Civil rights marches versus the right to puke

It was a day of vivid contrast. One the one hand, tens of thousands marching through the streets, angry over a lack of justice and appalling inequality; on the other hand, the arrogance of privilege distilled in an alcohol-fueled invasion.

The Week of Outrage did meet SantaCon in the streets of New York City. “Taking the streets” has seldom meant such different things.

Despite the raw anger still felt in the wake of the police killings of Michael Brown and Eric Garner (and so many others), the December 13 Week of Outrage march in New York City was a model of peacefulness. A multi-cultural multitude, there was a real respect shown toward others throughout. Time and again, when somebody accidentally bumped into someone else — regardless of who bumped who — both would quickly say “excuse me.” I was even thanked for being there after gently bumping into someone else. I appreciated that, but I was only doing my duty as a human being.

Marching in the streets of New York City

Marching in the streets of New York City

Then we have SantaCon, where yuppies and other privileged White people in their 20s act out their “right” be as drunk as possible, to overrun neighborhoods and vomit on the sidewalk. In past years, New York’s edition of this annual spectacle of drunken obnoxiousness took place in Manhattan’s Lower East Side, a neighborhood that has become the poster child for gentrification — once a center for artists and non-conformists, it is now completely overrun with bars and chain stores.

Even there, bar owners and bartenders were fed up with it, and faced with a community unified in its opposition, SantaCon decamped for the Chelsea and Flatiron neighborhoods to the north, at least based on the numerous sightings of drunk Santas as the Week of Outrage march passed through those areas.

The SantaCon revelers were frequently encouraged to join the march; the reaction was almost invariably a slack-jawed uncomprehending look as if they couldn’t conceive of doing such a thing. Likely they couldn’t. The one notable exception I saw was when I suggested to one frat boy-looking character who probably works on Wall Street that he forget about SantaCon and join the march. He responded with a fusillade of expletives. Ah well, the stock market had just had a bad week; perhaps he wasn’t able to throw any grandmothers out of their homes and was in a bad mood because of it.

Claiming drinking as a “creative” activity

The flavor of SantaCon participants was captured by the Village Voice:

“Doug Bunton, owner of [a Lower East Side tavern], says he allowed Santas into his bar one time and quickly vowed never to do so again. ‘A guy poked me with a candy cane and said, ‘Santa doesn’t pay,’ and from then on I make no exceptions. I think their purpose is to take over the bar and make you do what they want,’ Bunton asserts. ‘I think they should try doing it in the Bronx, and see what they get there.’ ”

That would be interesting. But as one can not have privilege without an ideology justifying it, an anonymous SantaCon representative offered this nonsensical gem in the same Village Voice article:

“SantaCon’s New York organizer, the one who gives his name only as ‘Santa,’ feels SantaCon is merely misunderstood. He says outsiders are uncomfortable with such an unconventional and creative celebration. He insists the event is not a bar crawl, but rather an excuse to dress up, go caroling, and spread holiday cheer. ‘It draws criticism very easily from people because it’s rare to see so much unbridled joy and optimism outside,’ the man called Santa tells the Voice.”

There you have it: Getting drunk and vomiting in the streets, and doing so while wearing corporate products symbolizing consumerist excess that were almost certainly manufactured with sweatshop labor in a poverty-stricken corner of the world is “unconventional” and “creative”!

It is impossible not to see links with the runaway gentrification washing over one New York City neighborhood after another. SantaCon goes naturally with this. Gentrification is part of a process whereby people are expected, and socialized, to become passive consumers. Instead of community spaces, indoors and outdoors, where we can explore our own creativity, breath new life into traditional cultural forms, create new cultural traditions and build social scenes unmediated by money and commercial interests, a mass culture is substituted, a corporate-created and -controlled commercial product spoon-fed to consumers carefully designed to avoid challenging the dominant ideas imposed by corporate elites.

Undoubtedly, the SantaCon revelers, dressed alike and pursuing the same activity organized by someone else, believe they are rugged individualists, boldly displaying their “creativity.” That is what the corporate media tells them when they add a personal flourish to a corporate consumer product. Gosh, the corporate media wouldn’t lie, would they?

Corporate media get cold feet

The corporate media has begun turning against the fightback against the systematic police killing People of Color sparked by the shooting of Michael Brown in Ferguson, Missouri. That is a sign of its effectiveness. The ludicrous under-counting of the size of the December 13 marches and the “reporting” of a Brooklyn Bridge incident later that evening by local newspapers that read like police department press releases indicate that those authorities who had hoped the ongoing demonstrations would have died down by now may be preparing more repressive approaches.

We’re not talking about mad-dog Murdoch media outlets, but rather newspapers that had reported on continuing unrest in Ferguson and elsewhere with minimal malice. The New York Daily News, for example, breathlessly declared: “Police said Sunday that they had arrested a hooligan who assaulted two police officers during protests on the Brooklyn Bridge overnight.” The paper made sure to stress that the arrestee had written poems containing “disdain for the cops.” Quelle horreur!

And lest we are tempted to chalk that up to tabloid excess, The New York Times, although too genteel to use a word like “hooligan,” dutifully presented the police version of the incident as undisputed fact, making sure to note the police allegation that the arrestee’s backpack was found with a sack of hammers a day after uncritically citing the police department’s obvious under-counting of the size of the main march.

The Brooklyn Bridge activists wound up marching to the Brooklyn housing project where another young Black man, Akai Gurley, was recently killed by police in a stairwell. (The officer who shot Mr. Gurley, instead of calling for help, texted his union representative.) A moment of silence was held for him. Although no time was lost in condemning activists as “guilty” following the incident on the Brooklyn Bridge, the murder of Mr. Gurley was swiftly declared an “accident” by the corporate media and by Mayor Bill de Blasio without even the pretense of an investigation.

I was not on the Brooklyn Bridge, so I can not definitively say what did or did not happen. (A two-minute YouTube video shows a struggle underway, but not what might have precipitated it.) But the use of provocateurs by police to justify crackdowns is hardly unknown, so newspaper reports ought to be read with considerable caution. The uniform use of police violence against peaceful Occupy protestors and encampments should be borne in mind.

I will note that the sole example of anything violent I witnessed was when one person slapped the side of a police wagon with a hand, and several people immediately admonished that person not to do that. And this was on a spontaneous march after the main march in which the very point was to walk in the street to bring traffic to a halt in a symbolic gesture of “no business as usual.” Dozens of motorists stuck in traffic nonetheless honked their horns in solidarity, several putting their hands out their windows for the marchers to slap a “high-five” in support.

Besides a demonstration featuring parents and other family members of people killed by police in Washington, there were demonstrations in Boston, Nashville, Chicago, St. Louis, Houston, Oakland, San Francisco and Los Angeles, among other places. In Oakland, anti-racist activists followed up by chaining themselves to the city police headquarters.

Taking aim at systems of repression

The continuing nature of these protests — they have been nearly non-stop since August and the December 13 events likely saw the biggest single-day total of demonstrators yet — has led some people to ask if this is the beginning of an uprising. It is far too early to say, but the ongoing willingness to disrupt “business as usual” through civil disobedience tactics certainly merits serious attention. Any movement serious about effecting a change has to aim squarely at the system in which individual police officers, or district attorneys, or courts, operate.

As Angela Davis said in a lengthy interview with The Guardian, the recent police killings are part of a long chain of repression. She said:

“There is an unbroken line of police violence in the United States that takes us all the way back to the days of slavery, the aftermath of slavery, the development of the Ku Klux Klan. There is so much history of this racist violence that simply to bring one person to justice is not going to disturb the whole racist edifice. … The problem with always pursuing the individual perpetrator in all of the many cases that involve police violence, is that one reinvents the wheel each time and it cannot possibly begin to reduce racist police violence. Which is not to say that individual perpetrators should not be held accountable – they should.”

Capitalism was built on slavery and the “triangular trade” in which which European manufactured goods were shipped to the coast of western Africa in exchange for slaves, who were shipped to the Americas, which in turn sent sugar and other commodities back to Europe. The North American plantation-owning aristocracy feared that Black slaves, White indentured servants and those former servants who were nominally “free” would unite, putting an end to their rule. Instilling anti-Black racism in poor Whites was the solution to this threat, a process facilitated by the racism justifying the genocide of Native Americans.

Racism began to be developed as an ideology to counter solidarity between Blacks and Whites and to counter poor White settlers who left the colonies to live among Indigenous peoples, whose non-hierarchical society was more appealing to thousands of them. To facilitate this process, freed servants were given small privileges not available to slaves to give them the illusion of having a stake in the aristocracy-dominated social order; Whites who rebelled were not punished as severely as Blacks; and poor Whites were forced to move inland due to the monopolization of coastal land by elites, thereby exacerbating tensions with Native Americans.

Divide-and-conquer techniques, whereby we are set at one another’s throats for the scraps left to us by capitalist elites, are indispensable to the maintenance of massive inequality. No police officer says to him or herself, “I’m going to shoot this Black man to keep capitalism in place.” Nonetheless, the mixture of fear and loathing of Black men and women on the part of a White police officer from the suburbs with no connection to the community being patrolled is a product of structural racism. That racism, along with sexism, national hatreds, anti-Semitism and other backward ideologies, are propagated through a variety of social mechanisms, and survive partly because some people receive benefits from them and/or enjoy believing themselves superior to others through supremacist ideologies.

As long as working people allow ourselves to be divided, pointing figures at designated scapegoats, the economic structure that locks in inequality will remain untouched. That will require many people to examine and question their privileges. It would be unrealistic to expect SantaCon participants to do that, but the number of civil rights marchers greatly outnumbered SantaConners. We should not under-estimate the length of the task ahead, but that is a good start.

Are we ready for the twilight of neoliberalism?

Not since the Great Depression have so many people in the global North called into question capitalism, yet among most of the advanced capitalist countries there is little organized pushback. Worse, parties of the Right appear to be gaining ground as voters who in the past backed the traditional parties of the center-left increasingly stay home, disgusted at their “me, too” approach to economics.

A decaying order increasingly reliant on repression that delivers immiseration to ever more people ought to be under more pressure. It can’t be said there are no serious challenges — social movements such as Spain’s Indignados and political coalitions contending for power such as Greece’s Syriza, for example — and the dramatic instant popularity of the Occupy movement demonstrated widespread discontent.

Still, the limitations of Occupy led to its demise and nothing yet has arisen in its place. Is there a weakness in our movements that is preventing them from organizing that discontent and channeling it into productive forces capable of challenging prevailing social orders?

We Make Our Own History coverAny answer to the puzzle of why Left movements have gained so little traction comprises multiple parts. Certainly the enormous institutional advantages that industrialists and financiers possess through their ability to exert decisive influence over governments, their domination of the mass media, the disposal of police and military forces at their service, and ability to infuse their preferred ideologies through a web of institutions can’t be discounted. Nonetheless, that does not relieve ourselves of the necessity to think about how we attempt to organize.

Activist knowledge has been “frozen” in specific forms, and today’s movements must be willing to break with past patterns and to build different styles of organization, argue Laurence Cox and Alf Gunvald Nilsen in their study of social movements, We Make Our Own History: Marxism and Social Movements in the Twilight of Neoliberalism.* In writing this book, the authors, both of whom have long histories in activist work, set out to “reclaim” activist knowledge for today’s movements and problems.

The authors quite reasonably argue that the failure of neoliberalism is “evident” and that we are now living in the “twilight” of the neoliberal era. That neoliberalism is reaching its end does not necessarily mean that capitalism is reaching its end; merely capitalism’s latest phase. “There is no alternative” retains a powerful punch even as conditions continue to deteriorate around the world. Moreover, activists are at a disadvantage when operating within rules designed to maintain the status quo.

Theory does not derive from an armchair

Theory, Professors Cox and Nilsen write, derives from the activist work of making sense of, and changing, social experience. Theory helps grasp ideas in opposition to dominant discourses, helping us go beyond our immediate situation or experience. A “unity of theory and action, and not simply practice,” is a necessity. But theory is not a concept imposed from high above nor the province of a handful of philosophers. They write:

“The producers of theory are — potentially — everyone who reflects on their experiences so as to develop new and improved ways of handling problematic aspects of that experience. Theory, in this perspective, is knowledge that is consciously developed out of experience, and has been worked through using experience as a touchstone, that has become explicit and articulate, and which as been brought to a level where it can be generalised.” [page 8]

The everyday experience of creating new forms of organization during struggles itself provide bases for a better world.

“At their best and within wider movements for social change, the council, the assembly, the occupied factory, the social centre, the self-organised neighbourhood, or the liberated zone can simultaneously prefigure a different way of living together, represent an effective means of organising here and now, and embody a critique of key social relationships and institutions.” [page 11]

Building from abstract concepts in its early pages, We Make Our Own History steadily builds concrete scaffolding. A key concept of this scaffolding, introduced to emphasize the understanding that the current organization of the world is a product of human construction that can be disassembled and replaced through human agency, is that of “movements from above.” We are used to seeing grassroots activity as movements — movements from “below.” We Make Our Own History defines “movements from above” as the collective agency of dominant groups to reproduce or extend their power and hegemonic positions.

Movements from above draw upon a multitude of positions to cement their hegemony, among them their directing role in enterprises, superior access to state power, ability to extract “consent” from significant sections of the subaltern and ability to apply repression to those who refuse to consent. Movements from above are “forever moving.” the authors write, and are able to use a variety of tactics in their responses to movements from below: military force, police force, the law, and school and workplace sanctions. When necessary, concessions will be made, but only to some groups and in forms that reinforce clientalism and patriarchal relations while blocking self-activity and organization.

Seeing the efforts of elites as “movements from above” enables an understanding of our ability to change conditions, through the combined efforts of movements from below.

The building blocks of a movement

Movements from below must become strong enough to counter the hegemony of capitalist elites with a “counter-hegemony.” Professors Cox and Nilsen propose three “levels” of movements from below in distinguishing their ability to force structural change. Local, defensive struggles (the basic building block) can coalesce into much more effective offensives when they connect with other movements from below on the basis of common grounds to forge extra-regional or international coalitions that critique dominant ideas and projects.

Such coalitions, however, tend to remain field-specific and don’t necessarily relate to the social totality that shapes the issue being struggled against. If activists begin to examine larger structural issues, the authors write, they may go beyond field-specific campaigns to become a “social movement project” that targets the social totality. Thus,

“[S]uch a social movement project stands out from other forms of collective agency from below by virtue of its capacity to identify its own actors socially; name its central opponent; and recognizing that the social totality is the product and object of such struggles. In other words, there is a return ‘up’ the sequence from opposing everyday routines to opposing the structures that generate them, and finally to directly confronting the movements from above which have constructed the whole.” [page 83]

From this comes the question of: What is the nature of what we are fighting? To assist in answering that question, the authors divide the history of capitalism into three eras:

  • “Disembedded” market-centered liberal capitalism that lasted into the early 20th century. This era was marked by the violent incorporation of the colonized world into the world-system of capitalism, and concessions made to emergent middle classes split them from the subaltern, linking them to the aristocracy and bourgeoisie.
  • “Re-embedded” state-centered organized capitalism from the end of World War II to the 1970s. This period arose out of the breakdown of the previous era and in response to mass uprisings carrying the potential to sweep away capitalism. Some measure of development was allowed for the global South through import-substitution industrialism; workers of the global North received increasing wages and concessions in exchange for de-politicizing their demands.
  • “Disembedded” neoliberal capitalism since the 1980s, a project to “disembed” capital from institutional regulations. The turn to neoliberalism is grounded in changed conditions, in particular the profit squeeze that set in during the 1970s, and is organized globally through alliances with capitalists in all regions of the world and links among trans-national capital. Capitalists’ attempt to restore previous profit levels centers on breaking the power of labor and a strategy of “accumulation through dispossession” — the conversion of common property into private capital.

The victory of neoliberalism is “pyrrhic,” the authors write, because the accumulation strategies that restored power for capitalists are the root of the present crisis. Thus, we are in the twilight of neoliberalism. That elites can offer nothing new is a sign of their brittleness, but the simultaneous weakness of movements from below has led to an unusually long period of stalemate.

Learning from one another, not blindly following

How then will this logjam be broken? As no movement, organization or leader has a monopoly of ideas, Professors Cox and Nilsen envision a “movement of movements”: The coming together of independent movements without the intention of submitting to the leadership of any single party or of privileging narrow definitions of working class interests. This necessitates not only learning from one another to increase the body of knowledge that can be drawn upon but also learning from the past. It also stresses the full incorporation of struggles against racism, sexism and all other forms of oppression.

Winning, the authors write, means defeating the state, breaking up at least some power relations and instituting new ones, but doing so through the masses, not a vanguard. Success, then, is the collective achievement of people going beyond what they previously believed possible.

“These situations share a potential for human self-development to flourish beyond the normal limits set by exploitation, oppression, ignorance and isolation, creating institutions driven by human need rather than by profit and power. … These ‘everyday utopias’ do not need to be installed from above by decree; what they do need is a breaking of power relations within communities, workplaces, state institutions and globally, which stand in their way.” [pages 186-7]

Building the “counter-hegemony” that can check and then supplant the hegemony of capitalists is far from an easy task. Those who benefit from the current world order spare no exertion in attempting to convince us that no other world is possible. Realizing that such assertions are nothing more than self-serving ideology helps to give ourselves the necessary consciousness to liberate ourselves:

“[I]f we do not see not see neoliberalism as a complex, contested, fragile and ultimately impermanent achievement of elite agency we are taking the intentions of its makers as given fact — and in essence conceding permanent defeat.” [page 142]

Professors Cox and Nilsen set themselves the audacious goal of reclaiming activist knowledge through filling a void in studies of social movements. They have succeed: We Make Our Own History is recommended reading for activists serious about bringing into being a better world.

* Laurence Cox and Alf Gunvald Nilsen, We Make Our Own History: Marxism and Social Movements in the Twilight of Neoliberalism. [Pluto Press, London, 2014]

Shopping ’til we all drop at Wal-Mart

Wal-Mart is concentrated neoliberalism. From working to weaken government at the same time it gorges on government subsidies, to exploitation of its workforce, to moving production to the places with the lowest wages and weakest laws, to underpaying taxes, the workers who walked out on Black Friday have no shortage of targets.

Some of the latest findings in a just released report reveal that Wal-Mart dodges $1 billion a year in taxes and is the recipient of an estimated $6.2 billion a year in indirect subsidies through social-welfare programs such as food stamps. A separate report also just published documents the poverty of Wal-Mart workers, many of whom regularly skip meals because their pay is so low.

Four members of the Walton family, recipients of the capital amassed by Wal-Mart Stores Inc., are collectively worth $144 billion — each is one of the nine richest people in the United States. At the same time, Wal-Mart workers are organizing food drives so they can eat. Wal-Mart officials shamelessly praise the food drives as examples of its employees caring about their co-workers.

Too bad Wal-Mart executives care much less about their employees.

It’s not as if the company can’t afford to pay its workers — it earned $78.4 billion in profits for its last five fiscal years. In 2013 alone, Wal-Mart paid nearly $6.2 billion in dividends to its shareholders.* And who were the major recipients of this largesse, extracted from the backs of its employees? None other than the Walton family, who own about 50 percent of the company’s stock, according to The Wall Street Journal. Then there are the buybacks of its stock — a buyback is when a company pays a premium above the price to buy its stock from willing sellers, giving a windfall to the sellers and spreading the profits among fewer shareholders. In 2011, for example, Wal-Mart spent $11.3 billion on dividends and stock buybacks.

A Wal-Mart protester is led away during a Black Friday action in Sacramento, California. (Photo via Making Change at Walmart.)

A Wal-Mart protester is led away during a Black Friday action in Sacramento, California. (Photo via Making Change at Walmart.)

Who pays for this massive transfer of wealth? Let’s look at the other side of the equation. A report prepared by public-interest group Eat Drink Politics, “Walmart’s Hunger Games: How America’s Largest Employer and Richest Family Worsen the Hunger Crisis,” offers several stories of Wal-Mart employees who make too little money to eat properly. One employee, La’Randa Jackson of Cincinnati, Ohio, says:

“I skip a lot of meals. The most important thing is food for the babies, then my younger brothers. Then, if there’s enough, my mom and I eat.”

Full time work but under the poverty line

The Hunger Games report notes that Wal-Mart’s immense size drives down pay not only in retail but in other industries. The company’s wages are much less than it claims:

“Estimates of hourly Walmart wages vary, but one study by the National Bureau of Economic Research found that Walmart cashiers average just $8.48/hour, while another industry report found the average pay to be $8.81 per hour. At this rate, an employee who works 34 hours per week, which is Walmart’s definition of full-time, is paid $15,500 per year, which is about $8,000 below the federal poverty line for a family of four.”

Not that all Wal-Mart employees are able to work even those 34 hours per week. The Hunger Games report said:

“As many as 600,000 Walmart workers currently work part-time, although many want to work full-time and are pushing for additional hours. The company intensified its hiring of temporary workers last year, while continuing to deny full-time hours to many employees who want them.”

The report on Wal-Mart’s tax evasion, “How Walmart is Dodging Billions in Taxes,” produced by the coalition Americans For Tax Fairness, found that the company exploits tax loopholes to pay about $1 billion per year less in taxes than it would otherwise — a total of $5.1 billion in the past five years.

Meanwhile, the company retains a fleet of 74 lobbyists, mostly former members of Congress both Republican and Democratic, spending $33 million on lobbying in the past five years. Among the goodies on Wal-Mart executives’ wish list are more tax breaks, including a drop in the statutory corporate tax rate to 25 percent from 35 percent (although it, like almost all corporations, pay much less than 35% already) and the elimination of taxes on revenue it claims to have earned outside the U.S. Americans For Tax Fairness estimates that the company would avoid another $720 million per year in taxes should its wishes be granted.

This report also finds that taxpayers already spend at estimated $6.2 billion per year subsidizing Wal-Mart’s low pay and paltry benefits. This was calculated by projecting the cost to Wisconsin of Wal-Mart as reported in a study prepared by the Democratic Party staff of the U.S. House of Representatives Committee on Education and the Workforce to the company’s 1.4 million employees across the country. Programs included in the report’s estimate include school breakfast and lunch programs, Section 8 housing subsidies, the Earned Income Tax Credit, Medicaid, the Low Income Home Energy Assistance Program and food stamps (the Supplemental Nutrition Assistance Program).

It’s the system, not one company

Wal-Mart is not unique in the viciousness in how it deals with, and exploits, its employees. The internal logic of capitalist development is driving the manic drive to move production to the locations with the most exploitable labor, not any single company, industry or country. One company will inevitably become the most ruthless in implementing what companies in a variety of industries are forced to do under the rigor of capitalist competition. Wal-Mart so happens to be it.

Multi-national corporations that transfer production to low-wage countries  — and their suppliers who are forced to move production to them under compulsion, such as apparel manufacturers who knuckle under to the demands of Wal-Mart — profit from systems of global supply chains, and are the fiercest advocates of “free trade” agreements that make it easier for them to transfer and subcontract production.

If a supplier doesn’t transfer production to a low-wage company, it can’t meet Wal-Mart’s demand for lower prices and goes out of business because Wal-Mart is a dominant customer. Other suppliers, even those who service other chains, then have to do the same to match the competition.

Although an increasing amount of outsourced production is being shifted to Bangladesh and Vietnam, and the Chinese government is seeking to manufacture higher-end and more sophisticated products, the low wages and vast numbers of exploitable workers, often displaced from the countryside, that China offers represented an opportunity for Western and Japanese corporations.

“Market forces” are at work here. If markets can’t be expanded, cutting costs is the route to maintaining profit rates, no matter the human cost. The Wal-Mart workers and their allies who demonstrated, walked out and, in Los Angeles, staged a hunger strike on Black Friday are therefore not only going up against the company most responsible for the lowering of wages and movement of production overseas — one virulently opposed to any form of employee organizing and relentless in eliminating local competition — they are going up against the market forces of capitalism and the logic of neoliberalism.

The fight of Wal-Mart’s workers is our fight. Consider this passage from a Businessweek article:

“Walmart has been opposed to unions since Sam Walton opened his first store in Rogers, Ark., in 1962. These days, ‘we have human resources teams all over the country who are available to talk to associates, and we will get questions about joining a union,’ says David Tovar, a spokesman for the company. ‘We would say: Let us remind you of all that Walmart offers, and of what might go away. Quarterly bonuses might go away, vacation time might go away.’ ”

The Wal-Mart spokesman is merely saying out loud what many other corporate executives say in private. U.S. labor law, weak as it is, renders illegal intimidation tactics in regards to union organizing. Yet the company believes it can talk and act with impunity. So far, that is true.

Everyone who shops at Wal-Mart contributes to this problem. Those who do believe they are saving money by buying at low prices, but those low prices actually come at a high cost. The cost will become higher until we become willing to stop believing that begging for crumbs is the only way the world can be organized.

* My own calculation: Four quarterly dividend payments of 47 cents a share, multiplied by 3.28 billion outstanding shares.

You can have democracy as long as you vote for the boss

The idea that democracy and capitalism go together is a relatively recent phenomenon. The pairing don’t really go together: How much control do you have at your job? Over the development of your city? Over a political process responsive only to the greed of the one percent?

Early capitalists and their publicists believed political democracy was an outright impediment. Adam Smith and another influential classical economist, David Ricardo, among many others, opposed universal suffrage. Ricardo was prepared to extend suffrage only “to that part of them [the people] which cannot be supposed to have an interest in overturning the right to property.” Smith’s reluctance seemed to be rooted in his honest assessment of how few are able to enjoy that right to property: “For one very rich man, there must be at least five hundred poor, who are often driven by want, and prompted by envy, to invade his possessions.”

Not long afterward, the influential British politician and writer Thomas Babington Macaulay said universal suffrage would be “the end of property and thus of all civilization.”  (“Property” refers to the means of production, not personal possessions.)

Along U.S. Highway 20/26/93, west of Arco, Idaho (Photo by Pete Dolack)

Along U.S. Highway 20/26/93, west of Arco, Idaho (Photo by Pete Dolack)

Because capitalism is an impersonal system, it does not require that members of the dominant capitalist class actually hold political posts, although frequently they do. It is enough that the political structure that is a byproduct of the ideologies of capitalists’ institutions, corporations, remain in place, and that capitalists exert decisive influence over a society’s other institutions.

The modern state itself is a creation of the rise of capitalism and the need of industrialists and financiers for a structure to provide protection for investments and to settle disputes among themselves. These features are wrapped tightly in nationalism, with continual references to a given nation’s mythologies, to bind working people tighter to the system. Capitalism also requires a literate, educated population, in contrast to earlier systems, and a literate, educated populace is more inclined and more able to agitate for its interests.

Self-interest in expanding the vote

There is more communication — this, too, is a necessity for the increased commerce of capitalism — and if the people of one nation wrest a gain from their rulers, people in other nations will know about it, and will struggle to get it for themselves as well. Further, in the early days of capitalism, its development was seldom in a straight line; sometimes there could be an incremental expansion of the voting franchise because one bloc of capitalists believed the new voters would vote for their party.

Once the vote is made available to more citizens, pressure builds from below to further extend the vote; moreover, the creation of a modern working class brings together masses of people, enabling the creation of mass movements that can organize struggles for more democratic rights. Social media has proven to be a powerful tool for democracy activists, although by itself it can’t substitute for real-world organizing and a physical presence at key locations.

Capitalists intended to establish democracy only for themselves, but the spaces and contradictions contained within the political systems created to stabilize the functioning of capitalism (including institutions to adjudicate conflicts among the capitalists and mechanisms for selecting political leadership in the absence of an absolute monarchy or the continued ascendency of a static landed aristocracy) enabled their workers to wrest some of that democracy for themselves. None of that came easy — untold lives were snuffed out and untold blood was shed, and even in cases when a struggle has been bloodless, many advances required decades of dedicated activism to accomplish. The process is called “struggle” for a reason.

Summing up an essay in New Left Review on the development of voting rights across the world, Göran Therborn wrote:

“Democracy developed neither out of the positive tendencies of capitalism, nor as a historical accident, but out of the contradictions of capitalism. Bourgeois democracy has been viable at all only because of the elasticity and expansive capacity of capitalism, which were grossly underestimated by classical liberals and Marxists alike.”

Not endlessly expansive, however. Hard-won political rights are not only circumscribed by the immense power concentrated in the hands of corporate institutions and the class that controls those institutions, but those rights end at the entrance to the place of work.

A democratic lack of control?

If one class of people has the ability to bend the political process to benefit itself; arrogates to itself an unlimited right to accumulate at the expense of everybody else and at the expense of future generations; has the right to dictate in the workplaces, controlling employees’ lives; and can call on the state to enforce all these privileges with force, if necessary, then how much freedom do the rest of us really have? If one developer has the right to chop down a forest to build a shopping center that the community does not need or the right to build high-rise luxury towers that force out others who already lived there because one individual can earn a profit, and the community has no recourse, is this state of affairs truly democratic?

If a capitalist decides it would be profitable to move the factory to a low-wage country and thousands are put out of work as a result, is it not capital that actually possesses freedom? If enterprises were collectively run and/or under community control, would people vote to send their jobs to a low-wage haven thousands of miles away?

If the political system is so dominated by corporate power — the concentrated power of industrialists and financiers — that a politician at the national level who might genuinely wish to give working people a better break can’t because that corporate power is decisive, or that a politician at the local level might want to make the local factory owner do a little more for the community or simply pay a fair amount of taxes can’t because to push the idea would lead to the factory owner closing the factory and sending many townspeople to the unemployment office, then can this system said to be democratic?

Men and women have the vote, and have constitutionally guaranteed rights — lives were sacrificed to gain these rights. But if there is such a concentration of power that most elementary decisions are taken by a small number of people — either big capitalists or politicians acting on their behalf or under their influence — then the rights enshrined in a constitution are mere shells. Democracy is formal, and cannot be more than formal without democracy extending to all spheres of life. That is impossible under capitalism because concentrated economic power is leveraged into power over the political, cultural, social and educational life of a nation, and that power, as wielded by capital, will be tightened at home and expanded abroad due to the impetus to expand.

Capitalism is an impersonal system, and the competition that drives it inevitably leads to this dynamic, regardless of which personality is where. The world has not reached its present state by accident, and although it does not guarantee any particular capitalist a permanent place at the top, it does guarantee extreme inequality and the immiseration of the many (working people) for the benefit of the few (industrialists and financiers). No reform can wish that away.

Do rents really rise without human intervention?

It takes a lot of money to get people to vote against their own interests, and the real estate industry has plenty of money. Ideological obfuscation plays its part, too, and both contributed to a recent pair of defeats in San Francisco’s uphill fight against gentrification.

I happened to be in San Francisco in the days leading up to Election Day, and there seemed to be quite a lot of excitement over Proposition G, a modest proposal that would have instituted a tax on speculators buying and quickly selling tenant-occupied housing. “Yes on G” signs abounded and most, although not all, advocates I met believed it would pass. Why not? What renter could be against a law that might slow down, a little, skyrocketing rents? Nonetheless, the real estate industry poured $2 million into opposing Proposition G, outspending proponents 12-to-1, and it was defeated.

Only two weeks earlier, a federal judge overturned a law passed by the city government that would have forced landlords who kick tenants out of rent-controlled apartments to pay them the difference between the rent they had been paying and the fair market rate for a similar unit for a period of two years. An attempt to combat a steady upsurge in evictions, the judge nonetheless declared that skyrocketing rents aren’t the fault of landlords.

The rents go up all by themselves? Landlords by some lucky coincidence just happen to be the beneficiaries of some mysterious process outside of human control?

San Francisco's Haight-Ashbury district (photo by "Urban")

San Francisco’s Haight-Ashbury district (photo by “Urban”)

Ah, yes, the magic of the market at work again. The federal judge who handed down the ruling, Charles Breyer, has a reputation as a liberal. Yet he had no hesitation in grounding his ruling in orthodox economic ideology, largely echoing the arguments of the hard right, libertarian Pacific Legal Foundation, which represented the landlords. Judge Breyer went so far as to call the requirement a confiscation and “an impermissible monetary exaction.” But the law would not have stopped landlords from throwing tenants into the street so they could bring in new tenants who would pay more, merely ameliorate the cost to the evicted tenant.

Lawyers for the city of San Francisco argued that the two-year rent-differential payment would be “roughly proportional to the harm they impose on their tenants by evicting them from a rent-regulated unit and forcing them to seek new housing at market rates.” That is a real consequence, as the average San Francisco rent of a one-bedroom apartment is $3,100. It would require the combined salaries of 4.6 full-time jobs at San Francisco’s minimum wage to afford the average two-bedroom apartment there, according to the National Low Income Housing Coalition.

More than 10,000 San Franciscans have been evicted under a state law, the Ellis Act, that enables landlords to “exit” the landlord business (although in many cases, they “re-enter” the business after the previous tenants are evicted). The Tenants Together study that reported that total notes that it actually accounts for a small percentage of Ellis Act-related evictions as many others are forced out by the threat of an Ellis Act eviction and do not count toward the official statistic.

Court says landlords who evict are bystanders

Judge Breyer, nonetheless, blamed “market forces” and that favorite right-wing bogey, rent control, for runaway rents. Landlords, therefore, are innocent victims. In his decision, the judge wrote:

“[The law] seeks to force the property owner to pay for a broad public problem not of the owner’s making. A property owner did not cause the high market rent to which a tenant who chooses to stay in San Francisco might be exposed, nor cause the lower rent-controlled rate the tenant previously enjoyed.”

There you have it: If you are in the way of a speculator or a developer wanting to maximize their profits, get lost. That is simply a more polite way to say what former New York City Mayor Ed Koch said as gentrification got underway there in the 1980s: “If you can’t afford New York, move!”

Lost in these legal and ideological thickets are that landlords are cashing in on the sweat of others, including those they force out. Gentrification is a deliberate process. Organic cultures originating in the imagination, sweat and intellectual ferment of a people living in a particular time and place who are symbolically or actually distinct from a dominant moneyed mono-culture are steadily removed and replaced by corporate money and power, which impose a colorless chain-store conformity.

Those organic cultures then became selling points to promote the targeted neighborhood, cashed in not by those who created it but by real estate interests. Local governments facilitate this process on behalf of developers, tempered by the ability of movements from below to slow the process.

The fallback position of the Pacific Legal Foundation, also adopted by the judge, was that the two-year rent-differential payment would be unfair anyway, because there was no requirement that the payment be used toward rent. The San Francisco city attorney pointed out that the recipient of such a payment would have no choice but to spend it on new housing. But the Pacific Legal Foundation attorney admitted that were such a requirement in place, it would have opposed the law just the same.

The city of San Francisco has announced it will appeal Judge Breyer’s ruling to the U.S. Court of Appeals for the Ninth Circuit. “There should be no doubt that when a landlord evicts a rent-controlled tenant, the immense rent increase the tenant faces is the direct result of the landlord’s decision to evict,” the city attorney, Dennis Herrera, said. A decision acknowledging that would be one grounded in the real world, rather than the phantasmagoria of orthodox economics and its insistence that “markets” are based in the clouds, beyond human touch. In the real world, the landlords, developers and bankers who profit are the real estate market.

A flood of real estate money

Two weeks later, Proposition G failed, with 54 percent against and 46 percent voting in favor. Prop G proposed a “speculation tax” whereby a buyer of a multi-unit property would have to pay a tax surcharge if the building were sold in less than five years; the charge would range from 24 percent in the first year to 14 percent between four and five years. After five years, there would be no such tax surcharge. Because it was designed to be applied only to speculators, the proposed tax had several exemptions, including all single-family buildings and any building sold at a loss.

A heavy barrage of landlord mailings, including false claims that all properties would be covered, was too much for housing activists to overcome. Nonetheless, in a survey of activist responses after the vote published on the 48 Hills blog, there seemed to be a consensus that the effort to talk to people in the streets changed many minds, came close to overcoming the real estate industry’s 12-to-1 spending advantage and set the stage for further efforts that could succeed. The author of this article, Gen Fujioka, policy director for the Chinatown Community Development Center, quoted Causa Justa/Just Cause organizer Maria Zamudio:

“In this election we made major gains in organizing working class immigrants, seniors, low-wage workers, parents, and tenants, firing people up around the demand that they, too, deserve to live in San Francisco. … While it did not win this year, Prop G was part of a larger [local] progressive narrative that did win [including a minimum-wage measure that passed]. That narrative, along with the tools developed and relationships built in this campaign, will be the foundation on which we can continue to grow.”

Another activist, Randy Shaw of the Tenderloin Housing Clinic, believes that a greater emphasis on community organizing would make a difference. Proposition G had been placed on the ballot by four members of the city Board of Supervisors (San Francisco’s city council), rather than by activists collecting signatures, a strategy he believes should be reconsidered. He writes:

“Had the anti-speculation tax gone the signature route, activists would have recognized when the Title and Summary for the initiative petitions was prepared that the very popular idea of ‘stopping the flip’ did not translate well into a ballot measure. At that point a decision could have been made to alter it in some way as to either guarantee that the words ‘eviction’ or ‘speculator’ were included in the ballot question, or to seek to broaden the support base before going forward. … [T]he months spent talking to voters during the petition gathering process would have educated thousands about the issue. It would have insulated these voters from the big money attacks that created, and sought to provoke, confusion about what Prop G meant.”

The influx of technology-company employees may have also tipped the balance. It is difficult to speculate as I have no seen no surveys or breakdowns of the Proposition G vote, but it is possible that techies, many of whom absorb their corporate leaders’ libertarian political tendencies, voted in large numbers against. The group Techies Who Vote called on the technology industry to “exercise its electoral muscle” and vote against Prop G and progressive candidates who supported the measure.

Don’t mourn, organize

Organization is the only recourse against further gentrification, in San Francisco and elsewhere. But reversing the powerful moneyed interests that profit from it is no small task. A local organizer, Mike Miller, writing in CounterPunch, laments the fading of coalitions such as the Mission Coalition Organization that won many battles on behalf of tenants but was unable to coalesce into a force strong enough to reach neighborhood-wide agreements with landlord representatives. He writes:

“Regulation replaced organizing as the strategy to protect tenant interests—a voter-passed initiative created a rent control law, and a Rent Control Board to administer it. Electoral politics rather than mass, disruptive, nonviolent action became the means to enforce the strategy. Each, alone, is insufficient. ‘The market’ overwhelms them: too much demand for too little supply.

Unfortunately, there is no capacity now to negotiate with landlords, developers, lenders and others who profit from this run-amuck market. There is no longer a mass organization that might hurt profits and politicians’ careers by its capacity for boycotts, disruption, lobbying and electoral action.”

The inability to stop gentrification then has ramifications for surrounding areas. Across the bay, Oakland rents have risen 15 percent this year after rising 12 percent in 2013. Housing developments, with little affordable set-asides, are mushrooming in Oakland and evictions are increasing.

That, of course, is not merely a local phenomenon. The average net income from building ownership in New York City has increased 31.5 percent since 1990 — rents collected have risen faster than expenses. Nationally, real estate prices have been increasing faster than inflation since the 1960s. Thus it is no surprise the share prices of real estate investment trusts have more than quadrupled since early 2009.

This is the result of allowing “market forces” to control housing. The way out is for housing to be recognized as a human right, instead of a capitalist commodity to be bought and sold by the highest bidder. That, however, will require a different, better world.

Forward to the past: Next stop, the 19th century

If capitalism is taking us back to feudalism, we’ll have to pass through the 19th century on our way. In terms of wealth inequality, we’re on course to return to the century of robber barons. Back then, the public-relations industry hadn’t developed, so at least they were called by an honest name, instead of “captains of industry” or “entrepreneurs” as they are today. Although “heir” would frequently be far more accurate than “entrepreneur.”

We’re not at the 19th century yet, but we have arrived at the 1920s on our trip to the past. The level of inequality of wealth in the United States today has not been seen since the decade that led to the Great Depression.

The top 0.1 percent — that is, the uppermost tenth of the 1% — have about as much wealth as the bottom 90 percent of United Statesians. To put it another way, approximately 320,000 people possess as much as do more than 280 million. It takes at least $20 million in assets to be among the top 0.1 percent, a total that is steadily rising.

An altered version of a Depression-era image. (Image by Mike Licht, NotionsCapital.com)

An altered version of a Depression-era image. (Image by Mike Licht, NotionsCapital.com)

Emmanuel Saez, an economics professor at the University of California, and Gabriel Zucman, a professor at the London School of Economics, examined income-tax data to reveal these numbers. They write that they combined that data with other sources to reach what they believe is the most accurate accounting of wealth distribution yet, one that shows inequality to be wider than previously imagined. The authors define wealth as “the current market value of all the assets owned by households net of all their debts,” including the values of retirement plans with the exception of unfunded defined-benefit pensions and Social Security. (The reason for that exclusion is that those moneys do not yet exist but are promises to be kept sometime in the future.)

The authors’ paper, “Wealth Equality in the United States since 1913: Evidence from Capitalized Income Data,” reports that, for the bottom 90 percent, there was no change in wealth from 1986 to 2012, while the wealth of the top 0.1 percent increased by more than five percent annually — the latter reaped half of total wealth accumulation.

The 22 percent of total wealth owned by the top 0.1 percent is almost equal to what that cohort owned at the peak of inequality in 1916 and 1929. Afterward, their total fell to as low as seven percent in 1978 but has been rising ever since. At the same time, the combined wealth of the bottom 90 percent rose from about 20 percent in the 1920s to a peak of 35 percent in the mid-1980s, but has been declining ever since. Although pension wealth has increased since then, Professors Saez and Zucman report, the increase in mortgage, consumer-credit and student debt has been greater.

Nonetheless, this might still be an underestimation — the authors write that they “still face limitations when measuring wealth inequality” because of the ability of the wealthy to hide assets off shore or park them in trusts and foundations.

Inequality on the rise

Although rising throughout the developing world, inequality is particularly acute in the United States. Among the nearly three dozen countries that make up the Organisation for Economic Co-operation and Development, only three (Chile, Mexico and Turkey) have worse inequality than does the U.S., measured by the gini coefficient. The standard measure of inequality, the more unequal a country the closer it is to one on the gini scale of zero (everybody has the same) to one (one person has everything).

Of course, were we to measure inequality on a global scale, the results would be more revealing. Even the U.S. gini coefficient of 0.39 in 2012 pales in comparison to the global gini coefficient of 0.52 as calculated by the Conference Board of Canada. To put it another way, global inequality is comparable to the inequality within the world’s most unequal countries, such as South Africa or Uganda.

How to reverse this? Professors Saez and Zucman offer reforms that amount to a return to Keynesianism. They advocate “progressive wealth taxation,” [page 39] such as an estate tax; access to education; and “policies shifting bargaining power away from shareholders and management toward workers.” Such policies would surely be better than the austerity that has been on offer, but the authors’ wish that this can simply be willed into existence is quite divorced from capitalist reality.

Indeed, the authors go on to lament that one factor in stagnant incomes is that “many individuals … do not know how to invest optimally.” It is difficult to believe that these two learned economists are unaware of the relentless chicanery of the financial industry. How does one invest “optimally” in a rigged casino stacked against you?

The past is not the future

Fond wishes for the return of Keynesianism will not bring those days back. (And, of course, if you weren’t a white male those days weren’t necessarily golden anyway.) The Keynesian consensus of the mid-20th century was a product of a particular set of circumstances that no longer exist. Keynesianism then depended on an industrial base and market expansion. A repeat of history isn’t possible because the industrial base of the advanced capitalist countries has been hollowed out, transferred to low-wage developing countries, and there is almost no place remaining to which to expand. Moreover, capitalists who are saved by Keynesian spending programs amass enough power to later impose their preferred neoliberal policies.

Capitalists tolerated such policies because profits could be maintained through expansion of markets and social peace bought. This equilibrium, however, could only be temporary because the new financial center of capitalism, the U.S., possessed a towering economic dominance following World War II that could not last. When markets can’t be expanded at a rate sufficiently robust to maintain or increase profit margins, capitalists cease tolerating paying increased wages.

And, not least, the massive social movements of the 1930s, when communists, socialists and militant unions scared capitalists into granting concessions and prompted the Roosevelt administration to bring forth the New Deal, were a fresh memory. But the movements then settled for reforms, and once capitalists no longer felt pressure from social movements and their profit rates were increasingly squeezed, the turn to neoliberalism was the response.

Nobody decreed “We shall now have neoliberalism” and nobody can decree “We shall now have Keynesianism.” Capitalist market forces — once again, simply the aggregate interests of the most powerful industrialists and financiers — that are the product of relentless competitive pressures have led the world to its present state and the massive inequality that goes with it.

Even if mass social movements build to a point where they could force the imposition of Keynesian reforms, the reforms would eventually be taken back just as the reforms of the 20th century have been taken back. The massive effort to build and sustain movements capable of pushing back significantly against the tsunami of neoliberal austerity would be better mobilized toward a different economic system, one based on human need rather than private profit.

Reforming what is ultimately unreformable is Sisyphean. Going back to the mid-20th century Keynesian era, even were it possible, would be no more than a detour on the way to the 19th century. Building a better world beats nostalgia.

New development banks unlikely to threaten World Bank

Forecasts that new development banks sponsored by the largest developing countries are destined to erode the economic dominance of the United States are quite premature, but it is nonetheless no contradiction that the global hegemon has vigorously sought to stop them. More than a little hypocrisy is at work here.

The newly created Chinese-led Asian Infrastructure Investment Bank has drawn much more of Washington’s ire than has the BRICS New Development Bank formed by the five “BRICS” countries of China, Russia, India, China and South Africa. The U.S. government has leaned heavily on Australia and other countries sufficiently firmly that Canberra has declined to join the Asian Infrastructure Investment Bank despite its initial interest, nor have Indonesia and South Korea.

Although the infrastructure bank is to be capitalized with US$100 billion, it would be ridiculous to say that the World Bank or International Monetary Fund will be put out of business. It will not necessarily go much beyond complementing the existing Asian Development Bank, a regional multi-lateral institution controlled by the U.S. and Japan. And even the World Bank says Asia will require trillions of dollars to build its infrastructure in coming years that it and existing institutions can’t supply.

Protest at the World Bank. (Photo by "Jenene from Chinatown," New York City)

Protest at the World Bank. (Photo by “Jenene from Chinatown,” New York City)

The politics of imperialism are at work here. The very idea that a country outside the control of the U.S. dares to set up an institution outside the control of the U.S. is an example that Washington, as the ultimate enforcer of multi-national corporations’ prerogatives, is determined to stamp out.

In a front-page article, The New York Times reported:

“American officials have lobbied against the [infrastructure] bank with unexpected determination and engaged in a vigorous campaign to persuade important allies to shun the project, according to senior United States officials and representatives of other governments involved.”

And what excuse does the U.S. government give for its opposition? Officially, the Obama administration is not talking, but, quoting a “senior official” granted anonymity, the Times reports:

“A senior Obama administration official said the Treasury Department had concluded that the new bank would fail to meet environmental standards, procurement requirements and other safeguards adopted by the World Bank and the Asian Development Bank, including protections intended to prevent the forced removal of vulnerable populations from their lands. … ‘How would the Asian Infrastructure Investment Bank be structured so that it doesn’t undercut the standards with a race to the bottom?’ asked the senior official.”

Has the Obama administration, or, more accurately, the government apparatus that has steered U.S. policy on behalf of corporate interests for generations, suddenly grown a conscience? Quite unlikely. The World Bank and International Monetary Fund, as well as regional banks such as the Asian Development Bank, have been under U.S. suzerainty since their founding. Does the World Bank really uphold development ideals? The record firmly says otherwise.

The World Bank’s record of destruction

The World Development Movement, a coalition of local campaign groups in Britain, reports that the World Bank has provided more than US$6.7 billion in grants to projects that are destructive to the environment and undermine human rights, a total likely conservative. To cite merely three of the many examples, the World Bank:

  • Loaned an energy company in India more than $550 million to finance the construction of two coal-fired power plants. Local people, excluded from discussions, were beaten, their homes bulldozed and complain of reduced food security and deteriorating health as a result of the power stations.
  • An Indonesian dam, made possible by the World Bank’s $156 million loan, resulted in the forcible evictions of some 24,000 villagers, who were subject to a campaign of violence and intimidation.
  • In Laos, a hydropower project made possible by World Bank guarantees displaced at least 6,000 Indigenous people and disrupted the livelihoods of around 120,000 people living downstream of the dam who can no longer depend on the rivers for fish, drinking water and agriculture.

A study of World Bank policies, Foreclosing the Future by environmental lawyer Bruce Rich, found that:

“Drawing on Bank studies, project evaluations and sectoral reviews, it is shown that the World Bank still suffers from a pervasive ‘loan approval culture’ driven by a perverse incentive system that pressures staff and managers to make large loans to governments and corporations without adequate attention to environmental, governance and social issues. In 2013, Bank Staff who highlight social risks and seek to slow down project processing still risk ‘career suicide.’ … [The bank] has continued to binge on enormous loans to oil and gas extraction, coal-fired power stations and large-scale mining generating environmental damage, forest loss and massive carbon emissions.”

A study prepared by the Institute for Policy Studies and four other organizations found that World Bank lending for coal, oil and gas was $3 billion in 2008 — a sixfold increase from 2004. In the same year, only $476 million went toward renewable energy sources.

It could be pointed out that China’s industrialization has had serious environmental consequences, and that Chinese money was critical to the building of the Three Gorges Dam, the construction of which led to the forced removal of at least 1.3 million people. True enough, but Canadian, French, German, Swiss, Swedish and Brazilian capital were also necessary to build the dam. The World Bank also provided loans associated with Three Gorges and provided experts during the project’s planning stages.

Despite the pressure from Washington, 21 countries signed up to be founding members of China’s Asian Infrastructure Investment Bank, including India, Singapore and the Philippines.

BRICS bank expected to bow to the logic of capital

China’s new bank was formed three months after the BRICS New Development Bank. The BRICS bank will be more modest, with a goal of US$100 billion capitalization, spread equally among the five countries. In a July 2014 communiqué, the five countries said their bank will have the “purpose of mobilizing resources for infrastructure and sustainable development projects in BRICS and other emerging and developing economies.” They also pledged to organize a “BRICS Contingent Reserve Arrangement” to “help countries forestall short-term liquidity pressures” resulting from foreign-exchange or debt markets.

Although this bank is intended as a gesture of independence from the U.S.-dominated world financial system, and will use some combination of the BRICS currencies, detaching from the world system is not a simple matter of setting up new institutions. A New Delhi economics professor, C.P. Chandrasekhar, sees the bank being limited in what it can potentially do. Writing on Naked Capitalism, he said:

“However, the new development bank is fundamentally not detached from the global financial system. Being a bank, even if a specialised one, it must ensure its own commercial viability. And it must do so when a large part of the resources it lends would be mobilised from the market. … [W]anting to be seen as respectful of the sovereign interests of borrowing countries, the [New Development Bank] would be careful not to frame its lending rules in ways that threaten the policy sovereignty of borrowing countries. If the countries that approach the institution are pursuing neoliberal strategies, there may be clear limits in terms of what the new development bank itself can achieve.”

Professor Chandrasekhar concludes:

“The decision of the BRICS to set up mini-versions of the World Bank and the IMF seems to be more a symbolic declaration of resentment at the failure of the US and its European allies to give emerging countries a greater say in the operations of the Bretton Woods institutions. … The desire to redress the obvious inequities in the global financial system seems far less important.”

If it is a safe haven, it is not going away

That, for at least the near future, U.S. hegemony is not threatened received fresh confirmation during October’s week-long decline in the world’s stock markets — money from around the world quickly poured into U.S. treasuries as a safe haven. From a capitalist standpoint, doing so is entirely rational: If the U.S. government unravels, the entire global capitalist system disintegrates.

Although predictions of the U.S. eventually being dethroned will one day come true — every empire has an expiration date — that such a dethronement is imminent is wishful thinking. This is not to say that U.S. power is not eroding, but there is no conceivable replacement for the U.S. at the center of the world capitalist system. The U.S. spends about as much money on its military as every other country on Earth combined and the dollar remains the world’s reserve currency; that the world continues to buy U.S. debt as a safe haven enables the U.S. to continue to run up deficits and finance its military.

There is no military remotely in a position to become the global enforcer of capital, nor any currency that could replace the dollar at the present time. The euro is not a candidate because the eurozone is too fractured and unstable; the renminbi is not fully convertible. According to the Bank of International Settlements, the U.S. dollar was involved in 87 percent of the world’s foreign-exchange transactions in April 2013, while the euro was involved in 33 percent and the renminbi in 2 percent.

The U.S. needs China to buy its debt but China needs the U.S. as an export destination; Chinese growth continues to be dependent on unsustainable levels of investment rather than internal consumption, a situation difficult to adjust because production is moved to China to take advantage of its low sweatshop wages. A contradiction on the other side of the Pacific is that U.S. foreign policy treats China as a capitalist competitor that must be contained at the same time that U.S.-based multi-national corporations are instrumental in transferring production to China.

A change in the global hegemon from the U.S. to another country or bloc, leaving the capitalist system intact, provides no salvation, no more than did the early 20th century’s transfer from Britain. Another world is possible only with an entirely new economic system. Otherwise, the subaltern will remain subaltern, be they nation or people.