Anthony Eden said that Roosevelt "contemplates the dismantling of the British and Dutch empires."

Unfortunately for the world, FDR died on April 12, 1945. A coup within the Democratic establishment, then replete with Fabians and Rhodes Scholars, had already ensured that Henry Wallace would lose the 1944 Vice Presidency in favor of Anglophile Wall Street Stooge Harry Truman.

Truman was quick to reverse all of FDR's intentions, cleansing American intelligence of all remaining patriots with the shutdown of the OSS and creation of the CIA, the launching of un-necessary nuclear bombs on Japan and establishment of the Anglo-American special relationship.

Truman's embrace of Churchill's New World Order destroyed the positive relationship with Russia and China which FDR, White and Wallace sought and soon America had become Britain's dumb giant.

The Post 1945 Takeover of the Modern Deep State

FDR warned his son before his death of his understanding of the British takeover of American foreign policy, but still could not reverse this agenda. His son recounted his father's ominous insight:

You know, any number of times the men in the State Department have tried to conceal messages to me, delay them, hold them up somehow, just because some of those career diplomats over there aren't in accord with what they know I think. They should be working for Winston.

As a matter of fact, a lot of the time, they are [working for Churchill]. Stop to think of 'em: any number of 'em are convinced that the way for America to conduct its foreign policy is to find out what the British are doing and then copy that!" I was told six years ago, to clean out that State Department. It's like the British Foreign Office

Before being fired from Truman's cabinet for his advocacy of US-Russia friendship during the Cold War, Wallace stated:

American fascism" which has come to be known in recent years as the Deep State [ ] Fascism in the postwar inevitably will push steadily for Anglo-Saxon imperialism and eventually for war with Russia. Already American fascists are talking and writing about this conflict and using it as an excuse for their internal hatreds and intolerances toward certain races, creeds and classes.

In his 1946 Soviet Asia Mission, Wallace said:

Before the blood of our boys is scarcely dry on the field of battle, these enemies of peace try to lay the foundation for World War III. These people must not succeed in their foul enterprise. We must offset their poison by following the policies of Roosevelt in cultivating the friendship of Russia in peace as well as in war.

Indeed this is exactly what occurred. Dexter White's three year run as head of the International Monetary Fund was clouded by his constant attacks as being a Soviet stooge which haunted him until the day he died in 1948 after a grueling inquisition session at the House of Un-American Activities.

White had previously been supporting the election of his friend Wallace for the presidency alongside fellow patriots Paul Robeson and Albert Einstein.

Today the world has captured a second chance to revive the FDR's dream of an anti-colonial world . In the 21st century, this great dream has taken the form of the New Silk Road, led by Russia and China (and joined by a growing chorus of nations yearning to exit the invisible cage of colonialism).

If western nations wish to survive the oncoming collapse, then they would do well to heed Putin's call for a New International system, join the BRI, and reject the Keynesian technocrats advocating a false "New Bretton Woods" and "Green New Deal" .

Originally published on The Saker

[1] You may be thinking "wait! Wasn't FDR and his New Deal premised on Keynes' theories??" How could Keynes have represented an opposing force to FDR's system if this is the case? This paradox only exists in the minds of many people today due to the success of the Fabian Society's and Round Table Movement's armada of revisionist historians who have consistently created a lying narrative of history to make it appear to future generations trying to learn from past mistakes that those figures like FDR who opposed empire were themselves following imperial principles.

Another example of this sleight of hand can be seen by the sheer number of people who sincerely think themselves informed and yet believe that America's 1776 revolution was driven by British Imperial philosophical thought stemming from Adam Smith, Bentham and John Locke.

Matthew Ehret is the Editor-in-Chief of the Canadian Patriot Review , a BRI Expert on Tactical talk , regular author with Strategic Culture, the Duran and Fort Russ and has authored 3 volumes of 'Untold History of Canada' book series. In 2019 he co-founded the Montreal-based Rising Tide Foundation and can be reached at matt.ehret@tutamail.com

[May 16, 2020] America's Chilling Experiment in Human Sacrifice

Neoliberalism is a dangerous, evil secular religion.
May 16, 2020 | www.nakedcapitalism.com

Since the days of Adam Smith, free market capitalists have held that human beings are rational actors who pursue economic gain for self-interested motives. But here is Patrick, a free marketer if there ever was one, talking about a gift-sacrifice economy model in which people – some people, at least – lay down their lives to keep the economic engines revved.

Patrick's words reveal an unspoken truth about capitalism. For the system to work smoothly, there have always been requirements of human sacrifice -- a certain portion of the population was expected to act not as self-serving homo economicus, but self-sacrificing homo communis , focused upon what benefits the collective at their own expense. If these people can't social distance at the workplace, they are expected to show up anyway. If there isn't enough safety equipment, they are declared essential workers who must put their lives and that of their families at risk for the greater good.

But for whom and for what is this sacrifice intended? How much dying will be figured into state budgets and gross domestic product (GDP)? When ranked by GDP, the U.S. is the wealthiest economy in the world, but is a country's wealth something totally separate from, or even contrary to, the health and life the majority of its citizens?

Wealth v. "illth"

To help us navigate these questions, it is useful turn to someone who offered potent challenges to the economic calculus of his day: John Ruskin , the 19 th -century art critic-turned-political economist. He was one of the most outspoken critics of capitalism and prevailing economic ideas of the Victorian era , and his work presciently points to shortcomings that have followed us into the present day.

Ruskin questions the premises on which free market capitalism is based, returning to first principles: what is wealth? What do we value? How should we understand the relationship between people, the economy, and the state?

In his view, economies are, above all, social systems whose true end is to benefit the people, and not, as the Texan politician would have it, the other way around. Anticipating the behavioral economics of our own day, Ruskin rejected the idea advocated by such economists as John Stuart Mill that there could be a deductive science of economics based on the assumption that the human being is "a covetous machine" that when applied to actual situations could take "the social affections," the non-rational aspects of human behavior, into account. Ruskin recognized that such a system implicitly removed the marketplace from the constraints of religion and morality that are supposed to apply to all human behavior. He compared it to an assumption that humans are essentially a skeleton with flesh, blood and consciousness as add-ons founding "an ossifiant theory of progress on this negation of a soul."

Ruskin defined wealth quite differently from many of his contemporaries, and ours. For him, wealth is anything that supports life and health, from the supplies in your storeroom to the song in your heart: "There is no wealth but life. Life, including all its powers of love, of joy, and of admiration. That country is the richest which nourishes the greatest number of noble and happy human beings; that man is richest who, having perfected the functions of his own life to the utmost, has also the widest helpful influence, both personal, and by means of his possessions, over the lives of others." ( Unto this Last ).

By that definition, America is looking increasingly impoverished. And it is not a virus which is stealing our wealth away.

Playing on the root of the word "wealth" from the Old English word "weal," signifying health, Ruskin proposed that while wealth was anything life-supporting that could be used and enjoyed, it had a dark counterpart that he called "illth" from the Old Norse word for bad – the things that make people ill, their lives stunted and despairing, their environment polluted. Wealth cannot be produced without illth, but great fortunes have been made by extracting the means of wealth without paying the cost of illth. To take a Ruskinian example, a factory that pollutes the water it uses, fouls the air and pays its workers below what a healthy life requires will be more profitable than a business that cleans up after itself and pays a living wage, but its illth becomes a form of national debt expressed in damage to the health of others and the environment. Think of something like a toxic Superfund site.

Economists have a term for Ruskin's concept of illth, referring to it as "negative externalities," even though they are not external to the capitalist economic system, but intrinsic to it. The most daunting problems of the current age, environmental disaster and inequality, are fueled by illth.

The Covid-19 crisis has merely amplified trends of rising illth, of despair, sickness, and alienation, which have been on the rise for decades as globalization, money-driven politics, decimated workers' rights, and privatization have tipped the economic balance far in favor of the very few. If we are to judge a country's health not by GDP, which rises in the face of a massive oil spill , but according to the criteria of the World Happiness Report (WHR), which measures things like social trust and faith in institutions, America is in bad shape when it comes to the ratio of wealth to illth. Scandinavian countries top the WHR, while the U.S. ranks a dismal 19 th .

According to the Columbia University study of the 2020 WHR report , the key factors that account for the relative happiness of Scandinavian countries -- what makes them wealthy in Ruskin's terms -- are precisely those that have been under pressure or cut back in the U.S. since the rise of neoliberalism: "emancipation from market dependency in terms of pensions, income maintenance for the ill or disabled, and unemployment benefits" together with labor market regulation such as a high minimum wage. Of course, no one likes to pay taxes, but Scandinavian "citizens' satisfaction with public and common goods such as health care, education, and public transportation that progressive taxation helps to fund," meets with approval at all income levels.

Pandemics are exacerbated by illth. We can see it in communities of color where the coronavirus strikes down those whose resources and access to health care have been limited by discriminatory policies and high contact employment. We can see it in factory farms where broken supply chains have caused farmers to euthanize livestock and plow under crops while people across the country go hungry. Airlines got immediate stimulus aid in the U.S., but there has been no subsidy for the restaurant supply chain that could be diverted for distribution by food banks and favorably located restaurants thus sustaining at least some of our much-vaunted small businesses. No one has to fly, but everyone must eat.

We sense illth accumulating in the comments of Las Vegas mayor Carolyn Goodman, who, in her eagerness to get the casinos back in business, told an astonished Anderson Cooper on CNN that she would offer up the city's workers as a " control group " in a reopening experiment. If they weren't able to social distance, Goodman was unconcerned: "In my opinion, you have to go ahead," she said . "Every day you get up, it's a gamble."

Ruskin saw the capitalists of his day as gamblers heedless of the costs they foisted onto ordinary people: "But they neither know who keeps the bank of the gambling-house, nor what other games may be played with the same cards, nor what other losses and gains, far away among the dark streets, are essentially, though invisibly, dependent upon theirs in lighted rooms." ( Unto This Last ).

In other words, not only do capitalists gamble with other peoples' lives; they are oblivious to the fact that there are other ways to arrange society, to deal the cards differently, more fairly.

Witness the post-Covid reality imagined by Governor Cuomo. Instead of focusing on what changes could better support the health and lives of ordinary people, he has called in Google CEO Eric Schmidt to head a commission to reimagine New York state with more technology permanently inserted into every dimension of civic life. A better deal for Silicon Valley, to be sure. But what is in the cards for everyone else? When educational platforms and health protocols are mapped by gigantic and unaccountable corporations, who gets lost? Surely the answer is those who can least afford it.

President Trump says that it is time to move on from the coronavirus and get on with economy. Ruskin would have recognized the deity worshipped by country's leader, which he called the "Goddess of getting on." Only Ruskin recognized that she tended to favor "not of everybody's getting on – but only of somebody's getting on," -- what he called a "vital, or rather deathful, distinction." For capitalists, getting on post-Covid means executives working remotely while the rank and file return to the factory floor without adequate face masks, and large corporations, not public input, determines the blueprints for our lives.

The issue of worker safety does matter to Senate Majority Leader Mitch McConnell, but not because he fears that some will get sick or die, but for a potential " epidemic of litigation ." In the next pandemic relief legislation, McConnell is looking to solve the problem of worker safety by shielding corporations from lawsuits rather than supporting Centers for Disease Control (CDC) mandated regulations that would both promote safety and sort out what is and is not actionable.

The Visible Hand

Instead of Adam Smith's Invisible Hand, Ruskin advocated a Visible Hand of reasoned management, a government which could allocate resources effectively and create stores of what citizens most needed in a crisis. In our day this need not be a literal storehouse but surge capacity. The Obama administration, for example, contracted with Halyard Health to design a machine that could turn out 1.5 million N95 masks per day. They were ready to build the machine in 2018 when the Trump administration cancelled the program .

In Ruskin's view, the Visible Hand was the guardian of the lives of the citizens, especially the poor, whose health and lives were their essential property. Ruskin actually defined an economy as the wise management of labor, applying labor, carefully preserving what it produces, and wisely distributing those products. A country's wealth is in the people's strength and health, not their illness and death.

Ruskin's concepts of wealth and illth help us understand the centrality of ethics and responsibility to economic activity, and how economies are not an assemblage of atomistic human units but whole systems of people interacting, where the activities of some impact the lives of all. His work indicates the need for a whole systems approach to a crisis in which what happens on the beaches of Georgia impacts a nursing home in North Carolina, and visitors to New York City or New Orleans can carry the infection home. The decisions of one business in a complex international supply chain can impact the fate of millions.

In unregulated capitalism, Ruskin sussed out what Sigmund Freud might have recognized as the death drive. Decisions about the economy, he held, must be informed by the essential biologic basis of life itself: "The real science of political economy, which has yet to be distinguished from the bastard science, as medicine from witchcraft, and astronomy from astrology, is that which teaches nations to desire and labour for the things that lead to life; and which teaches them to scorn and destroy the things that lead to destruction" ( Unto This Last ).

The Covid crisis has exposed contradictions in market and America First ideology. Without federal aid to state and local governments, essential personnel are being laid off even as we declare them heroes. Employer based insurance is failing, but few American politicians are willing to fully embrace single payer insurance. Meat plant workers are declared essential, but still subject to deportation, as if famed Revolutionary patriot Nathan Hale had said, "I only regret that you have but one life to give for my country."

Ultimately, the most dangerous pestilence that threatens the country is not a packet of RNA called Covid-19 but an economic and political system that does not value true wealth, and promotes the life of the few while condemning the many to literal sickness unto death.


Henry Moon Pie , May 15, 2020 at 5:38 am

Excellent piece by Parramore. Ruskin is an interesting thinker whose ideas have direct application to our situation. This was central:

President Trump says that it is time to move on from the coronavirus and get on with economy. Ruskin would have recognized the deity worshipped by country's leader, which he called the "Goddess of getting on." Only Ruskin recognized that she tended to favor "not of everybody's getting on – but only of somebody's getting on," -- what he called a "vital, or rather deathful, distinction." For capitalists, getting on post-Covid means executives working remotely while the rank and file return to the factory floor without adequate face masks, and large corporations, not public input, determines the blueprints for our lives.

There's one thing I hope the Left learns before too long. Human beings have a religious impulse. It's not as powerful or as central to our existence as the sexual impulse, but it's there in all of us, even Richard Dawkins. Like the sexual impulse, the real question is where will this religious impulse lead us. For the Right, their twisted unChristian conception of Christianity is a powerful force within their political movement. In fact, it might be said to be what holds it together and provides the energy for their unfortunate efforts.

Meanwhile, the Left, considering itself too firmly ensconced in modernity to recognize the reality of the religious impulse despite modern science's identification of it, denies the existence of this basic and potentially powerful human trait. We saw some of the activists and organizers in Bernie's campaign employ deep organizing techniques which are basically spiritual exercises. We know Thomas Berry's calls for a new religion focused on humanity's relationship to the Earth and its creatures. The Left needs to acknowledge our spiritual aspects and work to turn our religious impulse away from patriarchalism, misogyny and homophobia of the Right and toward love for the Earth, our fellow humans and our fellow creatures. That's where reside the power and persistence necessary to overcome our religiously misinspired opponents.

Bsoder , May 15, 2020 at 9:34 am

There is a gene that creates within the brain a structure that either perceives 'god' (my view), or generates a sense of spirituality in [sic] reality. The university of Waterloo has been doing studies on this for at least thirty years. Anything we have evolved has a calorie cost to maintain, so it must serve purpose in furthering life. There have been many debates about this gene but no one can argue it's not about spirituality, and/or god, and/or what the Druids what call magic. To me there's always been, that question, we can go back and have data to 1/billion of 1/billion to 1/billion⁶⁶⁷(minus) of a second before the inflation singularity that created this universe. But then, why? As the said in the 'Little Prince', 'it's only with the heart one sees rightly'.

Susan the other , May 15, 2020 at 10:07 am

The little prince is right. What we call spirituality is intelligence above what is necessary our daily existence. Our "daily bread". Our sixth sense is probably more accurate and reliable than all our rationalizations combined. But it is a thing that can't be orchestrated by religion or politics. What happens between people in groups when fear is eliminated is a sudden change toward choices that are the most sensible. As long as the process isn't interfered with. That's the difficulty. It's like leaving nature alone long enough for it to recover from human devastation.

Clive , May 15, 2020 at 10:28 am

What we call spirituality is intelligence above what is necessary our daily existence.

(although if I was trying to do your comment complete justice, I would have to simply re-quote the whole thing, it was that good)

Sometimes Susan the other, you're so profound, it almost hurts!

Certainly for me, I've got very little, comparatively, in my life right. I've passed on opportunities which would made me rich beyond the dreams of avarice. And much else besides. Mostly because I've overanalysed and rationalised things away. What I've got right has been, conversely, down to following my intuition. If humanity could unlock that potential within us, just think what we could do.

Susan the other , May 15, 2020 at 1:21 pm

If I'm profound Clive it's because I look to you and a handful of other VSP for inspiration.

RBHoughton , May 15, 2020 at 8:48 pm

That's what makes NC unique – the sense of honor and respect amongst supporters.

SAKMAN , May 15, 2020 at 10:29 am

If we are talking about VMAT2 here, then its also been implicated in opiod dependence. . . just another example of god I guess? To some for sure.

Susan the other , May 15, 2020 at 9:58 am

Neo-transcendentalism please.

ChiGal in Carolina , May 15, 2020 at 10:41 am

The Sun
mary oliver

Have you ever seen
anything
in your life
more wonderful

than the way the sun,
every evening,
relaxed and easy,
floats toward the horizon

and into the clouds or the hills,
or the rumpled sea,
and is gone–
and how it slides again

out of the blackness,
every morning,
on the other side of the world,
like a red flower

streaming upward on its heavenly oils,
say, on a morning in early summer,
at its perfect imperial distance–
and have you ever felt for anything
such wild love–
do you think there is anywhere, in any language,
a word billowing enough
for the pleasure

that fills you,
as the sun
reaches out,
as it warms you

as you stand there,
empty-handed–
or have you too
turned from this world–

or have you too
gone crazy
for power,
for things?

Henry Moon Pie , May 15, 2020 at 11:01 am

A response to Oliver's powerful poem from Thomas Berry:

The continuity between the human and the cosmic was experienced with special sensitivity in the Chinese world [A] sense of the sacred dimension of the Earth is involved, a type of awareness less available from our traditional Western religions. This lack of intimacy with the natural was further extended when Descartes proposed that the living world was best described as a mechanism, because there was no vital principle integrating, guiding, and sustaining the activities of what we generally refer to as the living world.

Yet, strangely enough, a new sense of the sacred dimension of the universe and the planet Earth is becoming available from our more recent scientific endeavors. The observational sciences, principally through the theories of relativity, quantum physics, Heisenberg's Uncertainty Principle, the sense of a self-organizing universe, and the more recent chaos theories have taken us beyond a mechanistic understanding of an objective world. We know there is a subjectivity in all our knowledge and that we ourselves, precisely as intelligent beings, activate one of the deepest dimensions of the universe. Once again, we realize that knowledge is less a subject-object relationship than it is a communion of subjects, .

Thomas Berry, "The Gaia Hypothesis: Its Religious Implications" in The Sacred Universe

Susan the other , May 15, 2020 at 1:26 pm

I'm reading Rovelli's The Order of Time right now and every few pages I just stop, my jaw drops and I get lost in the realization.

Rod , May 15, 2020 at 9:59 am

I'm glad you are making this point to acknowledge:

Human beings have a religious impulse.

From my direct experience, Native Americans seem to center their activism in a Spiritual Context. Prayer for Guidance–for courage–for wisdom–for compassion–before starting up on anything. imo, it keeps the priorities in focus.

Petter , May 15, 2020 at 3:12 pm

I'm posting in this thread even though I'm not sure it fits. The religious or spiritual impulse appears to be universal, there doesn't seem any doubt about that. Here's an interesting article on Big Gods, or moralizing Gods.
Big data analyses suggest that moralizing gods are rather the product than the drivers of social complexity:
https://www.sciencedaily.com/releases/2019/03/190320141116.htm
-- -- -- -- --
One prominent theory, the big or moralizing gods hypothesis, assumes that religious beliefs were key. According to this theory people are more likely to cooperate fairly if they believe in gods who will punish them if they don't. "To our surprise, our data strongly contradict this hypothesis," says lead author Harvey Whitehouse. "In almost every world region for which we have data, moralizing gods tended to follow, not precede, increases in social complexity." Even more so, standardized rituals tended on average to appear hundreds of years before gods who cared about human morality.

Such rituals create a collective identity and feelings of belonging that act as social glue, making people to behave more cooperatively. "Our results suggest that collective identities are more important to facilitate cooperation in societies than religious beliefs," says Harvey Whitehouse.
-- -- -- -

Amfortas the hippie , May 15, 2020 at 6:14 am

I can definitely recommend Ruskin's "Unto This Last". I obtained it(among several others that had been on my list(from NC) for a while) just before Covid.
short book wonderfully written.
and kicks you in the gut like some new revelation.
turns out that divorcing "Economics" from "Political Economy" was a mistake.
treating the former as if it were a natural science, like Physics or Chemistry let alone Pure Mathematics is deleterious.
It ignores and neglects all the amorphous and ephemeral things that make this Life worth living .how can you quantify a sunset or a moonrise or the smell of your newborn's hair or a first kiss?
the Economists have taken reductive essentialism to absurd extremes .and somehow convinced a great many of us to go along to our ultimate destruction.
https://www.youtube.com/watch?v=MHOhD0RT9NU

Marx called this sort of thing Reification .giving something a Quality it doesn't truly possess. Money as the Holy Cracker in the Temple of Moloch.
or, the morality of a Serpent: I shall Devour.(see: Joseph Campbell:"a serpent is a "motile alimentary canal")
we're expected to feed ourselves and our children into the flaming bronze maw of their idol( https://en.wikipedia.org/wiki/Moloch )
as if "The Economy" is some thunderstorm or Holy Mountain, instead of a Human Creation.
"There is no such thing as Society" .and "TINA" .and these moronic "protesters" holding signs that say "Arbiet macht frie" apparently unaware of the provenance of that phrase .after all , we stopped really teaching the Humanities like History quite a while ago.
we forget that "They" require our assent and consent to this "sacrifice"(L:"to make holy") that without that consent, they have nothing not even their precious wealth(which is what, these days? electrons moving in a database, somewhere?).

now, "They" have as much as admitted that things like the Stock Market are disconnected from Reality that the Casino doesn't need Main Street and Human Beings to function.
This, after decades of training us to believe just the opposite. Why else put a stock market ticker at the bottom of every cable news channel as if all that mattered to us'n's?
One of my favorite words is Eudaimonia ( https://en.wikipedia.org/wiki/Eudaimonia ) but you only learn about that from the Humanities.
another of my favorite words is Thaumazein "Wonder", or "Awe" also from ancient Greek Philosophy
we've allowed the most withered souls to define the Good for us
Now, when all their works lie in ruins around us .and their narrow and anti-humanist, mechanistic absurdity and cruelty are on full display has there ever been a better time to turn away? To sit and think about what matters?
Withdraw your Consent.

" O happiness! O happiness! Wilt thou perhaps sing, O my soul? Thou liest in the grass. But this is the secret, solemn hour, when no shepherd playeth his pipe.
Take care! Hot noontide sleepeth on the fields. Do not sing! Hush! The world is perfect.
Do not sing, thou prairie-bird, my soul! Do not even whisper! Lo- hush! The old noontide sleepeth, it moveth its mouth: doth it not just now drink a drop of happiness --
-- An old brown drop of golden happiness, golden wine? Something whisketh over it, its happiness laugheth. Thus -- laugheth a God. Hush! --
-- 'For happiness, how little sufficeth for happiness!' Thus spake I once and thought myself wise. But it was a blasphemy: that have I now learned. Wise fools speak better.
The least thing precisely, the gentlest thing, the lightest thing, a lizard's rustling, a breath, a whisk, an eye-glance -- little maketh up the best happiness. Hush!
-- What hath befallen me: Hark! Hath time flown away? Do I not fall? Have I not fallen -- hark! into the well of eternity?
-- What happeneth to me? Hush! It stingeth me -- alas -- to the heart? To the heart! Oh, break up, break up, my heart, after such happiness, after such a sting!
-- What? Hath not the world just now become perfect? Round and ripe? Oh, for the golden round ring -- whither doth it fly? Let me run after it! Quick!"
( http://4umi.com/nietzsche/zarathustra/70 )

Bsoder , May 15, 2020 at 9:43 am

Good day it you sir, you are in rare and most excellent form, Amfortas. Amen.

McKillop , May 15, 2020 at 3:00 pm

Hey Amphortas the Hippie!
I enjoy reading your comments and the slices of your life served up to us – you are an interesting guy and a good antidote to me whenever I am disheartened by the stuff I am bombarded with by the exceptional Americans foisted upon the world as typical.
Who would believe that I read Thus spake Zarathustra 'cause of your comments? I sent the link on to my son who is 16 and has been physically separated from us for months caught in this vortex. We'll see how it is taken compared to Mnm.
Thanks

Amfortas the hippie , May 15, 2020 at 3:21 pm

Aww. Thanks, dude/dudette.
zarathustra is very accessible.
i've noticed that lots of people(like my wife) have been taught somehow that they can't read stuff like that, so don't even try.
just another crime against us all.
aristotle can be pretty dense as can a lot of the more familiar philosophers(hegel=ugh–) but Nietszche is pretty easy to get into, due to his style .although some translations are better than others(I like the translation linked above for Zarathustra the KJV Tone works for me.)
One shouldn't be intimidated by Marcus Aurelius, Herodotus or Boethius, either.

rob , May 15, 2020 at 7:42 am

Isn't it ironic, that ruskin was able to see our issues and spoke to people with such force as to effect our lives and in a sense is partly responsible for the world we have today.
When he spoke at oxford in 1870 cecil rhodes was so impressed he supposedly carried a copy of it with him in the future.
The ideas expressed by ruskin convinced rhodes that he needed to save "good english society" from "the masses"(the poor english and all the rest of the savages who wouldn't understand how to be proper."
Rhodes and his cohorts,in the british upper crust and media establishment created "the british rountable" in 1891. These roundtablers did lots of things..Both through official channels and by ways of running the largest newspapers who really perfected propaganda, decades before goebbels. Eventually they formed in 1919, "the royal institute of international relations" in britian. and "the council on foreign relations" in new york"
Generations of these members have really "made" the world that exists today. Which is why the "conspiracy theories" exist . when people look at the lists of who
Personally, I think there ought to be study in the relationships these people had with each other and with history. As with any family, they may be related, but not always on the same page but still have the power of the family name and the prestige.
The council on foreign relations is the wellspring of "neoliberalism" neo consevatism too , for that matter. Their place in history is central. This is the axis of the "anglo-american establishment"

rob , May 15, 2020 at 9:02 am

oops, that is "royal institute of international affairs" or as people refer to it "chatham house"

Off The Street , May 15, 2020 at 9:21 am

Upon first reading the headline about America's Chilling Experiment in Human Sacrifice , I wondered: Which one?

Now back to Ruskin.

shinola , May 15, 2020 at 10:02 am

Dan Patrick's attitude is a prime example of a principle that regular NC readers may have seen a time or two:

Because Markets / Go Die

anon2 , May 15, 2020 at 11:26 am

Hence the folly of an economy based on debt rather than equity: it must continue to run or risk cascading defaults.

Then why do we have government privileges for private debt creation in the first place? Because subtle theft is easier and more "efficient" than honest sharing?

Alex Cox , May 15, 2020 at 12:15 pm

Perhaps science is the religion of the PMC. An unquestioning belief in anything scientists/big pharma/tech wizzards throw on the table, whether it's GMOs, vaccines containing mercury, thalidomide, social media, driverless cars or trips to Mars.

JBird4049 , May 15, 2020 at 2:14 pm

I use to go to Nevada regularly and mostly via the Donner Pass. Just a roundabout way of suggesting that some might consider the Donner Party as the right way to have a society. They almost made it over the pass, missing it by a couple of days, despite taking a shortcut that was actually a longcut using bad information from a book, IIRC. They were told repeatedly by those who had gone West before not to do so, but

They remind me of today's times.

Dwight , May 15, 2020 at 2:32 pm

In Nashville, TN last month, a masked protester at the state capitol carried a sign "Sacrifice the Weak." I was shocked when a local news show reported on protesters and filmed this sign along with other signs and protesters, and the reporter did not comment on this horrible, Nazi-like statement.

p fitzsimon , May 15, 2020 at 4:32 pm

Have there been any prominent religious leaders who have given counsel on the sacrificial nature of a return to work to save the economy. At what point is the risk to human life and health compensated by an economic return?

Hepativore , May 15, 2020 at 11:00 pm

Come to think of it, does it not seem odd that with many prominent religious figures, none of them seem to be willing to speak up on how greed is destroying the world and all of the wealthy owners of capital that are its promoters? Greed is a major sin in almost every religion, yet you hardly ever see any religious clergy give sermons on how widespread and dangerous greed is or publicly admonish Wall Street if they hold themselves up to be the moral leaders of society.

Henry Moon Pie , May 15, 2020 at 7:20 pm

The great way is low and plain,
but people like shortcuts over the mountains.

From Ursula K. Le Guin's translation of the Tao te Ching #53

It's an old problem.

Chris , May 15, 2020 at 10:01 pm

The fundamental problem we have with all the "very smart people" who think economics is a science is that I can't write an equation that will convince these masters of the universe that they shouldn't be @$$holes.

I can't tell anyone that even if it doesn't profit you there's a reason to choose to help your fellow humans.

I also can't define a relationship that explains why even if you can figure out how to stay within the letter of the law and exploit a loop hole to make more money but only in way that hurts other people, you shouldn't do it. Or why you shouldn't write a law or lobby for a law that exists only so it can be abused.

These guys will never accept the concept of illth because it challenges their concept of wealth. And so it goes

eg , May 16, 2020 at 4:59 am

One of the best educated persons I know shared this with me: the most valuable thing is a hierarchy of values.

rob , May 16, 2020 at 8:15 am

I thought it was a trust fund in a tax haven.
Silly me.

DHG , May 16, 2020 at 4:25 pm

I dont gamble with my life. The shrewd will take the necessary precautions and keep themselves concealed as much as possible. The stupid will not take these precautions, likely get sick and some will perish .

Karen , May 16, 2020 at 5:46 pm

It amazes me that protesters and policymakers are still treating this as an impossible tradeoff -- a false dichotomy -- between life and money, when it's clear that success lies with practical solutions, of which there are many, to achieve both. Starting with masks!

I love the idea of billionaires leading the way, demonstrating the efficacy of their reopening plans through personal example.

[May 16, 2020] In the "brutal economics" of capitalism, the lives lost to the COVID-19 pandemic are simply the cost of doing business. While trillions of dollars have been spent propping up financial markets, no serious efforts have been made to contain the pandemic

May 16, 2020 | www.moonofalabama.org

bevin , May 16 2020 15:31 utc | 104

An excellent article on the WSWS:
"...In the "brutal economics" of capitalism, the lives lost to the COVID-19 pandemic are simply the cost of doing business. While trillions of dollars have been spent propping up financial markets, no serious efforts have been made to contain the pandemic, and whatever mitigation measures have been put in place, including the closure of businesses, are being rapidly abandoned.

"The efforts by the ruling class to counterpose workers' lives to livelihoods is an entirely false choice. Both can be defended with the necessary allocation of social resources to stop and eradicate COVID-19 and all other communicable diseases. Non-essential workplaces must remain closed for as long as it takes for these measures to be put in place.

"But containing the pandemic requires an investment in social infrastructure that the capitalist class is not willing to make. The COVID-19 pandemic has made clear the utter incompatibility of the capitalist system with the preservation of the most basic social right: the right to life."
https://www.wsws.org/en/articles/2020/05/16/pers-m16.html


"I also don't know why you would quote a Wapo article, uncritically, in response to fairleft. Why would I care what they say about anything? They represent power. I consider them no more reliable on pharma imperialism as they are on military imperialism."
oglalla@102
You answer the question yourself. Nobody is suggesting that anyone read the Washington Post uncritically. I am surprised that you should accuse b of having done so. The evidence is that he has read the Post critically-as we all have to do in a culture in which the major source of news, for everyone, is a media compromised enormously by its allegiances, particularly its allegiance to capitalism.
Read the Wapo critically and you will be left with a residue of information which can be cross checked by various means, once you have done that you can evaluate the importance of its conclusions. It is what we all have to do.

[May 16, 2020] "Three of the largest for-profit nursing home operators in Ontario, which have had disproportionately high numbers of COVID-19 cases and deaths, have together paid out more than $1.5 billion in dividends to shareholders over the last decade, the Star has found.

May 16, 2020 | www.moonofalabama.org

bevin , May 16 2020 13:39 utc | 87

Maybe this story from the Toronto Star will help explain why so many people are dying:

"Three of the largest for-profit nursing home operators in Ontario, which have had disproportionately high numbers of COVID-19 cases and deaths, have together paid out more than $1.5 billion in dividends to shareholders over the last decade, the Star has found.

"This massive sum does not include $138 million paid in executive compensation and $20 million in stock buybacks (a technique that can boost share prices), according to the financial reports of the province's three biggest publicly traded long-term-care home companies, Extendicare, Sienna Senior Living and Chartwell Retirement Residences.

"That's a total of more than $1.7 billion taken out of their businesses."

Beneath all the uninformed, pretentious anecdote swapping about stats and panaceas, the drivelling over whether or not there is a pandemic or whether Bill Gates, Soros or the KKK planned and executed it on behalf of haute finance, something very simple is taking place.
Capitalism, which devours people and turns lives into capital, having made a pandemic disease of the sort now surrounding us inevitable, is protecting itself. Its major fear is that if there are too many victims-cf The Black Death- the price of labour may rise to the extent that it impinges on the rate of profit. It dare not consider the possibility that the working class will organise itself to put an end to the system, as an alternative to doing what men have done throughout the history of epidemics- blaming everything on an angry deity or an elite such as the Illuminati, the Council for Foreign Affairs or bloggers corrupted by money.

[May 16, 2020] Tucker Susan Rice and the origins of the Russia investigation

May 16, 2020 | www.youtube.com

Ed , 4 days ago (edited)

Farkas; "I'll come on the show any time and explain what you're missing."

Tucker: "You're invited on tonight."

Farkas: "Tonight? Oh, I can't make it tonight. Got a million other things to do. I'd come on any other time... But tonight?"

[May 16, 2020] Tucker Adam Schiff should resign

Highly recommended!
This act of sedition goes as high as (or as low as) Obama himself.
Notable quotes:
"... He should do more than resign. He should be prosecuted for his role in an attempted coup. Schiff for prisoner 2020. ..."
"... There's no willpower in the house to take action against him. ..."
May 16, 2020 | www.youtube.com

warchant59 , 1 week ago

He should do more than resign. He should be prosecuted for his role in an attempted coup. Schiff for prisoner 2020.

Shannon Moore , 2 days ago

Schiff probably practice his lies in his mirror every morning so he can convince himself of Russian interference. Biggest liar in America Adam Schifty schiff. Needs to be arrested immediately for treason and lying under oath. But as usual nothing will happen. These people are above the law. And are untouchable. Its enough to frustrate the hell out of normal sain Americans. 4 more years of Donald Trump

D LE , 3 days ago

Every person that went on television and knowingly lied should be tried for treason , sedition and attempted over throw of Trumps presidency.

TheFoolinthe rainn , 3 days ago

Folks need to take a much closer look at your own state legislature, district attorney, prosecutors, public defenders, social workers... especially your own town councils and school boards. They're stealing your lives and children at the Grassroots local level.

Norita Sanders , 5 days ago

Bill and Hillary Clinton sold the U.S. out years ago with the North American free trade agreement. And obama finished us off during g his last term.

CAPT. RICK ALLEN , 2 days ago

They should throw Schiff in jail and then give everything he owns to his victims who lost everything.

Joe Merkel , 1 day ago

Schiff absolutely SHOULD resign but he won't. Not only will he not but he'll cheat and win re-election along with his mom, Nancy Pelosi.

Tim Coleman , 3 days ago

Adam Schiff is not resigning. He's doubling down yet again! If you "want" him to resign, you need to understand he's staying in office until voted out. There's no willpower in the house to take action against him.

[May 16, 2020] Reopening Isn't only about Reopening -- It's also about forcefully removing people from unemployment insurance by Peter Dorman

May 16, 2020 | www.nakedcapitalism.com

By Peter Dorman, professor of economics at The Evergreen State College. Originally published at Econospeak

Donald Trump, cheering on his "warriors" who demand that states lift their lockdown and distancing orders (where they have them), would have you believe this is about bringing the economy back to life so ordinary people can get their jobs and normal lives back. Elitist liberals who work from home and have country estates to retreat to don't care, but "real" people do.

The reality is different. The shuttering of stores, restaurants, hotels and workplaces didn't begin with government orders and won't end with them. If the rate of new infection and death is too high, a lot of people won't go along. Not everyone, but enough to make a huge economic difference. Ask any small business owner what it would mean for demand to drop by 25-50%. Lifting government orders won't magically restore the economic conditions of mid-winter. So what's it about? Even as it makes a big PR show of supporting state by state "liberation" in America, the Trump administration is advising state governments on how to remove workers from unemployment insurance once orders are lifted. Without government directives, employers can demand workers show up, and if they refuse they no longer qualify. And why might workers refuse? Perhaps because their workplaces are still unsafe and they have vulnerable family members they want to keep from getting infected? Not good enough -- once the state has been "liberated".

How should we respond to this travesty? First, of course, by telling the truth that an anti-worker, anti-human campaign is being conducted under the guise of defending workers. If the Democrats weren't themselves such a tool of business interests we might hear that narrative from them, but the rest of us are free to speak out and should start doing it, loudly, wherever we can.

Second, one of the laws of the land is the Occupational Safety and Health Act of 1970, which gives workers the right to refuse imminently hazardous work. This hasn't been used very often, nor is there much case law around it, but the current pandemic is a good reason to pull it out of storage.

If there are public interest law firms looking for something useful to do during distancing, they could advertise their willingness to defend workers who need to stay home until work is safe -- while still getting their paycheck. If employers thought the choice was between public support for workers sitting out the pandemic or their support for them we might hear less about "liberation".


none , May 14, 2020 at 10:30 am

They want to throw people off of unemployment while using the virus threat to stop any serious protests against that. It is literally biological warfare against working people. Same class war as before, but now with CBW.

Rod , May 14, 2020 at 10:47 am

Taught it for years. This is the biggest net and is the # 1 Cited Violation for 1910/1926 and MSHA–ever.

OSHA 654 5(a)1 The General Duty Clause.

OSHA Laws & Regulations OSH Act of 1970
OSH Act of 1970
Table of Contents
General Duty Clause
Complete OSH Act Version ("All-in-One")
SEC.
5.
Duties
(a)
Each employer --
(1)
29 USC 654
shall furnish to each of his employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees;
(2)
shall comply with occupational safety and health standards promulgated under this Act.
(b)
Each employee shall comply with occupational safety and health standards and all rules, regulations, and orders issued pursuant to this Act which are applicable to his own actions and conduct.

And 'Recognized' totes a lot of water.

Rod , May 14, 2020 at 10:53 am

Quick Take –Two way street.
Employers mus t mitigate hazards. Employees must comply with mitigation.
No Employer Mitigation=Breaking the Law=No Employee requirement to work in Unsafe Conditions.

L , May 14, 2020 at 11:16 am

"Lifting all boats" was always a lie. It was simply a way to sell trickle down by claiming that the objectively observable inequality it produced would somehow help everyone, eventually, sort of. There was not and has never been a plan by the Conservative Movement to lift all boats. Only a plan to feign interest in doing so.

Librarian Guy , May 15, 2020 at 12:02 pm

I agree with most of your comment except the "smarter" part.

They don't seem smart to me, they openly plunder and loot and spit in the populace's faces. They don't even pretend to believe in or work for a "common good" anymore, really. That is the story of the 21st Century in the US, starting with Baby Bush II. (Okay, I get that the Obama crew seemed "smart" or sophisticated to the PMC and comfortable liberals, but how smart were they if they led to the open Kleptocratic Disruption of Trumpism and the God Emperor?)

What the Elites have that the proles don't is in-group solidarity. (And a captured Media establishment.) They protect their own, while the hoi polloi fight one another for scraps.

Hoppy , May 14, 2020 at 12:54 pm

What is the death rate among the working age population?

Seem like a tough hill to die on given the curve has flattened, hospitals are not overflowing, and the economy is teetering on the edge of depression.

No one has a vaccine, this isn't going away any time soon. It's time to focus on protecting the most vulnerable instead of pretending this effects everyone equally.

Allow states to cut benefits? Come on, UI benefits are taxed for pete's sake. 'Available to work' basically means you have start at 8am the next day which is doesn't align with any reality of hiring except in low end service sector jobs.

campbeln , May 14, 2020 at 3:25 pm

> and the economy is teetering on the edge of depression

This was baked in the cake already, COVID was simply the spark that ignited all that dead wood on the forest floor.

cripes , May 15, 2020 at 12:16 am

campbeln:

Yes.

I thought the quiet transfer of trillions in helicopter money to the banksters in the last half of 2019, way before the covid craze was telling.

How convenient.

Wally , May 14, 2020 at 1:49 pm

The other really significant thing is that 're-opening' doesn't necessarily mean returning to business. For example, Musk insists on re-opening Tesla the assumption being that sales are there to be had if they re-open. But if not no sales, no need for employees back down the drain we go.
Same for restaurants. retail, hotels, transit and white collar jobs – attorneys, architects, CPAs

DHG , May 14, 2020 at 5:48 pm

Yup, the smart and shrewd will conceal themselves as much as possible and live, the stupid will rush out and most likely die.

JBird4049 , May 15, 2020 at 1:20 am

The poorest and the most desperate actually. Some people still have not received any money from the state or federal governments. The quarantine started about two months ago. So no job, no income, no money, and no joke. No matter how shrewd or smart you are sometimes you are not making the decisions. Reality makes them for you.

KFritz , May 14, 2020 at 3:24 pm

There's another possible reason to reopen. If the country officially reopens, there's no need for any more federal stimulus!

campbeln , May 14, 2020 at 3:26 pm

Bankers got their TRILLIONS?

Pack it up, boys! We're done here.

J.k , May 14, 2020 at 5:06 pm

Well till the markets crashes again and they need to save the assets of the wealthiest.

I just got a text from a buddy who is an electrician. His company just told him they are not expecting to take any major work till second quarter of next year. They will only be taking emergency calls. This is in Chicago.

LawnDart , May 14, 2020 at 6:28 pm

Your buddy might be able to use this link:

https://wepoweramerica.org/hotjobs.cgi

Granted, it's a union site, but one point that they make is how union saturation raises the wages for all workers within a given region.

In Appalachia, I was offered $15hr. to work as an electrician. In Chicagoland, starting wages were close to or more than double that. Guess where I went in order to establish a salary history? And no, the cost of living is really not too different between those two places, but opportunities sure were.

(moderators: in response to an "Eat the Rich!" comment, I posted a link with recipes: I apologize for this. Admittedly, it was in poor taste.)

[May 15, 2020] US Unemployment Update

Notable quotes:
"... @apenultimate ..."
May 15, 2020 | caucus99percent.com

apenultimate on Thu, 05/14/2020 - 9:50am The past week's unemployment claims came out today, and add another 2.98 million to the pile. This brings total unemployment claims for the past 8 weeks (two months or so) to 36.5 million.

Determining unemployment percentages depends on what data you use. The Bureau of Labor Statistics (BLS) shows the employment numbers for the United States in August 2019 as ~157 million ( https://www.bls.gov/cps/cpsaat08.htm ). Admittedly, that's not March 2020 statistics, but employment numbers would not change all that much in half of a year.

The St. Louis Federal Reserve has a different set of statistics that show 205.5 million Americans employed in March 2020 ( https://fred.stlouisfed.org/series/LFWA64TTUSM647S ). (They show the August 2019 period with employment at 206 million.)

Why the huge difference? I have no idea. But going forward, I'll use both to determine unemployment numbers. Remember that in early March 2020, unemployment was already around 3%.

Using the BLS statistics, we get an unemployment rate of 23.16% for the past 8 weeks. Add on the previous 3% of people unemployed, and you reach 26.16% unemployment.

Using the St. Louis Fed statistics, we get an unemployment rate of 17.76% for the past 8 weeks. Add on the previous 3% of people unemployed, and you reach 20.76% unemployment.

The peak rate of unemployment during The Great Depression was 24.9%. The peak rate of unemployment during the the Great Recession in 2008 was 10%.

According to BLS statistics, we are already greater than Great Depression unemployment numbers.

According to the St. Louis Fed, we are already more than double Great Recession numbers and only about 4 percentage points away from Great Depression peaks.

The Labor Department last week reported April unemployment for the United states at 14.7%, but this according to their own admission was undercounting the real rates. Be careful of any numbers coming out of the mainstream media or government sources.

https://www.sfchronicle.com/business/article/Coronavirus-job-loss-Weekly...

Some jobs will definitely come back, but many will not. For example, JC Penny's reported that they are permanently closing 200 of their 850 nationwide stores. Those jobs will not be coming back. There are weekly reports of many cafes, restaurants, and small businesses shuttering their doors for good. Those jobs will not be coming back.

Even for the companies that do not shut down, it may be a long haul before economic activity has picked up enough to bring workers back. In most cases, it will not be a quick recovery.

Hang on for a very rough ride. 2 users have voted.

ggersh on Thu, 05/14/2020 - 10:52am
This is the place to go for stats

@apenultimate and like everything else our govt does, the unemployment number is just pure BS

http://www.shadowstats.com/article/csfu1435

• Headline April 2020 Unemployment Really Was Around 20%, Not 15%
• Bureau of Labor Statistics Disclosed Erroneous Unemployment Surveying for a Second Month
• About 7.5 Million People in the April Household Survey Were Misclassified as Employed Instead of Unemployed, per the BLS
• Headline April U.3 Unemployment at 14.7%, Should Have Been 19.5%
• The BLS Had Disclosed the Same Surveying Error Last Month; Where Headline March 2020 U.3 Was 4.4%, It Should Have Been 5.3%
• Per the BLS, Headline Data Will Not Be Corrected: "To maintain data integrity, no ad hoc actions are taken to reclassify survey responses."
• Nonetheless, Headline April Unemployment Soared to Historic Highs from March: U.3 from 4.4% to 14.7%, U.6 from 8.7% to 22.8% and ShadowStats from 22.9% to 35.4%
• More Realistic, Those Same Unemployment Numbers, Corrected: U.3 from 5.3 % to 19.5%, U.6 from 9.6% to 27.7% and ShadowStats from 23.7% to 39.6%
• April 2020 Payrolls Collapsed by an Unprecedented 20.5 Million Jobs
• Annual Growth in April 2020 Money Supply Measures Soared to Historic Highs
• U.S. Economic Activity Has Collapsed to Great Depression Levels, with the Federal Reserve Creating Unlimited Money

apenultimate on Thu, 05/14/2020 - 10:58am
Nice

@ggersh

Thanks for that. Seems like a large percentage of the difference is that BLS says 7.5 million were mis-classified as employed.

At the very least, it seems the BLS does a bit of correcting, whereas the Fed does not.

gulfgal98 on Thu, 05/14/2020 - 1:13pm
Federal Reserve Chair Jerome Powell

stated in the very beginning of this video, that of people who were employed in February of this year, nearly 40% of those earning $40,000 or less have become unemployed. This is an unprecedented human tragedy that Congress in all their bailouts now totalling about $8 Trillion have seen fit to throw a one time pittance of $1,200. With mountains of cash going to corporations and lobbyists, Congress insultingly gave real suffering Americans a few pennies and in effect told them that their lives do not matter to Washington DC.

//www.youtube.com/embed/AROXMTDOkjw?modestbranding=0&html5=1&rel=0&autoplay=0&wmode=opaque&loop=0&controls=1&autohide=0&showinfo=0&theme=dark&color=red&enablejsapi=0

[May 14, 2020] Tucker on Obamagate

May 14, 2020 | thenewkremlinstooge.wordpress.com

Patient Observer May 11, 2020 at 8:50 am

Don't fuck with the Tuck:

https://www.youtube.com/embed/fHh19Baj_pM?version=3&rel=1&fs=1&autohide=2&showsearch=0&showinfo=1&iv_load_policy=1&wmode=transparent

The guy is on fire. Per Carlson, Obama orchestrated the Russian collusion propaganda. I suspect that the lovely Ms. Hilary was a conspirator as well.

Carlson has the number 1 television news show with 4.56 million viewers on average.

https://www.nytimes.com/svc/oembed/html/?url=https%3A%2F%2Fwww.nytimes.com%2F2020%2F04%2F28%2Fbusiness%2Fmedia%2Fvirus-tucker-carlson-sean-hannity-fox-ratings.html

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Mark Chapman May 11, 2020 at 9:54 am
Absolutely remarkable; in fact, 'stunning', as he uses it, is not too much of a stretch. The 'liberal elites' just go right on lying even though the sworn testimony of FBI interviewers is available for anyone to read, as well as the chilling manipulations of Strozk and Page, both of whom should be in prison and perhaps will be. And that fucker Schiff should swing. I can't believe the transformation of Carlson from Bush shill to the reincarnation of Edward R. Murrow. He makes this case so compellingly that nobody could watch that clip and not believe that Flynn was railroaded from the outset. And what were they allegedly going to jail Flynn's son for? Does anyone know? Were they just going to make something up? That is terrifying, and almost argues for the disbanding of the FBI, although it demonstrably still contains honest agents – as Carlson asks rhetorically, how many times have they done this already, and gotten away with it?

It's hard to imagine anyone would vote Democrat now.

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Cortes May 11, 2020 at 10:10 am
The son was being lined up for prosecution for alleged FARA violations regarding work on Turkey, I think. The son was working with the General.

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Mark Chapman May 11, 2020 at 11:45 am
Couldn't have been too much of a crime, if they offered to let him go in exchange for Flynn pleading guilty to lying. Actually, you'd kind of think their business was prosecuting crimes whoever committed them, and that offering to excuse a crime in exchange for a guilty plea is .kind of a crime.

Man, they have to clean house at the FBI. And there probably are several other organizations that need it, too. Not the political culling based on ideology that was a feature of the Bush White House, but the crowd that's in now just cannot be allowed to get off with nothing.

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uncle tungsten May 12, 2020 at 2:55 am
Greetings Mark and all, I am a new arrival as Jen suggested the company is fine here for barflies to ponder the world. Can I surmise that if Flynn and son were the FBI targets for nefarious business dealings then surely Biden and son fall in to that same category. After all Biden and son filched millions after arranging a USA loan of $1Billion to Ukraine and then did it again after the IMF loaned a few million more. Carpetbagging and its modern day practice is a crime in the USA last I looked.

If that conspicuous bias isn't enough cause to dismember the FBI then consider the Uranium One deal that Hillary Clinton and family set up or perhaps the Debbie Wasserman Shultz fostering the Awan family spy and blackmail ring.

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Mark Chapman May 12, 2020 at 9:37 am
Good day, Uncle, and welcome! For some reason I can't fathom, the Democrats seem to own or control all the 'respectable' media in the USA. FOX News is an exception, and has been a mouthpiece for the Republicans since its inception. But the Democrats control the New York Times and the Washington Post, which together represent the bulk of American public feeling to foreigners, and probably to the domestic audience as well. They are extremely active on conflicts between the two parties, ensuring the Democratic perspective gets put forward in calm, reasonable why-wouldn't-a-sensible-person-think-this-way manner. At the same time they cast horrific aspersions at the Republicans. Not that either are much good; but the news coverage is very one-sided – the position of the Democrats on the sexual-assault furor over the Kavanaugh appointment compared with their wait-and-see attitude to very similar accusations against Biden is a classic example.

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rkka May 13, 2020 at 9:33 am
Mark,

I don't think its the Democrats that control the NYT &WP, so much as plutocrats. They're also the ones who fund both the Democrats & the Republicans. The only significant difference between the parties is largely in the arena of the social "culture war" issues. But on the issues plutocrats care about, like economic policy & foreign policy, the differences are shades of grey, rather than actual distinctions.

Just remember the coverage of both papers in the run up to George W Shrub's catastrophic Iraq war. They're stenographers, not journalists.

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Mark Chapman May 13, 2020 at 11:12 am
That may well be true, but the NYT and WP historically champion the Democrats, endorse the Democratic candidate for president, and pander to Democratic issues and projects. The Wall Street Journal is the traditional Republican print outlet, and there might be others but I don't know them. CNN is overwhelmingly and weepily Democratic in its content – Wolf Blitzer's eyes nearly roll back in his head with ecstasy whenever he mentions Saint Hillary – while FOX News is Repubican to the bone and openly contemptuous of liberals. It could certainly be, on reflection probably is, that the same cabal of corporatists control them all, and a fine joke they must think it. And I certainly and emphatically agree there is almost no difference between the parties in execution of external policy.

[May 14, 2020] 'I Didn't Know Anything': Former Obama Official Criticized After Classified Testimony Contradicts Her Public Statements by Jonathan Turley

Notable quotes:
"... One of the most embarrassing is the testimony of Evelyn Farkas, a former Obama Administration official who was widely quoted in her plea to Congress to gather the evidence that she knew was found in by the Obama Administration. In her testimony under oath Farkas repeatedly stated that she knew of no such evidence of collusion. ..."
"... Farkas, who served as the deputy assistant secretary of Defense for Russia/Ukraine/Eurasia, was widely quoted when she said on MSNBC in 2017 that she feared that evidence she knew about would be destroyed by the Trump Administration. She stated: ..."
"... ...was urging my former colleagues, and, frankly speaking, the people on the Hill Get as much information as you can, get as much intelligence as you can, before President Obama leaves the administration, because I had a fear that somehow that information would disappear with the senior people that left. So it would be hidden away in the bureaucracy . . . the Trump folks, if they found out how we knew what we knew about their, the staff, the Trump staff's dealing with Russians, that they would try to compromise those sources and methods, meaning we would no longer have access to that intelligence. So I became very worried, because not enough was coming out into the open, and I knew that there was more. ..."
"... 'You also didn't know whether or not anybody in the Trump campaign had colluded with Russia, did you?' Gowdy later asked, getting to the point. ..."
"... "I didn't," Farkas responded. ..."
May 11, 2020 | ronpaulinstitute.org

The long-delayed release of testimony from the House Intelligence Committee has proved embarrassing for a variety of former Obama officials who have been extensively quoted on the allegedly strong evidence of collusion by the Trump campaign and the Russians. Figures like James Clapper, who is a CNN expert, long indicated hat the evidence from the Obama Administration was strong and alarming. However, in testimony, Clapper denied seeing any such evidence .

One of the most embarrassing is the testimony of Evelyn Farkas, a former Obama Administration official who was widely quoted in her plea to Congress to gather the evidence that she knew was found in by the Obama Administration. In her testimony under oath Farkas repeatedly stated that she knew of no such evidence of collusion.

Farkas, who served as the deputy assistant secretary of Defense for Russia/Ukraine/Eurasia, was widely quoted when she said on MSNBC in 2017 that she feared that evidence she knew about would be destroyed by the Trump Administration. She stated:

...was urging my former colleagues, and, frankly speaking, the people on the Hill Get as much information as you can, get as much intelligence as you can, before President Obama leaves the administration, because I had a fear that somehow that information would disappear with the senior people that left. So it would be hidden away in the bureaucracy . . . the Trump folks, if they found out how we knew what we knew about their, the staff, the Trump staff's dealing with Russians, that they would try to compromise those sources and methods, meaning we would no longer have access to that intelligence. So I became very worried, because not enough was coming out into the open, and I knew that there was more.
MSNBC never seriously questioned the statements despite the fact that Farkas left the Obama Administration in 2015 before any such investigation could have occurred. As we have seen before, the factual and legal basis for such statements are largely immaterial in the age of echo journalism. The statement fit the narrative even if it lacked any plausible basis.

Not surprisingly, the House Intelligence Committee was eager to have Farkas share all that she stated she "knew about ["the Trump folks"], their staff, the Trump's staff's dealing with Russian" and wanted to get "into the open." After all, she told MSNBC that "I knew that there was more."

She was finally put under oath in the closed classified sessions and there was nothing but classified crickets. Farkas was repeatedly asked to share that information that electrified the MSNBC hosts and audience. She repeatedly denied any such knowledge, telling then Rep. Trey Gowdy (R, S.C.), "I didn't know anything."

Gowdy noted that Farkas left the Obama administration in 2015 and asked "Then how did you know?" She repeated again "I didn't know anything."

Gowdy then asked "Well, then why would you say, we knew?"

He also asked:

'You also didn't know whether or not anybody in the Trump campaign had colluded with Russia, did you?' Gowdy later asked, getting to the point.
"I didn't," Farkas responded.

MSNBC has said nothing about its prior headline story being untrue. Indeed, the media has barely acknowledged that the new documents reinforce that there was never any evidence of collusion and ultimately the allegations were rejected by the Special Counsel, Congress, and inspectors general.

For her part, Farkas has moved on. She is running for Congress . She is still citing her role in raising "the alarm" about Russian collusion:

'fter I left the Obama administration, I campaigned to help elect Secretary Clinton as our next President. When Russians interfered in that election, I was among the first to sound the alarm and urge Congress to take action. And I haven't let up since then.
She was indeed one of the first but it proved to be a false alarm based on nonexistent knowledge. Does that matter anymore?

Reprinted with permission from JonathanTurley.org .


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