Socialism and Errors

A tentative thesis: 

The Soviet Union towards the end of  WWII made a mistake similar to the one the Paris Communards made who did not raid the Paris central bank (as Marx thought would have been sensible to pay their soldiers, etc), they did not invade Switzerland and confiscate the ill gotten stashes of the European bourgeoisie who evaded the affects of the carnage and continued to play the stock markets. Instead they acted, post war, in an increasingly imperialist fashion, emulating the bourgeois countries, imposing socialism and giving it, therefore, a bad name across Europe. Why leave Switzerland, the bank of the European bourgeoisie and one big bankroller of the Nazis, untouched? It is unfathomable if you are a communist to grasp why any communist would do this. The centre of European capitalism was, and remains, Switzerland. The answer to this question is key.

We are now living, therefore, in the aftermath of a kind of socialist funk, the result of a lack of resolution and theoretical understanding of Marxism. This is why Greece is so fascinating as a case in the crisis. The Cold War policies that made the Allies turn on the local communists who had bravely fought the Nazis meant Greece was facing years of rightist corruption and money lending to support an unpopular capitalism, it led to the reign of the Generals, and then to the joining of the Eurozone and now Greece’s massive debt crisis, all of it still being fuelled by debt.

Unemployment nearing Great Depression levels for African Americans and Latinos

Below are the findings of a new report compiled by the Economic Policy Institute of the impact of the recession on 50 major U.S. cities:


* In 2009, the national annual unemployment rate was 9.3%. Five of the 50 largest metropolitan areas had unemployment rates over 11.3%—2 percentage points above the national rate—while seven experienced rates that were less than 7.3%—2 percentage points below the national rate.
* Only one metro area had a white unemployment rate above 11.3% (Detroit, 13.8%). Nine metro areas had a Hispanic unemployment rate above 11.3%, and 14 had a black unemployment rate above that level.
* No metropolitan area had a black unemployment rate below 7.3%, and only two areas had Hispanic unemployment rates below 7.3%. Nearly half of the areas—24—had white unemployment rates below that level.
* In all but two metropolitan areas, the white unemployment rate was lower than the overall rate. For the 50 largest metropolitan areas, the average white unemployment rate is 0.8 times the overall rate.
* The Hispanic-white unemployment ratio was highest in Providence, R.I. In Providence the Hispanic unemployment rate was double the white rate, and the gap was 11.3 percentage points.
* The black-white unemployment ratio was highest in Minneapolis and Memphis. In these metropolitan areas, the black unemployment rate was three times the white rate.
* In many instances, disparities are visible in unemployment rates even when we compare racial subgroups with the same level of education. We need to ensure that nonwhites have equal employment opportunities in the labor market.

Recovery for whom?

by Joel Wendland

This economist is predicting the end of the recession by the end of this year by with 11 percent unemployment. Why is it that unemployment rates are the last thing on anyone's mind when it comes to economic issues? How could he say there is a recovery with such high unemployment? Even with the end of an official recession, a second stimulus will be needed to make the economy come back and to protect working Americans from this "recovery."

From CNBC:

Nouriel Roubini, the economist whose dire forecasts earned him the nickname "Doctor Doom", told CNBC Monday that the economic recovery is going to be "very ugly."

Nouriel Roubini
cnbc.com

"The recovery is going to be subpar," Roubini said. "I see a one percent growth in the economy in the next few years. There will also be 11 percent unemployment next year and the recovery is going to be slow. It's going to feel like a recession even when it ends."

Asked about his comments in a speech last week about the recession ending in 2009, Roubini said, "I've been saying all along the recession is going to last 24 months. It started in December of 2007 and my view is that it won't be over until December of this year."

Read more and watch the video...

Official Unemployment Reaches 6.7%

by Norman Markowitz

Official government statistics announced today that unemployment had reached 6.7%, far exceeding "official" forecasts. I say official because serious progressive economists and labor sociologists have long contended that the "official statistics" seriously and deliberately undercount unemployment numbers. This was in effect alluded to by the press reports, which mentioned that "a mass departure from the work force helped to hold down the unemployment rate...." The government in the Clinton administration in response to longterm criticisms from labor and progressive academics began to compile an "underemployment rate" which includes part time workers seeking full time jobs and those who have "officially" been dropped out of the statistics because they are longterm unemployed.

The press rarely reports the underemployment rate but did this time. It jumped from 8% to 12.5% the largest it has been since the BLS began to calculate it. If the underemployment rate is a more serious calculation of the employment crisis and its likely trajectory as I think it is, we are in the very early stages of a depression, not simply the "longest recession" since the 1930s, which the Bush administration is now admitting even though it denied through the election that the U.S. was by "official' statistics in a recession until very recently.

By the way these statements are also being made by establishment business analysts who are predicting massive layoffs particularly if the auto industry collapses (the auto industry is more than simply jobs for auto workers but connects to jobs for a wide variety of connected businesses).

Spokesmen for finance capital(meaning here Wall Street and big bank analysts) are deeply "pessimistic" predicting significant decline in GDP and significantly higher "official" unemployment statistics for 2009. They have no solution, except to say that there aren't any "quick fixes" or likely "quick rebounds" in the near future.

Essentially what they are saying is what Andrew Mellon said to Herbert Hoover in the early stages of the Great Depression, that is, let the crisis run its course, with one important caveat: they are preaching what Mellon practiced when he left the position of Secretary of the Treasury so his banking empire could receive bailout money from the Reconstruction Finance Corporation, that is, bail us out and as for the people, let them bear the brunt of unemployment, sharply declining
real incomes for the employed, home foreclosures, family breakups,
rising crime rates, and all of the the other consequences of letting the crisis run its course.

Government must act and act now, as FDR used to say. It must begin to address the peoples depression. Nationalizing the banks would be a radical solution but one, if it were connected with a restructuring of bank credit card debt, providing massive debt relief for tens of millions of Americans, might both help those citizens and their families and begin to revive consumer purchasing power relatively quickly.

It might also, if it were connected to public control of the mortgage division of finance capital, see a relatively quick revival of the construction industry(which would also benefit from major public works projects) increased minimum wages and most of all, increased trade union membership by the passage of the Employee Free Choice Act as a beginning to the repeal of all post WWII anti-labor legislation and a partnership between the trade union movement and the Obama administration to rapidly increase union membership would empower working people to protect themselves from the depredations of capital while increasing their mass purchasing power.

Since I am not a utopian, I do not expect this to happen immediately and most of our readers, I am sure, have great doubts that most of it will ever happen. But it should be what we are fighting for in 2009 as we seek through mass struggle to lead an administration move in that direction, not the direction that the spokesmen for finance capital are projecting, that is bailouts on a piecemeal basis and encouraging the people to learn to live with double digit unemployment, much higher levels of the double digit underemployment we already have, until the crisis rides itself out and prosperity once more "trickles down" to the people.

Unemployment and Inflation: Is This Just a Recession?

by Norman Markowitz

Unemployment rose in May, from 5 % to 5.5%, the largest one month jump in over twenty years. The national average for a gallon of gas reached four dollars today, with the upward spiral continuing. Those of us who visit supermarkets find that what are now advertised as "sale" prices for basic foodstuffs are above what the regular prices were a few months ago. And the Bush administration is still denying that a "recession exists" and the Republican presidential candidate, John McCain is talking about ending the federal gas tax, which, even if you discount the various middlemen hustling in to increase their profits, would only reduce gas prices as the moment, by around 15 to 18 cents a gallon. And this would not in any way affect the "market" speculation and manipulation of oil companies and various oil producing states (which would mean that gas that cost $3.80 a gallon this month would probably be up to $4 a gallon next month. Of course, McCain is addressing unemployment and wage stagnation by advocating new corporate tax cuts.

First, we should remember that the difference between "recessions" and "depressions" has always been artificial. At the beginning of the 1930s "depression" was a euphemism for what had previously been called "panics" and "crises," a soothing public relations term ("we are merely in a depression") until the term came to represent what was really happening, that is catastrophic mass unemployment, wage decline, and general decline in living standards. By the late 1930s, the term "recession" came into general use as an alternative to "depression" with economists developing the view that unemployment and other vital economic statistics had to be declining for a set period of time for the economy to be first in "recession" and then in "depression."

Even by those standards, as Jared Bernstein, a labor oriented economist noted, "we simply have never had five months of net job losses without being in a recession."

Even economists who work for pro business and Wall Street firms are making the point that the combination of huge gas prices and a very bad "labor market" for workers is creating general public pessimism and fear as reported in opinion analysis that is significantly greater than in the last two recessions.

And there are many "traditional" dimensions to the present crisis. One 1.5 million unemployed face a cutoff in their unemployment insurance benefits, which progressives in Congress appear ready to extend for another thirteen week, but which may face a presidential veto, since Bush administration spokesmen are contending that benefits have never been extended with the unemployment rate "so low." Unemployment among African Americans jumped to 9.7%, more than twice the jump in the general unemployment rate, and unemployment among people ages 16-19 rose by 3.3 %, from 15.4 to 18.7%. Of course, the "discouraged workers" or longterm unemployed are not counted any more (the official story is that they are "no longer looking for work" since they have failed to find it, a Catch 22 moment if ever there was one).

Also, economists are making the point that many companies, after years of job reduction through attrition, simply can't "shrink payrolls" much anymore. Instead they are cutting hours of employees and of course cutting their wages in the process.

What no one is really saying is that all of this is reminiscent of the "great depression," when unemployment shot up and the majority of the employed faced significant wage reductions. When the "stagflation" crises of the 1970s hit, as no one is saying, about one fourth of the
labor movement was unionized, personal consumer debt was much smaller than today, the U.S. was far less dependent on oil imports, and was still the leading creditor nation on earth. Today, the number of workers in unions as a percentage of the work force is less than half of what it was in the 1970s and less than a third of its peak in the early post WWII period. The national debt is more than ten times what it was in the 1970s, consumer debt has a crippling effect on the economy, and the U.S. is of course the world's largest oil importer.

Not only is the U.S. in a significant recession but it wil also l take transforming economic policies to address this crisis and keep it from become the "great depression" of the early 21st century.

It will take first of all a national administration which joins with the trade union movement to promote the organizing of the unorganized; a national administration which develops a national policy and agency to relieve the consumer debt crisis just as the New Deal government
established the FDIC, the Commodity Credit Corporation, and other programs to relieve the bank crisis. It will take a national energy policy that begins to both develop rapidly alternative energy sources and also public transportation policies. And it will take at the very least a revival of progressive tax policies. Senator Obama is coming forward with alternative energy proposals. He has also advocated eliminating the Bush tax cuts on the wealthy (although he is still a long way from a progressive tax program). He has also advocated a longterm "green jobs" creation policy, in which the government would through its investments help to produce millions of new environmentally positive jobs.

Senator Obama is moving in the right direction, and is keeping, as Franklin Roosevelt did, his options open. McCain of course is knocking his head against the dead end that is the Bush administration and thirty years of reactionary polices. Progressives as they support the Obama candidacy should actively encourage him to move forward and become bolder in his policy planning, since it will require bold progressive polices to address what is clearly becoming the largest general economic crisis in decades, perhaps of the whole post WWII era.

Bernanke and the Return of Keynes

by Norman Markowitz

When the chairperson of the Federal Reserve calls for a fiscal stimulus package, you know, as Bob Dylan famously sang, "The Times they are a changin." "Fiscal stimulus" approaches to fight business cycle downturns derive from the thinking of John Maynard Keynes, the British economist who, after WWI, contended that the capitalist system faced a "secular crisis" which called for state fiscal policies to sustain mass purchasing power in the economy in order to counteract stagnation that would produce decline.

Unlike Marx and Lenin, Keynes didn't see the crisis as structural, but he saw it as long-term and not simply "cyclical," as most ruling class theorists contended, to be waited out until the "market corrected itself"(traditional ruling class economists saw state intervention, particularly policies to provide jobs for the unemployed and protect workers wages, as leading to a withdrawal of private capital and making the overall situation worse). Keynes contended that state intervention was necessary to save capitalism both from long-term stagnation and decline and (he implied) from the political consequences of that, which might very will be socialist revolution to end capitalism. Keynesian theories and policies were adopted in many developed capitalist countries from the depression to the 1970s, with the New Deal in the U.S. playing a leading force in this development, informally during the depression and more formally after WWII though U.S. government influence in the world capitalist economy.

These policies were connected to general economic expansion and stabilization within the capitalist world through the early 1970s, but, just as U.S. capitalists had no love of the New Deal, except as an alternative to a socialist America, capitalists everywhere had no real love of economic policies which both regulated their predatory activities and, more importantly, supported minimum wages, public pensions, work programs for the unemployed, and other social and labor legislation as a way to sustain mass purchasing power. By the 1960s, Keynes and Keynesianism in its positive sense had been scrapped for the conservative monetary theories of economic Milton Friedman, Keynes great antagonist, who argued that the free market could be free again, unions, minimum wages, social legislation were all essentially handicap for economic growth, and that "compensatory fiscal policies" that had been the hallmark of Keynesian theory, especially "social investments" in health care, education, housing, transportation, jobs for the unemployed, could be replaced with central banks using what one might call "compensatory monetary policies," that is, controlling the flow of credit by raising or lowering prime interests rates to "fine tune" the economy.

We have lived with these policies and the devastation that they have caused since the 1980s We have a national debt ten times what it was when Ronald Reagan became president. Minimum wages have lagged way behind (they were frozen for 12 years under Reagan and Bush I). The percentage of workers in trade unions is substantially lower than it was when Reagan became president, as both union busting policies and the export of jobs have undermined it.

But capitalists don't really care about that. They do care that Merrill Lynch posted a $9.8 billion loss earlier this week. They do care that the giants of Wall Street, investment bankers and brokerage houses, are selling shares in themselves to deal with their losses and debts. They do care that the peoples crisis is becoming
their own.

So, after a couple of decades, Ben Bernanke announced that the Federal Reserve supports a Keynesian solution, a fiscal stimulus package. That may mean many things, including Wall Street's realization that they need the next Democratic president and Congress to go back to traditional liberal Democratic policies to bail them out (of course, if the "fiscal package" includes large increases in the minimum wage, a jobs program for the unemployed, and substantial re-regulation of capital and a revival of progressive tax policies they will be kicking and screaming). It may also mean that Bernanke realizes that the jig is up for the Republican right and since he will be around for the next administration, he had better make it clear that he is not, like his predecessor, in denial that the New Deal in the U.S ever happened.

The return of Keynes, if he is really returning, is a small step forward for the working class. Reviving what in the U.S. was "left Keynesianism," that is government support for strong unions, a strong public social security system to provide an decent living for retirees, national public transportation, housing, education and energy policies (both on the TVA principle and in the development of alternative energy programs) and repeal of both the Bush and Reagan regressive and reactionary tax policies and revival of progressive taxation would be a much bigger step.

Bush Orders Limits on Medicaid as Country Slips in Recession

Media reports this morning say Bush is casting about for ideas on how to stop the looming recession. That he has no ideas of his own is suggestive. Likely we'll here more of the same: tax cuts for the wealthy and for rich corporations, etc. etc. etc.

But he then did something that makes no sense whatsoever.

While recession looms, Bush is ordering states to curtail plans to expand Medicaid coverage to working families.

White House spokesperson Tony Fratto: “This policy demonstrates the president’s compassion.” What? Fratto used this phony claim to cover for the Bush administration's ideological commitment to helping private insurance companies get richer.

Now is the time for expanding health care coverage for working families. The unemployment rate has risen about one-half point over the last six months to 5% last month. The foreclosure crisis has sparked even more serious financial problems and will likely reverberate through the economy with more layoffs in related industries.

Now is the time to help working families who, if they don't already have a hard time paying for inadequate private insurance, soon will see a big financial crunch in their pocketbooks and savings accounts.

What is Bush thinking? This is compassionate? It is similar to his veto of two S-CHIP bills that would have helped cover an additional 4 million uninsured children.

Bush's actions aren't motivated by compassion. In fact, the perverse ideological obsession with big profits for big insurance companies is the very thing more than 236,000 people voted against in Iowa last night.

Bush's Medicaid crunch is the sort of typical Bush-ism that will send a wave of people to polls on Nov. 4th to end 8 long years of ultra-right, anti-people policies that serve as the planks of the Republican Party's platform and the hot air of its ideology.