From The SteveLendmanBlog-Class Warfare Jeopardizing American Workers' Security

Tuesday, November 16, 2010
Class Warfare Jeopardizing American Workers' Security

Class Warfare Jeopardizing American Workers' Security - by Stephen Lendman

Warren Buffett once said:

"There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning," Obama's deficit-cutting agenda the latest battle.

On May 4, Hugo Radice, Life Fellow of the University of Leeds School of Politics and International Studies, headlined an article, "Cutting Public Debt: Economic Science or Class War?" asking:

"Is cutting the public debt really an objective economic necessity, or is it actually a deeply political stance, reflecting the interests of the business and financial elites?"

Analyzing historical public policies, he explained the shift from earlier Keynesianism to "the unchallenged hegemony of free-market neoliberalism since the early 1990s." In fact, over the past three decades, it was notable, beginning under Britain's Margaret Thatcher and America's Ronald Reagan, establishing practices that succeeding administrations hardened. As a result, Britain's New Labour governs like Conservatives while American Democrats mimic Republicans, especially on imperial and pocket book issues.

Radice calls it class warfare, pitting private wealth against public good, "a new common-sense" based on property rights, individualism, and notion that free markets work best so let them, including the right to demand massive public spending cuts, ones Radice says "are not, repeat not, economically necessary."

Nonetheless, for over 30 years, they've been ongoing. Since the mid-1970s, real wages haven't kept pace with inflation. Benefits have steadily eroded. High-paying jobs disappeared. Improved technology forced wage earners to work harder for less. More than ever, "free" markets work only for those who control them.

As a result, the class struggle between haves and have-nots escalated. A handful of powerful winners emerged. Wealth disparity extremes became unprecedented. Exploitation increased and successive crises, busts following speculative booms. Easy credit fueled them by excess lending and spending as well as high public and private debt levels. To heal, officials now call for "shared sacrifice," their sharing, our sacrifice.

Richard Wolff calls mainstream economics "faith-based." For Michael Hudson it's "junk economics," a Wall Street power grab, holding industrial America and wage earners hostage, debt peonage the final solution, benefitting only a powerful, elite few.

Today's buzzword across Europe and America is austerity, Obama's deficit commission declaring war on ordinary workers. Targeted are their jobs, benefits, standard of living, and retirement futures from draconian cuts. A scam to transfer greater wealth to the rich, trillions more than already looted, the grandest of grand theft, class warfare of the worse kind, a bipartisan scheme to wreck the economy and working Americans for profit.

After endorsing deficit commission proposals, a second New York Times editorial headlined "Waiting for the President," saying:

There's "no way to wrestle the deficit under control without both cutting spending and raising taxes." Everything "must be on the table," Obama out in front promoting it. Watching from the sidelines increases odds "it will never go anywhere." Strong White House leadership is needed to support "the commission's plain truths."

The Times editorial, other mainstream opinions, and Obama's deficit cutters avoided constructive alternatives, the right way to address high debt, foster economic growth, and lift all boats equitably. Obvious ones include:

-- waging war on concentrated wealth and power;

-- an across-the-board populist agenda, elevating social justice as issue one;

-- slashing the defense budget, minimally in half, ideally much more, including closing overseas bases, reducing force levels, ending foreign occupations, and renouncing imperial wars;

-- a progressive income tax replacing today's dysfunctional one;

-- removing the payroll tax ceiling, taxing all earned income at the same rate;

-- empowering workers to bargain collectively with management on equal terms;

-- a guaranteed living wage, adjusted by urban, rural, state and local considerations;

-- a guaranteed income for the indigent;

-- real regulatory reform, reinstituting vital ones eroded or lost;

-- abolishing monopoly and oligopoly power;

-- strengthening public education;

-- enacting universal, single-payer healthcare, excluding predatory insurers, except as a voluntary option;

-- returning money creation power to Congress as the Constitution mandates;

-- a Tobin Tax to make Wall Street and rich investors pay their fair share; and

-- establishing government of, by, and for the people for real.

Benefits of a Tobin Tax

Besides discouraging speculation, economist Robert Pollin estimates that at one-half of one percent, about $350 billion annually can be raised. A one-tenth of one percent tax on the estimated $500 trillion in annual derivatives trades could bring up to $500 billion a year. Depending on volumes and taxable trading threshold levels, those figures might be greater or smaller but nonetheless considerable. Most important, they'd help grow the economy productively, cut the deficit, and raise everyone's standard of living equitably, especially working Americans left out of bipartisan equation thinking - corrupted for America's aristocracy, Wall Street giants most of all.

Instead ordinary Americans are sacrificed on the alter of capitalist excess, their pain the price for its gain, a shocking indictment of a broken system - venal, depraved, degenerate, and criminal, deserving a dagger in its heart to kill it before making workers serfs, including destroying their retirement security.

America's Growing Retirement Crisis

In the May 2006 issue of Monthly Review, Teresa Ghilarducci titled her article "The End of Retirement," saying:

"Scarcely a day passes without a new pension nightmare: Social Security privatization," corporations ending private pensions, declining household savings, cancelled retirement healthcare benefits, and "401(k) accounts becoming '201(k)s,' " having replaced traditional pensions, defined benefit obligations fast disappearing.

These developments reflect a nightmarish reality. Today's "ownership society" forces everyone to manage their financial futures, leaving them vulnerable to marketplace uncertainties, a task few have enough expertise to handle, especially during hard times, eroding years of built up resources savagely, what older workers may be unable to recoup.

Conditions are far worse today than in May 2006. Yet Ghilarducci said "For the first time in US history, every source of retirement income is under siege: Social Security, personal savings, and occupational pensions." Also Medicare for retirees, their dependents, and the disabled, as well as Medicaid for the nation's poor - vital income-equivalent plans without which millions would be uninsured or underinsured, leaving them vulnerable to the catastrophic illness costs.

In July 2010, Professor James W. Russell, writing in Socialism and Democracy, titled his article, "Retirement Crisis in the United States," saying:

"The great 30-year experiment in 401(k) and similar retirement financing schemes that depend on stock market investments has failed. Even before the" 2008 crash, it was clear, the signs "everywhere that very few workers would be able to accumulate enough wealth through these accounts to insure" their retirement futures.

Like Russell, economist Richard Wolff explains that until 1980, each generation since the 19th century was better off financially than previous ones, including more retirement security. No longer, workers since victimized by institutionalized inequality. Examples include eroded union representation, mostly in commerce and industry, stagnant wages, weakened or lost benefits, and high-risk defined contribution plans replacing secure defined benefit ones.

By 1935, during the Great Depression, 34 European nations and America established social insurance programs. It was a watershed time, "consistent with the socialist value of solidarity through socialization of support for children, the elderly, the disabled, and others unable to" to work productively for a living.

Social Security in America As Amended

The Social Security Act became law when Franklin Roosevelt signed it on August 14, 1935, perhaps his finest hour, a measure during hard times against the 50% poverty rate. It still is when US poverty rates are soaring, perhaps heading for Great Depression levels or higher.

The program works well as mandated, taxing active workers and their employers to support eligible retirees, their dependents and the disabled. As Russell explains: "It is a formula that has worked remarkably well since its inception, producing the federal government's most successful and popular domestic program."

Employers also began offering pensions in a package of other benefits. It worked the same way, they and workers contributing for retirees, "a pay-as-you-go formula" - simple, effective, and assured, based on employment tenure under individual company plans.

The Revenue Act of 1978, however, changed things, its sections 401(k), 403(b), and 457 letting retirement plan contributions be made with pretax dollars. Though intended to encourage workers to participate in defined benefit plans, employers used it advantageously, increasingly switching them to defined contribution ones, providing no assurance of enough income at retirement.

In contrast, "defined benefit plans are progressive reforms within capitalist societies that are consistent with guaranteeing old age support as worker or social rights." Today, they're fast disappearing, victimized by neoliberal "reforms" for business, especially financial industry predators, not employees.

Russell cites two reasons why 401(k)s failed:

-- by falsely assuming worker investments (mostly stock market ones) will provide a secure retirement; given other lifetime obligations, including medical expenses, home purchases and mortgage payments, and college tuitions, it's not possible for most people; and

-- the financial services industry profits hugely from private investment plans, siphoning off large commission amounts that add up through the years; as a result, American workers have subsidized the industry's expansion while jeopardizing their own futures.

In contrast, government or business provided plans are "dedicated purely to supporting retirement instead of creating private wealth," often more for investment firms than their customers, and therein lies the problem. Instead of secure retirement income, having enough depends on marketplace uncertainty that in crisis times can be ruthless, destroying years of savings quickly, savagely, and unfairly.

As a result, for millions, 401(k)s and similar plans have been poison, failing to deliver on promises. Three arguments were made to sell them:

-- they'd way outperform traditional pensions - untrue;

-- retirement income would "owned" - true, but it hardly matters; and

-- they'd be portable - importantly true in a highly mobile society, jobs and careers today changed more often than earlier.

A major problem is how commonly these plans are used - for home purchases, medical expenses, college tuitions, other needs, or discretionary ones, depleting funds intended for retirement.

In contrast, Social Security works as intended by financing it, not private wealth or profits for industry predators. Bogusly, critics claim it's going bankrupt when, in fact, it's sound and secure if properly administered, needing only modest adjustments at times to keep it that way.

Moreover, as explained above, simple revenue enhancement methods exist, including a progressive income tax; removing the payroll tax ceiling, taxing all earned income at the same rate; and instituting a Tobin Tax - combined they might keep Social Security flourishing for a millennium, for sure a century or two, and more.

"They could and should be (ways to expand) Social Security benefits and (begin) phas(ing) out employment-based retirement plans" that don't deliver on promises. Retirement plans should have fundamental goals - to provide predictable, adequate income amounts, adjusted for inflation, delivering as much annual working lifetime earnings as possible. Achieving it depends on replacing today's "three-legged stool" - "Social Security, employment-based benefit(s), and personal savings - with a national system in which Social Security accounts for the" lion's share of income, "topped off by personal savings" that for most people are meager.

A Final Comment

For American workers, achieving retirement security is simple and achievable, but not with opposition from powerful, destructive forces - financial giants complicit with government, willing bipartisan majorities plotting to jeopardize the future of millions. A previous article explained how, accessed through the following link:

http://sjlendman.blogspot.com/2010/11/obama-teams-deficit-cutting-proposal.html

Only mass outrage can stop them from slashing Social Security, Medicare, Medicaid, and other social benefits on the way to ending them - a venal plot to make America another banana republic, its working millions oppressed serfs, their present and future security destroyed. Obama and congressional majorities support this in league with big money backers, largely Wall Street racketeers profiting hugely from sucking public and personal wealth to themselves. The die is cast. It's their future or ours. There's no in between. Grassroots activism only, or lack of it, will decide.

Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net. Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.

http://www.progressiveradionetwork.com/the-progressive-news-hour/.

posted by Steve Lendman @ 4:46 AM

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*Freeze Home Foreclosures, Freeze Mortgage Payments, Restructure Debt- A Fighting Program To Save The Working Class In Order To Fight Another Day

Click on the headline to link to an American Left History entry,
FOR A MORATORIUM ON HOME FORECLOSURES- And A Note On The Housing Question From Friedrich Engels, dated Saturday, May 26, 2007, that relates to this commentary.

Markin comment:

It does not take a hard-bitten communist, although that helps, to know that our class, the working class, along with the marginal working poor, and the vast majority of minorities in this country have borne the brunt, the immediate brunt, of the now several year old economic crisis spear-headed by the continuing debilitating housing crisis. What has not happened, although one would have expected the explosion from the left by now, is any push back against those who created this crisis, the capitalists. This Tea party thing doesn’t count, for our side any way, because from all the anecdotal evidence that I have gathered their position on the plight of the working class is –“tough luck.”

Tough luck, however, is not the policy of those of us who want to fight for our communist future. Thus, since the American Bankers Association, an organization chock- filled with villains in the various crises of the past few years, is meeting this week, the week of October 17th, in Boston to further their dastardly plans to wreck havoc on the economy I have a three-point program that those of us on the other side can fight around.

Immediate, Unconditional Freeze On Home Foreclosures. This is a no-brainer, even on technical grounds according to the various recent media reports recently about the snafus in this process.

Freeze Mortgage Payments. Hey, those who are swamped in debt up to their eyeballs need relief from these ballooning mortgage payments that have forced millions to walk away from their homes probably never to have another change, at least under this capitalist system, to own their own homes.

Restructure Debt. One of the key practices that has been exposed for all to see during this crisis is that working people, with nothing but their labor to survive on, have been gouged on ultra-usurious interest rates, penalty rates, and extra add-ons. Enough.

Of course, any self-respecting banker, although that seems oxymoronic here, is going to choke on her or his five-course dinner on reading this program. Oh well, if that is the worst thing that happens to them in their sorry lives they will have gotten off easy. If they, and their finance capitalist-driven system can’t see their way clear to do this then we say move on over and we will take charge and implement the program. For that it does take hard-bitten communists though. Fight For A Workers Party That Fights For A Workers Government! 

*On The Question Of Organizing Anti-War Contingents For The October 2, 2010 "One Nation" Demonstrations In Washington, D.C.

Click on the headline to link to the Majority Agenda Report website for information on the aims of sponsors of the One Nation October 2, 2010 March and Rally in Washington, D.C.

Markin comment:

Last winter I went out of my way to argue, and argue strongly, for organizing our anti-capitalist, anti-imperialist forces as best we could for the March 20th anti-war rally in Washington, D.C. (See, On The Question Of Organizing For A Major National Anti-War Rally This Spring – A Commentary, dated January 30, 2010.) My motivation at that time was to stir up opposition to President Barack Obama’s then recent troop escalations in Afghanistan with a show of anti-war forces in the streets if for nothing else than to see who we really had on board, and to stick a thumb in Obama’s false anti-war credentialed eye. As I noted after the event the turnout was not as large, not nearly as large, as we could have used in order to create an effective battering ram against the Obama war policies. I believed, and argued so shortly after that rally to the effect, that it was still a worthwhile effort.

Now comes the inevitable fall campaign season, no, not the electoral sideshow 2010 Congressional elections but a labor-centered rally in Washington, D.C. on October 2nd being pushed by the NAACP, SEIU, AFL-CIO and the usual other suspects . (See the call to action from the Majority Agenda Project website below). As a perusal of the call indicates this is about jobs and other economic issues (all important, no question) but has no, none, nada, point on the struggle against Obama’s imperial war policies. I assume the sponsors, given their almost unanimous 2008 support to his candidacy, believed that they were being very “radical” by merely advocating the idea of a rally in Obama’s Washington during election time. Well, as the saying use to go back in the day, the 1960s day, a Maoist favorite aphorism as well, that is THEIR contradiction.

That, however, still begs the question of what leftists and other anti-war militants should do about the war issue at this rally. Or, for that matter, about whether we should be marching in this thing at all. I believe on that second point, which also will incorporate the first point, that we should attend as anti-war contingents linking the opposition to the Obama war policies with the one thousand and one other things that need fixing and that his Administration is patently incapable of fixing, even if it knew how to do so is which is very much up an open question these days.

As motivation for this position I would offer up most of the arguments that I made for participation in the March rally and will repost the pertinent sections below:

“In a recent blog entry, As The 2010 Anti-War Season Heats Up- A Note On "The Three Whales" For A Class Struggle Fight Against Obama’s Wars, dated January 19, 2010, I put forth a few ideas, particularly around the concept of forming anti-war soldiers and sailors solidarity committees, that the circle of anti-war militants that I work with locally are committed to pursuing this year as the struggle against War-monger-in-Chief Obama’s Afghan war policies takes shape. The elephant in the room that was missing in that laundry list of tasks enumerated in the entry was any notion of supporting a national mass anti-war rally in Washington, D.C. this spring, now scheduled, as usual, for the anniversary of the start of the Iraq war in 2003, March 20th. And there is a good and sufficient reason for that omission. The circle is split on an orientation toward that event. Thus, the comment that follows in favor of organizing for and building such an endeavor and putting some resources and energy into the event is my own personal take on the question, fair or foul.

Certainly, given the priorities listed in that previous blog entry mentioned above, it would be quite easy to walk away from serious organizing for, getting transportation for, making housing arrangements for, and the thousand and one details that go into providing a contingent for a national march or rally. Moreover, as has been argued in the circle by a number of militants, to do so for just one more garden variety of a seemingly endless (and fruitless) series of mass marches over the past several years. And normally I would agree with that analysis, especially once it became clear that the main strategy of those groups who call such national marches is to make such events the main, and exclusive, point of extra-parliamentary opposition to the war. Or worst, see these things as an effective political tool for “pressuring” politicians, especially “progressive” Democrats (if there are any left, as of late). Pleassee...

Hear me out on this one though. President Obama made his dramatic announcement for a major Afghan troop escalation on December 1, 2009. That, along with a less publicized build-up in February 2009, and the odd brigade deployed here or there since has meant that the troop totals-I will not even bother to count “contractors”, for the simple reason that who knows what those numbers really are. I don’t, do you? - are almost double those that ex-President Bush nearly had his head handed to him on a platter for in the notorious troop “surge” of 2007. And the response to Obama’s chest-thumping war-mongering. Nada. Or almost nothing, except a small demonstration in Washington on December 12th with the “usual cast of suspects” (Kucinich, McKinney, et. al) and a few hundred attendees and small local demonstrations around the country.

Now this might seem like a slam-dunk argument for wasting no more time on the spring rally tactic. And that argument is enticing. But, as a veteran of way too many of these demos, and as a militant who has spilled no small amount of ink arguing against the endless rally strategy on many previous occasions, I still like the idea of a spring march. First, because Obama needs to know that those on his left, particularly those who supported him in the 2008 election cycle are more than just passively angry at him for the Afghan troop escalation. And that is important even if the numbers do not match those of the Bush era. Secondly, those of us on the extra-parliamentary left need to see who those disenchanted Obamians are. If we are going to be successful we have to get our fair share of these left-liberals before they ditch politics altogether. And lastly, as the bikers and gang members say- “we have to show our colors”. Large or small we need to see what we look like. All those may not be individually, in the end, sufficient reasons but I will say this to finish up. Unless you plan to have an anti-war demonstration outside the gates of places like the military bases at Fort Bragg, Fort Hood, Fort Drum, and Fort Lewis in which case I will be more than happy to mark you present and accounted for you should be in Washington on March 20th. And ready to fight around the slogan – Obama- Immediate, Unconditional Withdrawal of all U.S./Allied Troops and Mercenaries from Iraq and Afghanistan!”

And on October 2nd too! More later.


***************


Published on Majority Agenda Project (http://majorityagendaproject.org/go)

Home > A Call to all sectors of our movements for justice and peace to mobilize for October 2

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A Call to all sectors of our movements for justice and peace to mobilize for October 2
signatories [1] || what you can do [2] || transportation [3]

The NAACP, SEIU 1199, United for Peace and Justice, the AFL-CIO, Green for All, and a broad range of civil rights, labor, peace and social justice organizations around the country are calling upon us to join them on October 2 in Washington. Leading with a demand for jobs, this will be a massive demonstration to blunt the attack from the right and to unify a majority of Americans around a hopeful and inspiring vision of our nation based on social justice, mutual respect and common values.

Come to Washington DC on October 2 for an emergency mobilization of all our forces at this critical moment before the fall elections!

•Take our government back from big oil and the banks.
•Stand up for the well-being and economic security of all our families.
•Stand up against hatred, intolerance and immigrant-bashing.
•Stand up for a society that works for all of us.
•Demand the change that we voted for in 2008.

Dear Friends,
Our country is at a crossroads. Big oil, big banks, big pharmaceuticals, the military-industrial complex and big money of all types have a stranglehold on our government and our society. Their corporate agenda has led us into an unparalleled social crisis marked by economic distress, environmental danger, unsustainable military spending and endless war.

But this is also a time of opportunity for comprehensive, mutually-reinforcing and effective solutions: building a green economy cuts harmful emissions and creates millions of desperately needed jobs; national security based on international cooperation and negotiation rather than war frees up the resources needed to keep our teachers in the classroom and maintain all essential local services; sustainable economic policies protect our environment and foster grassroots economic development. All of these goals are within our grasp and are supported by a growing majority. Together they save lives, dollars and the planet that sustains us.

Yet instead of positive solutions we see the media dominance of an aggressive, energized and reactionary movement of the right fostered by Fox News and an out-of-control talk radio establishment. Intolerance, hatred and immigrant-bashing will be the big story this fall--grabbing national attention and electing extremist candidates who will ride the coattails of that mobilization to make big gains in November and beyond. Unless …

…we all come together to create a vibrant, viable grassroots mobilization built on a vision that inspires action and commitment. That galvanizes the majority for justice and fair play. That builds a movement that involves everyone in dealing effectively with the multiple crises confronting the country.

Now is the time to give visibility to effective policies that actually address our crises of employment, health care, environmental catastrophe and a deepening war in Afghanistan and Pakistan that is draining our resources, undermining out security and killing scores of people every day.

It is critical that our social movements join together with labor and major African-American and Latino organizations to make a broad-based showing of strength.

Fortunately, the NAACP in Washington and SEIU 1199 in New York have initiated “One Nation Working Together.” Exciting meetings in New York and Washington brought together the AFL-CIO, many other labor unions, United for Peace and Justice, Green For All and over one hundred other major social change organizations. They are building a mobilization that can unify the majority around a hopeful and inspiring vision of our nation based on social justice.

The signature event of One Nation is a massive march on Washington on October 2, 2010.

They have asked all of us to join them in this major effort to move us off the sidelines of the national debate and out, onto the playing field where we can participate in the fight for the future, starting with the fall elections.

This mobilization addresses only some of the key issues that deeply concern us. But without such a mobilization, all of our efforts will be set back years if the right-wing mobilization is allowed to go unchallenged.

We call on all parts of our social movements to mobilize for the October 2 demonstration and participate in the One Nation Campaign and bring your priorities to D.C.

- The Majority Agenda Project
August 4, 2010

*From The Archives- Marx vs. Keynes- A Guest Commentary

Click on title to link to archival article about the current "hot" topic of Keynesian economic policy and a Marxist response (from history) to its re-emergence as a bourgeois panacea, of sorts.

*From The Archives Of "Workers Vanguard"- Marx vs. Keynes

Markin comment:

As almost always these historical articles and polemics are purposefully helpful to clarify the issues in the struggle against world imperialism, particularly the “monster” here in America.

Workers Vanguard No. 932
13 March 2009

From the Archives of Workers Vanguard

Fiscal Fiddling Can’t Stop Depression

Marx vs. Keynes

By Joseph Seymour

The deepening economic crisis has meant the loss of jobs, homes and savings for millions of working people. It has also demonstrated the utter fallacy of the economic doctrine of monetarism, which maintained that economic crises could be minimized, if not eliminated, by adjusting the amount of money in the banking system along with interest rates. Monetarism was the gospel for bourgeois economists in the right-wing climate marked by the ascendancy of Ronald Reagan and Britain’s Margaret Thatcher in the 1980s. The counterrevolutionary destruction of the Soviet Union in 1991-92 and the attendant “death of communism” triumphalism in the western imperialist countries, centrally the U.S., put more wind in the sails of the “free market” ideologues of monetarism.

Today, with the monetarist myth in tatters, bourgeois economists have rushed to embrace the ideas of John Maynard Keynes, the British economist who, during the Great Depression of the 1930s, championed the notion that capitalist economic crises could be overcome through government deficit spending. That is the idea behind President Barack Obama’s “stimulus” package, an expenditure of almost $800 billion financed by government borrowing that is supposed to “jump start” the economy. In reality, Keynesian economic schemes, no less than monetarist ones, run up against the destructive irrationality of the capitalist system, analyzed and explained by Karl Marx and highlighted by the boom-and-bust cycle.

The article reprinted below, first published in WV No. 64, 14 March 1975, presents a Marxist critique of Keynes’s economic theory.

The current extremely sharp economic downturn has produced a wave of pessimism extending from the Stock Exchange and White House to the academic redoubts of bourgeois economics. While President Ford proclaims that unemployment will not drop below 8 percent again for another two years, the president of the American Economics Association, Robert A. Gordon, declares: “I don’t think we have a body of economic theory that is of great help to use in today’s world” (Wall Street Journal, 30 December 1974).

During most of the 1960s U.S. government economic policy was dominated by Kennedyesque “whiz kids” who claimed to be able to simultaneously hold down prices and stimulate investment through adroit manipulation of fiscal “levers.” Now, however, with the onset of double-digit inflation and a slump of depression proportions, these claims are rapidly being debunked.

It was predictable that a world depression would lead to the collapse of optimism concerning Keynesian economic policies. The anti-Keynesian right (well represented in the Ford administration by the Ayn Randite Alan Greenspan and by former Wall Street bond dealer William Simon) had argued for years that government deficits must generate ever-increasing inflation, and now claims vindication.

Even the Keynesian liberals appear unsure of themselves, observing that the “trade-off” between inflation and unemployment has become most painful. Thus Sir John Hicks, one of the original architects of the “Keynesian Revolution,” has recently brought out a book entitled, significantly, The Crisis of Keynesian Economics. And revisionist Marxists who had earlier written about the “relative stability of neo-capitalism” are now dusting off their copies of Capital and asserting that its venerable truths still haunt the capitalist world.

We are witnessing a notable intellectual convergence ranging from bourgeois reactionaries (Milton Friedman) to ostensible Marxists (Ernest Mandel), and including a number of liberals (John K. Galbraith, John Hicks, Abba Lerner): Keynesian economics, which supposedly “worked” for a generation, has now been overcome, they agree, by unprecedented global inflation and the worst crisis since 1929. Despite its widespread acceptance, however, this thesis is false. Keynesian fiscal policies never did, and never could, stop the cyclical crises of overproduction which are inherent in the capitalist system.

A major world slump as severe as the present one has been possible at least since the world recession of 1958. That such a slump did not occur before 1974 is due to contingent factors and not to the effectiveness of Keynesian countermeasures. For example, in 1967 the U.S. would have had a recession except for the expansion of the Vietnam War. Output actually did fall in the first quarter of that year and there was a 1967 recession in West Germany, then the second-largest capitalist economy. Without the sudden escalation of the Vietnam War, this conjuncture would undoubtedly have caused a world economic crisis, possibly quite severe. Only an idiot objectivist could deny this historic possibility.

The fact that a major world slump did not occur in the 20 years preceding 1974 is not due to credit inflation, an ever-increasing arms budget, Keynesian stabilization policies or any other deliberate government policy. There has been no fundamental change in the structure of postwar capitalism that would justify the various labels popular in liberal and revisionist Marxist theorizing—e.g., neo-capitalism, the mixed economy, the permanent war economy, etc.

Myths of the “Keynesian Revolution”

John Maynard Keynes was not responsible for developing or even for popularizing the policy that capitalist governments should increase their expenditures during an economic downturn, financing this through borrowing rather than increased taxation. This bourgeois reform measure has a long and respectable history going back to at least the 1890s.

Thus the minority report of the English Poor Law Commission of 1909 stated, “We think that the Government can do a great deal to regularize the aggregate demand for labour as between one year and another, by a deliberate arrangement of its work of a capital nature.” In 1921 President Harding’s Conference on Unemployment recommended expanded public works during the postwar downturn, a recommendation endorsed by such conservative organizations as the U.S. Chamber of Commerce.

Moreover, in 1930 a bill was introduced into the U.S. Senate (No. 3059) calling for “advanced planning and regulated construction of certain public works, for the stabilization of industry, and for the prevention of unemployment during periods of business depression.” This principle was incorporated into the National Industrial Recovery Act of 1933, a half decade before the popularization of Keynesian economics.

What, then, is the significance of Keynesianism—why all the hullabaloo? While practical politicians had advocated and partly attempted expanded government expenditure during economic downturns, orthodox bourgeois economic theory (particularly in English-speaking countries) still held that slumps were easily self-correcting through a fall in the rate of interest. According to the textbooks, government policy during a downturn should be to expand bank reserves and run a balanced budget.

What Keynes did was to provide a theoretical justification, within the framework of bourgeois economic doctrine, for the deficit spending which most capitalist governments practiced in the 1930s, as well as in earlier slumps. The “Keynesian Revolution” was a revolution in university economics departments, in the writing of textbooks, not in actual government policy.

In the post-World War II period, capitalist politicians have claimed that the relative economic stability has been due to their effective use of Keynesian stabilization policies. This assertion—that capitalist governments can and do control the economy for the benefit of “the people”—is partly bourgeois propaganda and partly bourgeois false consciousness.

The notion that the proportion of government expenditure has increased greatly since World War II is so widespread that it is taken as a matter of course by virtually all political tendencies, including bourgeois reaction, Keynesian liberalism, social-democratic and Stalinist reformism, and revisionist “Marxism” à la Mandel. In truth, the supposed expanded role of state expenditure is the greatest of all myths of the “Keynesian Revolution.”

It can be easily disproved by a few statistics which indicate government expenditure as a percentage of gross national product for the major capitalist powers during the interwar period (1920-39) and during the 1961-70 decade:

Country 1921-1939 1961-1970
France 14% 13%
Germany1 18% 16%
Great Britain2 21% 19%
Japan 10% 8%
United States 11% 20%

Sources: OECD, National Accounts, 1961-1972; U.S. Department of Commerce, Long-Term Economic Growth, 1860-1970; Mitchell, Abstract of British Historical Statistics; Stolper, The German Economy, 1870-1940; Maddison, Economic Growth in the West; Ohkawa and Rosovsky, Japanese Economic Growth.

1German interwar figures only cover 1925-39.

2British figures are based on national product net of depreciation, giving them a slight upward bias relative to the other countries.

These few figures utterly destroy the notion of a “Keynesian Revolution” involving major structural changes in the capitalist system following World War II. Only in the United States was there a significant rise in the level of government expenditure. In all other major capitalist countries, the weight of the state budget in the economy declined slightly. And the expanded role of the state budget in the U.S. is entirely accounted for by the greatly increased military expenditure required by the emergence of American imperialism as world gendarme in the postwar period.

Moreover, the relative weight of military expenditure in the U.S. has been steadily declining since the Korean War, except for the Vietnam War years. In 1954 (the year following the end of the Korean War) the military budget accounted for 11 percent of the U.S. gross national product (GNP); by 1965 (the year before the Vietnam buildup) the figure had fallen to 7 percent; and in 1973 military spending accounted for only 6 percent of GNP (Economic Report of the President, 1974). So much for the “permanent war economy” theory!

Marxism vs. Keynesianism

Before undertaking a Marxist criticism of Keynesianism it is necessary to indicate more precisely what it is that the latter asserts. According to the pre-Keynesian orthodoxy of bourgeois economics, a fall in the volume of investment that precipitated a slump would also free money capital, which in turn would enter the loan market and drive down the rate of interest. This fall in interest rates would then stimulate investment to the point that full employment of resources was restored. All the government had to do was to see that the crisis did not disorganize the banking system, i.e., to ensure that the mechanisms of credit expansion remained functioning.

Keynes accepted the theory that a sufficient fall of interest rates would restore a full-employment level of investment in a slump. His major work, The General Theory of Employment, Interest and Money, is an attempt to explain why such a sufficient fall of interest rates does not occur. Keynes asserted that rentiers held some notion of a normal rate of interest. If the rate falls much below this, lenders will expect it to rise again, thereby producing a capital loss on bonds purchased at the lower rates. In a general sense, Keynesianism holds that at some abnormally low rate of interest (termed the “liquidity trap”) lenders will hoard money in anticipation of higher rates in the future. This is less an explanatory theory than a description of the monetary aspect of a crisis/slump.

From these premises Keynes argued that government efforts to expand money and credit during a slump would be ineffective, producing simply money hoards and/or excess bank reserves. Therefore, he argued that increased state expenditures would have to substitute for inadequate capital investment. This, in a nutshell, was the “Keynesian Revolution.”

In order to understand the difference between Marxist and bourgeois (including Keynesian) analyses of economic cycles, it is necessary to take account of a fundamental difference concerning the role played by the rate of interest. In bourgeois economics the level of investment is determined by the difference between the rate of interest on borrowed money capital and the rate of profit on the physical means of production. As long as the interest rate is substantially below the profit rate entrepreneurs will presumably borrow and invest until this gap is eliminated. A historical tendency for the rate of profit to fall, projected by many bourgeois economists (including Keynes), is not viewed as a fundamental barrier to expanded production. As long as the rate of interest is sufficiently low, a full-employment level of investment is supposedly assured.

In contrast, for Marx the level of investment is determined by the rate of profit on the privately owned means of production. The interest rate is part of and governed by the profit rate on the real means of production. During a slump, despite abnormally low rates of interest, loanable capital remains unused. Thus Marx referred to “the phase of the industrial cycle immediately after a crisis, when loanable capital lies idle in great masses” (Capital, Vol. III, Chapter 30).

The validity of the Marxist position was demonstrated during the late 1930s when excess bank reserves (an index of the difference between actual loans and the legally authorized lending capacity) were at the highest level in U.S. history, in spite of the unusually low interest rates. The exact same phenomenon is occurring in the present depression. Bank deposits in the U.S. are now declining at an annual rate of 0.6 percent as bank loans fall, although the falling interest rates are now even lower than the rate of inflation (International Herald Tribune, 15-16 February). The expansion and contraction of credit is a passive result, not a cause, of changes in production.

Underlying the analytical difference over the role of credit and interest between bourgeois and Marxist economics is the concept of class. In bourgeois economics there is no capitalist class. Instead, atomized non-capitalist entrepreneurs borrow from equally atomized rentiers, using the funds to establish productive enterprises. Entrepreneurs and rentiers are linked solely through the rate of interest.

According to Marxism, however, the capitalist class is a definite concrete group composed of those who own and have a monopoly over the means of production (including loanable capital). The capitalist class is bound together by innumerable personal, familial and organizational filiations; the atomized non-capitalist entrepreneur—the central figure of bourgeois economic theory—is a fiction. The capacity to borrow is strictly limited by one’s ownership of the capital assets required for security against loans. In reality, credit under capitalism is always rationed, on the basis of specific monopoly complexes involving financial, industrial and commercial capitalists. The clearest example of this is the Japanese zaibatsu system, but the same phenomenon holds throughout the capitalist world.

From the Marxist standpoint the fundamental fallacy of Keynesian economics is the assertion that the expansion of the government sector will leave the rate of profit, and therefore the level of private investment, unchanged. Whether financed through borrowing or taxation, government expenditure constitutes overhead costs of the capitalist system—a part of the total social capital expended and replaced, denoted by “constant capital” in Marx’s equation for the components of the commodity product. (For a fuller discussion of this question, see “Myth of Neo-Capitalism,” RCY Newsletter No. 10, January-February 1972.)

Assuming, as Marx did, that the share of wages of productive workers (variable capital) is determined in the labor market, then an increase in government overhead costs (constant capital) must reduce the potential surplus value and therefore the rate of profit as well. A constantly expanding government sector would tend to drive down the rate of profit, progressively arresting private capitalist investment.

The Limits of Mattick’s “Mixed Economy”

Published in 1969, Paul Mattick’s book Marx and Keynes, which carries the more indicative subtitle, The Limits of the Mixed Economy, accepts the common revisionist/reformist/liberal view that for a certain historic period Keynesianism produced “prosperity”:

“Government induced production may even bolster the rate of economic growth. Conditions of ‘prosperity’ more impressive than those brought forth under laissez-faire conditions may arise.... At any rate, recent economic history has demonstrated the possibility of a ‘prosperous’ development of a mixed economy.”

However, Mattick at least makes a serious attempt to develop the internal contradictions of Keynesian economic policy and holds that increased government expenditure must eventually destroy capitalist stability:

“Once non-profit production becomes an institutionalized part of the economy, a vicious circle begins to operate. Government production is begun because private capital accumulation is diminishing. Using this method diminishes private capital accumulation even more; so non-profit production is increased.... The limits of private capital production are thus, finally, the limits of government induced production.”

The most orthodox of the various revisionist theoreticians of postwar capitalism (e.g., Mandel, Paul Sweezy, Michael Kidron), Mattick is the most grudging in giving ground before the claims of Keynesianism. In contrast to Mandel and Sweezy, Mattick’s work has the virtue of recognizing that expanded government expenditure drives down the rate of profit on private capital and therefore inhibits productive investment. However, Mattick would have been more consistent with Marxist economics if instead of treating government expenditure as a non-profit component of surplus value he treated it as a subtraction from the gross value of output, in the form of constant capital expended and replaced.

Mattick’s work is a partially correct explanation of why those capitalist countries bearing a heavy burden of government expenditure (the U.S., Great Britain) have grown much slower than those economies with a relatively limited state sector (Japan, France). Yet his theory cannot explain the onset of a major world depression, nor does Mattick project such a development. The logic of his theoretical model is for progressive stagnation, not a general world slump.

According to Mattick’s model, a sharp fall in private investment such as occurred in 1974 should have been preceded and caused by a sharp rise in the share of government expenditure. But this did not at all happen during the 1972-73 boom. The share of government outlays in the advanced capitalist countries remained virtually unchanged during that period, as can be seen from the following figures:

Government Expenditures as Percentage of GNP

Country 1971 1973
France 12% 12%
Japan 9% 9%
United States 22% 22%
West Germany 17% 18%

Source: OECD, Economic Outlook, December 1972 and December 1974.

Thus even at the empirical level it is indisputable that the current world economic crisis cannot be attributed to the limits of Keynesianism, at least not in the sense of intolerably large government expenditure relative to private capitalist production.

The Mandelian School of Falsification

In “The Generalized Recession of the International Capitalist Economy” (Inprecor, 16 January 1975) Ernest Mandel, theoretician-leader of the pseudo-Trotskyist United Secretariat, attempts a major analysis of the world conjuncture. The article begins with a statement of self-praise to the effect that the author, unlike many others, always rejected the idea that Keynesian economic policies could stabilize capitalist industrial cycles:

“While the recession may be a surprise to all those in bourgeois and petty-bourgeois circles and in the workers movement who had been taken in by the claim that the governments of Capital endowed with neo-Keynesian techniques would henceforth be in a position to ‘control the cycle,’ it was foreseen and predicted by our movement, almost to the date.”

And who are these unnamed figures in the workers movement who believed—oh, how naively—that “neo-Keynesian techniques” could “control the cycle”? Perhaps Mandel is referring to the author of the following excerpts from a well-known book on Marxist economics published in 1962:

“Since the Second World War, capitalism has experienced four marked recessions: in 1948-49, 1953-54, 1957-58, and 1960-61. It has had no grave crisis, and certainly nothing of the dimensions of 1929 or of 1938. Have we here a new phenomenon in the history of capitalism? We do not think it necessary to deny this, as certain Marxist theoreticians do.... The origins of the phenomenon are connected with all the features of the phase of capitalist decline which we have listed. The capitalist economy of this phase tends to ensure greater stability both of consumption and of investment than in the era of free competition, or than during the first phase of monopoly capitalism; it tends toward a reduction in cyclical fluctuations, resulting above all from the increasing intervention of the state in economic life.” [emphasis in original]

What is this supposedly Marxist work which claims that state intervention has ensured “greater stability” and “a reduction of cyclical fluctuations”? It is entitled Marxist Economic Theory (the excerpts are from Chapter 14) and is written by one Ernest Mandel.

To be fair to Mandel, it should be noted that he always hedges his bets. He has not completely rejected the efficacy of Keynesian countercyclical measures. Buried in the Inprecor article is a statement that governmental intervention can arrest and reverse the present world economic crisis:

“The recession is precisely a crisis of overproduction whose breadth and duration are limited by an injection of inflationary buying power. Thus, if the economy is refloated by means of such injections—first of all in West Germany, then in the United States and Japan—the international capitalist economy will avert a grave depression this time.”

If this were possible, one wonders why the capitalist governments have let things go so far.

Despite his usual fine-print escape clauses, Mandel’s latest contribution is a dishonest repudiation of the analysis of contemporary capitalism expressed in his principal writings during the 1960s. Having served its purpose as an impressionistic justification for opportunist policies of adaptation to the labor bureaucracy, “neocapitalism” has now been discreetly removed from the Mandelian vocabulary.

A Professional Impressionist Views the Conjuncture

Having “disappeared” his belief in the efficacy of Keynesian stabilization policies, Mandel resorts to various ad hoc theories to explain the present conjuncture. His central theme is why there is a world crisis now, whereas during the past 20 years the various national slumps (sometimes severe) were largely isolated in time from one another. As Mandel puts it:

“The generalized recession will be the most serious recession in the post-war period, precisely because it is generalized. The lack of synchronization of the industrial cycle during the 1948-68 period reduced the breadth of recessions.”

It is an indisputable empirical fact that since the 1958 recession (not since 1948 as Mandel contends), the various national economic downturns have not reinforced and have partly offset each other. This statement can be transformed from an empirical description into a causal theory only if it is asserted that the absence of conjunctural synchronization was not due to contingent factors, but rather was inherent in the structure of postwar capitalism (at least until recently). This is precisely what Mandel now seeks to demonstrate:

“This synchronization is not an accidental feature. It results from deeper economic transformations that occurred during the long period of expansion that preceded the recession.”

Mandel advances three reasons to support this thesis. The first is that the world economy in the l950s-1960s was not sufficiently integrated (!) to permit a generalized crisis. But during that period, the world economy became sufficiently integrated, particularly due to the expansion of multinational firms:

“Internationalization of production took new leaps forward, marked by advances in the international division of labor among all the imperialist countries. From the standpoint of the organization of capital, this reflected itself in the rise of multinational firms which produced surplus value in a great number of countries simultaneously....”

Apparently it really is necessary to point out to Mandel that the world economy has been sufficiently integrated to generate international crises/slumps for more than a century! The principal basis of that integration is world commodity trade and its associated complex of financial claims. The principal “multinational firms” which extract surplus value in a “great number of countries simultaneously” are today, as they have been for centuries, the great banks, not industrial corporations.

World crises are marked and intensified above all by major bank failures: the Austrian Credit-Anstalt in 1931, Bankhaus Herstatt in West Germany and Franklin National Bank in the U.S. in 1974. The partial displacement of banks by industrial firms in financing international trade and investment has a certain effect on present-day capitalism. But it certainly does not qualitatively raise the level of international economic integration, permitting world economic crises for the first time.

Mandel’s second reason is that the displacement of the dollar exchange standard by managed fluctuating rates in 1971 has prevented competitive devaluation, thus requiring simultaneous deflationary policies:

“...as soon as the collapse of the international monetary system led to the system of floating exchange rates, that is, as soon as it became impossible to resort to sharp devaluations to boost exports, all governments were obliged by interimperialist competition to apply an antiinflationary policy simultaneously.” [emphasis in original]

This argument is simply false, totally wrong. The fixed exchange rate system set up at Bretton Woods in 1944 was deflationary and acted as a limit to deficit spending. Several prominent British Keynesians, such as Roy Harrod and James Meade, long advocated fluctuating exchange rates in order to pursue more expansionary monetary and fiscal policies.

Before August 1971 competitive devaluation was exceptional, to be used only in extremis; today it is the rule. During the 1950s and 1960s governments often resorted to deflationary measures to protect an overvalued exchange rate (for instance, the policies of the second Eisenhower administration, the austerity program of the early Gaullist regime and the “stop-go” policies of various British governments before the 1968 devaluation of the pound).

Mandel’s third reason is that since periods of national economic slump are becoming longer they are more likely to overlap with recessions in other countries:

“The phases of stagnation, and even recession, are beginning to be longer. Obviously, this leads to synchronization. When they occur in a dozen countries at once, recessions that last six months are less easily surmounted than recessions that last two years.”

This is, of course, a statistical truism. However, since the prolongation of an economic crisis in one country is strongly influenced by simultaneous slumps in the rest of the world, Mandel’s reasoning is completely circular. Thus his third “reason” is no reason at all but simply another way of describing a general world downturn.

In short, of Mandel’s three reasons why a general world slump is occurring now but was not possible in the preceding period, the first is irrelevant, the second is false and the third is meaningless.

Is Inflation the Achilles Heel of Keynesianism?

Virtually all liberal bourgeois, reformist and revisionist economists maintain that the only obstacle to effective Keynesian policies is inflation. Expanded government expenditure can always produce full employment, they say, but sometimes only at the cost of intolerable rates of inflation. From bourgeois reactionaries like Milton Friedman to the pseudo-Marxist Ernest Mandel there is agreement that Keynesian policies must generate ever-higher levels of inflation. Is this contention valid?

The accelerated inflation of the past few years is an indisputable empirical fact. In the period 1961-71 consumer prices in the advanced capitalist countries increased at an annual rate of 3.7 percent; in 1972 this rose to 4.7 percent, in 1973 to 7.7 percent and in 1974 to 14.1 percent (OECD, Economic Outlook, December 1974)! Is this accelerated inflation an inevitable result of 20 years of Keynesian policies?

Earlier in this article it was pointed out that the share of government expenditure did not increase during the 1972-73 boom. Thus the price explosion during the past few years cannot be attributed to ever-greater budget deficits to finance ever-greater government spending. The very sharpness of the price increases since 1971 argues against the theory that it is an organic, inevitable outcome of a generation of deficit spending.

What then is the cause of the increased inflation of the past three years? One major cause has already been touched on. The dollar exchange standard, which collapsed in August 1971, had an effect partially similar to the pre-World War I gold standard. The maintenance of a fixed exchange rate served as an external limit to the expansion of domestic money and credit. Since 1971 capitalist governments have taken the “easy way” out of balance-of-payments deficits by allowing their currencies to depreciate. Exchange-rate devaluation further feeds domestic inflation, producing a vicious spiral. Britain and Italy are the clearest examples of this process.

The second reason for the accelerated inflation is that the sharp 1972-73 world boom had an effect on agricultural and raw material supplies similar to that of a major war. From the Korean War through 1971 the terms of trade for agricultural products/raw materials had deteriorated relative to manufactures, producing a fundamental imbalance in global productive capacity. During 1972 when industrial output in the advanced capitalist countries increased by 8 percent, global food production actually fell slightly (OECD, Economic Outlook, December 1973). These physical shortages quickly generated speculation, hoarding and cartel manipulation. Between 1971 and 1973 the index of world raw material prices increased by over 80 percent, as did the price of internationally traded food products (OECD, Economic Outlook, December 1974). Thus two factors—the widespread resort to competitive devaluation after 1971 and the effect of the 1972-73 boom on agricultural and raw material supplies—account for the price explosion of the last few years.

Even discounting the fact that it is empirically false, the argument that Keynesianism is now ineffective because it leads to intolerable inflation is not a fundamental but rather a temporary, conjunctural one. As an attempted objective analysis it is similar to the present position of certain right-wing Keynesians, such as Federal Reserve Board chairman Arthur F. Burns and Ford’s economic adviser William Fellner, who contend that a few years of high-unemployment slump are needed to drain the inflationary pressures out of the world capitalist system. After that, they contend, Keynesian policies can again produce 10 or 20 years of low-inflation, mild-recession expansion.

If there is no major war nor a mass revolutionary upheaval in West Europe during the next few years (both are genuine possibilities), the world depression should deepen this year, giving way to high-unemployment stagnation lasting at least through 1976. If this occurs, in two years the rate of inflation will be greatly reduced; it already shows numerous signs of slowing. Those leftists whose central argument against bourgeois economic reformism is that it leads to ever-accelerating inflation will then find themselves theoretically defenseless against the claims of resurgent Keynesianism.

The “theory” that for a generation capitalist governments were able to prevent major crises and stimulate exceptional economic expansion has an implacable revisionist logic. Whatever the subjective attitudes of its proponents this view leads straight to the conclusion that we have been living in an epoch of capitalist economic stability. Such arguments have nothing in common with Marxism. On the contrary, the Transitional Program of the Fourth International has as its corner-stone the Leninist theory of imperialism as the highest (last) stage of capitalism, its epoch of decay and a period of wars and revolutions. This must be our perspective.

*"Brother, Can You Spare A Dime?"- The Songwriting of "Yip" Harburg

Click On Title To Link To YouTube's Clip Of Yip Harburg's "Brother, Can You Spare A Dime?" done by Tom Waits. Wow.

Commentary

Virtually every odd ball political call- in show that I have listened to lately and virtually every other audio/visual commentary source that I have paid attention to, as well, concerning the relationship between today’s economic downturn and the Great Depression of the 1930’s has felt obliged to flesh out its analysis with a rendition of “Yip” Harburg’s Depression classic “Brother, Can You Spare A Dime?”. And, seemingly, give the economic numbers they are not wrong to do so, except that instead of Yip’s dime today it should be a dollar, although that destroys the rhythm of the piece. It seems fitting today that this space should recognize the work of Brother Harburg.

Actually, not for the first time here, the recently departed Studs Terkel should be called to account for my interest in Yip. While reading Stud’s book "The Spectator” about various cultural trends and personalities that he witnessed in his long life I noticed that one of his interviews was with Yip concerning the genesis of “Brother”. Yip gives a pretty straight forward account of how he wrote it in 1931. The only comment that I would add is that the various versions that I have heard, Bing Crosby’s being the most outstanding, tend to do it in an upbeat 1930’s Broadway show tune cadence. There is, seemingly, none of the darkness that I think that Yip was trying to get at about the plight of working people that built all the wealth, fought all the wars and then were placed on the scrap heap. I believe that I heard Dave Van Ronk do a classic raspy Von Ronk-type rendition of “Brother” long ago that caught the pathos of ex-World War I soldiers down on their uppers. I have not been able to find a copy yet.

One final point. For those who may not think they are familiar with Yip Harburg you actually do know some of his other musical work. Like “Somewhere Over The Rainbow” in “The Wizard Of Oz”. More importantly, for consideration in this space, when the anti-Soviet “red scare” of the 1950’s put the hammer down on the entertainment industry Yip was ‘blacklisted’. Yes, indeed, I knew there was something wrong with that “Rainbow” song. It was way, way too hopeful about future prospects. I guess it was true what the old McCarthyite witch hunters of the 1950’s said- there ‘really’ were ‘reds’ under every bunk bed trying to corrupt the morals of America’s youth. I’m with Yip on this one though. I’d give you a dollar anytime.


"Brother, Can You Spare a Dime," lyrics by Yip Harburg, music by Jay Gorney (1931)

They used to tell me I was building a dream, and so I followed the mob,
When there was earth to plow, or guns to bear, I was always there right on the job.
They used to tell me I was building a dream, with peace and glory ahead,
Why should I be standing in line, just waiting for bread?

Once I built a railroad, I made it run, made it race against time.
Once I built a railroad; now it's done. Brother, can you spare a dime?
Once I built a tower, up to the sun, brick, and rivet, and lime;
Once I built a tower, now it's done. Brother, can you spare a dime?

Once in khaki suits, gee we looked swell,
Full of that Yankee Doodly Dum,
Half a million boots went slogging through Hell,
And I was the kid with the drum!

Say, don't you remember, they called me Al; it was Al all the time.
Why don't you remember, I'm your pal? Buddy, can you spare a dime?

Once in khaki suits, gee we looked swell,
Full of that Yankee Doodly Dum,
Half a million boots went slogging through Hell,
And I was the kid with the drum!

Say, don't you remember, they called me Al; it was Al all the time.
Say, don't you remember, I'm your pal? Buddy, can you spare a dime?



The Free and Equal Blues

Written by Yip Harburg, sung by Josh White

I went down to that St. James Infirmary, and I saw some plasma there,
I ups and asks the doctor man, "Say was the donor dark or fair?"
The doctor laughed a great big laugh, and he puffed it right in my face,
He said, "A molecule is a molecule, son, and the damn thing has no race."

And that was news, yes that was news,
That was very, very, very special news.
'Cause ever since that day we’ve had those free and equal blues.

"You mean you heard that doc declare
That the plasma in that test tube there could be
White man, black man, yellow man, red?"
"That’s just what that doctor said."
The doc put down his doctor book and gave me a very scientific look
And he spoke out plain and clear and rational,
He said, "Metabolism is international."

Chorus

Then the doc rigged up his microscope with some Berlin blue blood,
And, by gosh, it was the same as Chun King, Quebechef, Chattanooga, Timbuktoo blood
Why, those men who think they’re noble
Don’t even know that the corpuscle is global
Trying to disunite us with their racial supremacy,
And flying in the face of old man chemistry,
Taking all the facts and trying to twist ëem,
But you can’t overthrow the circulatory system.

Chorus

So I stayed at that St. James Infirmary.
(I couldn’t leave that place, it was too interesting)
But I said to the doctor, "Give me some more of that scientific talk talk," and he did:
He said, "Melt yourself down into a crucible
Pour yourself out into a test tube and what have you got?
Thirty-five hundred cubic feet of gas,
The same for the upper and lower class."
Well, I let that pass . . .
"Carbon, 22 pounds, 10 ounces"
"You mean that goes for princes, dukeses and countses?"
"Whatever you are, that’s what the amounts is:
Carbon, 22 pounds, 10 ounces; iron, 57 grains."
Not enough to keep a man in chains.
"50 ounces of phosophorus, that’s whether you’re poor or prosperous."
"Say buddy, can you spare a match?"
"Sugar, 60 ordinary lumps, free and equal rations for all nations.
Then you take 20 teaspoons of sodium chloride (that’s salt), and you add 38
quarts of H2O (that’s water), mix two ounces of lime, a pinch of chloride of
potash, a drop of magnesium, a bit of sulfur, and a soupÁon of hydrochloric
acid, and you stir it all up, and what are you?"
"You’re a walking drugstore."
"It’s an international, metabolistic cartel."

And that was news, yes that was news,
So listen, you African and Indian and Mexican, Mongolian, Tyrolean and Tartar,
The doctor’s right behind the Atlantic Charter.
The doc’s behind the new brotherhood of man,
As prescribed at San Francisco and Yalta, Dumbarton Oaks, and at Potsdam:
Every man, everywhere is the same, when he’s got his skin off.
And that’s news, yes that’s news,
That’s the free and equal blues!

A NOTE ON THE CURRENT MARKET VOLATILITY

COMMENTARY

FOR A MORATORIUM ON MORTAGE FORECLOSURES

FORGET DONKEYS, ELEPHANTS AND GREENS- BUILD A WORKERS PARTY!

In a commentary earlier this year I argued for a moratorium on home mortgage foreclosures as a defensive act on behalf of the ‘little people’ who were being squeezed out by their inability to pay the adjustable interest rate hikes that came with many such housing loans. That call is still appropriate today. Obviously this demand has nothing to do with the fight for socialism, as such, but if we had workers party congressmen or senators we would have them submit such legislation to Congress. Moreover, I believe that we would also want to introduce legislation for regulation of the unchecked financial services industry that has wrecked havoc on the backs of working people, wittingly or unwittingly. Since I first argued for the moratorium the fallout from the bad loans and other problems that have trickled down as a result has created an extremely volatile, and potentially destructive, economic situation for working people who depend on credit to make ends meet. Thus a couple of notes on episodic economic fluctuations seem appropriate.

I make no bones about the fact that I am not an economist, Marxist or otherwise. My relationship with the ‘dismal’ science of political economy is weighted toward the political end not the economic one. Oh sure, I have read Adam Smith’s Wealth of Nations and, of course, Karl Marx’s Das Capital and some of the commentaries on these works. Thus I have a sense of the classical underpinning of the capitalist mode of production but as for the various instruments, especially the financial ones, which drive the day to day modern capitalist economies I admit my ignorance. In my defense I would argue that while some Marxists had better study these workings (just not this writer) getting caught up in the minutia of the capitalist mode of production is not decisive. If one assumes, as I do, that the capitalist mode of production has played out its progressive historic role then the real fight is not over the ramifications of the day to day fluctuations of the market but the need to overthrow it-a political question. The capitalist mode of production, its operators, apologists and hangers-on need to be pushed out-there is no other way.

As if to underline the above sentiment I have been recently reading Irving Howe and Lewis Coser’s History of the American Communist Party that I will review in this space later. The most interesting section of that work concerns the ‘third period’ Communist International strategy and tactics. This policy, that held sway from about 1928 until 1935 as the official international line, was predicated on a ‘final collapse’ of capitalism. For those not familiar with the period this is the time when the Communist International was calling virtually any non-Stalinist politcal formation ‘social fascist’. The most famous, or rather infamous, result of that strategy was the refusal of the German Communists to unite with the Social Democrats to form a workers united front in order to fight off Hitler’s advances in the early 1930’s. We are all painfully aware of the results. The point for today, and I have seen it come up enough to note it, is to not directly tie general economic trends with political action. If not opposed and defeated the capitalist will muddle through one way or another. Thus, in the end the economic issues dominate but in the meantime it is about politics.


As a kind of subset of that last idea the fact that many of our ‘people’ are being squeezed to the wall by today’s credit crunch would seemingly create conditions for a fight back. Right? Alas, in the short run those affected are too demoralized to fight and the next layer above them is afraid they are next so economic downturns do not necessarily favor militant political action. Along this same line I would note, however, that their ‘people’ –the capitalist investors, jobbers and brokers are not going to the wall on this. It is our ‘people’ who wind up with the bad credit record, monetary losses and loss of whatever sense of self worth home ownership brings. To dramatically bring this point home a recent article in the financial section of a Boston newspaper highlighted the demise of one of their ‘best and brightest’ capital managers who had to close his financial operation at the end of July when the creditors clamored for cash. This manager was no ‘fly by night’ operator but had been a star in the management of Harvard University’s 29 billion dollar endowment fund (now 34 billion, as of August 23). This brought many rewards among them a nice house in the very exclusive town of Wellesley, a suburb of Boston. At some point this manager left Harvard’s management team and went out to run his own financial operation and snagged 500 million from the Harvard endowment to work with, among other high end clients. When the crash came this operator had to close up not however before losing 350 million dollars of the Harvard endowment and smaller sums for other clients. His response- a heartfelt e-mail message of sorrow to all those who had lost money through his poor management. Yes, I can see the tears streaming down your eyes after hearing this story. Not to worry though- he is NOT losing his house. Enough said.