Tag Archives: capitalism

End capitalism, build a green economy

19 Apr

For capital in Canada and the United States, the sudden drop in oil prices is a disaster. For humankind it is a signal that fossil fuel use must decline.

Thirty years ago scientists pointed out that the burning of fossil fuels was causing global warming. To prevent catastrophic climate change, carbon dioxide levels in the atmosphere would have to be kept below 350 parts per million, a level that could be maintained only if three-quarters of the known reserves of conventional fossil fuels were left in the ground.

Corporate capitalism in Canada responded by investing tens of billions in tar sands, fracking, and oil pipelines. U.S. capital invested even more in off-shore drilling and fracking. Governments provided fossil fuel corporations with tax breaks and subsidies. By 2014 atmospheric carbon dioxide levels over North America on some days exceeded 400 parts per million.

In the 1980s when science first drew attention to global warming, it was to be expected that some would claim this was merely an idea. Now, the hypothesis of human-caused climate change has been tested and measured. Increases in global temperature continue to be historically unprecedented.

As predicted, glaciers and polar ice caps are shrinking. Sea levels are rising. Droughts and floods have become more frequent. Storms, rainfall, and hurricanes have become more severe. Carbon dioxide raining down from the atmosphere increases ocean acidity; crustaceans from coral reefs to microorganisms are losing the capacity to reproduce, undermining the ocean ecosystems on which all sea life depend.

Climate change deniers may have been eased to the fringes, but corporate capitalism continues to ignore the impact of carbon emissions. For capital, profits from the exploration, development, and transportation of coal, oil, and natural gas are just too important. Profits in the automobile industry, air travel, agribusiness, and global trade depend on plentiful fossil fuels. Major financial institutions are heavily invested, directly and indirectly, in fossil fuels. In a time when most global markets for consumer and producer goods are stagnant and low interest rates have reduced the base return on capital, capital generally is dependent on profits from fossil fuels.

Unwilling to reduce dependence on fossil fuels, corporate interests in the United States and Canada insist that green energy is not a realistic alternative. They’re wrong, and at this point they probably know it.

To undermine green energy expansion, they have persuaded federal governments to impose punitive tariffs on solar panels made abroad. They have persuaded states, counties, and utilities to deny local solar producers access to grids. Meanwhile, in China, India, Africa, Brazil, and even in some U.S. states, wind and solar power is a growing source of electricity. Electricity from wind power will double by the end of this decade. With present technology solar power alone could replace all the electricity now provided by fossil fuels at no additional cost. As investments on wind and solar increase, the technology will advance, further reducing the cost and efficiency of green power.

To drive a wedge between industrial workers and environmentalists, corporate shills present green power as touchy-feely, less industrial, less masculine than energy from fossil fuels. Yes, solar and wind are cutting-edge technologies. Many highly educated professional and technical specialists will be required in basic research, development, and administration. Still, most employees will be engaged in manufacturing, transportation, installation, and maintenance — traditional blue-collar occupations that can be equally done by men and women. Work will be widely dispersed in all regions. By boosting employment, income, and markets, the massive expenditures required to convert to green energy will end the austerity promoted by capitalist interests. Employment and income will rise. Markets will revive.

The shift to green energy, motivated by human well-being, will have to be pushed from below. Although capitalist interests now have a death grip on political agendas, people acting together for the common good can counter capitalist influence. We are the vast majority. Industrial and service workers, professionals and technical specialists, students, the unemployed, and pensioners all share a common interest in the continuation of the environments on which humankind depends. No more than 5 per cent depend on marginal increases in profits.

Strikes, protests, boycotts, and civil disobedience can help speed up the shift away from fossil fuels. Community-owned utilities, cooperatives, and local capital can take initiatives. Electoral mobilizations can push federal, provincial, and state governments to shift to green energy and to provide funding for public transportation. Cities could be reconfigured to make it practical for people to walk and cycle to employment, services, entertainment, and commerce. Publicly supported local food production could replace dependence on transnational corporate imports.

The funding required could in part come from excise taxes on fossil fuels, perhaps $50 a barrel, equivalent to the recent drop in the price of oil. Since capitalist profit is at the root of the problem, most of the revenues should come out of additional taxes on corporate income and private capital.

Al Engler

 

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Raise taxes on capital and the rich

24 Feb

In the 1940s, following decades of booms, busts, unemployment, disorder, wars and destruction, rigid free market policies were abandoned. Governments began to deliberately act to maintain employment and market demand. This shift was identified with J.M. Keynes, a prominent British economist and government adviser who had made the case that classical economics was wrong. Depressions, he wrote, were not caused by a decline in the supply of capital but by a fall in demand caused by declining wages and rising unemployment.

During Keynesian times, until the late 1970s, economies and employment grew steadily. Democracy came to mean that governments had a responsibility to protect and advance the interests of common people. Keynesian policies, including increased access to higher education, public health care and income support were funded by taxes on those with the means to pay. The marginal tax rate on the highest income was 80 per cent. Taxes on corporate income were 50 per cent and higher.

Humankind now faces global crises. Widening disparities in income, opportunities and control are provoking disorders, militarism and wars. Emissions of carbon dioxide from fossil fuels threaten the climates on which human well-being depends. Private capital, focused on short-term profits, systemically aggravates these problems. Prevailing ideology is now aggressively hostile to government action. Tax cuts for corporations and the super rich have reduced the public funds required.

Since 1980 taxes paid by corporations and the rich have been methodically reduced. During Keynesian times, the richest one per cent got ten per cent of total income. The richest one percent now gets twice as much, twenty percent. Ten per cent of total income has been transferred from public revenues to private capital.

Neoconservatives like Margaret Thatcher and Ronald Reagan claimed that giving capitalists more money and freeing corporations to maximize profits would be generally beneficial, trickling down to the masses. Instead disparities widened. Tax cuts not only provided private capital with more funds to invest; it gave the super rich more money to manipulate political agendas. Regulations on corporate finance and industry were weakened. Union rights were curtailed. Corporations were freed to move capital to countries with lower taxes, and jobs to places with lower wages. Real wages fell. Unemployment rose.

With consumer markets stagnant, investors awash in funds turned to speculation in stocks, bonds, futures and real estate, to derivatives, index funds, credit default swaps and collateralized debt obligations. Capital markets became casinos, adding little to real production. Gains for a few came out of the losses of many others.

Meanwhile as taxes on capital were reduced, public deficits and debt increased. Concerned that capital would lose value, the rich demanded austerity. Although governments were more than willing to spend more on prisons, intrusive surveillance, militarism and war, social programs and infrastructure spending were frozen and cut. Public assets were privatized. Here in Canada, while courts were confirming rights of indigenous people, governments used deficits as an excuse to disregard Treaty obligations.

Meanwhile, carbon emissions from the burning of fossil fuels continued to rise. In 1995 countries meeting at the Kyoto Conference agreed to voluntarily reduce carbon emissions. Science had concluded that carbon dioxide levels had to be kept below 350 parts per million. But corporate capitalism preoccupied with profits from existing industry did not act. Declining public revenues and corporate opposition prevented government action.

By 2014 carbon dioxide levels exceeded 400 parts per million.  If green energy had replaced two percent of fossil fuel energy each year since 1995, as the Kyoto Accord proposed, carbon emissions would already have been reduced by half. Instead, corporate capitalism responded by spending hundreds of millions to deny that carbon dioxide emissions were a problem. Hundreds of billions were spent to develop, produce and transport more fossil fuels.

Everyone not blinded by capitalist dogma or the prospects of immense profits now knows that fossil fuel emissions are melting polar ice caps and glaciers, raising sea levels, flooding coastal communities, acidifying oceans, and generating more frequent and more destructive weather events.

Now that denying climate change is no longer credible, capital simply disregards the threat, claiming that there is no technologically realistic alternative to energy from fossil fuels. Yes, the technology to efficiently store and distribute alternate energy on the scale required has yet to be developed. But the needed technologies would already be available if solar, wind, wave and geothermal power had received the investments, tax breaks and subsidies provided for offshore drilling, fracking, tar sands and oil pipelines.

Technology is not the problem.  With relatively small expenditures Denmark in 2014 got 40 percent of its electricity from wind power. Renewable energy, mostly solar, is providing Germany with 25 percent of its electricity. Solar power is providing China, India, Brazil, and African countries with expanding shares of electricity.

Capitalism is the problem. So long as major shareholders and top corporate executives are entitled to make major economic decisions in their private interests, capitalist profits will continue to trump employment, labor income and public services. Environmental costs will continue to be externalized—passed off to communities and future generations. Replacing capitalist title with human entitlement begins with deliberately transferring income from private capital to the public.

In his Capital in the Twenty-First Century, Thomas Piketty makes the case that corporation taxes should return to 1950s levels. Marginal tax rates on personal incomes over $500,000 should be raised to 80 percent. He proposes an annual tax of 0.1 percent of private wealth over half a million dollars rising in steps perhaps to 2 percent on wealth over three or five million dollars.  Homes are already taxed annually.  Why should stocks, bonds, and other wealth be excluded?  Piketty adds a progressive estate tax on inheritances over one million dollars and a tax of 0.1 percent on financial transactions. He argues that more transparency in income records and better statistics gathering would make it practical for countries to cooperate in preventing income and wealth from being hidden in offshore accounts.

Of course, the super rich will aggressively object. But nearly everyone else would gain. Taxing capital could provide local governments with funds to reduce disparities and expand social services. Public spending on green infrastructure would provide more employment and increase market demand. Public spending to reconfigure cities could make it practical for people to live their daily lives without cars. Public spending on solar, wind, wave and geothermal power and public transit would reduce carbon emissions and generate more jobs.

Al Engler

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Top 10 Ways to Save Ourselves From Global Warming

7 Oct

My fellow lobsters, we are being cooked.

I know some of you don’t believe it and others have come to the conclusion there is nothing we can do, but the simple truth is the gas has been turned on, the fire lit and the temperature is slowly rising. There is no significant disagreement amongst our lobster pot scientists about these basic facts. In fact the latest study argues the water is much hotter than previously thought. Our only way of avoiding the rolling boil is to come up with a plan to turn the gas off and then take the steps necessary to implement that strategy. But, as individuals we cannot claw our way to a solution. Lobsters of the world we must join together.

Here are 10 things we can do to start:

10. Read Naomi Klein’s new book This Changes Everything — Capitalism vs. the Climate. This is a great way to become informed about the problem and what to do about it. Klein offers a comprehensive, thoughtful, witty and sometimes personal analysis of how we can still save the planet, if enough people put their minds and bodies into the project. The book is an absolute must-read for every environmentalist and everyone who has ever challenged the status quo.

9. Help create and strengthen local food systems. Build and participate in self-sustaining regional economies. Demand governments get rid of “free trade” agreement language that prevents this or limits measures that would reduce global warming.

8. Escape the clutches of the private automobile. Walk, take public transit, ride a bike, join a car share and demand cities that thrive on human energy in a sustainable relationship with nature. Understand there is a better, healthier life waiting if we evolve beyond homo automotovis. Read Stop Signs — Cars and Capitalism on the Road to Economic, Social and Environmental Decay by Yves Engler and Bianca Mugyenyi, an entertaining and enlightening road trip through a car-crazy world.

7. Spread the word that human beings are part of nature and do not have dominion over it. Learn from aboriginal peoples around the world about our place in the environment.

6. Support alternative energy sources. We must quickly replace all carbon-based energy with alternatives, a project that is doable. The barrier is not technological but rather economic and political. The only reason burning fossil fuels is currently cheaper than wind, solar or geothermal is because the carbon-based fuel sector does not pay for the real cost of its emissions.

5. Assert the principle that polluters must pay for all the negative consequences of what they put into the environment. We must calculate the price of repairing the damage caused and add this to their cost of production. Not paying the true cost of production is, in effect, a subsidy. Ending that subsidy will leave most of the fossil fuel industry uneconomic.

4. Get off the consumption treadmill. Every time you think about acquiring more stuff or buying more services ask yourself these questions: Do we really need this? Is this good or bad for the environment? To answer these questions objectively we must understand and combat the marketing/advertising system that twists our emotions and desires to mould us into the sort of consumers that make the most profit for multinational corporations.

3. Elect and support governments that take global warming seriously. Without that we have little hope of success. To ensure that the governments we elect really do what is best for people and our planet rather than what is good for the rich and powerful, we must end the power of money to control politicians.

2. Work to change our current economic system, which is the ultimate source of the problem. We must construct an economy based on human need rather than capitalist greed. The foundation of this new economy must be an understanding that our most basic human need is a safe and healthy environment. To ensure that our economy works for the benefit of all it must be democratic and inclusive, rather than run by and for a wealthy minority.

1. Become part of a mass movement to make all of the above happen. We must come together to say no to any further expansion of carbon extraction. We must blockade the carbon industry into extinction. To succeed we must build a grand coalition of all those who are fighting for a better world. This means environmentalists finding common cause with the union movement, First Nations, poor people, poor nations, liberation movements, anti-capitalists, and with all those who do battle against the many forms of inequality.

Lobsters of the world unite, you have nothing to lose but the chains that keep you on the stove.

Gary Engler

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Top 10 ways we can build a better economic system

26 Aug

For the numerous readers who asked: “But what can we do?” after reading my Top 10 Reasons to Hate Capitalism:

  1. We can elect governments that represent people rather than corporations. This will require serious electoral reform and include laws to make it clear corporations are not people and therefore cannot participate in the political process. A government representing all the people would regulate corporations to ensure socially responsible behaviour and transform psychopathic capitalist monstrosities into democratic, social enterprises that benefit all.
  2. We can build communities and organizations that encourage solidarity, compassion and altruism. These will include worker, consumer, housing and producer cooperatives, as well as institutions of government. People must always remain vigilant, especially while capitalism continues to exist, about the pervasive power of greed to destroy these communities and organizations.
  3. We can promote and build a democratic economy in which social ownership replaces private ownership of communities’ means of livelihood. The people who work in them and the communities in which they are located should control economic enterprises.
  4. Since authentic freedom for any of us can only come when all of us are free we must create enterprises, communities, forms of governance and institutions that respect the rights of everyone and encourage the creativity of all. Socially useful individual enterprise should be encouraged but everywhere people work together we must create effective forms of democratic decision-making to promote creative input from all involved.
  5. Everywhere we work we can organize in ways that become the building blocks of a new, democratic economy. Sometimes this will be through existing unions but often we will create new organizations that defend our day-to-day interests while self-consciously preparing to replace capitalist minority rule with democratic social control of all enterprises.
  6. We can work to undermine capitalist, consumerist propaganda whether it masquerades as news, entertainment or advertising. We can create forms of newsgathering and information-exchange that challenge capitalism while building the self-confidence of people everywhere to democratically manage our economy. Rather than spend countless empty hours consuming mindless advertising-driven ‘entertainment’ we can relearn the myriad forms of healthy social interaction that brought joy and solidarity to generations past. Millions of us can discover the fun in making a better world.
  7. We can rebuild a progressive taxation system in which people with extreme incomes pay very high levels of taxes. We can promote a one person, one vote system of decision-making everywhere we work together, whether in the political, social or economic realm. The means of bringing about such fundamental change may, in part, come through existing political structures, but will also include diverse forms of mobilization as workers, residents, concerned citizens, producers and human beings supporting a healthy planet.
  8. We can speak up for our planet as one community with intertwined interests that can only be satisfied through mutual respect and cooperation. We can learn from indigenous communities to respect the earth. We can act on the principle that an injury to one anywhere and everywhere is an injury to all. At a minimum this requires an end to war and environmental destruction of every sort. We can work together in enterprises and organizations that exist in local communities, but which also connect with like-minded regional, national and international groups to accomplish the changes we need.
  9. Through our words and actions we can demonstrate that the realistic alternative to capitalism is an expansion of democracy. In order to build the peaceful, ecologically sane world we desire, our tactics are non-violent, but we understand that people under attack have a right to self-defence.
  10. We can replace capitalism with a system based on social ownership, equal human entitlement and workplace democracy. Building an economic democracy is the key to human survival. We can exist in harmony with our environment if we get rid of capitalism and promote respect for nature and understanding the interdependence of all forms of life.

Gary Engler

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Capitalism a leech on publicly funded research

23 Aug

Prevailing neo-liberal dogma holds that private capital is responsible for most economic innovation and that governments stand in the way. In The Entrepreneurial State: Debunking Public vs, Private Sector Myths, Mariana Mazzucato points out that most research is funded by governments and that current anti-government policies not only widen disparities but threaten future innovation, especially the mobilization of resources necessary to rapidly shift away from dependence on carbon-spewing fossil fuels.   

Mazzucato—professor of The Economics of Innovation at Sussex University in the UK—argues that capitalists are not the visionary risk-takers that free-market economists, the corporate media and politicians would have us believe.  Their focus on maximizing profits actually makes capitalists risk-averse.

Governments fund and organize research and development precisely because they do not have to answer to shareholders. They can have broader goals—future well being, new employment, reduced disparities, or environmental integrity.  And in fact, even in the U.S. the federal government funds two-thirds of the country’s research and development: private business funds less than twenty percent.

Neo-liberal ideology aside, capital has long depended on governments to fund research. In earlier times, governments funded research on canon fire and ocean shipping. They funded construction of railways, telegraph then telephone lines, and funded research on aerodynamics and jet engines. After government funding has made production profitable private business takes charge.

Today, military-industrial corporations continue to rely on publicly funded research to develop weapons and equipment. They then sell the results to governments at cost plus inflated profits. Pharmaceutical corporations do the same. Most new drugs are developed in publicly funded labs.  These are then modified slightly, patented and sold to government-funded health care systems at hundreds of times the production cost.

Contrary to public opinion, neither Steve Jobs nor Apple had a critical role in the development of the Internet  or iPhones.  Hard disk drives were developed by the U.S. Defense Advanced Research Projects Agency. The Internet was constructed by U.S. federal agencies working with publicly funded universities. The Hypertext Transfer Protocol (HTTP) and the World Wide Web were conceived by U.K. government-funded scientists.

Touch screen technology was developed in government labs in the U.S. and U.K.  GPS was developed by the U.S. military and continues to be funded by the U.S. Air Force. Lithium Ion batteries were developed by U.S. Department of Energy scientists. Liquid Crystal Display (LCD) and Thin Film Transistors (TFT) were developed in government-funded labs. So were SIRI, an artificial intelligence program, and the critical Web Search algorithm.

Steve Jobs and Apple can be credited with stylishly rounded edges on computers and iPhones. Eye-catching design and effective marketing allowed their shareholders to make billions from the socialization of research and the privatization of profits.

Future innovation in the U.S., U.K. and Canada, Mazzucato argues, is threatened by current anti-government policies. A few—wealthy capitalists—have unquestionably benefited from neo-liberal policies. Corporations have been freed to move technical and professional employment as well as jobs in manufacturing and services to places where wages are lower, where enforcement of labor and environmental regulations is lax. Meanwhile, cuts to taxes and government spending have widened disparities, aggravated market stagnation, and by reducing funds available for research are prolonging dependence on fossil fuels.

If carbon-induced global warming is to be reversed, massive sums will have to be invested. Widely coordinated action will be required to rapidly replace dependence on fossil fuels with solar, wind, tidal, wave, and geothermal power. Existing capital is locked into profits from fossil fuels; private capital cannot be expected to take the lead. Only the public can mobilize the resources required.

Where measures have been taken, public authorities have taken the initiatives. Denmark is a leader in the technology of wind power.  China has massively increased its production of wind and solar power.  Germany has installed solar panels that can produce as much electricity as 24 nuclear power plants. Wider action is blocked by corporate lobbying anti-government ideology. Denying carbon-fueled climate change is no longer credible; still so long as governments are denied the means to act, corporations and their shareholders can continue to make massive profits from fossil fuels.

Concerted public action is urgently required to develop low-cost electricity storage, to construct the smart grids and digitized energy distribution systems needed to “optimize the flexibility, performance, and efficiency” of wind and solar power.  Concerted public action is also required to rapidly reduce consumer waste and industrial and agricultural pollution.  National, regional and local governments could gain the resources needed if taxes were raised on corporations and top incomes as well as on financial transactions, wealth, and inheritance. Increasing taxes on capital would socialize some profits. Most of the costs of innovation have already been socialized.

Al Engler

 

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Top 10 reasons to hate capitalism

13 Aug
  1. Capitalist corporations suffer from a personality disorder characterized by enduring antisocial behavior, diminished empathy and remorse, and are rewarded by shareholders for acting that way. If corporations could be sent to a criminal psychologist’s office they’d be diagnosed as psychopaths and locked away forever.
  2. Capitalism encourages greed. But greed is only good for capitalists. For normal people it is anti-social and soul destroying, not to mention very bad for our communities, which rely on altruism, compassion and a generalized concern for others.
  3. Capitalism is a system of minority privilege and class rule based on the private ownership of means of livelihood. This gives a few rich people the power to buy and sell jobs, which means they can build or destroy entire communities that depend on those jobs.
  4. Capitalists praise freedom and individualism, but they destroy freedom and individualism for everyone but themselves. The vast majority of us who work for a living are daily asked to uncritically follow orders, to act as if we are machines, and limit our creativity to what profits our bosses.
  5. Capitalists denigrate cooperation and collectivism, but create mass production processes that rely on both from workers. Their system requires us to be cogs in a giant profit-making machine, but because they fear the power this gives us we are told working together for our own interests is illegitimate and bad. Thus capitalists undermine unions and other organizations that encourage workers to cooperate with each other and act collectively.
  6. Capitalism requires the largest propaganda system the world has ever known to convince us it is the only system possible. It turns people into consumers through advertising, marketing, entertainment and even so-called news. Millions around the world are employed to use their creativity to twist our feelings of love, desire, human solidarity and fairness into tools of manipulation, so that ever more profits can flow into the hands of a tiny minority.
  7. Capitalism is a system in which the principle of one dollar, one vote, dominates that of one person, one vote. Those who own the most shares (bought with their dollars) control giant corporations, many of which are more powerful than all but a few governments. Rich people also use their money to dominate the elections that are supposed to give us all one, equal vote. Under capitalism those with the most money are entitled to the most goods and services as well as the most say in directing our governments and our economy.
  8. Capitalism proclaims the virtue of naked self-interest, but self-interest without regard for morality, ecology or common sense leads to environmental degradation, destruction of indigenous communities, colonialism, war and other forms of mass destruction. Self-interest leads capitalists to seek profit absolutely everywhere, regardless of the damage done to other people and the health of the planet’s ecosystem. Self-interest leads capitalists to destroy any rival economic system or way of thinking (such as indigenous communal land use and respect for nature) that can be a barrier to their endless quest for profit.
  9. Capitalism is not a friend to democracy but ultimately its enemy. When pushed, capitalists choose capitalism over democracy. If people use democracy to weaken the power of capitalists the rich and powerful turn to various forms of fascism in order to keep their privileges.
  10. Capitalism is a cancer taking over our planet. Capitalists make profits from global warming, from destroying our oceans, from pumping ever more chemicals into the atmosphere and from patenting everything they can, including life itself. Only by getting rid of capitalism can we rescue our environment

Gary Engler

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The new Capital — a review

24 Jun

Thomas Piketty’s, Capital in the Twenty-First Century, is a sensation—an economics textbook, translated from the French, that has been on the New York Times best-seller list. It is an important work. If you ignore more than one hundred pages of notes, it is still a long but easy read.

Piketty, a prominent French economist and social scientist, uses rigorous logic and reputable statistics to dismiss the mainstream claim that capitalist markets are based on individual equality, and that great wealth is a fair reward for individual contributions to general wellbeing. He shows that capitalism in its logic and observable practice actually widens disparities between the super rich and everyone else.

The title of the book conjures images of Karl Marx’s Capital. But Piketty says he is not a Marxist; he does not call for the abolition of capitalism. He is a social democrat who explicitly rejects the top-down centralized state ownership of the twentieth century USSR. He looks to a more democratic alternative, arguing that economics, which he prefers to call political economy, should refocus on how best to meet human needs. He looks to cooperatives, community ownership, and more democratic control of workplaces.

The two Capitals have distinct starting points. Marx began with the commodity. He makes the case that exchange value is determined by labor time embodied in commodities, and that the wealth and power of capital come at the expense of labor. Although Marx grumpily dismissed campaigns to abolish market exchange as utopian, his focus on the commodity convinced many of his readers that opposing capitalism meant opposing commodity exchange.

Piketty’s analysis is focused on the distribution of income and wealth. He begins with a logically indisputable proposition: when the rate of return on capital is greater than the rate of economic growth, capital increases its share of total income. He then tests this hypothesis with historical statistics. These show that national growth rates usually range from one to two percent; the return on capital is usually around five percent. Without deliberate public intervention the share of income going to capital must grow.

Piketty’s focus on income distribution is a more direct and convincing critique of capitalism. To be fair, Marx was writing in the 1860s. Credible income statistics did not become available until governments adopted income taxes to pay for World War I. Marx’s critique was necessarily more abstract, more a criticism of capitalist market theory than of capitalist practice.

Piketty, born in 1971, knows that twentieth-century attempts to replace market exchange with top-down state direction required unacceptably heavy and intrusive repression. The USSR’s disadvantages have been well documented, but capitalism is hardly the utopia of equal opportunity its supporters claim. In France, the U.K., and the U.S., the share of total income currently appropriated by capital is thirty percent. The top 0.1 percent of income earners own twenty percent of wealth. The top one percent own 40 percent. The top ten percent own 80 to 90 percent. The bottom 50 percent own a mere five percent of wealth.

Mainstream economics justifies great fortunes in a few hands by claiming these are just rewards for successful work, innovation, and merit. In fact sixty percent of great fortunes are inherited. Piketty shows that capitalism continues to be a system of patrimonial wealth. Even for those few wealthy individuals who are or were innovators, it does not take long before the income earned from their past capital exceeds the income from their work. For countries with reliable statistics, annual income from capital now accounts for thirty percent of total income. Privately-held wealth equals 600 per cent of annual national income.

Nonetheless, governments, electoral parties, and the corporate media insist that the main problem facing economies is public debt. Actually public debt in most countries ranges between thirty and seventy percent of GDP. In the nineteenth and twentieth centuries, the governments of major capitalist countries had debts that reached 200 percent of their GDP. Past governments reduced debt by cutting public spending, by allowing inflation to rise, and by increasing taxes.

Austerity is the most damaging way to reduce public debt. Government cutbacks increase unemployment, reduce working-class income and consumer purchasing power, aggravating market stagnation. Inflation does reduce the real value of debt, but largely at the expense of the investments of middle income pensioners. The most benign way to reduce public debt is to increase taxes on great wealth and on the highest top incomes.

Piketty argues that marginal tax rates on income over $500,000 could reasonably be raised to 80 percent and that progressive inheritance taxes should be instituted or raised. In addition, he calls for an annual tax on all private wealth including real property, stocks, bonds, bank balances, and assets held abroad. This annual wealth tax could be one percent on wealth from $1 to $5million; two percent on wealth over $5 million; and 5 to 10 percent on wealth over $1 billion.

Piketty concedes that such taxes in the present political climate appear utopian and could lead to capital flight, if not coordinated among numerous countries. Still people should begin discussing such taxes. Once widely implemented by the international community, public debt could be quickly eliminated. Public spending to meet human needs and to sustain consumer markets could be increased. The tendency of capitalists to appropriate more and more income would be reversed. Democracy would be strengthened as information on private wealth become more transparent. Such taxes could also provide the public with the means to respond to climate change. Massive investments are required to move away from dependence on fossil fuels: if private capital does not take the initiative, taxes on wealth could provide the public with the revenues needed.

Al Engler

Capital in the Twenty-First Century, Thomas Piketty, The Belknap Press of Harvard University, 2014, 685 pages

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Corporate organized crime

23 Jun

“I’m gonna make him an offer he can’t refuse,” is one of the most famous lines in cinematic history. It is the set-up for the scene in Godfather where a big shot Hollywood producer wakes up with a bloody horse’s head in his bed.

In less than 10 words it also perfectly sums up how the rich and powerful get their way. Use of the tactic has certainly never been limited to Mafiosi.

In fact, countries possessing military might have made “offers they can’t refuse” all through history to less powerful nations or regions.

But today’s ultimate practitioners are giant corporations that dominate the world economy. The 0.1% wealthiest people on the planet use their control of these corporations to impose their will on the rest of us.

Their “offers we can’t refuse” go something like this:

“Cut pensions, chop government jobs, privatize everything you can, or we will start a run on your currency and sink your entire economy.”

“Sign this ‘free trade agreement’ or we will pull all our investments from your country and move them to places that have agreed to everything we want.”

“Cut our taxes or we will fund a political party that will.”

“Build this pipeline if you want jobs.”

“We don’t care about democracy, satisfying us is more important that satisfying the will of the majority.”

“Weaken unions, or we’ll take our money and run.”

“Ignore global warming, or we’ll make sure you regret it.”

“If we don’t like your response or you protest too much, maybe even at all, we will use the violence at our disposal, including that of the governments we own, to crush you.”

But it’s not just threats. Like Don Corleone, the corporations also have politicians, judges, journalists, academics, lobbyists, personalities and many others on their payroll to lie, obfuscate, corrupt, manipulate and who knows what else in order to get their way. Both the wise Mafia Don and the effective corporate CEO understand that power comes in many forms. The use of violence needs to be minimized. Better to save it for when there is no other way to impose your will, or it loses its effectiveness. And too much looks bad. (Witness Iraq and Afghanistan.)

But here’s the thing with both organized crime and our economic system in general. There’s always some competitor — be it a long established rival or neighbourhood punk/upstart capitalist — willing to employ whatever means necessary to steal your territory. If you get soft you risk losing everything. If your profit margins are less than your competitors their power will grow while yours stagnates.

As the movie (and its sequels) vividly shows, there can be no Mr. Nice Guy Mafia Don. The logic of organized crime makes it impossible. To be successful — to survive — lying, cheating, bribing and ultimately violence is necessary.

The same is true of our wider economic system. While violence is usually confined to governments that the corporations control, in both worlds hands get dirty doing whatever it takes to succeed because the system demands it.

This is why environmentalists who look for capitalist solutions to global warming are either extremely naïve or in the pay of corporations. This is why union leaders who fail to see the fundamental contradiction between workers’ and capitalists’ interests often sell out to the bosses. This is why in the long run there can be no capitalism with a human face.

If the 0.1% who own and control most of our economy want to keep their power they will act as capitalists have always acted. They will grab as much profit for themselves as they can and pass the environmental costs onto the rest of us while doing so. They will try to reduce wages to increase their profits. They will manipulate democracy to get their way. They will attempt to overthrow democracy if it threatens their existence. They have no choice. Greed, self-interest and a relentless drive to increase profits are the foundations upon which the capitalist economic system is built.

Only when the vast majority of us, the 90% who work for a living, come together to use our collective power to create a new democratic economic system will anything change.

Only greater power can overcome the might of the Mafia Don or the corporate CEO: The power of the people who actually do all the work that makes up our economy.

Gary Engler

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Piketty’s book important, but should go one step further

2 Jun

Is Thomas Piketty’s Capital in the 21st Century a left-wing book?

Yes and no. It depends on how you define left wing.

If you believe the litmus test of being “left” is opposition to capitalism then the book may be interesting and important, but it is not left wing. If, on the other hand, you believe capitalism is a dynamic economic system worth preserving, but in need of a tune-up, you would likely have a different answer. In the range of political/economic opinion allowed in the corporate North American media the book is certainly at the left end of the spectrum.

But perhaps there is another more important question to consider. Is the book useful, including to those who think an alternative to capitalism is both desirable and necessary? And the answer is an unequivocal yes.

Strangely, it’s not primarily for the reason you may think, if all you know about the work is what you have read or heard in the mainstream media.

While most of the commentary has been about the book’s take on inequality and the author’s prescription (a tax on capital) for controlling the problem, the really unique and useful aspects of Piketty’s work are his insistence on what might be called “reality-based” economics and his straightforward, easy-to-read language.

Unlike the obscurant writing and “fairy-tale” premises that typify most works of economics, Piketty bases his arguments in actual data and sets out to explain them in a style that is accessible to a broad range of readers.

Imagine that! Economics for everyone, including those of us who insist that theories should be tested in the real world! Refreshing, almost scientific.

If Piketty can do it we should hold all economists to these standards. Imagine no more theories of perfect competition where all buyers know everything about all sellers, but instead explanations of what really happens when individuals suffering from a lifetime of brainwashing come up against the might of multinational corporations. Imagine economics that explained the world as lived by ordinary people in a fashion that most of us can understand.

This threat of a good example explains much of the “emperor does so have clothes” reaction of orthodox academic economists and their fellow travellers in the business press to Piketty’s book. Then you add in the overwhelming evidence presented in Capital that inequality does exist, has grown over the past three decades of neoliberal reform, and is likely to grow much greater  — and yes sir those apostles of greed sure are angry.

So, the book is important and you should read it, but … let’s just say one should be aware of its limitations.

Contrary to what you might assume based on the attacks from certain quarters, the author does not advocate socialism — unless you believe socialism can be defined as simply trying to be nice to everyone and sometimes using the government to override the power that capitalism gives rich people.

Piketty is firmly in the camp of those who would save capitalism from itself. While he does argue too much inequality is bad because it threatens democracy and leads to revolution, or at least economic nationalism, there is no question he supports the system. He frequently and explicitly praises capitalism as the best economic system because it produces the most growth. There is no mention of an environmental crisis and its link to inequality and an economic system that values greed above all else until the very end, almost as an afterthought. He does not deal with environmental limits to growth.

Still, the book provides all sorts of useful information about the last 200 years of actually existing capitalism. Its offers a glimpse of what the study of economics should be. Piketty seems to be on the side of ordinary people and even makes mention of economic democracy.

Go and buy Capital in the 21st Century from your local bookstore, but read it with this thought in mind: Rather than tinkering with capitalism, can’t we come up with a better system? One that democratizes economic decision making while rescuing our environment from the ravages of unchecked greed, also known as the fallacy of unlimited growth?

Gary Engler

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An impertinent question

21 May

Do people exist to serve the economy or does the economy exist to serve people?

This question came to me as the left side of my brain was reading Thomas Piketty’s important new book Capital in the 21st Century while the right side of my brain watched the news.

There was an item about the B.C. government chopping money from university arts’ programs to fund apprenticeships because it would produce more taxpayers, which would be good for the economy, followed by a commercial touting the Northern Gateway pipeline, which also would be good the economy. As my right brain soaked in the TV images my left brain was digesting statistics that demonstrated conclusively most wealth is owned by a few people and this inequality is growing.

Do people exist to serve the economy or does the economy exist to serve people?

When the two sides of my brain began acting together I realized this is not merely a rhetorical question. Rather, even raising the issue is subversive, or at least impertinent to those who maintain the status quo.

At its most basic level the economy is the sum total of the things people do to provide themselves food, shelter and other things that enhance life, such as recreation, healthcare, entertainment and art. So, the answer to our question should be clear-cut: The point of an economy is to serve people.

But the reality for most of us is exactly the opposite.

We are told the economy demands this or that as if it were some sort of primitive deity to be appeased.

Raising the minimum wage is bad for the economy. Expanding the tar sands and building pipelines to ship bitumen around the world is good. Public daycare or increased pensions are not affordable. Mass layoffs and wage rollbacks are necessary. But consume anyways (the more disposable the better), because that’s what makes the economy go round and round.

Politicians, corporate executives and the media all send us the message that our lives only attain meaning in so far as we contribute to the economy as consumers or taxpayers.

Rather than serving us, “the economy” has become an excuse to treat many people badly, to create unhealthy products, to damage our environment, to justify exploitation, to steal from other people and even to wage war.

Why?

The primary reason is that too much of the economy is run by and for a small minority of people. As Picketty’s statistics show, actual existing capitalism (as opposed to the phoney idealized system taught in school) concentrates ownership of wealth in the hands of a few people. This wealth produces both income and power, so much of which has gone to the richest 1% that any effective democracy is threatened.

Many of us feel powerless in the face of this inequality. Our unions have been undermined and delegitimized. The system tells us our only valid participation in the economy is as consumers, but getting to choose between Coke and Pepsi hardly inspires a sense of engagement.

We certainly get no vote in directing the economy, unless we are shareholders, and in that realm decisions are made by one-dollar-one vote, so billionaires hold sway. Moreover, for at least the past 30 years, the prevailing wisdom has been that governments are incompetent and therefore must keep their hands off the economy. We are told any sort of democratic control is bad because it creates distortions in the natural working of the system, as if there was some divine order that was being interfered with.

But it is not god’s will that is being challenged when democratic control is asserted. Rather it is the will of the 1% who currently own a vast proportion of the economy and direct it (and us) in their self-interest. There are no mysterious natural forces deciding what gets built, what gets shut down, who loses their jobs, how much to invest in green energy versus the tar sands; there are only very wealthy people and the managers who work for them.

Given that, it is really no surprise that the economy seldom serves the interests of the majority — it serves other masters. The economy follows the orders of the people who own it. And it gives the biggest rewards to the ones among them who are the greediest, the most willing to grab huge profits for themselves while making the rest of us pay for the pollution, ill health and other forms of destruction their industry causes. Then they spend some of those vast profits to buy politicians, think tanks and media pundits who work to convince us that this form of minority rule is good for us — the natural order — and trying to create a better system is hopeless.

But what if, despite all that, we demanded an economy that served all of us? What would we do?

Piketty argues for a tax on wealth and that might be a good starting point, but if we really want to fix this we must go further. When the problem is too much power in the hands of a few the obvious solution is to distribute that power more widely.

We should take away control of the economy from the greedy minority and share it amongst all of us. A good name for such a system is economic democracy.

The exact form such a system might take would probably depend on a country’s history, culture and level of development. But essential elements would be: one-person-one-vote instead of one-dollar-one-vote decision making in all aspects of the economy; workplace democracy instead of master-servant relations and community control instead of corporate control.

If we want an economy that serves all people we must create a system of democratic governance to ensure that happens.

 Gary Engler

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Global warming is caused by capitalist greed

30 Apr

Humans have caused climate change by pumping ever more carbon dioxide into the atmosphere and we must quickly cut these emissions.

True, but what has this got to do with unions?

Well, at their core unions are organizations that bring people together to fight for the common good. This essential truth is reflected in the structure, philosophy and history of most unions.

But exactly whose “common good” a union is fighting for can vary widely.

Is it narrowly defined as immediate job interests of local union members? Is it the common good of all those working in a particular trade? All union members in one industry?

Or is it more widely defined as the common good of every union member? Every worker in a particular country? Of all Canadians? All the workers of the world? Every person in the world? Or even wider as the common good of all life on the planet?

The truth is every thoughtful union member, and especially every union leader, must consider the common good from many different perspectives. Everyone has more than one self-interest and therefore more than one common good.

No one is solely a pipefitter, nurse, front desk clerk; or employee of General Motors; we are also children, parents, residents of a city or town, citizens of a country, inhabitants of a planet who are dependent on a common environment, and much more besides.

But unions often find it easiest to fight for the narrowest common good, the immediate self-interest of workers in a particular trade, industry, or company. Higher pay, improved benefits, better job security — members almost always cheer if a union achieves these things. Fighting for all life on the planet or against inequality is a bit more complicated.

But there is another reason as well why unions find it easiest to fight for the narrowest common good. “Looking after No. 1” is what capitalism tells people to do. You are a consumer. Buying more is what life is all about.

In fact, proponents of capitalism argue there is no such thing as the common good, that we are all simply individual consumers and therefore unions are an illegitimate intrusion into the free market. Still, if workers are going to unite for any purpose it had better be limited to stuff like higher pay, something that allows people to buy more and does not challenge capitalism.

So, here’s the reality we face: In so far as a union, its leadership and members have bought into capitalism, the greater the likelihood that union will choose to focus on a very narrow self-interest and ignore such issues as climate change or inequality. Some unions do buy into capitalism despite the fact it does not like workers joining together to fight for any common good, whether narrowly or broadly defined. If it were up to capitalists there would be no unions at all. Capitalists — the bosses — are not our friends. The more people buy into their system the weaker unions are.

And the opposite is also true. The more people come together to fight for the common good, the stronger unions are. The more unions fight for the widest common good, the more people will be on our side and the stronger unions will be. The more unions fight the existing system the stronger unions are.

History shows that the periods of greatest growth in unions were times when capitalism faced widespread challenges and the periods when unions have shrunk, like during the past 20 years, were times when opposition to capitalism was weak.

History also shows that unions have been willing to fight for the widest common good despite opposition from the rich and powerful. Unions were part of the struggle to end slavery and child labour; unions helped win universal voting rights, public education, equal rights, Old Age Pensions, Medicare, the 40-hour work week, paid vacations and numerous other social programs that have benefited society as a whole.

It won’t be easy to stop global warming. Many brothers and sisters earn their living extracting oil, building private automobiles and mining coal, industries that must shrink or disappear to save our planet. Of course this raises difficulties inside the labour movement because it pits narrow self-interest against the wider common good.

But progressive unions were not deterred by similar internal problems in the struggle for civil rights or against sexism and homophobia. As in those battles we must do what is necessary and right. We must demand jobs that do not harm the environment. We must not shy away from battling climate change because there is no more important common good than the health of our environment. We must learn from and work with environmentalists.

But environmental activists must also learn an important lesson from the long history of the labour movement: Capitalism is the problem and certainly not the solution.

The capitalist drive to maximize profits explains the externalizing of environmental costs. Capitalism is a system of small minorities profiting at the expense of others. Private ownership of what are social means of livelihood allows capitalists to make decisions that pass the real costs of industry to communities, workers, future generations and other species.

Capitalism requires growth. But what happens when the environment needs a smaller human footprint? When, at least in wealthier countries, we must learn to live with less stuff?

If a capitalist economy shrinks for a sustained period the system goes into a crisis. Banks crash, unemployment rises and wars suddenly make sense to rich people in order to get their system growing again.

Supporters of capitalism claim the system is based on freedom and choice, but when it comes to the environment for many people this amounts to the freedom to choose between destroying the planet or having a job. The promoters of tar sands, fracking, coal mining and pipelines are explicit about this. The business pages are full of stories quoting the captains of the carbon-industrial complex as telling us: “You must choose between economic prosperity and what is good for the environment, because you can’t have both.”

With capitalism they are correct.

Yet someenvironmentalists, as well as some union members, look to capitalism for solutions. That’s like expecting Toronto Mayor Rob Ford to tell the truth. A sustainable, democratic economy is incompatible with a system run in the interests of a tiny minority that constantly demands more profit.

Science leaves little reasonable doubt that the burning of currently known reserves of coal, oil and natural gas will push atmospheric carbon dioxide levels past a tipping point, after which rising global temperatures will irreversibly undermine the conditions on which human life as we know it depends.

Despite the evidence, today’s capitalism rests on the expansion of fossil fuel production and use.

In Canada capitalist investment is focused on expanding tar sands production. The promoters claim that these developments will create jobs. But every analysis shows more jobs would be produced if equivalent investments were made in solar, wind and geothermal power. Far more jobs could be produced by investing in domestic employment for domestic markets, in the production and distribution of sustainable local agriculture, clothing, etc. Even more jobs would be created by investments in childcare, elder care, social housing, public transit and other green infrastructure.

More jobs but less profit. Capitalists invest in fossil fuels because corporate profits now largely depend on cheap fuel. Equivalent profits cannot be made meeting actual human needs.

So, unions and environmentalists share a common enemy: an economic system run by and for the wealthiest people in the world.

Together we can fight for a different sort of economic system that will prosper in harmony with the environment. Or apart we can fiddle with capitalism as our planet burns.

Gary Engler

From a speech given on the weekend at the Peoples’ Social Forum Assembly on Climate and Oil & Gas in B.C.

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‘The Sixth Extinction’ and our looming catastrophe

24 Apr

Carbon dioxide from the burning of fossil fuels is warming the planet, melting glaciers and polar ice caps, raising sea levels, causing more destructive hurricanes, floods, and droughts and increasing ocean acidity. So far corporations, governments, electoral parties and the media are largely indifferent.

When presented with the evidence, profit-seekers may concede that perhaps something should be done. The claim that climate change is just a theory is used to justify inaction: no particular storm, hurricane or flood can be directly blamed on the burning of fossil fuels; perhaps the sun or tides or other natural cycles are to blame. Anyway, the threat is in the distant future — long beyond normal quarterly or annual financial reports, beyond the four or six year terms of most governing parties.

In The Sixth Extinction: An Unnatural History, Elizabeth Kolbert points to a direct, indisputable connection between rising atmospheric carbon dioxide levels and the increasing acidity of oceans.

A third of carbon dioxide added to the atmosphere rains into seas. Carbon dioxide dissolved in water becomes carbonic acid. As aquatic acidity rises, the shells of crustaceans weaken and dissolve. Billions of micro-organisms along with lobsters, oysters and coral reefs can no longer survive. As crustaceans disappear so do the creatures that depend on them as food sources, fishes and land animals like human beings.

Kolbert is a staff writer for The New Yorker who earlier published, Field Notes from a Catastrophe: Man, Nature, and Climate Change. As its title indicates, The Sixth Extinctionfocuses on epochal species extinctions. Current science records six major extinctions. The Fifth Extinction, the most widely known, wiped out dinosaurs 65 million years ago. It is attributed to a massive meteor strike off Yucatan. The immediate shock wave caused wide destruction. Clouds of dust then enveloped the planet, altering climates and vegetation.

Scientists call the current extinction, the Sixth, the Anthropocene, the human-caused extinction. The capacity of human beings to alter environments can be traced back at least 11,000 years when large animals, like mammoths, began to disappear. Since then, humans have leveled great forests, altered and blocked the flow of major rivers.

For the last 500 years global exchange and industrial capitalism have dramatically transformed flora, fauna and micro-organisms everywhere. Humans have added massive amounts of chemical fertilizers, herbicides and pesticides to soils and waterways. Our dependence on fossil fuel energy has increased carbon dioxide in the atmosphere to levels not seen in millions of years.

How much of a threat is rising carbon dioxide levels? The past may give us a glimpse of what could happen.

The Third Extinction, the End-Permian, 250 million years ago, was triggered by a massive release of carbon dioxide — from causes not yet understood. Temperatures soared. The chemistry of the oceans changed dramatically. As waters acidified, reefs collapsed; dissolved oxygen levels fell; aquatic organisms that relied on oxygen suffocated. They were replaced by others that used sulfur as an energy source. These gave off hydrogen sulfide, a toxin to most organisms on land and sea. “Glassy purple seas released poisonous bubbles that rose to a pale green sky.” Ninety per cent of land and ocean species disappeared.

Today rising carbon dioxide levels are measurably increasing the acidity of oceans. Coral reefs are shrinking in the Caribbean, off Australia and elsewhere. Other sea life is already under threat. In early 2014, Vancouver Island scallop producers reported that ten million scallops had failed to mature. British Columbia oyster stocks have also declined dramatically.

The Sixth Extinction leaves no doubt that carbon dioxide emissions are a looming catastrophe, far more serious than the profit-seeking establishment would have us believe. The problem is capitalism, a system that entitles major shareholders and top corporate executives to direct economies in their private interests. Capitalist competition drives corporations to maximize profits. Corporate control of the media makes people believe that profits are more important than employment, decent wages and the environment.

The Sixth Extinction makes it clear that action to cut reliance on fossil fuel energy is needed urgently. It is also a popularly written sketch of the evolution of scientific revolutions. Its many anecdotal asides make it an easy read.

Al Engler

The Sixth Extinction: An Unnatural History
 by Elizabeth Kolbert
(Henry Holt and Co.,
 2014; $28.00)

 

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Rebuilding the commons through economic democracy

5 Apr

Who runs your workplace?

For most of us the answer is a boss, who reports to a higher boss, who reports to an even higher boss, who reports to a … all the way up to the “owner” of the enterprise. This is called a chain of command.

The words “chain” and “command” are both suggestive of a fundamental truth: Today’s rules about the power of bosses and workers evolved from a time of masters, servants and slaves. While many norms and expectations have changed over the years the fundamental truth that bosses give orders and workers are required to obey remains the same.

This explains the use of the term “wage slavery” by some who oppose capitalism. It suggests that working for wages is similar to being a slave. The Wikipedia entry on wage slavery offers a good introduction to the subject, pointing out the concept is much older than capitalism and that even ancient Romans argued accepting wages for work put one into a slave-like position. The idea that giving up your free will for any reason or length of time makes you a slave is as old as wage work itself.

Interestingly, the usage of the term wage slavery has diminished as a greater and greater proportion of us work for wages. The notion that most of us are effectively slaves is probably too uncomfortable to contemplate. And, of course, not talking about this serves the interests of those who profit from our labour.

But I’d like to suggest there’s another reason as well.

As more and more of us work for wages it becomes more and more normal and we lose the sense of an alternative. I was reminded of this while reading Peter Linebaugh’s stimulating new book Stop, Thief!: The Commons, Enclosures, and Resistance, a series of 15 essays “written against enclosure, the process of privatization, closing off, and fencing in.”

Contrary to the mythology of a modern, progressive and democratic capitalism replacing backward feudalism, most ordinary people had more say in their day-to-day work life before our current economic system came along. In fact, the rights and privileges of “commoners” (the majority of people, whose independent livelihood depended on the shared commons) were destroyed as part of capitalist expansion. To this day, everywhere capitalism goesthe rights and privileges of indigenous people disappear as the commons are enclosed (become private property) so that rich people can steal their profits.

When commons were common, through tens of thousands of years, people mostly developed technology and systems of usage that respected the land, ocean, river, forest, grassland and creatures that lived there. They did this because it was in their collective self-interest to do so. This was reflected in their religions and how their societies were organized, including the ways people thought of themselves.

Mutual respect, independence, collective responsibility, reciprocity, community and what we would now call a sense of ecology were encouraged because all served a society that held its resources in common.

As Linebaugh points out in Stop Thief, 200 years ago poets bemoaned the loss of these values as well as the ugliness created when capitalism enclosed the land and resources that people depended on for their livelihood. Capitalism waged war on the rights, privileges and ideology of commoners. Enclosure of the rest of the world (colonialism) was the logical next step. That war has continued ever since, with today’s military interventions, as well as the mass marketing of never-ending consumption and individualism just the latest in a long line of assaults.

But this is not just interesting history. People who work for wages today can learn important lessons from those who resisted, and continue to resist,the enclosure of the commons.

We should learn that:

  • Every enclosure of the commons is an assault on the environment. The point of capitalism is to exploit nature and other human beings for private profit.
  • Our strength is always collective; it flows from the commons. As individuals we are weak and defeated.
  • We must insist that everywhere people work together be transformed into a commons. The factories, the shops, the distribution systems, all the places of our employment — the entire means of production — are a commons enclosed by capitalists in order to profit at our expense.
  • To create an environmentally sustainable, healthy, nurturing economy requires we no longer accept being wage slaves. We must take responsibility for what we do. We must understand that our world is a commons, not private property, and begin to act collectively to protect the resources that belong to all of us.
  • We must re-learn the values of mutual respect, independence, collective responsibility, reciprocity, community and living in harmony with the environment that were once the hallmarks of commoners.

During most moments of sudden, great change in human history people have been motivated by rights that were lost, insisting they be restored.

To accomplish the great change necessary today let us demand that which requires social labour be recognized for what it is, the common property of all. Let us rebuild the ways of thinking, the social relations, as well as the rights and responsibilities that were lost when our commons were enclosed.

The term that best describes what we would be fighting for is economic democracy. The commons was always an economic democracy.

The term also helps explain a key flaw in our current so-called democracy — power flows from control of the economy, which is “owned” by a tiny minority.

The most successful social movements in the past two centuries have all pushed for an expansion of democracy. The fight for economic democracy would be a continuation of these movements.

Let’s build an economic democracy to rebuild the commons!

Gary Engler

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Understanding the intellectual whores of capitalism

28 Mar

There’s nothing worse than ignorant and opinionated.

You know the type: Most mainstream newspapers have at least one; they dominate radio talk shows and certain TV “news” networks.

Loud supporters of the existing economic system who deny inequality is a problem or even claim it doesn’t exist.

Business leaders/columnists/celebrities/media hacks and the “think tanks” they come from who also deny climate change is a problem or even claim it doesn’t exist.

Apostles of greed who claim to be “conservative”, defend chemical-laden, genetics-manipulating industrial food production, ignore all the ways corporations poison our environment, ridicule anyone who points out there must be some limit to the exploitation of the earth’s resources, promote the use of private automobiles, hobble public transportation (and every other public good) by promoting tax cuts, love pipelines and usually claim to speak on behalf of the “middle class” or even the “little guy.”

How should we respond to these defenders of the status quo who frequently pretend to rail against a mythical left-wing media agenda?

Argue with them? Quietly loathe them? Ridicule them? Ignore them?

I’d like to make the case for understanding and pity as the most appropriate reactions.

First, to understand them we must examine the role they play, the first step of which is to recognize whose interests they represent, which is another way of asking: Who would pay them to say/write the things they do?

The answer is, of course, the people who profit most from pipelines, tax cuts, unlimited growth, a private automobile dominated landscape, industrial food production, chemicals poisoning the environment, pipelines, global warming and an acceptance of income inequality.

But why would the billionaires and mere multi-millionaires whose fortunes depend on the continued flow of profits from oil, agribusiness, automobiles, chemical, real estate, media and capitalism in general think it worth their while to handsomely reward thousands of cheerleaders who endlessly repeat a few shallow ideas on the sidelines of capitalism?

Because it is necessary. The wealthy 0.01% minority who rule over the 90% majority understands that the future of their system depends on convincing or paying off 9.99% of the population who become the opinion leaders, the managers, the foremen, the supervisors, the small businessmen and the other shock troops of the system. The rich are like the pathetic men who frequent red-light districts — they must pay for it — and the right wing columnists/celebrities/media hacks/researchers do it for money, often working in the political equivalent of brothels, called think tanks.

The choices offered young writers, journalists and academics who aspire to earn a decent living at their craft are not great today. There are many more opportunities to voice opinions supporting the system than to criticize it. If you do get a job in a shrinking newsroom or social science department the best way to get ahead is always to support the existing power structure, not oppose it. Arguing in favour of the rich and powerful certainly pays better.

And in a time when the Left seldom confronts capitalism, confining its criticisms to tinkering around the edges, rather than offering a vision of an alternative system, should it be a surprise that the easiest route to intellectual success is selling out to the highest bidder?

Media whores are not that much different than the women and a few men who earn a living from selling their bodies. (And I do apologize to every sex-trade worker who is offended by the comparison to Rush Limbaugh.) They too are just trying to survive; they are typically people who don’t have many alternatives; they are often victims of abuse by a system that penalizes intellectual non-conformity (amazing the number of conservative pundits who claim a left-wing background); the ones who do really well at it typically claim they actually enjoy it.

Given the similarities between these two forms prostitution doesn’t it make sense that we respond to both the same way?

We don’t hate streetwalkers or harangue them; we mostly pity them because of our understanding that they are products of sexism and other forms of oppression.

So too should we pity the sycophants of the rich and powerful because we understand they are nothing more than the intellectual prostitutes of an economic system that attempts to buy, sell and profit from everything we do.

Gary Engler

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Sustainability and capitalism: Can we have it all?

30 Jan

From a speech given at the One World Week Forum at the University of Warwick on January 30, 2014.

Can capitalism solve the problems of global warming and growing inequality?

It seems to me this is like discussing the issue of inappropriate hyper-sexual imagery bombarding 11-year olds and then asking: Can Justin Bieber or Lady Gaga fix the problem?

Real capitalism, not the theoretical version taught in school, is a system of minority rule in which a few people profit at the expense of others.

Real capitalists are always trying to cut their costs and increase their profits, which leads to unemployment, falling wages, rising economic disparity and not paying for the environmental damage they cause.

Private ownership of what are social means of livelihood produces incentives for capitalists to pass along the real costs of industry to communities, workers, future generations and other species.

Private ownership makes growing inequality inevitable. A system can proclaim itself democratic, but if a minority holds most of the economic, and therefore social and political power, that minority will inevitably reward itself, its power will grow and ever-expanding inequality will be the result.

Capitalism is sociopathic. Its ideologues, like the late Margaret Thatcher, reject the social, claiming only individuals exist. Yet capitalism has driven individual producers to the fringes of economies. Most people, ninety per cent in the U.K., depend on wages or salary, working with others in cooperative, coordinated labour — social labour, but directed by wealthy minorities for their own profit.

Capitalism promotes greed. It boasts of this. So why would we be surprised when a small minority with most of the power looks after itself, in effect telling the rest of us: “Screw you and the planet you live on! We don’t care about global warming because we have the money to buy a nice place regardless of how high the oceans rise.”

Capitalism requires constant growth to satisfy its need for more profit. But what happens when the environment needs a smaller human footprint? When, at least in wealthier countries, we must learn to live with less stuff?

History shows capitalism reacts badly to declining markets. When the economy shrinks for a sustained period the system goes into crisis. Banks crash, unemployment grows and capitalists often turn to war to get their profits rising again.

The truth is a sustainable economy is incompatible with a system that constantly demands more profit.

To quote the greatest living English political philosopher, Russell Brand: “I know what the fucking system shouldn’t do. It shouldn’t destroy the planet and shouldn’t create massive economic disparity.”

Like Russell we know what we don’t like. That’s the easy part. But how can we get rid of capitalism and what is the alternative?

To answer we must go back to the issue of power and how to distribute it in a way that promotes the common good, a key element of which is a healthy environment. The best way is through more democracy. REAL democracy. Economic democracy.

Do you want an equitable, sustainable economy? Then help overthrow capitalism and create an economic democracy.

What exactly does this mean?

Let me give you an example: With the one pound one vote system that governs corporate capitalism, Richard Branson, with a net worth of 3.5 billion pounds get 3.5 billion votes. In comparison you (pointing) get 147 and you get 58. Most of you poor buggers owe more than you own so you get no votes at all. Economic democracy means giving everyone the right to a voice and an equal vote in their communities’ economic decisions. When everyone has an equal right in decision-making, economies will be motivated by general wellbeing, not private profit. Economic democracy means eliminating the divide between workers and owners by making everyone an owner. Economic democracy means multiple owning communities  — local, regional, national, international — so that power does not become concentrated in the hands of a single central state. It means that wherever social labour occurs a system of democracy manages the enterprise.

Imagine companies that are democratically run by workers together with a local, regional, national or international government, whichever is appropriate to that enterprise; companies whose mandate it is to promote the common good, rather than the narrow self-interest of rich shareholders; companies that no longer have incentives to destroy the planet, but rather face real penalties for harming the environment.

Now, I know what at least some of you are thinking. This is not realistic. Your ideas are just pie in the sky. But the truth is capitalism has already created what one might call “objective conditions” that do indeed make economic democracy possible. Most people in most countries already depend on social labor. Most of you, if you find paid employment, will be salaried or wage workers. If we choose to fight for it, we can expand one-person, one-vote decision-making into every area where people work collectively, which is most of our economy. If we elect governments committed to it we could pass laws that limit private property to what is truly private and doesn’t give an individual power over others. We could create a system of social ownership with multiple democratic owning communities.

If we accomplish these three things — replacing corporate ownership with social ownership, replacing capitalist entitlement with equal human entitlement and replacing master-servant relations with workplace democracy — the system that drives enterprises to maximize profits, regardless of the consequences, would no longer exist.

Capitalism and sustainability, can you have it all? No. But there is a much better alternative: Economic democracy, a system that will offer authentic jobs, a nourishing work-life balance, your fair share of power and a healthy environment. This sounds like the essentials of a good life to me.

Gary Engler

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Capitalism uses unemployment to keep workers in line

1 Jan

A just society should provide everyone with access to a job yet nearly 2 million Canadians can’t find work.

Officially 6.9 per cent of the Canadian workforce is unemployed. But this number rises to 10.3 per cent when those who’ve given up searching for work are included. Counting “discouraged workers”, about 1.8 million Canadians can’t find a job.

Looked at from a different perspective, StatsCan announced last week that there were six job-seekers for every job available in September. Counting “discouraged workers” that number increases 50 percent.

Incredibly, some consider Canada’s unemployment rate a success. In his October throne speech Stephen Harper misleadingly declared that “Canada now has the best job creation record in the G-7 — one million net new jobs since the depths of the recession.”

This isn’t simply self-promotional rhetoric. Policy moves suggest the government is little concerned by the large number of Canadians out of work. Over the past two years they’ve curtailed Employment Insurance benefits, increased the age at which people can receive Old Age Assistance and slashed public-sector employment.

While the government would never say as much publicly, some among the corporate-funded think tanks argue that having over 1 in 10 Canadian workers out of a job is actually too few. “Canada’s unemployment rate dangerously low” was the title of an April Financial Post article by Philip Cross, Research Coordinator for the Macdonald-Laurier Institute.

Hostility to anything approaching full employment reflects the growth of neoconservative policies. Over the last three decades the idea that everyone should have access to a job has largely disappeared from political discourse. But it used to be fairly common.

In the 1963 election Liberal leader Lester Pearson ran on a “Sixty days of decision” platform that included a pledge of full employment and during his time as Prime Minister Canada’s official unemployment rate dropped below 3%. Similarly, the UN’s International Covenant on Economic, Social and Cultural Rights, which was adopted in 1966 and signed by Canada in 1976, called for the right to employment. It recognizes that “Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment.”

Instead of focusing on peoples’ right to employment, policymakers today emphasize property rights. In effect, this has meant extending patents, easing safety/environmental regulations on corporations and enabling investors to move to low-wage jurisdictions.

While these policies certainly benefit some, few of us gain our income from owning property. The vast majority of Canadians are wageworkers, their dependents or retired wageworkers. And without a job it’s difficult to get by.

But a job is not only about paying the bills. What one does is generally an important part of a person’s identity and most people want to feel like they are contributing to society. Persistent unemployment can be psychologically damaging for individuals.

It’s also socially damaging. Mass unemployment is a waste of peoples’ energy and ingenuity. Imagine what the 1.8 million Canadians out of work could accomplish if they were mobilized to develop green energy sources or to expand mass transit and childcare services.

But how do we mobilize all this latent human energy. One socially useful way to stimulate employment would be to have the government significantly expand its role in mass transit and childcare. Another would be to push Corporate Canada, which is sitting on over $575 billion in cash, to invest in renewable energy.

It’s time to rekindle the idea that all adults have the right to a job. There are 1.8 million Canadians waiting to better contribute to their society.

Yves Engler

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CEO fat cats purring all the way to their Swiss banks

5 Dec

Last week in Switzerland big money staved off an important challenge to big paychecks. But the sentiment that spurred a Swiss effort to tie executive compensation to common workers’ wages will not be defeated so easily.

A Sunday ago Swiss voters said no to a referendum question that would have capped executive compensation at 12 times the lowest paid worker in the firm. After gaining over 130,000 signatures to put the question to voters, proponents of the initiative were overwhelmed by a flood of money claiming a “yes” vote would drive companies away. Early polls found 46% of the Swiss public opposed to the 12:1 pay measure but with opponents spending up to 50 times more than the “yes” campaign, 65% ultimately voted “no.”

According to supporters of the measure, the average Swiss CEO made 43 times the average wage in 2011, up from six times in 1984. A number of top Swiss CEOs make more than 200 times their employees’ wage.

But Switzerland’s CEO-to-worker pay differential appears socialistic compared to North America’s. After the U.S., Canada has the second highest CEO-to-worker pay ratio. Last year, for instance, the CEO of BCE, George Cope, received $11.1-million in compensation. This staggering sum is nearly 200 times more than what a Bell Canada technician in Toronto makes and 2,000 times the pay of an Indian call-centre worker who responds to Bell customers.

Despite making 200 times the average industrial wage, Cope was not the best-paid executive in Canada. According to the Canadian Centre for Policy Alternatives’ summary of Canada’s 100 highest paid CEOs in 2011, the $11.1 million Cope made in 2012 would have placed him just off the top 15. Incredibly, the CEO of Canadian Pacific, Hunter Harrison, took home four and a half times Cope’s pay.

In recent years the difference between regular employees’ pay and CEO compensation has grown rapidly. A recent Globe and Mail survey found that ratio has reached 122-1 at Canada’s biggest firms, up from an average of 84-1 a decade ago. Using a different set of data, the CCPA and AFL-CIO put the Canadian CEO-to-worker pay ratio significantly higher.

As a flagrant symbol of growing inequality, executive pay is increasingly facing political challenge. While the 12:1 initiative was defeated, in March more than two-thirds of Swiss voters supported a referendum question requiring companies to give shareholders a binding annual vote on executives’ pay, while outlawing bonuses to executives joining or leaving a business or as part of a takeover. Similarly, some EU officials have suggested that shareholders should be given the right to vote on the ratio between a company’s best and worst paid workers.

The French government took office last year saying it would limit executive salaries at state-controlled companies to a maximum of 20 times that of the lowest-paid employees and on Wednesday, Ontario New Democrat leader Andrea Horwath called for the salaries of CEO’s at the province’s hospitals, electrical utilities and other public sector agencies to be capped at $418,000, twice the premier’s annual salary.

Politicians should legislate a maximum pay differential between the best and worst paid workers in all companies. How about a ratio of 20 times that’s steadily reduced over time?

It may be difficult, but I’m sure CEOs like Bell’s George Cope could learn to cope on a million bucks a year.

Yves Engler

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Working for a living in an irrational economic system

1 Nov

Our economic system is pretty funny, eh.

I don’t mean of the belly laugh sort, but rather the ironic variety (although a decent argument could be made that many elements of modern work life have the humour quotient of a Three Stooges skit).

There was a rally Thursday to support unionized cleaners working in Cadillac Fairview buildings in downtown Vancouver who are paid in the $12 per hour range. Cadillac, self-described as “one of North America’s largest investors, owners and managers of commercial real estate” and owned by the Ontario Teachers’ Pension Plan, has given its former $12 per hour cleaning contract to another supposedly unionized company that pays its workers $10.50 per hour.

These hard working people, mostly immigrant women, clean the offices of financial analysts, brokers, accountants, lawyers, executives and others, mostly men, who are paid five to many hundred times more.

Among the many ironies in this sad situation is the realization that the harder and more important the job the worse it pays. The more pointless and socially unnecessary the work the more cash is thrown at the person.

Keeping buildings where we work clean is pretty important. Making the clothes everyone needs to wear, picking the vegetables and fruit that keep us healthy, making sure urban sewers don’t get blocked, or picking up garbage are all important and difficult jobs, but how much are people doing them paid?

Gambling, on the other hand, pays extremely well, if it’s the sort that rich people do. Of course we’re told that what they do on Wall Street or Bay Street is part of the real economy and only what happens on the Las Vegas Strip is gambling.

But it seems to me, real gambling is when you don’t understand what is going on. Think about it: If I bet my pension on whether or not the little ball is going to fall in a red slot or a black slot, at least I can see what happens. If I hand it over to a mutual fund, I don’t have a clue.

How many of us really understand how the stock market works? Sure, we nod in agreement when the analyst comes on the six o’clock news and says: ‘Bond prices rose six basis points and the Dow dropped 43 points today on news the September durable goods figures were higher than expected.’ Say what?

If I put my hundred on the table the least they can do is show me the cards to prove whether I won or lost. On a Las Vegas craps table I see the pit boss check the dice. Cameras cut down on cheating. On Wall Street? No pit boss, no cameras, not even some guys named Guido and Tony to take a cheater out in the alley. Two years after some company steals ten billion, the government starts a court case that lasts another 14 years with appeals and at the end of it all, five rich guys lose their trading privileges.

But I digress.

If you want to earn the really big dough in capitalism you get a job in one of those Cadillac Fairview-owned buildings buying and selling numbers, letters and symbols that only exist on a computer screen. They call this working in the financial sector, but is it that much different than gambling?

And even better paid than those doing the buying and selling are the guys who give advice about which numbers, letters and symbols — that only exist on a computer screen — to buy and sell. Best paid of all is the guy who hires all these people and then sits back and lets them do their job. He’s called a hedge fund manager and can pull down a pay cheque of two million per week or more if he’s really, really good at convincing other rich people to let him “invest” their money.

Sure, some of these number pushers are smart and even have a lot of education, but is what they do socially useful? Compared to cleaners or seamstresses or fruit pickers or garbage guys?

They “make” money, that’s all, something that is supremely valued in our current economic system, but which when judged by any sort of authentic human experience is nothing more than fantasy.

It’s as if the world were one gigantic cornfield, but instead of harvesting it for food, we build mazes because they fascinate the people with money. Cornfield owners can earn huge profits if they invest in mazes. Trillions of dollars change hands, with the really big bucks going to the experts who design them and those who help people find their way through the mazes. But the people who grow the cornfields are paid barely enough to live on.

The truth is, the cleaners of Cadillac Fairview buildings — like the people who grow the corn — perform easily identifiable useful work. The same cannot be said for many of the people who work in the buildings.

What does this reality say about our economic system?

Gary Engler

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Has the NDP capitulated to the rich?

28 Oct

This past week may come to be seen as a watershed moment in the NDP’s capitulation to neoliberal capitalism. The nominally social democratic party effectively supported a major corporate ‘trade’ accord all the while opposing an International Monetary Fund call for a more progressive tax code.

Last week the NDP basically endorsed the Comprehensive Economic and Trade Agreement (CETA) the Harper Conservatives have negotiated with the European Union. The accord will greatly expand the power of multinational corporations. By extending Canada’s patent protections, CETA will drive up already high pharmaceutical drug costs. It also weakens provincial and municipal agencies ability to “buy local” by giving multinational corporations greater rights to bid on public contracts. Maybe most egregious, the accord gives corporations based in Canada and the EU the power to sue governments in special investor friendly tribunals if they feel public policy impedes their profit-making.

Despite these corporate giveaways, NDP Trade Critic Don Davies released a statement saying, “New Democrats welcome progress towards a comprehensive new trade agreement with the European Union.” To justify this position Davies pointed to the social democratic credentials of Western Europe. “The NDP has long maintained that Canada should have deeper economic relations with the European Union, democratic countries with some of the highest environmental and labour standards in the world.”

Interestingly, the NDP was less fixated on democratic standards when they voted for the Canada Jordan ‘free’ trade agreement at the end of last year. In that case they were desperate to point to a ‘free’ trade agreement they had supported so the party happily turned a blind eye to the lack of independent labour unions and elections in the country as well as the Jordanian monarchy’s prosecution of individuals for “extending one’s tongue” (having a big mouth) against the King.

In another sign of the NDP’s capitulation to rule by the rich, the International Monetary Fund is proposing a more progressive tax policy than Canada’s ‘Left’ party. Last week the usually neoliberal minded IMF released a paper that noted, “tax systems around the world have become steadily less progressive since the early 1980s.” To rectify this the Fund’s Fiscal Monitor presented an argument to increase income taxes on high earners to 60 to 70 per cent and even suggested a capital levy on wealthy households.

Long a proponent of socially devastating austerity policies, the IMF basically proposes a return to the income tax levels that were common three decades ago. At the start of the 1980s Canada’s top tax bracket was over 60%, which is some 15 percentage points higher than today’s rates. (In 1948 incomes over $2.4 million in 2013 money were taxed at 80%).

A social democratic party motivated by bettering society — rather than simply taking power — would have jumped on the IMF proposal. Instead, the NDP leader was busy repudiating the party’s Toronto Centre by-election candidate, Linda McQuaig, who previously argued that tax rates should be 70% on the rich.

“Be careful, she has never said anything different from party policy [since becoming a candidate],” Thomas Mulcair told the National Post. “She is a public intellectual who has written all kinds of things. But we’re the ones who have to put an offer before the Canadian public … Personal income tax increases are not on the table.”

At some point progressive minded party members will have to ask themselves how far down the neoliberal path they are willing to travel. In the meantime they should tell the NDP leadership they oppose CETA and want substantially increased taxes on the wealthy.

Yves Engler

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Economic democracy is the solution to global warming

18 Oct

Why are greenhouse gas emissions not being drastically curtailed? As carbon dioxide levels rise, temperatures rise, oceans become more acidic, polar ice caps melt, sea levels rise, the atmosphere absorbs more water. Floods, hurricanes and droughts become more frequent and more destructive.

Science makes it clear that global warming is caused by the burning of fossil fuels—coal, oil, natural gas—and biofuels.

In September 2013 scientists on the UN Intergovernmental Panel on Climate Change released their conclusion: the burning of fossil fuels at current levels will lead to devastating warming within this century. In 2012, the Berkeley Earth Surface Temperature Study reached the same conclusion. This was a surprise since it had been financed by Charles Koch and led by Richard Muller, one of the few reputable scientists who had remained a global warming sceptic. Shortly after the release of the Berkeley study, the U.S. association of meteorologists, who had not taken a position on global warming, announced that they accepted the science.

In the face of the scientific consensus and worsening natural disasters, corporate capitalism responds by investing billions in fracking, tar sands, deep sea petroleum development, and expanding pipelines.

Although some individual capitalists are alarmed by global warming, capitalists as capitalists focus on maximizing profits. In theory, green industry could be just as profitable, but profits are made on existing corporations. In resource extraction, materials processing, agribusiness, manufacturing, international trade, communications, and finance, profits are based on cheap energy from fossil fuels.

Supporters of the system claim that capitalism empowers individuals. Capitalism has actually pushed individual enterprise to the fringes of economies. No more than ten percent of populations are self-employed. In Canada and the U.S. ninety percent depend on wage and salary work. Although capitalism gives individual capitalists title to means of livelihood—title that is bought and sold for private profit—wage and salary workers are actually engaged in cooperative, coordinated social labor.

Corporations, capitalism’s dominant institutions, are minority-owned collectives that dominate markets, monopolize supplies, and control technologies. The twenty largest transnational corporations have more revenues than most governments.

Corporate governance is neither democratic nor egalitarian. Those with the most shares have the most votes. Less than one in four own any corporate shares. Most corporate shares are owned by less than five per cent of populations. Major shareholders and top executives, who combined are less than 0.1 percent of populations, control most corporations.

Under capitalism, the productivity of social labor has substantially increased. Aided by technology and expanding markets, humankind can now deforest entire continents, level mountains, dam major rivers, deplete mineral reserves, and fish sea life to extinction. Meanwhile, private title allows corporations to give priority to profits and to externalize environmental costs, to pass these on to communities, workers, future generations, and other species.

In the 1970s, neo-conservatives like Margaret Thatcher and Ronald Reagan initiated what are now called neo-liberal policies. Taxes paid by corporations and the wealthy were cut. Laws and regulations were changed to make it more difficult for unions to organize and to make gains in collective bargaining. Public utilities and services were privatized. Capital was freed to move abroad in pursuit of cheaper labor, lower taxes and weaker environmental standards. As capitalists got richer, they gained more capacity to dominate political agendas and to manipulate the media and the outcome of elections.

So long as capital-owning minorities are entitled to direct economic and political activity in their private interests, private profit will take precedence over human wellbeing. The alternative is economic democracy. With economic democracy, community ownership would replace corporate ownership. Everyone—wage and salary workers, the self-employed, the unemployed, students, and the retired—would have a right to a voice and equal vote in their communities’ economic decisions. Workplace democracy would replace master-servant relations.

When everyone is equally entitled, communities will focus on meeting human needs, on providing employment and social services, on sustaining and improving the quality of present and future life. Instead of focusing on what is the most profitable, communities—responsible to all equally—would aim to balance employment opportunities with available labor. Public revenues would be balanced with needed social services. Imports would be balanced with exports. Industrial activity would be deliberately limited to the carrying capacity of environments.

Humankind cannot afford to delay action until the system changes. We must act now to cut greenhouse gas emissions. As individuals we can walk instead of driving, live in smaller residences, travel fewer air miles, eat less meat and choose produce grown organically. But so long as capitalists are entitled to direct economies in their private interests, corporations will continue to externalize environmental costs. The corporate media will continue to identify happiness with consuming more. Most employment will continue to depend on capitalist profit.

Isolated individual action has little impact, but human activity does transform the natural environment for good and ill. Capitalists can pass on environmental costs; humankind cannot.

We can begin by acting together to reduce damage to the environment. Some action—far too little—is already being taken to cut dependence on fossil fuels. Cities can be reconfigured so that most people can walk or bike to work, to school, to entertainment and recreation.

Investment in public transit can reduce dependence on private automobiles. With current technology, wind and solar energy could be much more widely used. Geothermal and waste heat networks would further reduce fossil fuel emissions. Governments could speed up development of cheap, safe, plentiful sources of energy. Public investment—freed from nuclear weapons interests—could determine whether breeder reactors would eliminate radioactive waste, and whether thorium reactors would eliminate the danger of meltdowns.

International agreement to raise average tariffs from the current five percent to thirty percent (as in the 1950s and 60s) would increase local production in agriculture and manufacturing, replacing fossil fuels with human energy. The revenues raised would help provide governments with the funds needed to redirect social labor to more sustainable ways of meeting human needs. Substantially increasing taxes on corporations and the highest incomes would further increase public revenues and would have the added benefit of reducing the money available to promote narrow capitalist agendas.

Communities can act now to assert their right to veto damaging industrial activity. Parties and coalitions can be formed to give priority to human wellbeing. Campaigns for electoral reform can make governments more transparent and responsible to general human interest. Expanding social entitlements, the right to food, housing, education, health care, employment and basic income would reduce dependence on capitalist profit.

Al Engler

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Why would any young person support capitalism?

11 Oct

They say you get more conservative, nostalgic for the past and critical of young people as you age. In my case it’s true, but maybe not in the same way most people expect.

This 60-year-old grandfather’s conservatism is reflected in a growing respect for the institutions, programs and social services that previous generations of ordinary working people built through organizing and struggle. I believe in preserving these institution, programs and social services despite the onslaught of right-wing choppers and cutters who proclaim “progress” when in fact people’s lives are being made worse.

My nostalgia for the past is reflected in fond memories of huge anti-war demonstrations, picket lines packed with people determined to get a good union contract and the feeling of being one among millions who believed another world was possible.

And I do sometimes ask myself what’s up with young people today. Mostly I’m just amazed they’re not out in the streets making a revolution.

I mean, they’ve got a hell of a lot of good reasons. Aside from the ongoing crap —war, the latest empire trying to dominate the world, poor people being screwed, aboriginal people being screwed, racism, sexism, other forms of discrimination — the economic system has put a huge bulls-eye on young people’s backs and the environment is about to collapse.

University and college costs at least six times more than it did when I was young and this at a time when you need a graduate degree just to get an unpaid internship. Youth unemployment is high and rising. And the jobs that are available? Suck-up service jobs. Smile and say, “have a good day,” or you won’t get a tip, if you’re lucky enough to have a job where you get tips. More likely you don’t have any incentive to smile except fear of a pathetic power-deprived supervisor who will ream you out for telling a customer your true feelings.

But let’s say you do get a decent job working for the government or making things in a factory or working in an office, the current economic system says you’re worth less than your parents and you damn sure don’t have a right to a decent pension and benefits. All that stuff is being cut back because the system can’t afford it, or so the people running things say.

A steady job? That’s not how it works anymore. Retire at 65? Sorry no, if you’re under 40 you’ll have to work years longer than your parents to qualify for any sort of pension. And all those good union jobs that people once enjoyed? Forget about it, the system has decided to crush unions. Or in the unlikely event you do find a union job, the new reality is lower wages for new hires.

Since the era of Ronald Reagan and Maggie Thatcher the system has gone out of its way to screw young people. Since the stupid capitalists took power the system says it can no longer afford the wages, benefits, social services and rights that the smart capitalists managed to provide in the 1950s, ’60s and ’70s. (But it can afford war and bailouts for banks.) Ever since the rise of neo-conservatism (also called neoliberalism) in the 1970s the cheerleaders of capitalism on crack have been up front about attacking unions, pensions, public education, healthcare and social services — all stuff that people over 50 got to benefit from, but which young people are told they can’t have.

Then to top off all this shit, people under 40 and their kids are the ones who will really feel the effects of global warming.

So, what’s with a generation that accepts punch after punch and then insults on top of the beating, barely raising a peep in protest? How could anyone under 40 support capitalism? Why aren’t they organizing, striking, picketing and marching?

Sure they have more distractions than we had: video games, the Internet, texting, Tweeting, Facebooking etc, But most of these could be put to good use rabble rousing the revolution, if the dream was there.

Most likely young people are so brainwashed by the system that they simply can’t imagine another world is possible. Consumerism and its evil twin individualism are the most likely culprits. Both have been pushed down the throats of young people the past four decades like bird parents stuff regurgitated food into the beaks of their babies. Buy, buy, buy. Me, me, me. Both these isms lead to ill health, alienation, and social paralysis. Inaction is the result.

And who is responsible for pushing individualism and consumerism? People my age. The me generation. Hippies. The turn on, tune in and drop out crowd. The feel-gooders through substance abuse. Individualism and consumerism were their bag.

Teach Your Children was the name of a famous 1970 song. We did, but now we can only hope that they are wise enough to unlearn much of what they were taught.

Take some advice from a grandfather: Dream of a better world with a democratic economic and social system. A system that lives in harmony with the environment rather than one that wrecks our planet. Get involved to make it happen. Take action, especially collective action. You’ll have the time of your life.

And teach your children well.

Gary Engler

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Capitalism or a healthy environment — time to choose

4 Oct

If all you care about is making more stuff, capitalism may be the best system ever. But if you want to save the planet from environmental catastrophe our current economic system is a dead end.

I remember in my socialist youth often being told: “Your ideas sound good but that’s just not how things work in real life.”

Today, in my socialist sixties, these same words seem appropriate as an analysis of mainstream environmentalism.

Here is the harsh reality:

Capitalists make huge profits from destroying the planet. The capitalist drive to maximize profits explains the externalizing of environmental costs. Capitalism allows small minorities to profit at the expense of others. Private ownership of what are social means of livelihood allows capitalists to make decisions that pass the real costs of industry to communities, workers, future generations and other species.

Worse, capitalism requires constant growth because it always needs more profit. Making ever more profit is what motivates people to make investments. But what happens when the environment needs a smaller human footprint? When, at least in wealthier countries, we must learn to live with much less stuff?

All the evidence shows capitalism is really lousy at dealing with declining markets. Every time the economy shrinks for a sustained period capitalism goes into crisis. Banks crash, unemployment rises and wars are often necessary to get capitalism out of its crisis.

Supporters of capitalism claim the system is based on freedom and choice, but when it comes to the environment for many people this amounts to the freedom to choose between destroying the planet or having a job. The promoters of tar sands, fracking, coal mining and pipelines are explicit about this and in fact go even further. The business pages are full of stories quoting the captains of the carbon-industrial complex telling us what amounts to: “You must choose between economic prosperity and what is good for the environment, because you can’t have both.”

If we continue with capitalism they are correct.

Yes, some so-called environmentalists do look to capitalism for solutions, but that’s like asking the fox to fix the henhouse. You can’t be a serious environmentalist and support capitalism. A sustainable economy is incompatible with a system that constantly demands more profit.

Now that the human population has passed seven billion, it should be obvious that we inhabit a planet of finite resources. But population growth is not the problem. Human energy remains our most precious and underutilized resource. Once basic material needs for food, clothing, housing and healthcare have been met, human wellbeing depends less on consumption than on opportunities for education, employment, social participation and social recognition.

Science leaves little reasonable doubt that the burning of currently known reserves of coal, oil and natural gas will push atmospheric carbon dioxide levels past a tipping point, after which rising global temperatures will irreversibly undermine the conditions on which human life as we know it depends.

Despite the weight of evidence and the urgency of the problem, capitalism rests on the expansion of fossil fuel production and use.

Around the planet trillions of dollars are being spent to develop massive deposits of shale oil and gas. In Canada capitalist investment is focused on expanding oil production from tar sands. The promoters claim that these developments will create jobs. But the funds required to extract and transport that fuel will create far fewer jobs than would be produced if equivalent amounts were spent on the development of solar, wind and geothermal power. Far more jobs could be produced with investments in the production and distribution of local agriculture, clothing, shoes and communications products. More jobs would be created by investments in childcare, elder care, social housing, public transit and other green infrastructure.

But capitalism prefers investments in fossil fuels because corporate profits now largely depend on cheap fuel. Equivalent profits cannot be made meeting actual human needs.

So, we have some important choices to make: Support capitalism or support the environment. Build a different sort of economic system that can prosper in harmony with the environment or fiddle with capitalism as our planet burns.

Gary Engler

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Capitalist entitlement is the EU problem

21 Sep

The movement to occupy on behalf of the ninety-nine percent has flagged, but the wealthiest one percent have not relented in their campaigns to enrich themselves at the expense of others. This was made clear in the 2012 World Economic Forum, in Davos, Switzerland. The tone was set by Canada’s Conservative Prime Minister, Stephen Harper. He blamed Europe’s social entitlements for current government debt problems, and then came back home to call for cuts in Canada’s pension entitlements.

Europe and Canada are facing crises of unsustainable entitlements, but social programs are not to blame. In Europe the countries with the most comprehensive social programs — Norway, Sweden, Denmark, Finland, Germany, and the Netherlands — are not facing severe deficit crises. The countries that are — Greece, Spain, Portugal, Ireland, and the U.K. — have far less generous social programs.

Rapidly expanding capitalist entitlement began in the 1980s with the election of neo-conservatives Margaret Thatcher, Ronald Reagan, and Brian Mulroney. Their governments rejected government intervention to maintain employment and consumer demand, substituting what they called supply-side policies, claiming that putting more money in the hands of the rich would increase the supply of money available for investments and employment.

Since then, the governments of most countries have adopted supply-side policies. Taxes on higher incomes, on corporations, on capital gains and dividends have been methodically lowered. In the 1950s and 1960s the effective tax rates on the highest incomes in Canada and the U.S. were 70 percent. In the early years of this century, these had fallen to 30 percent, much the same rate as paid by median income earners. (A smaller number — who may earn millions a year from capital gains and dividends — pay as little as fifteen per cent of their income as taxes.) As the tax on upper incomes fell, government revenues as a proportion of total income fell, even though governments increased sales taxes, value-added and payroll taxes.

Putting more money in the pockets of the rich did not lead to more investment. In fact, the rate of growth in private and public investments was higher in the 1950s an 60s than in the 1980s to the present in North America and Europe. The super rich do have money to spend on luxuries, private jets, yachts, and mansions. As money was available for financial speculation, share prices grew faster than the real economy, increasing capitalist claims on existing means of livelihood. To sustain and increase profit margins, corporations turned to places with cheaper labour, further reducing domestic employment. As disparities between rich and poor widened, governments with shrinking revenues were faced with expanding needs for social programs.

In Europe the most prosperous countries were shielded from the most damaging consequences of neo-conservative policies by more comprehensive social entitlements—pensions, unemployment insurance, retraining, and childcare. Poorer countries have not been as fortunate. Europe’s problem is not overgenerous social programs, but the failure to harmonize social conditions.

The European Union began with the Treaty of Rome in 1957, a time when most governments accepted the responsibility to maintain employment and improve living standards. Initially signed by Belgium, France, Italy, Luxembourg, Netherlands, and West Germany, the Treaty of Rome envisioned a Europe with a common market for goods, workers, services, with common transport and agricultural policies, and with a European social fund that would help harmonize social conditions in all countries.

As it now exists, the European Union began with a treaty signed in Maastricht, Holland in 1992. By this time, most of the continent’s major political parties had come to adhere to the Washington Consensus, a set of policies promoted by the International Monetary Fund, the World Bank and the World Economic Forum. Its ten points can be summarized as holding that governments should give transnational corporate interests precedence over domestic employment and enterprise, and give creditors’ interests priority over social programs.

In harmony with the Washington Consensus, the Maastricht Treaty provided for a common currency, common interest rates, and agreement to limit government deficit and debt levels. The idea of a social fund was dropped and no effort was made to harmonize wages or living standards.

For a time, the economies of poorer countries like Ireland, Greece, Portugal, and Spain did grow substantially. Their lower wages did attract investment until countries with even lower wages like the Czech Republic, Hungary, Latvia, Lithuania, Poland, and Slovenia joined the EU. As the continent’s major corporations moved more operations east in pursuit of cheaper labour, workers’ income declined; markets stagnated.

Before the financial crash of 2007-08, the decline in employment and markets was masked by bubble economies — European versions of the U.S. sub-prime mortgage crisis. Interest rates of one per cent and lower in Japan and the U.S. allowed German, French, and U.K. banks to borrow abroad and to lend these funds at three or four per cent to countries desperate for investment. As it became obvious that debts were unsustainable, interest rates jumped to six and seven per cent and to double digits. As more public revenues were diverted to pay creditors, governments cut spending and employment. In the U.K., Portugal, Spain, Italy, and Greece unemployment rose to ten per cent and higher. Youth unemployment rose to 20 per cent, 30 per cent, and even fifty per cent. Nonetheless governments focused on creditors’ interests continue to promote spending cuts which will increase unemployment and reduce consumer demand.

Stephen Harper in Davos encouraged further attacks on social entitlements. He then came home to call for reduction in future pension entitlements here. Why? Old Age Security and the Guaranteed Income Supplement for seniors currently costs less than three percent of Canada’s national income. Factoring in the expected growth of the population of seniors, the cost will rise to around four percent. In Italy, public pensions cost fourteen percent of national income. The current conservative coalition insists that Italy will have no problem meeting these obligations.

Yes, prolonged public deficits can lead to future problems. Costs of borrowing may rise. The value of a currency may erode. Taxes may have to be raised. For minorities preoccupied with maximizing capitalist profits, these are concerns. For majorities who depend on income from labour and social entitlements, declining wages, and reduced benefits are far more serious problems.

Deficits would not be problems for governments focused on the interests of the vast majority. Unsustainable debts would be written off, reduced, and rescheduled. What remains would be paid at fixed low interest rates. Where financial institutions that engaged in reckless lending practices must be bailed out to sustain credit markets, public funds would become public equity. Publicly owned financial institutions, transparently and democratically regulated, would focus on providing access to credits for community-owned, cooperative, and owner-operated enterprises.

To weaken the power of transnational corporations, governments would actively expand social entitlements, institute guaranteed annual income legislation, expand access to pensions, health care, post-secondary education, and public child care. The public revenues required could be raised through steeply graduated income taxes on the highest incomes. Tobin taxes on financial transactions and international agreement to raise tariffs enough to encourage domestic production for domestic markets everywhere would generate further public revenues.

Instead of giving priority to the interests of capital-owning minorities, governments would focus on policies that sustain employment, working-class income, and social entitlements. They would promote and support initiatives the are intended to provide everyone with a voice and equal vote in their communities and employment.

Al Engler

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The case for much higher taxes on the rich

10 Sep

High government deficits are being used to justify cuts to public employment and social programs. It is not a surprise that transnational finance, the corporate media and right-wing political parties demand that returns on investments be given priority over employment, workers’ income, and the well-being of the marginalized. Having aggressively supported cuts to business and income taxes, they have reason to worry about the real returns on government bonds.

It is also not a surprise that unions and students in Europe have mobilized millions against these cuts. Unions, public sector workers, pensioners, immigrants and the poor are not to blame. Government deficits are a direct result of tax cuts, capitalist speculation, the 2008 financial crash, government bailouts, and the resulting loss of employment, income and government revenues.

If public deficits were the real problem—not just a pretext—military spending particularly in the U.S. would be drastically cut. Taxes would be raised. Of course, tax increases have consequences. Higher sales and value-added taxes reduce consumer purchasing power, further weakening markets in times of recession. Taxes on enterprise revenues can reduce expenditures for plant and equipment and lead to the failure of more businesses.

Steeply graduated income taxes would upset the super-rich but are otherwise benign. Taxing income over $200,000 a year at rates of 75 per cent, and over $500,000 at 90 per cent would substantially increase government revenues without reducing markets for most goods and services. Taxing profits on the buying and selling of stocks, bonds, real estate, and currencies could raise additional revenues. International agreement to raise tariffs to 15 to 25 per cent from the current average of five to ten per cent would raise more. Although the profits of transnational corporations would be squeezed, the resulting growth in local production for local consumption would expand employment, income, and public revenues everywhere.

Increasing taxes on capitalist income is anathema to the supply-side economists who have dominated government policy for thirty years. They claim that increasing taxes on the wealthy reduces the supply of funds available for private investment, causing job loss, reduced real incomes, and economic decline. Supply-side economics was a wealth-holders’ reaction to Keynesian demand-side policies.

The Keynesian period—from World War II through the 1970s—had been a response to destructive twentieth century wars, financial crashes, prolonged economic declines, and rising support for militant unionism, socialism, and communism. To counter growing opposition to capitalism, to stimulate consumer demand and to revive opportunities for profitable investments, governments increased spending on pensions, unemployment insurance, education, healthcare and income support. Laws were changed to make it easier for unions to organize and to bargain collectively.

Much of the cost of stimulating demand was covered by steeply graduated income taxes. In Canada, the U.S., and the U.K. the highest incomes were taxed at marginal rates up to 90 per cent during the war and after. Although lowered in the 1960s, income taxes remained steeply graduated through the 1970s. The share of total income going to capital as profits, dividends, interest payments, and rent did decline. Nonetheless, investments in machinery, equipment, buildings, infrastructure (bridges, roads, schools, hospitals, public transit), and housing stock rose steadily.

By the 1970s many of the very rich and corporate oligarchs had concluded that the welfare state was not in their interests. Unions were in decline. Communism was clearly not outperforming capitalism economically or militarily. At the end of the decade, neoconservatives like Margaret Thatcher and Ronald Reagan were winning political office claiming that Keynesian policies had increased demand at the expense of the supply of capital for investments. The result, they said, was not growth, but inflation and stagnation.

In fact, the Keynesian period was a time of steady, impressive growth in investment and consumer income. Inflation rates did reach double digits in the 1970s. Neoconservatives blamed this on rising social spending and government deficits. A more obvious explanation was the combination of rising oil prices and massive inflows of capital from abroad. Oil prices had risen from under $3 to over $30 a barrel, increasing the price of nearly all goods and services. Suddenly awash in revenues, the rulers of oil exporting countries invested billions in the U.S., U.K, Europe and Canada. Governments that were already cutting taxes paid by the rich and accumulating deficits, responded by borrowing more. U.S. government decisions to finance war in Indochina with borrowed money, not tax increases, compounded the problem.

In the 1980s, after supply-side policies became the economic orthodoxy, taxes on corporations and upper incomes were methodically lowered. Industries were deregulated. Laws were changed to make it more difficult for unions to organize and to engage in effective collective bargaining. Public utilities and services were privatized.

The rich did get richer—the super-rich substantially richer—but economies did not flourish as supply-siders had predicted. The quality of public services declined. Social infrastructure was allowed to decay. Employment in manufacturing and service industries fell. The real income of wage and salary workers stopped growing. Markets for consumer goods stagnated.

Supply-side theorists ignored the evidence. Instead, they turned phrases from Adam Smith into a mantra. More income for capitalists, they intoned, meant more savings, more investment, more economic growth. But Smith was not talking of twentieth century corporate oligarchs when he equated capitalist income with savings and investment. He was describing a middle class of prosperous farmers, shopkeepers, and merchants, whose frugality he contrasted with the aristocracy’s fondness for luxury. The middle class, he said, turned their surplus income into savings for investment in the future; aristocrats spent and borrowed for their current pleasure.

Today’s super-rich are more like eighteenth-century aristocrats than the middle classes of Smith’s day. They are mega and giga-consumers who transform revenues from productive assets and social labour into personal wealth—into mansions, yachts, beachfront condos, and winter retreats. As a class, they are obsessed with maximizing returns on their wealth, but they have little interest in productive investment. For them, innovation means new more profitable investment instruments: futures, derivatives, dubious mortgages packaged as collatoralized debt obligations, and credit default swaps (bankruptcy insurance).
Even when pyramid scams and outright fraud are not involved, nothing is added to means of livelihood when one capitalist buys and another sells stocks. Financial entitlements are merely shuffled from one to another. When the rich do invest in actual plant and equipment this is likely to be abroad where labour is cheaper and profits are higher.

The economic argument

Steeply graduated income taxes would make public debt manageable. Unlike taxes on consumption, taxes on the highest incomes would not dampen markets for consumer goods. Additional public revenues could be used to improve education, healthcare, social housing, income support, public transit. As employment and markets expand, enterprises would be encouraged to invest more.

Undistributed corporate profits are the main source of investment in research, development, plant, and equipment. By discouraging the distribution of profits as dividends, executive salaries, and bonuses, confiscatory tax rates on the highest incomes would give enterprises more reason to retain earnings, increasing the funds available for investment in real means of livelihood.

With far higher taxes on capitalist income, the super-rich will have to make do with less sumptuous homes, fewer and less luxurious automobiles, yachts, and vacation spots. For everyone else, the cost of keeping up with the Joneses will be less. People in all income groups are likely to save more, making more funds available for investment in housing and local enterprises.

The democratic argument

Capitalism claims to be a system of individual opportunities. Increasing the revenues for education, healthcare, pensions, and income-support would expand opportunities. Steeply graduated income taxes would transfer control of social surpluses from a corporate oligarchy to elected national, regional, and local governments.

Can governments and elected representatives be trusted to act in the common interest? With steeply graduated income tax, a small self-serving minority would have less money to influence legislation and corrupt politicians. Billionaires, like the Koch brothers—two of the wealthiest men in the U.S. who have bankrolled the U.S. Tea Party—would have less spare cash to dominate and manipulate political agendas in their narrow class interests.

Steeply graduated income taxes alone would not end capitalist entitlement, but as elected governments gain more revenues to expand social entitlements and public employment, people will demand to have a voice in economic decisions. The right of wealth-holding minorities to impose their immediate interests will be replaced with the transparent, democratic right of people to direct economic life in the common interest, in the interests of human and environmental well-being.

The environmental argument

The wealthiest one per cent presently claim twenty per cent and more of total income. If their share were reduced to five per cent, extravagant consumption and the accompanying waste of resources would be greatly reduced.

Governments would have the funds needed to replace dependence on private automobiles with fast, accessible public transportation. Federal, regional, and local governments could be provided with the funds to construct public heating and cooling systems that require less fossil fuels. Investments could be made in local agriculture for local markets. Environmental protection agencies could employ enough inspectors to investigate complaints and to act against corporate damage to ecosystems.

As control of social surpluses passes from the hands of wealth-holding minorities to elected governments, people will mobilize to demand that national, regional, and local communities provide more employment and goods and services as human rights. Fewer people will come to depend on the profitability of capital in general and of transnational corporations in particular. More people will be free to oppose environmentally destructive industrial activity.

As communities replace private corporations as the institutions making economic decisions, industrial and service workers, professionals, the retired, homemakers, students, farmers, mushroom pickers, loggers, and ecologists will all have the right to a voice and equal vote. The interests of major shareholders and top corporate executives will no longer take precedence over the income and employment of common people, or over the carrying capacity of environments.

Al Engler

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What free market? A review

3 Sep

The University of Chicago has long been the center of opposition to government economic intervention and support for the claim that free markets best serve general interests. It is a surprise to find Bernard E. Harcourt—professor of law and political science at the University of Chicago—challenging neo-conservative market extremism.

In The Illusion of Free Markets: Punishment and the Myth of Natural Order, Harcourt holds that markets will be regulated by governments or by the rich on behalf of themselves.  Few markets are actually unregulated. He goes on to make the case that markets directed by dominant players in their private interest result not in greater freedom but in heavier repression.

Harcourt begins by examining the Chicago Board of Trade and the New York Stock Exchange. These exchanges are widely viewed as epitomes of the free market, but they are actually self-regulated private monopolies protected by legislation. Their rules are made by member firms and policed by internal committees that determine the methods and time of trading as well as who may participate. As should be expected, the rules favor those who make them.

The Chicago Board of Trade forbids outsiders from engaging in after-hours trading.  However, the insiders who control the Board, when they agree among themselves, can modify the rules, giving themselves opportunities for exceptionally profitable trades. The Chicago Board of Trade and the New York Stock Exchange allow brokerage firms to restrict retail buyers (outsiders) from reselling for periods of thirty to ninety days. “But the same brokerage firms may allow large institutions to dump their stock in the after-market at any time.”  In New York, “members of the stock exchange may get together and fix the commission rates on stock transactions of less than $500,000,” but they can “freely negotiate commissions for larger stock transactions”—which they dominate.

In Chicago, when parties are in dispute, the Board’s Office of Investigation and Audits may investigate. Where its decisions are challenged, the Commodity Futures Trading Commission may get involved. If disputes are unresolved, the U.S. Attorney’s office can initiate civil or criminal actions. The point is that these “free markets” are minutely regulated, first by the dominant insiders and then by civil and criminal law.

Stock exchanges are not exceptions. Markets from the local to the global are dominated by firms with the largest market share, who typically have privileged access to supplies, technologies, marketing networks, and credit.

It is no revelation to point out that when a few are allowed to make the rules, they will direct markets in their own interests. Nonetheless, in mainstream opinion it is now taken for granted that markets regulated by dominant players are preferable to government regulation. This was not always so.

Before the rise of industrial capitalism, industries were self-regulated—by Guilds that were usually dominated by wealthy merchants. Seeing this, political thinkers from the Scholastics to the Enlightenment generally held that governments had a responsibility to intervene to curb speculation, price gouging, and hoarding, to keep the prices of necessities low, to police the quality of goods and services, and to maintain public hygiene.

Mainstream economists now teach that support for free markets can be traced back to Adam Smith in the late eighteenth century and Jeremy Bentham in the early nineteenth. Harcourt notes that Smith and Bentham did view self-interest in the market as generally beneficial, but he points out both also wrote of circumstances in which government intervention was clearly required to curb the self-interested power of great merchants and masters.

Harcourt also questions the prevailing view that the late nineteenth century was a time of laissez faire policies.  While industrial production did expand dramatically, governments played critical roles in the accumulation of capitalist wealth. To expand their countries’ shares of global trade, governments organized and financed shipyards and railway construction. They spent lavishly on navies and armies and colonial wars. Each empire restricted access to captive markets through imperial preferences and tariff walls.

However, the claim that control of markets should be left to the rich has an historical precedent.  Harcourt draws our attention to France before the 1789 revolution and the Physiocrats—so called because they advocated rule by natural laws. Most economic histories now dismiss Physiocrats  for having insisted that land alone is the source of exchange value. In France in their time, that was not so controversial: land still was the main source of great wealth. In their time, what distinguished the Physiocrats was the claim that private property and unregulated markets were in accord with laws of nature and that the role of government was to vigorously repress criminal acts against this natural order.

Physiocrats held that absolute monarchy, by placing government in the hands of the largest landowners, was the natural form of government. Leading Physiocrats—Francois Quesnay, Samuel Du Pont de Nemours, and Le Mercier de la Riviere—were prominent in the Court of Louis XV. For them it was natural to oppose government restriction on profit-making. They likewise viewed it as natural to advocate repressive policing and onerous penalties for thieves, the idle, the disorderly and anyone else who could interfere with their natural order. Le Mercier, as governor of Martinique—then one of the wealthiest French slave colonies—gained notoriety for his heavy-handed policing which even plantation owners came to believe was provoking disorder among the slave population.

Although slavery, landed aristocracies, and absolute monarchies have largely passed into history, the ideology of natural order, freedom for the rich and powerful, and repression for the dispossessed and disaffected still resonates with the very rich and their supporters. That is at the root of the current neo-conservative reaction.

Beginning in the 1940s, University of Chicago economists Milton Friedman and Friedrich Hayek, began campaigning to replace liberal-social democratic welfare state policies with old ruling class verities. By the 1970s, they had a powerful constituency: the super-rich.  Long hostile to Keynesian policies, and frustrated that domestic profit-making opportunities were decreasing, the wealthy heirs of great family fortunes were smitten by arguments that economic rewards and decisions are best left to the very rich.  By the early 1980s, the policies promoted by Chicago School economists and generously financed by corporations and the foundations of wealthy families were adopted by the newly elected conservative governments of Margaret Thatcher in the U.K., Ronald Reagan in the U.S., and Brian Mulroney in Canada.

By the late 1980s a Washington Consensus called for the deregulation of markets, cuts to the taxes paid by corporations and the wealthy, privatization of public utilities and cuts to social services. Although some of the advocates of unregulated markets call themselves libertarians, the widening disparities that followed anti-Keynesian policies were accompanied by more repressive state power.

Freeing the rich to do as they choose in the markets they dominate, obviously allows them to appropriate more of total income. Among the masses, some may benefit from a trickle down. Of those who are left with less income and employment, some will find comfort in knowing that at least a few have gained more wealth than they can imagine. Others will go on strike, organize boycotts, or participate in unauthorized protests.  A few will engage in petty criminality. In countries that have been impoverished, some may lash out with any weapons available. In response or in anticipation, the privileged will demand more aggressive policing, more onerous criminal sanctions and more punitive military actions abroad.

Neo-conservatives view repressive violence as a required response to domestic and international criminality. Harcourt makes the case that crime rates are actually related to entitlements, employment opportunities, and income disparities. For him, this is not purely academic. Earlier in his career, he had practiced law in Birmingham, Alabama, representing prisoners facing capital punishment. He continues to act pro bono as an attorney for prisoners on death row. In his 2001 book, The Illusion of Order: The False Promise of Broken-windows Policing, Harcourt had made the case that more aggressive policing had no significant impact on crime rates in New York.  These, however, are closely related to changing social conditions.

Al Engler

The Illusion of Free Markets
Punishment and the Myth of Natural Order
By Bernard E. Harcourt
Publisher: Harvard University Press, 2011
Paperback, 328 pages
ISBN-10: 0674057260
ISBN-13: 978-0674057265

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Rant: Sense, cents and sensibility

27 Aug

It makes no sense we blow billions buying bombs or bailing out banks, but can’t afford to end world hunger. It makes no sense we pay to see a movie and then are forced to sit through commercials before it starts.

“It makes no sense.” I’m using these words more and more often.

The tyranny of idiot capitalism has become so ridiculous that it must be a sign the system is in crisis. The outrageous lies and distortions told to defend it have got to mean capitalism is finally obfuscating on thin ice.

At a minimum, please tell me other people have noticed the same absurdities that make me feel like smacking every sycophantic shill for the ruling class across the side of the head and screaming: “You’ve got to be kidding me! This is the best system possible? This is the height of human achievement? What do you take us for? Utterly brainwashed fools?” (And then I think it takes one to know one.)

Capitalism means freedom. Really? For the ever-greater proportion of people working in precarious part-time jobs paying peanuts? For the 70-year olds behind counters selling Big Macs or greeting Wal-Mart shoppers? For the tens of millions who have had their pensions chopped? For the garment workers toiling in life-threatening conditions in Bangladesh or Haiti or Honduras to earn $5 per day? For the millions of suburbanites who spend a quarter of their income and their waking hours on and in the vehicle that takes them to their shitty job? For the tens of thousands who have been recently bombed into “our way of life” by the greatest or one of the lesser capitalist powers? For the generations to come who will face climate change caused by profits earned spewing ever more carbon into the atmosphere?

Don’t interfere with the free market. You mean the same “free” market that has destroyed millions of good working class (what the scared-of-the-socialist-bogeyman Americans call “middle class”) jobs in order to enable a few dozen multi-millionaires to become billionaires? The market that had to be saved by bailouts to the very companies that caused its crisis, but which can’t afford good free public education for all? The market that gives us ever more processed food made from genetically modified plants fed to animals that graze in slashed-and-burned rainforests then shipped ten thousand miles but can’t provide nutritious meals of locally grown real food for every child on the planet? The market that is so efficient it requires hundred of billions of dollars to be spent on advertising to convince us to buy its products? The market that gives us plenty of $80,000 cars and $10,000 watches but can’t give billions proper sewage and water systems? The market that enforces patents owned by huge corporations, instead of the right for all to access affordable life-saving medicines? A market free from government controls, which when you really think about it means a market whose rules are made by and for the rich instead of through democratic decision-making?

Yes, we live in an absurd world. A world all about making cents, not sense.

The apostles of greed claim competition and choice are the only rights worth fighting for, as if we are all only consumers. But the vast majority of us are workers too. What about our rights at work? They are ignored, trampled upon and denied because that is what the “free” market requires.

Yes, we live in an absurd world but it can’t possibly get any worse. Can it?

It will, if we don’t fight back.

It can and it will get worse unless millions of people join together behind a common vision of an alternative to this system of one dollar, one vote called capitalism.

Once upon a time we did have a vision of an alternative economic and social system. Once upon a time a movement of hundreds of millions of ordinary people with that vision was created to build a better world and it was successful in many places, winning the universal franchise, public education, the 8-hour day, pensions, health and safety legislation, public health programs, daycare, laws against discrimination and more. Pretty much every reform that was listed in the Communist Manifesto 165 years ago.

But the unions and political parties that came out of that movement never won the most important thing: equality of power, the right of everyone to participate in running both our economic and political system. It never fought for and won something best described as economic democracy.
It left power in the hands of tiny minorities who ultimately run the world in their self-interest. And now these self-serving minorities are rolling back the reforms our mothers and fathers struggled so long and hard to win.

Yes we live in an absurd world. And it will get worse unless we come together to change it. It’s time we showed some collective sensibility.

 Ernie Peshkov-Chow

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Capitalism versus economic democracy

26 Aug

Capitalism is a system that gives major shareholders and top corporate executives—one per cent or less of populations—the right to direct means of livelihood in their private interests. The system’s dominant institutions are corporations. Deemed in law to be individual persons, corporations actually combine the capital of numerous shareholders with the intention of dominating markets.

Corporations are privately owned capitalist collectives. The largest control more revenues than most governments.  To maximize profits, corporations expand production and introduce labour saving machinery, cut wages, and move employment to places where labour is cheaper. A recurring result is that the income of majorities who depend on labour falls as production increases. With declining markets for consumer goods, capitalist investment turns to financial speculation. Market crashes follow. Production facilities are shut down. Unemployment worsens, more jobs are lost, wages are cut further. Individual lives are disrupted. Communities are impoverished.

To deal with disaffection, the system relies on repression, militarism, and war. Within countries, surveillance is expanded and tightened. The marginalized, the dispossessed, and the disorderly are racialized and demonized as criminals. More people are jailed for longer periods. Globally, people who actively oppose the system are demonized as terrorists; countries are bombed and occupied. Wars are highly profitable for well connected corporations and divert attention from domestic divisions. Wars also glorify the violent machismo that encourages the subjugation, abuse, and marginalization of women.

Military intervention in Iraq, Afghanistan, and Libya increased sales of B-52s, guided missiles, helicopter attack ships, aircraft carriers, and drones. In the invaded countries, life was made worse. Power and water plants, bridges, railways, communications systems, schools, neighborhoods and entire towns were destroyed. Tens of thousands have been killed. Millions have become refugees. Invading countries gain no tangible benefits, but for politically influential aircraft and munitions corporations like Raytheon, Lockheed Martin, and Boeing profits did rise substantially.

Supporters of military action abroad claim it is humanitarian intervention. In Haiti the aim of “the responsibility to protect” was to make the poorest people in the western hemisphere so desperate that they would work for even less. In 2004, the U.S., France, and Canada sent troops to remove Jean Bertrand Aristide, the elected and widely popular President. Haiti was occupied in the name of the UN Security Council. Haitian government and municipal institutions were dismantled. Public workers lost their employment. The minimum wage law was abolished; so was public transit. Education was turned over to foreign aid organizations. With no functioning public institutions, Haitians were left with no means to protect themselves from hurricanes or to rebuild after major earthquakes.

Capitalism is at the root of growing environmental crises. Private capitalist entitlement allows corporations to externalize environmental costs, to pass these on to communities, workers, future generations, and other species. Science has convincingly demonstrated that rising carbon dioxide emissions from the burning of fossil fuels disrupt weather patterns, melt glaciers and polar ice caps, and acidify oceans. Still, major transnational corporations continue to fund campaigns of denial.

When the supporters of capitalism concede the seriousness of carbon emissions, they propose profit-making schemes (scams) like cap and trade, or they insist that consumers are to blame and should pay. Here in BC, corporate business supported the Campbell government’s carbon tax—paid by final users of gasoline and heating oil. This ostensibly green policy fits neatly with neoconservative plans to shift the tax burden from business to working people. Meanwhile, the government increased tax-breaks and write-offs for oil and gas exploration and development.

In capitalist rhetoric, unions, public sector workers, and local communities are reactionary vested interests, opposed to change. From a human perspective, capitalists are the most socially and environmentally destructive vested interest. They shamelessly use their wealth and political influence to increase their wealth by impoverishing others and blocking changes that undermine the profits made from fossil-fueled production and trade.

The working-class alternative

The working class—everyone who depends on labour not capital for their income—has the capacity to challenge the right of capitalists to direct social labour for their private profit. The working class includes wage and salary workers and the self-employed—shopkeepers, owner operators, farmers, and self-employed professionals, all whom depend on income from their labour. Those without capitalist entitlements also include most artists, artisans, full time parents, pensioners, students, the unemployed, and those unable to work.

Being the overwhelming majority—everyone but the one per cent, 0.1 percent or 5 percent who control and live off capital—the working class frees itself only by freeing all. So long as some are exploited and oppressed, the wellbeing of everyone who depends on income from labor is threatened. A world of human equality requires the replacing of capitalist title with human entitlement, corporate ownership with social ownership, and master-servant relations with workplace democracy.

With equal human entitlement, residents of owning communities will replace shareholders as the legal beneficiaries of means of livelihood. Social labour will be motivated and directed not for private profit but for general wellbeing. When all inhabitants including people whose livelihood depends on tourism and organic agriculture, berry and mushroom pickers, scientists, educators, parents, and students as well as manufacturing and resource workers have a voice and equal vote in economic decisions, communities will limit industrial activity to the carrying capacity of environments.

With social ownership means of livelihood will no longer be bought and sold for private gain. Social ownership must be distinguished from state ownership. State ownership as it exists continues the top-down command structures of corporate capitalism.  Social ownership means ownership by towns, neighborhoods, cities, regions, nations, and perhaps international communities. Social ownership means democratic and transparent planning by inhabitants for their wellbeing.

With workplace democracy workers in all occupations—machine operators, clerical workers, trades people, administrators, professionals—will have a voice and equal vote in the direction of their labour time. All occupations will be self-regulated professions. Assembly line workers will have a voice and vote in the direction of assembly-line work. Skilled trades people, clerical workers, engineers, and administrators will democratically direct their labour time. General assemblies of workers in all occupations may elect managers; owning communities will elect or appoint auditors and perhaps the directors of enterprise boards.

When capitalism is replaced with economic democracy, social labour and economies will no longer be directed in the interests of capitalist profit. When everyone is equally entitled to participate in economic decisions, communities will aim to provide acceptable employment opportunities for all available labour. No longer pressed to give priority to private profit, communities will be freed to balance industrial activity with the carrying capacity of environments.  The financial costs of social services will be balanced with revenues generated in exchange. The cost of needed imports will be balanced with exports.

Capitalism is based on market exchange, but capitalism should not be confused with the latter. Markets flourished long before capitalism. Ending capitalism does not mean abolishing market exchange. The working class has an obvious interest in democratic control of means of livelihood and labour time.  Majorities have an equally obvious interest in expanding social entitlements—employment at decent wages, education, food, housing, health care, child care,  leisure. However, people who depend on wages and salaries cannot reasonably be expected to support the abolition of market exchange. Half and more of working people are employed in the production and distribution of goods and services for exchange.

The right of individuals and communities to freely exchange goods and services with others—subject to democratically agreed taxes and regulations—is and will remain a basic human right. The widest practical access to supplies and markets is a major source of material wellbeing. Perhaps when capitalist entitlement has become a distant memory, exchange values and market forces will be anachronisms. Until then, communities from the local to the international will aim to base trade on the exchange of equivalents in labour time.

Three twentieth century dogmas have obscured the working-class alternative. The first narrowly defined the working class as blue-collar industrial workers. The second held that the alternative to competitive capitalism is centralized state control. The third is that ending capitalism requires armed revolution to seize state power.

Factory workers have a vital role in production and in mass movements against the system, but production workers alone do not provide an alternative to capitalism. The working class is far broader. It includes blue collar, pink collar and white collar wage and salary workers—service providers, skilled trades people, clerical workers, and professionals as well as assembly line workers. When the self-employed are included, the class of people without capitalist entitlement unquestionably does everything necessary to initiate, plan, produce, transport, distribute, and sustain the production of goods and services required for human wellbeing.

In the twentieth century, top-down centralized state control was generally viewed as the alternative. The collapse of the Soviet Union and China’s adoption of capitalist policies, did embolden corporate oligarchies. From a working-class perspective the demise of what was called actually existing socialism was not entirely negative. We no longer have to answer for external alternatives that divide people. We can look for the alternative within, in the working class, in the collective capacities and human aspirations of overwhelming majorities everywhere.

The twentieth century identification of fundamental social change with armed revolution did not inspire working-class opposition to capitalism. Violence and disorder damage immediate and long-term working-class interests, undermining employment, democracy, and human rights. Young men are maimed and killed. Women and children are victimized, terrorized, and killed.  An anti-capitalist working class will look not to armed struggle but to strategies and tactics that rely on the energy, spirit, and knowledge of men and women, on workplace organization, political action, and community mobilizations

Extremists among wealth-holding minorities may initiate or provoke violence to protect and advance their privileges. While people have an inherent human right to defend themselves and their interests, the working-class response is to look to mass support and to winning soldiers and police—who are themselves wage and salary workers—to the side of working-class majorities. Venezuela, Bolivia, Egypt, and Tunisia provide recent evidence that police, soldiers and officers can be won to the side of majorities.

From gross production to human wellbeing

So long as capitalism is unopposed, the working class appears dependent on capital, but it is capital that depends on labour. Capitalists as capitalists are drones; their function is to appropriate values produced by others. Every activity required for human wellbeing is now done by the working class—including the self-employed, as well as wage and salary workers. What the working class lacks is the understanding that capitalism is a house of paper entitlements that rests on the acquiescence of majorities.

Ideally, people who depend on labour for their livelihood would overwhelmingly refuse to accept rule by, and in, the narrow interests of a wealthy minority. Everyone would continue doing the work they now do, but instead of submitting to master-servant relations, people in all occupations—production, transportation, distribution, and sales people, professionals, managers, day care workers, service providers, teachers, accountants, nurses, and doctors—would democratically direct their labour time. Instead of working for the profit of shareholders, they would work in the interests of their communities.

Realistically, so long as capital is dominant substantial numbers will believe that their relative wellbeing and status depend on capitalism. Many will ignore capitalist privilege and see the enemy as the state, big government, foreign countries, unions, the poor, minorities, immigrants, liberals, Ivy League elites, feminists, older white men, communists, anarchists, criminals, Jews, Christians, Muslims, Hindus.

Seeing human equality, cooperation, and democracy as a realistic alternative will encourage the disaffected to look to human solidarity, to respect diversity and each other. It will deepen opposition to a system that gives the interests of wealthy minorities priority over human and environmental wellbeing. It will encourage community mobilizations, workplace organization, and political action for gains and reforms that weaken capitalist title and strengthen human entitlement. As such gains are made, more men and women will be inspired to mobilize against the system.

In the second half of the twentieth century, a time of virulent anti-communism, Keynesian reforms that improved living conditions did dampen opposition to capitalism.  When motivated by visions of economic democracy, movements for reforms that improve the quality of life can convince more people that opposition to capitalism is practical.

The exact issues that will inspire mass mobilization against the system cannot be predicted. We can start by campaigning for steeply graduated income taxes. Rates of 75 per cent or higher on incomes over $250,000 a year could increase government revenues by an equivalent of five per cent or more of gross national income. The revenues raised would eliminate government deficits and provide needed funding for social services, health care, education, public transit, and renewal of needed public infrastructure.  Higher wealth and inheritance taxes can be similarly beneficial. Tobin taxes on financial transactions and the re-regulation of international currency and interest rates would reduce the negative impact of financial speculation and raise more public revenues. Increasing tariffs enough to encourage domestic production would further increase government revenues and weaken the power of transnational capital over markets.

Supporters of the system claim that attempts to increase taxes on the rich inevitably backfire because capital will move elsewhere. In fact, capitalists invest where it is profitable. Capital does move in response to marginal changes in profitability, but wherever we are, we are not alone. Raising taxes on capital can inspire similar movements elsewhere, potentially limiting the threat of capital flight and weakening the power of capital to play regions and countries against others for their private benefit.

Public ownership of banks would direct savings away from speculative manias to socially useful investments. Reversing privatizations, renewing public ownership of utilities, transportation and communications systems, and natural resources could methodically weaken the power of capital and strengthen democratic control of means of livelihood.  Reforming political campaign finance rules, lobbying regulations, electoral laws would reduce the control capital now has over political agendas.

Local communities can take initiatives to set up cooperatives and community owned financial institutions, social housing, electrical power and communications utilities. Public support for local food production can make people less dependent on the vagaries of capitalist markets.  Environmental action can help ensure a better human future. Local, national, and international mobilizations can help reduce dependence on fossil fuel and replace automobiles with public transit and bicycles. Cities can be reconfigured so that walking once again is a pleasant, healthy mode of daily transportation.

Community and workplace mobilizations in solidarity with First Nations, racialized minorities, the marginalized, women, and immigrants will build human bonds and help expose the mean-spirited divisiveness of wealth-holders’ privilege. Support for policies that are intended to reduce disparities increase global human cooperation. These include the right of people to democratically direct their domestic markets as well as international funding with no strings attached for education, housing, health care, and infrastructure. Development should be directed not by foreign agencies but people themselves. The aim is to help provide people with capacity to help themselves.

The capacity of capitalists to use violence against working-class gains can be reduced. Vocally supporting the work police do in protecting persons and property, while exposing covert politically motivated policing, demanding public accountability of the criminal justice system, and mobilizing against police assaults on opponents of the system can help win police to the side of the people. Supporting soldiers in the sacrifices they make while opposing militarism and war can expose capitalist profiteering at the expense of soldiers as well as of people abroad.

Unions will have critical roles in movements against capitalism. Workers not represented by unions have no means to formulate their workplace interests independent of capitalists.  Unions were organizing centres of campaigns for freedom of assembly, association, speech, and the press, as well as the right to vote for men and women. Unions are largely responsible for the wages and working conditions that allow capitalism to claim it provides rising living standards. Now in a time when capitalist interests are eroding collective bargaining rights, unions have been preoccupied with conserving past gains. Still unions have provided critical support for First Nations, racialized minorities, women, gays and lesbians, and immigrants.

Revived opposition to capitalism may begin with the unemployed, marginalized, dispossessed minorities, immigrants, or students. Wherever it begins, rising opposition to capitalism will encourage workers already organized for collective bargaining to join in solidarity. As opposition to capitalism grows, more wage and salary workers will demand collective bargaining rights. Revived unionism will convince more people that a working-class alternative is practical.

Mass protests over the past few years in Brazil, Egypt, Tunisia, Wisconsin, Greece, and Israel show that people will rally against repression, privatizations, public sector layoffs, cuts to social programs, rising food costs and the high cost of for-profit housing.  Immediate results may be disappointing, but as people come to see that they are not alone in opposition to a system directed by and for super-wealthy minorities, mass protests can turn into general strikes and workplace occupations as well as into electoral gains for democracy and equality.

Al Engler

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Capitalism’s complicated relationship with public debt

25 Aug

Most political parties, central banks and the corporate media insist that public debt is the most pressing problem facing governments. Meanwhile, real wages in the U.S., UK and Canada, and much of the EU continue to fall. Disparities widen. Rates of chronic unemployment are rising.  Unemployment levels for young people are at historic highs, over fifty per cent in Greece, Spain and Portugal. But capitalists—whose income comes from profits, dividends, interest, rent and capital gains—are preoccupied with public debt.

For centuries, public debt has been a driver of capitalist growth. By increasing financial reserves, government bonds and treasury bills add to the credit available to business. Most of the interest on public debt is paid to financial institutions and wealthy individuals.  Capitalists clearly benefited from the trillions in the additions to public debt to bailout financial institutions after the 2007-08 sub-prime mortgage crash.

For capitalists the only real problem with public debt is that it might not be repaid. In a time of declining government revenues, creditors have reason to worry. But additional revenues could be raised with little damage to most markets by restoring taxes on corporations and top incomes to earlier levels. This is not happening because it would be contrary to entrenched supply-side policies that have dominated political agendas for more than thirty years.

In the 1970s neo-conservatives, liberally funded by the super rich, began to stridently demand an end to Keynesian demand-side policies. They claimed that rising real wages and expanding social entitlements were lowering the income of capital, reducing the supply of funds for investment, leading to stagnation and inflation. They demanded that governments cut spending on social services, weaken unions, reduce regulations on business, and leave economic priorities to the marketplace.

The Keynesian period that preceded the neo-conservative reaction was no utopia. It was a time of paranoid anti-Communism, institutionalized racism, discrimination against women, homophobia, and genocidal imperialist wars. But in many countries laws were passed to make it easier for unions to organize and engage in collective bargaining.  Common people gained rights to public pensions, unemployment insurance, family allowances and post-secondary education. Governments made major investments in transportation infrastructure, electrical utilities, schools and hospitals. Capital movements, currency values and interest rates were regulated. International trade was encouraged, but reciprocal tariffs were kept high enough to protect domestic production for domestic markets.

To pay down heavy war debts and to increase spending on social services and public infrastructure, taxes on corporate income were 50 per cent and higher; taxes on top personal incomes were 70 and 90 percent. Although the share of total income appropriated by the richest two percent fell during Keynesian times, corporate investment rose steadily, as did markets and real wages.

The first major neo-conservative victories were the elections of Margaret Thatcher in the UK in 1979 and Ronald Reagan in the US in 1980. Taxes on capitalist income and corporations were cut. So were social programs. Regulations on corporations were eased and eliminated.  Laws were changed to make it more difficult for unions to organize and bargain successfully.  Neo-conservatives claimed that increasing the after-tax income of the rich and freeing corporations to maximize profits would increase the supply of funds for investment. They said  employment would increase, as would the supply of goods and services.

The top two per cent of income earners did double their share of total income to twenty percent. However, the rate of investment did not increase. Real wages declined. Chronic unemployment increased. Growth in markets for consumer goods slowed.

Supply-side policies—now more often called neo-liberalism or the Washington consensus—have a fundamental flaw. Individual capitalist investment has little impact on real economies. Most private investment in machinery, equipment, buildings, land, resources, and on research and development comes out of depreciation and depletion allowances and other pre-tax corporate revenues.

In a recent study commissioned by the UK government, prominent economist John Kay reported that the total capital raised by British companies in equity markets is actually negative. He concluded that financial markets serve the narrow interests of financial institutions and wealthy investors who can make quick profits by buying and selling shares, taking control of companies and stripping assets.  “In a paradoxical way, the function of equity markets today is not to enable savers to put money into companies. It’s to enable them to get it out.”

When capitalists do invest in real means of livelihood, they look to places where labor is cheaper. As more jobs move abroad, overall wage income falls, further weakening markets. Private domestic investment focuses on speculation in real estate, high tech start-ups, futures markets, derivatives, and to mergers, acquisitions and takeovers. Few of these investments add anything to real means of livelihood. In casino capitalism, excess capital drives up share prices, overvaluing assets. Financial booms are followed by busts, capital evaporates, credit dries up, real enterprises go bankrupt, more people lose employment.

Instead of the frugal savers in Adam Smith’s free market, today’s capitalists are self-indulgent gamblers. They spend extravagantly on lavish mansions, luxury condos, private jets and yachts.  They have more than enough left over to fund the political campaigns and lobbying that give them effective control of political agendas.

Letting the market decide may sound benign. In practice it means giving a wealthy minority–major shareholders and top corporate executives—free rein to direct economies for their private short-term profit. Meanwhile, tax cuts for corporations and the super rich have reduced the capacity of governments to limit the damage done by capitalist self-interest. In Canada, in the last decade, total government revenues have fallen from 43 percent of GDP to less than 38 percent.

When current governments do intervene they do so to defend capitalist interests. Public services are frozen and cut, public employment is reduced. Yes, austerity policies, by assuring creditors that they will be paid, help keep capital markets booming, but cuts to employment and consumer income weaken most other markets, discouraging investment in real means of livelihood, increasing unemployment and poverty. As disparities within and among countries widen, capitalist minorities turn to more internal repression, more surveillance, more public spending on weapons of mass destruction and foreign military intervention.

Al Engler

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Rant: Idiot capitalism

8 Aug

You know one of the things I hate most about capitalism? How it turns people into idiots.

You want proof? Advertising.

What’s the fundamental underlying principle of advertising? That people are idiots.

Drink lots of beer and you’ll get the girl. What do people watching learn from this? That young men are idiots.

You need to zoom zoom around in a fast car that costs the average yearly wage to buy and third of your monthly income to maintain to really enjoy the good life. Men of all ages are idiots.

You’ll never get the guy unless you buy that perfume and this skin cream…  Women are idiots.

But advertising is just the tip of the idiot iceberg sticking out of the capitalist ocean.

Cut taxes on the rich, slash social services and we’ll all be better off. Who’d buy that nonsense? Rich people and idiots.

Let’s go to war against those bad guys. And these bad guys too who just happen to have a lot of oil. And those very bad guys who also just happen to have a lot of oil. And these very, very, very bad guys who are mean to women. They don’t have any oil. Oh, but they do have a lot of other resources and just happen to control the route where we want to build our oil pipeline. Who’d buy this transparent bullshit? People who profit from war and idiots.

Be proud you live in a democracy. Except at work, where you must accept the dictatorship of the boss, or in the economy where capitalists run the show. And don’t complain that money buys the few elections we do have. Who’d accept this state of affairs? Capitalists, their sycophants, and idiots.

I know what you’re thinking. Capitalism treats most people like idiots because it works. That’s what most people are.

Not you or me of course, but most people. Right? That’s what you believe: Most people are idiots.

The truth is capitalism requires us to think that way. A system in which less than one percent of the population makes all the important economic and political decision functions best when most people think most people are idiots. If the 90 per cent of us who do all the work actually believed we were smart and capable of running the world ourselves, it would not be good news for the ruling class. We might take over and say: Hey capitalists, it was swell, but we don’t need you anymore. Or, at the very least, a lot of us might ask why, instead of how high, when the boss tells us to jump.

Throughout history ruling classes have justified their rule by claiming superiority over the rest of us. Five hundred years ago they were mostly concerned with convincing each other this was true. They didn’t care what the peasants thought. Sure, they had the church to keep us in our place, but mostly they relied on military might. Now, with the limited democracy we have won, it’s become more complicated.

The best situation for capitalists today is when workers are smart enough to do all the work, but stupid enough to think other workers are idiots.

This explains the right wing attacks on public education, the mindless trash on TV and all the other brainwashing, which the system calls popular culture.

You know what I hate even worse than capitalism trying to turn us into idiots?

That we let them.

Ernie Peshkov-Chow

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