The choice is between socialism or barbarism

On Uzbekistan cotton:

[A recent BBC video showing children in] Uzbekistan working in the fields picking cotton was incredibly shocking. You can watch it here.

Secretly filming, the BBC reporters showed the schools closed for the duration of the harvest, and the police herding children as young as nine years old onto buses. The video shows Lorry loads of mattresses being taken to the farms, as the children are expected to sleep in the fields after working for hours in the baking sun. The cotton picked by forced child labour then appears in clothes sold in ASDA and Primark in the UK.

The film also showed film of the mechanised cotton harvest in the days when Uzbekistan used to be part of the USSR. Contrast the picture here from the Uzbek cotton harvest in 1977 with the BBC film of children picking the cotton by hand today.

Tony Cliff always used to criticise those who fell for the lie that the Soviet economy was intrinsically more backwards than the West by pointing out the implicit chauvinism of those who compared Russia with Germany in terms of living standards, but did not compare Uzbekistan with Pakistan.

In the days of the USSR, Soviet republics of Central Asia had higher living standards than other countries in the region.

Many socialists in the West still do not appreciate what a disaster the collapse of the Soviet Union has been.

Using as sources [...] Unicef, the World Bank and the BBC, we find that the world bank reported in 2000 that in the USSR overall incomes have dropped by 50%. In some regions, such as the Caucasus and central Asia, over half the population now live in absolute poverty - defined as living on an income of $2 per day or less.

Unicef report 18 million children on less than $2 per day, 60 million children in poverty.

Unicef reports; “In Central Asian countries less than half of 15-to-18-year-olds now attend secondary school. Ten years ago more than two-thirds attended. ” There were also at least one million displaced as refugees by war within the borders of the former USSR.

[...]

Back in the USSR. Socialist Unity. 31-Oct-2007.

How has capitalism helped?

[...]

Mikhail Gorbachev, the Soviet Union’s last president, had based his policies on the premise that the USSR’s economic difficulties – which he referred to as ‘stagnation’ – were caused by the Soviet Union’s socialist economic model: universal public ownership and the central planning of production. But as this system was dismantled and replaced by privatisation and the dominance of market forces, Russia and the other republics of the former USSR went into catastrophic industrial and social decline, which continued throughout the 1990s.

The failure of the capitalist reforms to deliver on the promises of economic dynamism and higher living standards (except for an elite minority) was not an experience confined to the former USSR and other ex-socialist states. The majority of South American countries, for example, underwent a process of de-industrialisation and mass impoverishment during the neo-liberal 1980s and 1990s, an experience which is fueling the current movements on that continent for a turn towards socialism.

[...]

Mulholland, Marcus. The Soviet model and economic cold war. 21st Century Socialism. 31-Dec-2006.

Work Choice Howard's achilles heel

The working people of Australia, spearheaded by the Australian Council of Trade Unions (ACTU), have been fighting a bitter battle with the John Howard's hard-line neo-liberal government for years. Howard, cut from the same cloth as George Bush in the US, has been anti-labor, pro-war, pro-deregulation and pro-tax-cut.

These policies have created the same conditions in Australia as they have everywhere else, namely increased wealth polarization, reduced workers rights and a destruction of civil society.

But now it looks like people are finally waking up to the truth. The ACTU and many others have been campaigning to stop Howard and remove him from office. Their Your Rights at Work campaign (YRAW or YR@W) has, through a massive grassroots effort, put the Howard administration on its heels.

[...]

The Howard government won a legal bid yesterday to suppress secret Work Choices documents, saying the release of the papers would lead to speculation that the coalition planned a new wave of workplace changes.

A spokesman for the prime minister told News Ltd last night that the documents could not be released because "the majority of them were cabinet documents".

[...]

Rudd can't fathom why Work Choices documents suppressed. Sydney Morning Herald. 20-Nov-2007.

And more on the ACTU campaign:

Grassroots activism has sullied the Work Choices brand; now it stands to topple the Government.

[...]

In marginal seats around Australia, the Your Rights At Work logo, YR@W, is more conspicuous than the Labor Party banner. It appears on so many T-shirts and placards that it threatens to depose Che Guevara as the new emblem of activism and resistance. There are 46 groups around NSW and John Robertson, the secretary of Unions NSW who devised the blueprint for the grassroots campaign, believes they will revive the labour movement.

"They're the future of unions," Robertson says. "Over the past 20 years we got very complacent and lost members. But these groups are made up of locals, not blow-ins. They're the same people you see running chocolate wheels at school fetes.

"Even if Rudd gets in and overturns Work Choices, these groups won't disappear. I don't know, or even care, if they get involved in party politics, but we will have trained future community leaders, who will be able to fight on issues like transport, infrastructure, schools and housing."

[...]

West, Andrew. Peoples front is in full swing. Sydney Morning Herald. 17-Nov-2007.

Historic strikes in France, Korea

From LabourStart on Friday:

The last few days have seen extraordinary struggles taking place in Korea and in France.

Those struggles have also illustrated the need for the trade union movement to have its own independent media. Let me explain what I mean.

France saw a huge wave of strikes this week. This gigantic struggle is the long-awaited counter-attack by unions to a right-wing government with an explicitly anti-union agenda.

I've been able to follow the coverage a bit in the British media, and was not surprised to hear a discussion yesterday on the radio about whether French President Nicolas Sarkozy would be "tough enough" to resist the unions. As one reporter put it, would he be as strong a leader as Margaret Thatcher was back in the 1980s?

That's an extreme example, but the more common coverage has focussed entirely on the difficulties faced by commuters, with photos illustrating empty Metro stations in Paris to make the point.

In other words, the news story for most mainstream media has been about Sarkozy's toughness and the suffering of commuters -- and not about the actual workers on strike and what they are calling for.

Korea this week provided us with what I think was an even more extraordinary example of how mainstream media covers labour disputes.

Every November, tens of thousands of trade unionists rally in the capital, Seoul. I know because I was there ten years ago. This year's national workers' rally was used by Korean unions to focus attention on the free trade agreement between Korea and the USA, and thousands of farmers and students joined in the protest.

According to one eyewitness account, their protest was blocked by some 25,000 baton-wielding riot police, who proceeded to attack them with water cannon in an attempt to disperse the demonstration.

The main foreign news agencies such as Reuters and AFP reported this as an "anti-FTA" protest, without mentioning that it was actually an annual trade union event. Normally reliable news sources like the BBC didn't even bother to report the event at all. As a friend of mine in Paris put it, local coverage in France of the Korean rally described it as "a bunch of rebellious farmers going wild about a trade agreement with the USA which they mistakenly believe will deprive them of income."

What we have here are gigantic protests by national trade unions in two of the world's most important industrialized countries, which are either being under-reported or mis-reported.

[...]

Lee, Eric. LabourStart. 16-Nov-2007.

Ellen DeGeneres is a Scab!

From Union Review:

A press release from the Writers Guild of America, East is circulating this evening about Ellen DeGeneres, which the union is very disappointed with and Union Review is outraged at.

The talk-show host comedianne, whom I have been a big fan of for many years, respected the picketing writers for one day and then went back to work with her own material -- and that stinks (not her material, the fact that her going back to work disrespects the strike). Her performances this week is no different than a scab laborer breaking the strikers backs.

This is explained fairly well in the release (below), however, it is important to note that when a star like Ellen does this, she is only raking in the revenues for the companies that won't fairly negotiate with us -- it prolongs everything.

Ellen DeGeneres is a Scab! Union Review. 09-Nov-2007.

The Credit Bubble and the Crisis of Capital

Today in the WSJ:

California, Ohio and Florida had more than two-thirds of the 25 cities with the nation's highest foreclosure rates during the third quarter, as the credit crunch and falling home values hit homeowners, a foreclosure-listing service said.

James J. Saccacio, chief executive of RealtyTrac Inc., said the number of filings at 77 of the 100 largest metro areas rose from the second quarter. There continue, however, to be "pockets of the country -- most noticeably metro areas in the Carolinas, Virginia and Texas -- that have thus far dodged the foreclosure bullet," the CEO noted.

Higher interest rates and weaker home values have hit many homeowners hard, especially those with higher-risk subprime mortgages. Lenders, in turn, have tightened standards, making it tougher for individuals and companies to obtain credit.

Early this month, RealtyTrac of Irvine, Calif., said third-quarter foreclosure filings surged 30% nationally from the second quarter and nearly doubled from a year earlier, with one foreclosure filing for every 196 U.S. households. Third-quarter filings were up from a year ago in 45 states. Mr. Saccacio said at the time that "given the number of loans due to reset through the middle of 2008, and the continuing weakness in home sales, we would expect foreclosure activity to remain high and even increase over the next year in many markets."

[...]

Barris, Mike. California, Ohio, Florida Lead in Foreclosure Rates. Wall Street Journal. 14-Nov-2007.

And from Justice:

[...]

It wasn’t too long ago that capitalist pundits proclaimed the end of sharp economic crises. The reality, however, is that capitalism is a crisis-ridden system. At the end of the ‘90s, the Federal Reserve moved to contain the collapse of the dot-com boom by lowering interest rates, which combined with an abundant supply of cheap credit and rising home values to trigger the housing bubble.

This led to a feeling of invincibility and incredibly risky investments for casino financial capitalism, which further detached it from the real economy. The current crisis shows that it can only remain suspended in air for a while before the “reality-based” economic laws have an effect.

The current boom has been defined by the increasing chasm between the ultra-rich and the rest of the population. While a few roll in money, wages for the majority have stagnated. Wages and salaries now make up the lowest share of gross domestic product in the U.S. since 1947. Ultimately the falling share of wages in national income is restricting the market for capitalism and increasing the tendency towards crisis.

Enormous anger has built up during the boom years at the unequal nature of society. A job (albeit often low paid and insecure) and the availability of relatively cheap credit, have softened the blows that have rained down on working-class people.

However, the onset of a world recession, when it comes, will profoundly alter the political situation as billions of working-class people will be expected to pay for the crisis. There is not a mechanical connection between economic developments and the consciousness and combativity of the working class, but, whether sooner or later, the coming economic upheavals will lay the basis for a massive increase in radicalization in the U.S. and internationally.

Shibabaw, Theodros. The Credit Bubble Bursts. Justice. 08-Sep-2007.

Our 21st Century Zimmerwald

In September 1915 two coach loads of outstanding socialist leaders from the antiwar left wing of Socialist (2^nd) International affiliated parties, including two future leaders of the October Soviet Revolution - Lenin and Trotsky -- met at Zimmerwald (in neutral Switzerland) to unite those revolutionary socialists prepared to carry out serious and consequent opposition to the imperialist world war. They issued a manifesto calling on soldiers, workers and oppressed peoples and nationalities of Europe to lay down their arms; and to refuse to continue to slaughter one another in the interests of capital; to struggle to defend their own class interests against those who had sent them to the trenches. In today's jargon we might say that the group was small enough to meet in a rented Tim Horton's, but too big to meet in a telephone booth (as do quite a number of ultraleft groups today when they congregate to cross more t's and dot more i's on their manifestos denouncing Chávez and Morales as a mealy-mouthed "populists").

The solid core of the Zimmerwald group, despite its small size, went on to lead the Russian October revolution. Under the impact of Soviet power in the former Tsarist Empire, the capacity of the German and other ruling classes in Europe to continue their carnage and slaughter dissipated. Kings, Kaisers, and Tsars were toppled as the "war to end all wars" collapsed amidst mutinies, rebellions, civil wars, and insurrectionary commotion across the "Old Continent." The rebellious mood even spread to North America as the Winnipeg General strike of 1919 showed.

From Santa Clara (Cuba) -- today's 21^st Century Zimmerwald -- tested Cuban and Venezuelan leaderships wielding government and state power set forth a clear orientation to millions of anti-imperialist, anti colonialist, and anti-capitalist fighters across the continent. Hugo Chávez made it clear that they and their allies will not back down in the face of imperialist threats. And they will not stand idly by - Chávez iterated this with utter clarity - and allow imperialist inspired forces to overthrow the Bolivian government and/or assassinate Bolivian President Evo Morales. The great moral authority of el Che - Ernesto Che Guevara - accompanied that of Fidel Castro and Hugo Chávez to add force and depth to the message.

Our 21st Century Zimmerwald. VenezuelaAnalysis.com. 14-Oct-2007.

Inevitable Inflation?

The new inflation goes beyond all markets, turning them into art forms or play grounds for economic playboys. - Marshall McLuhan, 1974

If food, fuel and housing are all increasing in price, why isn't it called inflation?

The Consumer Price Index (CPI) compiled by the US Bureau of Labor Statistics (BLS) measures these things, but inflation figures are usually reported as excluding costs of essentials, such as food and fuel.

The CPI uses a fixed-weight Laspeyres index to determine prices changes over time, with the base period reseting every two years (more on the CPI index). The scope the CPI measures is the price of a "basket" of goods purchased by a typical "urban" consumer. Items included in the CPI fall into a number of categories including food, housing appeal, transportation, and medical, among others (CPI Q&A).

We know that fuel, education and medical costs have been skyrocketing in recent decades, at the same time that inflation is supposedly staying at 2-3% per year. This has justified keeping wages stagnant for the majority of workers. Why the statistical disconnect?

The answer is that, since 2000, the Federal Reserve system (the Fed) consistently focuses on something called the core-CPI or the CPIX (also core inflation, core index, or core rate). CPIX is a price index which excludes certain items, such as food and fuel.

According to the Federal Reserve Bank of Cleveland, core-CPI is measured as:

CPI excluding food and energy. The most commonly used measure of core inflation is the CPI excluding food and energy, published by the BLS. [The term "core CPI" is often used to refer to this measure.] This measure of core inflation systematically excludes food and energy prices because, historically, they have been highly volatile. More specifically, food and energy prices are widely thought to be subject to large changes that often fail to persist and frequently represent relative price changes.

Cleveland Fed

So the idea is that, there are many ways to measure CPI, and the Fed has picked one that paints the rosiest picture for capitalists. The problem is that it is an incomplete picture which does not reflect reality. Even worse, this neoliberal econometric mechanism has been foisted onto all of the other major economies, including China and the Eurozone, in recent years.

The net effect has been a distortion of the money supply at an unprecedented level in history, which has led to the biggest credit bubble, in terms of capital and breadth, of all time.

What are the results?

In China, consumer price inflation in October reached 6.5%, matching the 11-year highs tapped in August, as the cost of staples foods such as pork and vegetables vaulted.

Pork prices jumped 55%, and vegetable prices surged 30% after a 12% gain during September.

The data are expected to spur further action from Beijing to rein in spiraling prices.

Analysts speculated a further tightening could be imminent, with Beijing poised to lift interest rates for a sixth time this year after the data's release. China's central bank lifted the reserve-requirement ratio for banks for a ninth time this year on Saturday in an attempt to cool lending growth.

"Today's CPI release is likely to persuade the government to closely monitor prices and, in our view, supports our forecast that the PBoC will raise the benchmark one-year lending and deposit rates in the near term," said Yan Zheng, an economist at Barclays Capital, in a note to clients.

Credit Suisse economist Dong Tao added persistently high food prices were a particular worry for the authorities because they signaled broad-based inflationary pressures may be taking hold throughout the economy.

"If the cost of food at the dinner table continues to hold at high levels, people will demand higher wages," Tao added.

English breakfast, mou-shou, baguette prices rise. Market Watch. 13-Nov-2007.

From Marxists.org:

Inflation is the situation wherein the prices of all commodities of whatever kind are subject to a steady and more or less uniform increase in price over time. The term dates from 1838.

Given that price expresses the ratio between a given quantity of a commodity and its equivalent in money, it is self-evident that inflation manifests the falling value of money, rather than the increasing value of all other commodities. Thus, the reasons underlying inflation need to be sought in factors which may be undermining the value of money.

In Capital (Vol I, Chapter 25) Marx discusses inflation and its relationship to the crisis of capital.

Thus, when the industrial cycle is in the phase of crisis, a general fall in the price of commodities is expressed as a rise in the value of money, and, in the phase of prosperity, a general rise in the price of commodities, as a fall in the value of money. The so-called currency school concludes from this that with high prices too much, with low prices too little money is in circulation. Their ignorance and complete misunderstanding of facts are worthily paralleled by the economists, who interpret the above phenomena of accumulation by saying that there are now too few, now too many wage-labourers. Marx, Karl. Capital, Volume I, Chapter 25. 1867.

Inflation has always been blamed by classical economics on the increase of workers wages. The logic being that, the more workers get paid, the more money is in the system, and therefore the less value the currency has vis-a-vis goods and services.

However, history has shown that in fact repeated financial bubbles lead to crisis in capital through boom-and-bust cycles which are the prime drivers of inflation. Again, from Marxists.org:

The most common cause of the loss of value of money is the creation of “Fictitious capital”, i.e., the creation of money or credit exchangeable for money without the creation of commensurate value in the form of goods and services, thus undermining the value of all forms of money and credit: for example, the excessive printing of paper money by the government to finance public works, the creation of fictitious value by banks through unsecured loans, the declining exchange rate of a country's currency, causing prices of all imports to increase, and so forth.

Does this sound familiar? Does this sound like a good description of what has been happening in our economy? First the dot.com fueled stock market bubble, then the housing fueled mortgage crisis credit bubble, both examples of "fictitious capital."

Clearly workers wage increases are not to blame for inflationary economic cycles. It is inherent in the crisis prone capitalist system. The increasing financialization of capital only exacerbates and intensifies the crises.

The greed based capitalist economic system must be replaced by a rational system based on sound principles designed to meet human needs. A move towards 21st century socialism is required to face the challenges of the future and to reverse the ravages of capital.

What other bloggers are saying about core-CPI:

• Inflation: CPI, Core Rate, Inflation ex-Inflation. The Big Picture. 04-Oct-2007.
• What is the core for? Economics and... 01-Oct-2007.
• Pro-forma CPI, or let's pretend there's no inflation. Gold Eagle. 18-May-2005.
• Speechless on Core Inflation. The Big Picture. 27-Sep-2007.