Bourgeois pundits ponder Marx

Repost from Louis Proyect:

Over the past few months there has been a bumper crop of articles in elite publications such as the Financial Times making the case that Karl Marx was right—or mostly right. This is understandable given the perilous times we are living through. The kind of Panglossian message found in Fukuyama’s End of History is ill-suited to a world edged on the precipice of economic ruin, largely beyond the capability of the world bourgeoisie to resolve.

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Towards a Fifth International

Excerpts from an article by Alan Woods reporting from the first congress of the PSUV (United Socialist Party of Venezuela). The emphases are mine:

At the opening session of the PSUV congress Chavez made a very radical left-wing speech, calling for the setting up of a new international, explaining that it was necessary to destroy the bourgeois state and replace it with a revolutionary state, but also referring to the bureaucracy within the Bolivarian movement itself. It was clearly a speech that reflects the enormous pressure from the masses below who are getting tired of talk about socialism, while real progress towards genuine change appears to be frustratingly slow.

[...]

The main emphasis of the first part of his speech was the need to set up a new revolutionary international, which he referred to as the Fifth International. Chavez pointed out that Marx had set up the First International, Engels participated in the founding of the Second International, Lenin founded the Third International and Leon Trotsky the Fourth, but that for different reasons, none of these Internationals existed today.

[...]

Chavez pointed out that the state in Venezuela remained a capitalist state and this was a central problem for the revolution. Waving a copy of Lenin’s State and Revolution (which he recommended all the delegates to read), he said that he accepted Lenin's view that it was necessary to destroy the bourgeois state and replace it with a revolutionary state, and this task remained to be carried out.

23-Nov-2009. Woods, Alan. First Extraordinary Congress of the PSUV - Chavez calls for the Fifth International. In Defense of Marxism.

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.
  

Musing on 21st Century Socialism

I've been thinking a lot about what socialism means in the context of modern times. I am radically opposed to the revisionist histories that suggest somehow the current climate is different than in the past. Many of our comrades seem to ache for a past where socialism was an idea that was widely accepted and popular. I continue to search the history books to find when precisely this may have been. In the times of Eugene Debbs, 100 years ago, when the SPUSA was at its apex, Wobblies were being assassinated by capitalists, none of the capitalist press covered socialist or anarchist movements with any credibility, and Debbs himself was jailed while running for president. Then came the Sedition Act, the Red Scare, McCarthyism, etc. etc. etc.

Perhaps things were better in Europe, but somehow I doubt there was ever a mass politics that measures up to the dreams of some. Certainly there is no reason to change politics simply to try to be popular! I often correlate my experience as a Marxist to that of early Protestants and draw inspiration from the author of "The Pilgrim's Progress," John Bunyan. It took hundreds of years for Protestantism to break the stranglehold of Catholic hegemony. Regardless on how good an idea may be, the more revolutionary it is, the more resistance it shall face because it attacks the interest of a larger base of power.

Considering the past 100 years, I think socialism has done pretty damn well!

What does 21st century socialism look like? Well, this advertisement presents a compelling vision. Take a gander: http://www.veninfo.org/

Revered Chinese Author Ba Jin Dies at 100

Revered Chinese Author Ba Jin Dies at 100
Elaine Kurtenbach, Associated Press

BEIJING (AP) — Ba Jin, one of China's most revered communist-era writers
who attacked the evils of the pre-revolutionary era in novels, short
stories and essays, died Monday of cancer in Shanghai, the official
Xinhua News Agency said. He was 100.

Best known for his 1931 novel "Family," the story of a disintegrating
feudal household, Ba Jin also translated the Russian writers Ivan
Turgenev and Pyotr Kropotkin.

Ba Jin worked well into his later years writing essays and compiling
anthologies of his work.

He was part of the young intelligentsia in the early 20th century that
looked to Western philosophies — Marxism, anarchism, and liberalism — for
solutions to China's backwardness and social inequality.

This story continues at:
http://info.interactivist.net/article.pl?sid=05/10/17/2139240

Discuss this story at:
http://info.interactivist.net/comments.pl?sid=05/10/17/2139240

Adam Smith and the Duff Factor

Adam Smith seems to be one of David Duff's favorite theorist.

The following is a reply to David Duff's recent comments. I believe that our conversation has been very fruitful and wanted to share a bit of it:

Hi Duff. I agree that Adam Smith did not invent capitalism, however your statement that he “described what was going on around him” is incorrect. It is well known that Smith was an apologist for the capitalist and that in many ways he was performing CYA to secure his stellar academic career while he witnessed the incredibly unjust process of primitive accumulation taking place all around him, especially in Scotland.

In fact, Marx was the person who “described what was going on around him.” Additionally, compared to Smith, Marx describes in far more detail the math behind capitalism. Marx understood that capitalism produces more evil than good and further he developed a set of tools for analyzing the mechanics of how the system works. Contrary to your previous statements, neither Marx nor Marxists invented socialism, it existed previously and independently from his body of work. The Communist Manifesto was not even written until 1848, with socialist groups having formed throughout Europe as early as 1827 (and the socialist form of organization having existed since the dawn of human history).

Marx lived and documented what he came to understand as class struggle. On the other hand, your hero Adam Smith invented political economy as a discipline and labeled it a body of natural laws when in fact it is nothing more than assemblage of speculations and doctrine.

Smith is entirely deductive. Smith generalizes the laws of wealth, not from the phenomena of wealth, but from the phenomena of selfishness. He makes men naturally selfish; he represents them as pursuing wealth for sordid objects, and for the narrowest personal pleasures.

Nevertheless Smith gives us some pertinent insights, for instance: "As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce." – and my favorite “[law], is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all.”

Please read Marx’s analysis of Smith in Volume IV, Chapter III of Capital (Marx: Surplus Value) and tell me where Marx goes wrong. Marx understands Smith much better than you or I ever will and does a good job showing Smith’s errors.

Duff, the bourgeoisie revolution brought freedom to many people and changed the world for the better. I believe strongly in the positive results of the American and French Revolutions and the roles they played in bringing down the then-existing aristocracies. Your boogieman, Marx argued this very case many times. But what we see today is that capitalism is the tool of the new aristocracy. The wealth has been reaccumulated to the top, small sellers and buyers, freeholds, farmers, shop owners and common men have no control over their own destinies as we are all essentially slaves to wage labor. This is not what Smith nor Marx had in mind.

Socialism provides an alternative precisely because it offers an achievable system which fits with the demands of a complex society. Duff, if you believe that human nature is not consistent with Socialism, then you must believe that human nature is inconsistent with Christianity as well. I believe you are wrong. People are just as charitable as they are selfish. Given a system that leverages the modes of production for the common good, I believe that people will dedicate their labors to the common good as well. It is what we desire more than anything and ultimately the reason why another world will rise from the ashes of the one created by Capital.

Paris Commune : From Rebellion to Revolution

The year 1871 is the fulcrum point of human history.

It was on March 19th of that year that the Revolution of Paris brought about the final rupture between working-class democracy and the ruling classes. Today, we must look back to the heroes of the Paris Commune and understand how important their bravery was to our changed and happier condition.

The buildup to the Revolution is as inspirational story as one is likely to read. The reactionary rulers of France and Prussia had been subjecting their peoples to a brutal war precipitated by nothing more than pride and adventurism. The people of Paris and the National Guard had been resisting Prussian forces for over six months. Finally the French aristocracy capitulated to the Prussians, and in the peace terms gave Paris over to be sacked.

To facilitate this transfer of power, the officers commanded the National Guard to lay down its arms and surrender its cannons. This was refused, and a rowdy but good natured mob of working Parisians, combined with the citizen soldiers of the National Guard, forced the French army to flee to Versailles. The people then threw up over 600 barricades throughout the city to defender her against all aggressors. In reaction, the vile and treacherous French government declared war upon the citizens of Paris, who had only wished to defend themselves against a foreign invader!

On March 28 the Paris Commune was declared, after democratic elections appointed 101 councilors as wards of the city. Of these 21 were Socialist members of the International Working Men’s Association. Among the many policies implemented, the Commune put a moratorium on unpaid rents, shut down pawnshops, separated the church from the state seizing church property, excluded religion from schools, postponed debt obligations, and abolished interest on the debts.

Local councils were formed to run the city with a high degree of worker control and cooperation. Revolutionary tendencies included anarchists, socialists, Blanquits and libertarian republicans.

Ultimately Paris fell to the treacherous forces of Versailles, who were tellingly more afraid of their own citizens than of a foreign invader. The reactionary leaders of the supposedly opposing sides even collaborated to put down the revolution, with the Prussian king releasing 130,000 French prisoners to send against the Communists. After one month of resistance, Versailles marched through the gate at St. Cloud. In the end nearly 30,000 martyrs lost their lives, men women and children, slaughtered without prejudice. These facts were gleefully recorded by the reactionary press itself, cravenly celebrating the mass murder.

The Paris Commune marks the beginning of the new world for the working classes, and the beginning of the end for class society. This was quite clear at the time to the reactionaries, and continues to be the thing which they fear most to this very day. The Commune was fueled by the moving spirit of a social revolution, a movement of the lowest classes to seize true freedom and equality for all men. The blood of the martyrs is why we raise the red flag to this day!

The history of great peoples contains startling pages which compel the admiration of posterity, and the greatest of these are not generally the records of speedy victories or obvious successes,’ but rather those terrible tragedies in which the souls of nations are rent to the very depths, and show suddenly such tremendous energies that we do not know whether they ought not to inspire us with elevation rather than fear.

Such are the memories which peoples guard as tokens of undying glory, because, in these events, their energies attain the summit of power. The intensest passion used for the furtherance of the loftiest and purest ideal — there is nothing higher than this under the sun. Therefore, the conscience of the people is not deceived herein, and it is in these passages of despair and enthusiasm that they inscribe the names of their heroes.

So, for our part, we say that the Parisians who chose to bury themselves in the smoking ruins of Paris rather than to allow Socialism and the Revolution to be befouled and degraded are as great as the greatest heroes of history.

A Short Account of the Commune of Paris of 1871. by E. Belfort Bax, Victor Dave and William Morris

See also:

• Marxists.org
  
• Paris.org
  
• Pourquoi Pas?