Why Democrats Cannot Be Trusted - Party of Losers

The Democratic Party is The Losing Party

Democrats have bought into Neoliberal ideology

Neoliberal ideology promotes the belief that everyone is an individual with a unique identity. The free market is meant to enhance our uniqueness.

Even leftists are caught in this trap. The last fifty years has seen the growth of ‘identity politics’.

What matters now is individual lifestyle, the right to sexual equality, sexual difference and freedom to pursue our liberated lifestyles.

Long gone are are values of collectivity, cooperation, solidarity and equality. Leftists have been sucked into neoliberalism’s free-trade fantasy.

It’s become more important to update our Facebook page and tweet supposedly significant comments.
Social media’s echo chamber has replaced collective action. Meanwhile, neoliberalism is free to push the extremes of poverty and wealth.

 

Unfettered Capitalism for the Rich

Rich fight to return workers to poverty

By Barry Grey

The past several months have witnessed a shift in social policy by the international bourgeoisie even further to the right, marked by a turn from economic stimulus policies to brutal austerity measures.

In the name of deficit reduction, the ruling classes of all the major capitalist countries are carrying out a frontal assault on the past social gains of the working class. The long-term aim of these policies is to eliminate the welfare state, reestablishing the competitiveness of the older capitalist powers by slashing workers’ living standards to the level of their impoverished counterparts in emerging economies like India and China.

That the living standards of the world’s people are to be equalized downward, rather than upward, is an indictment of the capitalist system.

The “Big Society” speech delivered Monday by British Prime Minister David Cameron exemplified this shift. It was a manifesto for a return to Dickensian conditions of working class poverty.

Seeking to camouflage the brutal implications of his plan to impose between 85 and 100 billion pounds in social cuts over the next four years, Cameron described his “Big Society” as a “huge cultural change” that will “empower” and “liberate” people. It will supposedly achieve this by privatizing and gutting government-run social services.

There has been a shift from the stimulus policy of 2008-2009, centered on the plundering of national treasuries to bail out the banks, without providing any serious relief to the working class.

The austerity programs of today coincided with the 750 billion euro bailout fund announced in May by the European Union and the International Monetary Fund. The fund was established to stave off default by euro-zone countries such as Greece, Portugal and Spain and the threatened collapse of the euro.

It represents yet another massive transfer of public funds to the big banks. As Mohamed El-Erian of the bond investment firm Pimco put it:

“Through the ECB [European Central Bank], EU and IMF, the official sector has stepped in with its balance sheet to assume liabilities previously held by the private sector, thereby allowing private investors to exit in an orderly fashion.”

When the fund was established, the major European governments agreed that the cost of offloading the banks’ bad debts would be borne by the working class in the form of savage cuts in social programs, jobs, wages and pensions. Talk of stimulus to continue the “recovery” was dropped and replaced by the universal demand for “fiscal consolidation.”

The shift was signaled at the G20 finance ministers meeting the first week of June and formally ratified at the G20 summit meeting held at the end of the month in Toronto.

In working out its class policy, the bourgeoisie was emboldened by the experience in Greece, where the social democratic PASOK government has been able to push through a series of austerity measures in the face of massive popular opposition.

In Greece, the ruling class has relied on the trade unions to contain and dissipate working class resistance by means of token one-day strikes and protests.

The trade union bureaucracy has, in turn, been provided crucial assistance by the petty-bourgeois “left” organizations such as the Stalinist Communist Party and Syriza, which have insisted that popular opposition to the social cuts be subordinated to the unions.

The experience has been the same in Portugal and Spain, where social democratic governments have announced one set of social cuts, layoffs and wage cuts after another, and mass working class opposition has been suppressed by the unions.

A series of political changes have been carried out corresponding to the shift in economic and social policy and reflecting the growth of international tensions. In May, the Conservative-Liberal Democrat coalition government headed by Cameron was installed in Britain.

At the beginning of June, the same week as the G20 financial ministers meeting, Japanese Prime Minister Yukio Hatoyama resigned and was replaced by Naoto Kan.

He immediately announced an austerity program that includes a doubling of the 5 percent sales tax, combined with a cut in the corporate tax rate from 40 percent to 25 percent.

At the end of June, Australian Prime Minister Kevin Rudd was ousted in a coup within the Labor Party apparatus and replaced by Julia Gillard.

In addition to reaffirming Australia’s commitment to the US occupation of Afghanistan, Gillard immediately scrapped a proposed tax on Australian mining companies and announced a turn to austerity policies.

In Europe, sweeping budget-cutting programs have been announced from Ireland in the west to Eastern Europe and Russia. Germany, economically the strongest European state, is imposing 80 billion euros in cuts. France has announced sweeping cuts in pensions and a 10 percent reduction in local government budgets.

The 750 billion euro rescue package and the launching of austerity programs to make the working class pay for it have revived the European bourgeoisie’s self confidence—at least for the present.

The euro, which fell 15 percent in relation to the US dollar in the first six months of 2010, has rebounded sharply over the past two months. Hovering around $1.30, it has recouped 10 percent of its loss.

While the Obama administration has been at odds with Europe over the timing and pace of European austerity measures, it has made a similar shift from stimulus to deficit reduction.

It has abandoned even its paltry proposals for new federal aid to the states. The weeks-long delay in extending federal jobless benefits for the long-term unemployed is the preparation for ending them completely.

The administration and the Democratic leadership in Congress are tacitly encouraging a “debate” on jobless benefits.

Aid to the unemployed is being depicted as a “disincentive to work” and a “new entitlement.” This PR ofensive is an attempt to condition public opinion for depriving millions of laid off workers of any source in cash income.

In the US and internationally, mass unemployment is being used to bludgeon workers into accepting poverty wages and brutal speedup.

The international bourgeoisie is proceeding in a highly conscious manner to intensify its war against the working class.

It is keenly aware of the crucial service provided by the trade unions in stifling the resistance of the working class.

In his recent television interview over the Bettencourt scandal, French President Nicolas Sarkozy made a point of praising the unions for their “responsible” role in the economic crisis.

The ruling class is likewise well aware of the critical political role played by the various petty-bourgeois pseudo-left organizations, such as the Communist Party and Syriza in Greece.

Tere's also the CP and New Anti-Capitalist Party in France, the Left Party in Germany, the Socialist Workers Party in Britain, and the International Socialist Organization in the US.

The central concern of these organizations is the danger that the working class will enter into struggle outside of and to the left of the social democratic, “labor party” and trade union bureaucracies. They are above all determined to prevent such a development.

Neoliberal Capitalism Doomed

Capitalism Hits the Fan: The Global Economic Meltdown and What to Do About It

 Latest collapse of the free market system


By Gonzalo Pozo

The World Bank’s recent report on global economic prospects is a bumpy and entertaining read – if terror stories are your idea of fun, that is. It contemplates the possibility of 3.5 percent economic growth for the next three years.

But it is also clear that a further loss of investor confidence (“market nervousness”) might well derail these chances of recovery.

The worst scenario would see governments defaulting on their debts, leading to a deeper crisis, and more unemployment and pain. Though the report doesn’t say so, there would almost certainly be more social and international instability.

Alex Callinicos’s latest book, Bonfire of Illusions, traces the origins of the present crisis and considers its historical significance. The book arrives at an extremely delicate moment for the capitalist system.

This book is in two sections. The first part is theoretically more intricate. It deals with the credit crunch and the structural banking crisis that hauled the economy into the deepest recession since the 1930s.

The second deals with the fracture of US dominance, the sharpening of international tensions and instabilities, and the rise of challengers like Russia and China.

These trends, which have become increasingly visible, hit us in the face in 2008. The war between Russia and Georgia broke out in August that year and the Lehman Brothers investment bank collapsed the following month.

As Callinicos shows, these episodes dealt a powerful blow to the US-based, neoliberal brand of capitalism that had been dominant since the end of the Cold War.

Crucially, they also exposed the fallacies of its main supporting ideologies – the tale of two globalisations. The first of these was liberal capitalism. We were assured that prosperity would follow from the deregulation of trade and finance.

The second globalisation was that of liberal governance.

This promised to transcend the old system of nation-states, and spread democracy and human rights.

It would mean a gradual end to environmental destruction, arms proliferation and old-fashioned tensions between states.

This tale of two globalisations was widely embraced by key figures from the early 1990s.

Now that consensus has cracked. The financial excesses have opened the floodgates of rage against bankers and speculators, from anger among workers, to scathing books and damning assessments in ruling class newspapers.

Flurry

This critical flurry has tended to locate the roots of the crisis in the greed of those in the financial sector, its excessive deregulation and in financialisation.

This is the drive to make all the goods and services traded in the market into financial instruments.

In most accounts, a combination of these circumstances ensured that incalculable financial risks were spread across the system.

This resulted in the 2007 subprime crisis, the 2008 credit crunch and a global economic recession.

Callinicos shares the general dismay about the financial agents. But his key argument is that deregulation, footloose speculative practices and financialisation, though crucial, are not the ultimate sources of the crisis.

The book analyses these trends, but it argues that the crisis was generated in the capitalist system as a whole:

“What we are confronted with is an economic crisis that exposes the depths of the contradictions that have been at work in the entire process of capitalist accumulation, and not merely as some economists... would contend, the dysfunctions of the financial system”.

The debate is incomplete if it does not address the crisis of profitability that global capitalism has been mired in since the end of the post-Second World War boom in the late 1960s.

The thrust of neoliberalism from 1979 was to create a framework in which workers would accept lower wages and worse working conditions. Markets were flung open and relatively unprofitable capital destroyed.

Its aim was to restore profit rates to the levels of the long boom. The neoliberal revolution aimed to shift the balance in favour of capital, to the detriment of workers.

However, the treatment was contradictory. One of its key ingredients was wage repression, which would potentially shrink the demand for goods bought with those wages – putting the world economy in danger.

Rich countries, particularly the US, bridged the threat of a shortfall in consumer demand by an extreme expansion of credit. As their wages fell, many workers were forced to take out loans just to get by.

Callinicos writes, “If this explanation is correct, then we can definitely see the credit bubble as an effort to allow the US economy (and hence, thanks to its central role in maintaining demand, the world), to continue to grow, despite a failure to overcome a chronic crisis of profitability and overaccumulation.”

The expansion of credit rested on a highly volatile financial set up, which was the result of decades of financial deregulation.

It had already been shaken by several stock market crashes, devaluations and defaults.

The financial system of the 2000s was also sharply unbalanced. The ability of the US and other Western economies to increase cheap lending relied on their ability to keep interest rates at historically low levels.

This further relied on the East Asian economies, in particular China, re-investing their bloated foreign reserves in US bonds.

What emerges is, in Callinicos’s words, “an accident waiting to happen”. When the last bubble burst, triggering the subprime crisis, the enormous extent of the problem emerged.

Dizzying

The estimated cost of the slump is many trillions of dollars. National governments are throwing dizzying amounts of money into the economy, in an attempt to avert a global slump of unimaginable depths.

But even if they succeed in the short-term, the real source of the crisis – decades of low profit rates – remains at the centre of the system.

The illusions of liberal-capitalist globalisation went up in smoke along with the illusions of liberal-democratic globalisation.

The fantasy that a conglomerate of international organisations held together by US leadership was superseding the nation-state has faded away.

Callinicos writes, “As the banking system crumbled and the world slipped into recession, it was the state that came to the rescue, with nationalisations, bailouts and fiscal stimuli.”

The crisis and the Russia-Georgia war left the political fragmentation of the European Union (EU) shamefully exposed. The EU is often cited as the clearest example of globalisation transcending the state.

The eurozone’s retreat into forms of national protectionism as a response to the banking crisis is an indication of the unravelling of globalisation.

The different interests of its members with regards to EU and Nato expansion have intensified.

A crucial dimension of both these projects is countries’ relationship to Russia, with Europe’s great dependence on its gas.

Enlargement

The war with Georgia helped Russia stop the enlargement of Nato into former Soviet-dominated countries. Nato enlargement has been a central goal for all US administrations since the end of the Cold War.

The message was clear – Russia was no longer the “sick man” of the post-Cold War order. It had become a regional power, thanks to its oil and gas.

All this is compounded by the decline of US power, which was already stretched in Afghanistan and Iraq. Callinicos echoes writers David Harvey and Giovanni Arrighi in claiming that “American hegemony is nearing its end”.

A pattern is emerging of a fragmented world order, less and less under US direction.

It marks, as Callinicos puts it “the beginning of an era of more intense geopolitical competition and greater global instability”.

This short book throws light on the economic and geopolitical crisis of neoliberalism. But events continue to unfold at an impossible speed.

Capitalism threatens to claw back from the edge. Even if the lies of neoliberalism no longer wash, the beast refuses to go without a fight.

The obvious consequence of bailing out the banks – ballooning levels of public debt and government deficits – have been greeted by a consensus in the media and mainstream politics.

Their bottom line is that the deficit has to be closed and the national debt slashed – at a tremendous social cost.

The recent talk of “we’re all in it together” is one of the uglier ploys used by politicians to sell regressive budgets, inequality and unemployment.

It’s a spectacularly cynical way of telling you to pay up, grin and bear it.

Meantime, top corporations continue to dish out billions in bonuses, taxes on companies are cut further, lay-offs increase, and the public sector is squeezed.

This is the outlook facing people in the West and across the world.

Though there are signs of economic growth, the cuts threaten to scupper the recovery. Moreover, the structural cause of the crisis has not been addressed.

The system’s economic prospects are dark, and we can expect more penury, pain and instability.

As Callinicos argues, 2008 marked a turning point. Neoliberal capitalism entered a period of turmoil.

The result is a historical crossroads – either neoliberalism drags itself on destructively, or it can be made to retreat further by a more rational, collective alternative.

The second prospect has immense difficulties, above all the weakness of the anti-capitalist left.

However, despite its terrible consequences, the crisis of neoliberalism opens up a chance to reformulate politics in our favour. The challenge is to seize this opportunity.

We must work to ensure that “the limits of the possible really are widened”. As usual, Alex Callinicos’s work is an invaluable tool for that task.

Neoliberal Regimes, "A Turnning Back of the Clock"

The end of Capitalism's "Golden Age"

By Prabhat Patnaik

Neoliberal regimes reflect the supremacy of financial interests, are run on the principle that what is good for finance is good for the economy (and conversely that the interests of the economy are best served by serving the interests of finance).

Capitalism enjoyed a boom for nearly two and a half decades from the beginning of the 1950s, the like of which, over a comparable period, it had never experienced in its entire history.

With the unemployment rate down to unprecedentedly low levels, the workers were in a position to gain wage increases in tandem with productivity increases which were steep because of the rapidity of growth.

These wage increases, together with the Welfare State measures through which State expenditure was injected into the system (in addition, of course, to military spending in the U.S.

This was back-door State intervention. American spending on defense meant a significant improvement in the condition of the workers.

This improved state was widely considered at the time to have become a permanent feature of capitalism, a durable phenomenon from which further improvements were possible but there was no going back.

So firmly entrenched was this belief that several distinguished writers (including even John Strachey, at one time a front-ranking British Communist thinker) expressed the opinion that "capitalism had changed".

Two factors brought the so-called "Golden Age of capitalism" to an end.

The first was an inflationary upsurge, triggered by a money wage explosion that occurred all over the metropolitan capitalist world in 1968.

The precise sequence of developments that underlay or preceded this wage explosion need not detain us here, but it brought home the point that capitalism could not operate for long with such low levels of unemployment.

True, the higher wages made possible by such a small size of the reserve army of labour could be accommodated without either hurting the share of profits in the gross value of output.

Neither could it cause inflation (which arises when profit-share in gross value of output is sought to be protected), if the terms of trade could be turned against the primary producers, so that their share in gross value of output could be correspondingly squeezed.

But even if this could be done, as indeed it was and also to some effect since the inflationary upsurge came down proximately because of it, the capacity of this factor to sustain low unemployment had become severely restricted.

This was because the share of primary commodities, other than oil, in the gross value of output in metropolitan capitalism had already become quite minuscule, given the long history of past squeezes on the primary producers.

And oil prices were protected by a cartel, which, far from allowing a price-squeeze, administered to the world on the contrary an oil-shock, the first of its kind, in 1973.

Even the unequal world economic arrangement, spawned by imperialism, in other words, was no longer adequate to sustain for any length of time the levels of unemployment witnessed during the "Golden Age".

Such levels of unemployment achieved through State intervention made the system dysfunctional and presented to it two alternative possibilities:

State intervention had either got to be intensified, with intervention in demand management being supplemented additionally by intervention in the form of a prices and incomes policy; or it had to be reduced.

The initial "improvement" in short had given rise to the possibility of two alternative dialectics.

Given the balance of class forces, the dialectics of subservience to the logic of capital, which meant a retreat from Keynesian demand management and a triumph of "sound finance."

This was the cornerstone advocated by monetarism, with its fall-out in the form a much larger reserve army of labour, a weakening of trade unions, and a significant increase in the share of profits in GDP at the expense of wages, became the order of the day.

Our second "spontaneous" development contributed to the triumph of this dialectics of subservience to the logic of capital. This was the "globalization of finance" brought about through the process of centralization of capital.

The enormous accumulation of finance during the period of Keynesian demand management itself had created pressures for easing cross-border capital flows which had been restricted under the Bretton Woods system.

Keynes himself had been acutely aware that any economic intervention by the nation-State (other than in accordance with the dictates of finance capital) could not be sustained if finance was supra-national.

Advanced capitalist countries eased cross-border capital flows during the decade of the sixties, creating problems for "demand-management regimes", in Britain starting from the days of Harold Wilson's government and in France during the Mitterand Presidency in particular.

The neo-liberal regimes that have followed in the metropolitan capitalist countries since then (it is only very recently that they have been jolted by the world crisis and some intervention has once again come on the agenda).

They have been extended to the world at large, including to the third world, corresponding to the era of ascendancy of international finance capital.

They reflect the supremacy of financial interests, are run on the principle that what is good for finance is ipso facto good for the economy (and conversely that the interests of the economy are best served by serving the interests of finance).

These neoliberal regimes are marked by higher unemployment rates on average (even before the current crisis), a decline in the share of wages in value added (and even an absolute stagnation of late in real wages of workers in advanced countries), and a rolling back, wherever possible, of Welfare State measures.

In short, they represent, in varying degrees, a turning back of the clock, caused by the fact that the "spontaneous" tendency towards centralization of capital has given rise to the phenomenon of hegemony of international finance capital.

The belief that "capitalism has changed" which marked the post-war years of Keynesian demand management has been belied as the "spontaneity" of the system has once again asserted itself.