At this point the entire advanced world is doing exactly what basic macroeconomics says it shouldn’t be doing: slashing spending in the face of high unemployment, slow growth, and a liquidity trap. It’s a global 1937. And if the result is another recession, the witch-doctors will just demand more bleeding.Robert Reich:
Not only are 25 million unemployed or underemployed, but American companies continue to cut wages and benefits. The median wage is still dropping, adjusted for inflation. High unemployment has given employers extra bargaining leverage to wring out wage concessions.
Meanwhile, the American economy has all but stopped growing -- in large part because consumers (whose spending is 70 percent of GDP) are also workers whose jobs and wages are under assault.This situation gives the lie to libertarian orthodoxy. Labor is the true Atlas; those who hold jobs create jobs.
The capitalists are not "job creators," to use the term favored by so many current propagandists. They are, at best, "necessary opportunists." The Wall Street finance capitalists aren't even that: They are unnecessary opportunists.
The true Atlas has not shrugged; he has been raped. Repeatedly. He lies exhausted on the ground, blood seeping out of his anus.
That ugly image illustrates what the Wall Streeters have done to us.
Social Security and Medicare did not create our current problems; neither did unions, regulations, environmental laws, welfare -- nor even the deficit. Alas, the vampiric wealthy are using the crisis they created to force false ideas into our collective cranium.
The truth of the matter is simple: Our economy has stalled because of low demand.
Our economy has stalled because so many people are out of work. Our economy has stalled because the capitalists keep insisting that American wages must descend to Third World levels.
When wages go down, people buy only what they need, not what they want. Economic growth depends on working class people buying a whole bunch of crap they don't really need.
When jobs and wages decrease, demand for those inessential consumer goods decreases. This leads to more layoffs and more pressure to cut wages even further. It's an ever-downward spiral. Don't kid yourself: The magic of the market will not cause the spiral to head upwards again; anyone who makes that case has been paid to peddle myths. As long as Mr. Average Worker has less money in his wallet to spend, the economy is going to go down, down, down.
These facts are obvious. These facts used to be universally understood.
Alas, the professions of economics and journalism have been debauched. Economists understand that they can get ahead only if they tell the wealthy what they want to hear, not if they tell the truth.
Imagine the ultimate vampire novel -- a dystopian story in which the vampires have taken over the world. The vampires are haughty and condescending; they consider themselves inherently superior.
And then they run out of donors.
Because there's no more blood, the vampires start to die -- victims of their own success.
As things fall apart, the vampires fund their own sanguinary versions of Fox News and the CATO Institute. They mount a propaganda campaign designed to convince both themselves and the donors that the problem was caused by the donors, not by the vampires. The propaganda campaign is so effective that even the donors start to believe it.
But to what end? Who is kidding whom? Even the best propaganda campaign can't change the reality of the situation.
Vampire survival depends on keeping the donor supply healthy and growing. Paradoxically, the vampires will die if they gorge themselves on too much blood.
Here's where the metaphor breaks down. It's not so easy to take blood out of a vampire and inject it into the veins of the donors. (In some versions of the vampire mythos, that process would only create more vampires.)
But it is easy to take money from the ueber-wealthy -- from the vampiric affluent who have socked away most of the world's wealth into offshore bank accounts. This can be done via taxes.
We must raise taxes on the wealthy to what they were under Reagan, and then we must use that money to create jobs. Not any other purpose: Jobs, jobs, jobs. Not welfare, not unemployment benefits, not tax cuts. Jobs, jobs, jobs.
Once the workers are working again, once they are spending again, the capitalists -- the necessary opportunists -- can come up with creative new ways to convince working people to buy goods and services that they want but do not need. And things will be back to normal.
10 comments:
If one takes a thought and carries it to its very end....Canetti and Baudrillard especialy do this. IMarx did this for capitalism but his logic was incorrect. Capital has morphed into speculation, global capitalism. Fictionalized by the clairvoyant writer, DeLillo in Cosmopolis, we see the results somewhere in the near future. David Foster Wallace also wrote like this but not as pared down as DeLillo.
Reagan opened the floodgates with deregulation. Of course small business has many regulations to cripple them, and were never affected, but speculative capital started to fly. Around the world. Globally, numbers on a screen. We are in the Virtual Reality of Money.
All your well reasoned writing and arguments fall within capitalism that waits to absorb you. Marcuse is very clear on this with his pac-man metaphor. Michael Moore is clear when he talks about the capitalistic distributors that make money from his films that tear the living hell out of them. So what. They make money from him and nothing changes, and they know that, and we feel justified to go on thinking the way we think and feel about this mess, and nothing changes.
Baudrillard and proposes pushing the system to its limits and beyond so it implodes.
Zizek constantly takes almost any Event and shows it up as a mask hiding something else.
The question for all of us, and I mean susie , rd etc is how to be effective intellectual terrorists. I am trying in my small space.
Please follow me. - Jean Baudrillard
Could you please adjust the preferences for me so I can post here without having to wait for your moderation? Please?
seymour, it isn't possible to adjust privileges for individual commenters. Blogger doesn't work like other systems.
I used to allow all comments through, but the madness of 2008 made that impossible. Then there is the spam problem -- people using comments to sell viagra and other stuff. These days, I receive at least two spam comments for every "real" one.
I dont think its a classic Keynesian deficient demand problem. I think it is the combination of massive indebtedness and massive income inequality. If I am right, pushing in extra cash on its own will just cause inflation of basic commodities and luxuries. What you would have to do is write off household debt. Debt relief for the consumer and significantly greater progressivity of the tax system. Otherwise you will lose a decade or two to the slow bleed of debt deflation.
If an economy is owned by the few, then the labour of the many does not create both income and product in proportion. Instead the output is produced but cannot be bought by most people. This is the essence of a debt burden. We say to the indebted, "you must work to pay us". They work for the holders of the debt, and cannot consumer all of their output. The holders of the debt cannot consume it either (they have too much). So instead it piles up uselessly, in boats and second homes.
The reason why its hard to draw a distinction between finance capital and merchant capitalism is because most distinctions would be arbitrary. Trade finance? Is that finance or industry? Giving customers credit? Delayed payment terms? Credit cards?
However if you dont regulate banks properly, then you have given away the right to create new money without any controls. This is absurd. How can one group in society have the right to print their own money? You need heavy finance regulation because of the scope for anti-social behaviour with extreme consequences.
Harry
Excellent analysis with vivid imagery. If you are on the East coast, stay safe from the storm.
djmm
I was shocked tonight returning from a fishing trip when one of my fellows (a conservative) said "We're gonna have to have to have another civil war and kill all those rich assholes."
A second GOPer added, "And eat them."
I spent the rest of the ride egging them on.
The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who's Who of Goldman Sachs graduates. - Matt Taibbi
http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405
Once upon a time we made things here and sold them to each other and the rest of the world. We were doing very well because Europe and Asia were recovering from the Second World War. We were doing so well that the suits in the front offices decided we could sell any low quality crap because we were the only show in town. Crappy rust bucket land yachts were one of the symptoms of the corporate culture infecting US industry. That and running factories full tilt with no plans for replacing the machines that made the products. The problems were are facing now began in the late 1950's.
The suits decided that making money by selling debt was cheaper than making goods because they would have to replace the worn out War Production Board machines they got for free and it all began. They figured that by the time we got to where we are today they would be cashed out and living on gated estates, just like the Robber Barons of old.
I have an Erie Railroad tee shirt that has the slogan Serving the Heart of Industrial America that I can't wear anymore because those MBA suits ripped that heart out and sent it overseas.
The whole time the suits were dismantling our industrial infrastructure they were blaming it on greedy union members with the help of the GOP and the stupid republican voters bought into that canard. If you believe in Karma then republican voters are getting what they deserve (along with the O-bots), lost jobs and foreclosed homes too bad they are taking us with them.
If we do have that civil war it shouldn't be the rich but all the MBA suits that go up against the wall.
I agree with pretty much the whole of this post, certainly including the political demands, but I think you may be pushing under-consumptionism a bit too far.
Capitalist growth doesn't just depend on demand; or more exactly, capitalist growth and increasing demand depend on each other. The essential movement is the snowballing of value, and this depends on the technological revolutionisation of the means of production, which for several decades has depended on both productivity growth and - which has become even more important more recently - the increasing intensity of labour.
Capitalism's anti-human vampiric 'logic' is leading it towards a mass cull of the lower orders. They simply don't need so many labour-hours or so many of us any more, and we eat too much, and there ain't no point, from their fundamentally parasitic viewpoint, in keeping so many of us alive just to produce stuff - even crap - for ourselves, if not so many of us are required to produce surplus value in this given stage of capitalism. They only allowed consumerism - i.e. the actual production and purchase of loads of consumer goods by the 'average' family - because it was in their interests, which are primarily in the continued production and realisation of surplus value.
Keynes woke economists up to the fact that labour wasn't like potatoes where supply and demand were concerned (an obvious fact which any working class person could have told him), but he knew that Keynesianism - deficit financing, Fordism being a better term - wasn't for the long term.
You are right that the vampires are running out of blood. This is the fall in the rate of profit which Marx predicted. The countervailing tendencies have taken a very long time to play out. End game? If capitalism lasts, then for many of us, yes, although the plan is for technofascism to flourish...
A large part of the working class doesn't produce any surplus value. This covers not just the unemployed but also millions of office workers. (The rise and rise of office work underlines the insanity of capitalism, but also shows how in this labour-intensive part of the economy, computerisation hasn't helped increase productivity and intensity much, given the sheer numbers of workers employed). Why have they kept us alive? Part of it's been to do with the reserve army of labour, but that's pretty much going out of the window. Another part of the reason is cultural. A mass extermination campaign would upset those whom they wanted to keep alive to produce surplus value. This is changing.
Anyone who doesn't see the increasing 'dehumanisation' of the culture has their hands in front of their eyes. Just to take one example, during the Vietnam war there wasn't open support in the US mass media for torture. There is now. (911 buried 'Vietnam syndrome'. Cui prodest?)
The push for a cull explains the importance in Rockefeller-funded academe of 'population studies'. They know what they're doing when they cut state spending in a time of depression. Most capitalist factions and their political manifestations would have abhorred this until recently. Keynes was no social democrat even. Nowadays most support it. There is a consensus in most of the 'political class'...
On reflection, I think I bent the stick too far in the other direction. It's easy to forget how much hatred figures such as FDR and Harold Wilson still induce in parts of the inherited-wealth right-wing bourgeoisie.
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