Ding Dong! Thatcherism and sexism are alive

I have a deep ambivalence over the playing of the song “Ding Dong The Witch Is Dead” to commemorate the death of Margaret Thatcher. I can well understand the desire to rebel against orders by the British right-wing establishment that everyone must celebrate the prime minister’s “accomplishments,” but the exercise in this form is nonetheless deeply sexist.

Surely there are plenty of political epithets to be hurled at her memory that reference the disastrous policies of her reign. Ronald Reagan was just as awful, but he wasn’t denounced as a witch at his death, was he? Clearly, few of those who took part in the campaign to have the song played on the BBC’s music-chart program stopped to think about the sexism inherent in branding a woman a “witch.” Yes, even when we are talking about someone as horrid as Margaret Thatcher.

What does her gender have to do with her policies? And can it truly be said sexism is a thing of the past because a woman became head of the government of one of the world’s most powerful countries? No more than it could be said that racism is a thing of the past in the United States because Barack Obama is president.

Prime Minister Thatcher imposed misery on millions of Britons; her defenders’ demands that no ill be spoken of her rightly deserves contempt. What mercy did she show to working people? But although the prime minister was powerful and notoriously impervious to opposition — I still have a vivid memory of her reacting to being showered with derisive laughter from the Labour benches during a Prime Minister’s Question Time session with a fierce stare that unmistakably said, “You are very lucky I can’t have you all killed or I surely would” — women as a group do not possess privileges.

Statue of Alice Nutter, English woman accused of witchcraft.
(Photo by Graham Demaline.)

Unequal pay in the workplace, unequal opportunities, expectations of shouldering most of the burden of child care, violence at the hands of male partners, violence at the hands of men in general, sex trafficking, under-representation in governments and legislatures, difficulties being taken seriously, social and institutional discrimination — and this does not exhaust the list.

Social expectations are not separable from that list. Although most of those denouncing the prime minister as a “witch” likely think of themselves as making some sort of political statement, they are really just demonstrating their absorption of the sexism that permeates the world.

When we drill to the bedrock, branding Prime Minister Thatcher a “witch” has much to do with her not conforming to gender “norms.” She may have made her family’s breakfast in the morning, but there is no denying her ruthlessness and cold-heartedness in advancing her political career. Such behavior may or may not be liked in a male politician, but would not be seen as “abnormal behavior” in the way it often is in a female political leader.

An easy example are Bill and Hillary Clinton — she was portrayed on countless occasions as secretly possessing male genitalia and mercilessly ridiculed for supposedly being overly aggressive. Yet are her political positions, or her admittedly ambitious climb to political heights, in any way different than her husband? No — yet she is routinely mocked in ways her husband never has to endure.

If you don’t act ‘feminine’ you are a witch

The cultural history of “witch” is nothing to take lightly. A United Nations research paper reports that “more than 100 women are tortured, paraded naked or harassed … every year” in India’s Chhattisgarh state alone. Rita Banerji, founder of the 50 Million Missing Campaign, reports that more than 2,500 women were branded as “witches” and killed across India in the past 15 years.

In Ghana, there are six witch camps where women accused of witchcraft are banished, forced to live in wretched conditions to escape the near certainty of enduring torture, beatings and lynchings should they leave. The anti-poverty group ActionAid reports:

“Women who do not fulfil expected gender stereotypes, for example if they are widows, unmarried or cannot have children, are vulnerable to being branded as witches. … Some camps, for example Gnani, have male residents who have been accused of wizardry. However most of the camps contain only alleged witches and the total number of men in the camps is far lower than the number of women. This is because men are generally less vulnerable than women as they are economically better off and more able to resist physical violence. This illustrates that vulnerability is a key underlying factor in witchcraft accusations. … Though both men and women can be accused of witchcraft, the vast majority are women, especially the elderly.”

The UN research paper, written by Jill Schnoebelen, reports witchcraft accusations occur on every continent. These accusations often follow a pattern:

“The poor can be accused of jealousy-induced witchcraft, and the well-to-do can be accused of practising witchcraft to acquire wealth.”

A report in the Australian non-profit news Web site Global Mail, detailing mass accusations of witchcraft in Papua New Guinea, notes that communities stressed by the arrival of multi-national mining companies are scapegoating women:

“[T]radition has in places morphed into something more malignant, sadistic and voyeuristic, stirred up by a potent brew of booze and drugs; the angry despair of lost youth; upheaval of the social order in the wake of rapid development and the super-charged resources enterprise; the arrival of cash currency and the jealousies it invites; rural desperation over broken roads; schools and health systems propelling women out of customary silence and men, struggling to find their place in this shifting landscape bitterly, often brutally, resentful.”

The beneficiaries of oppression

These patterns were seen during the centuries of “witch” burnings across Europe and North America. In Germanic states, women were targeted as witches in order to take their wealth for benefit of states and well-connected individuals, while in the British Islands witch hunts mostly targeted poor peasant women, accused by wealthy individuals who were part of local power structures. The Inquisition peaked during a long period of famines, unrest and declines in population; women were systematically excluded from wage work in part to force them to bear children that would replenish the supply of workers in an era of falling population and in part to enable the sustainability of the male wage worker through enforced housework.*

Although witch hunts are today a relic of the past in those cultures, the underlying social forces driving them have not faded into history. As Fran Luck, host of the Joy of Resistance Multicultural Feminist Radio program, writes:

“[T]he oppression of women (and other oppressed groups) is not ‘an accident’ or a vestige from another era, but is an active process from which someone/someones are benefitting now!”

Accusations of witchcraft are no more separable from the cultures in which they arise than is the treatment of women in advanced capitalist countries. In the global North, the mass media and popular entertainment endlessly parade women as objects of pleasure for men, with serious consequences for women who refuse to conform. The oppression of women, as with the oppression of People of Color, national hatreds and similar chauvinisms, is woven into social fabrics, fostering social divisions.

That an individual woman such as Margaret Thatcher rises to a position of power in itself does nothing to alter those social fabrics. She is part of a system, not an individual deus ex machina, no matter how personally ambitious. The neoliberalism imposed by Margaret Thatcher, or Ronald Reagan, or Augusto Pinochet, is a natural consequence of the centralization of power and wealth, the beneficiaries of which have the ability to have their interests maximized above all other interests and to disseminate their ideologies through a multitude of institutions.

It did not take a “witch” to impose such policies, nor could one have imposed such policies if they weren’t already desired by the most powerful corporate interests. By denouncing a “witch,” opponents of Thatcherism not only blind themselves to the reality of the larger system of which it is a component, they actively promote the individualist ideology that maintains that system and the sexism that forms one of its longest-lasting components.

 

* This paragraph relies on Silvia Federici, Caliban and the Witch: Women, the Body and Primitive Accumulation [Autonomedia, Brooklyn, New York, 2004]; Maria Mies, Patriarchy and Accumulation on a World Scale: Women in the International Division of Labour [Zed Books, London, 1988]; Barbara Ehrenreich and Deirdre English, Witches and Nurses: A History of Women Healers (second edition) [Feminist Press at City University of New York, 2010]

Republicans, corporate interests intentionally destroying Post Office

Privatization is a polite word for corporate self-interest. When calls for privatization arise, it is always useful to see who’s interest is being served.

Take the United States Postal Service. The Republican Party is doing its best to destroy a national institution that provides hundreds of thousands of unionized jobs. (The Democratic Party is doing nothing, perhaps waiting for a signal from its corporate benefactors.) Merely reading “unionized” in front of “jobs” leads to the conclusion that ideology is behind this latest attack on working people, and surely a Right-wing desire to eliminate large unions and drive down wages further is a significant motivation.

Not the sole motivation, however. Privatizing the Postal Service would mean big new business for delivery services and companies that supply postal products. Advocates of privatization recently sought to inject more wind into their sails with the release of a study by a “think tank” with the bland-sounding name of National Academy of Public Administration. The “study” has yet to published in full, but its four authors, described as “postal industry thought leaders,” have published their conclusion — a call for a near total privatization.

Just who are these four “postal industry thought leaders”? With one exception, they are people who have a vested interest in privatization. Surprise! Here they are:

• Ed Gleiman, a former member of the Postal Rate Commission, has since become a lobbyist for the Direct Marketing Association, a group representing large mailers.
• John Nolan, a deputy postmaster general during the Bush II/Cheney administration, is currently a board member for Streamlite, a business-to-consumer lightweight package delivery service. He is also a senior advisor to The Western Union Co., another corporation that stands to benefit from dismantling the Postal Service.
• Edward Hudgins is a director of the Atlas Society (“Atlas” as in Ayn Rand) and previously worked for the Cato Institute and Heritage Foundation. The latter two organizations are manically dedicated to destroying all protections for employees, while the phantasmagorical absurdity of Ayn Rand’s novels bear as much relation to reality as an elephant that flies.
• George Gould, a former political director for the National Association of Letter Carriers union, doesn’t appear to have an ideological axe to grind as do the other three “leaders” and perhaps is guilty of nothing more than absorbing neoliberal ideology. Critics of the NALC say that the union has failed to fight for its membership, and Mr. Gould’s participation in this “study” might provide those critics additional fuel.

Direct funding by a corporation that stands to benefit

To round out the picture, the major funder of the postal privatization “study” is Pitney Bowes Inc., which stands to directly benefit. Greg Bell, executive vice president of the American Postal Workers Union, writes:

“Pitney Bowes, the company that is funding the review, stands to be a major beneficiary. The company is widely known as a provider of mailing equipment, but it is also a major mail ‘pre-sorter.’ The company takes advantage of generous pre-sort discounts offered by the Postal Service to provide outsourced services to high-volume mailers. In 2011, Pitney Bowes operated 41 mail processing facilities and generated $5.3 billion in revenue. Pitney Bowes would certainly snatch up a major portion of USPS revenue if it were given the chance.”

FedEx Corp. and United Parcel Service Inc., the two largest U.S. private delivery services, also stand to benefit from the destruction of the Postal Service. FedEx is one of the heaviest spenders on political donations and lobbying, and employs several dozen lobbyists who formerly worked in government, according to the Center for Responsive Politics. UPS is also a heavy spender on donations and lobbying, while employing its own team of lobbyists who formerly worked in government.

The National Academy of Public Administration “study” advocates a bizarre “hybrid” scheme in which all postal activities will be privatized, except for the “final mile” — a Postal Service worker would deliver mail and packages to mailboxes and other final destinations. The paper states:

“In the ‘final mile’ package strategy, private sector consolidators compete to pickup, process, and transport hundreds of millions of packages. Shippers pay the consolidators to prepare and transport the mail for ‘last mile’ delivery by USPS letter carriers. The consolidators pay USPS a delivery charge. Upstream competition among private sector providers promotes efficiencies that lead to better service and lower overall prices.”

Private oligopolies are not known for lowering prices, however, and the paper’s assertion that regulation counter excesses is refuted by the many industries in which regulation is toothless, and in which agency chiefs routinely cycle back to their primary roles as corporate executives. We need only look at vastly inflated pharmaceutical prices, runaway financial legerdemain and a lack of resolve in food safety to know that private delivery companies will easily evade any serious scrutiny, piling up profits while cutting jobs, wages and benefits. The only certainty is that large numbers of jobs will be lost.

Who can fund 75 years of pensions in 10 years?

A government institution painted as financially troubled is easier to be targeted for corporate plunder than one on firm footing, so, voilà, congressional Republicans cooked up a devastating scheme. A congressional bill signed into law in 2006 requires the Postal Service to pre-fund its pension costs for the next 75 years in only 10 years. This is unheard of; certainly no private business would or could do such a thing. This preposterous requirement — why do I keep seeing sneering villains twisting their mustaches like in those movies of a century ago? — has saddled the Postal Service with a $16 billion deficit.

Hoping to maintain corporate momentum, a leading congressional Republican, Darrell Issa, chairman of the House Oversight and Government Reform Committee, has pushed a bill that would allow an oversight committee to modify union contracts. Representative Issa’s bill, if passed, would allow unilateral cuts to previously bargained wages.

The National Association of Letter Carriers, however, has already approved wage cuts. The latest contract increases the number of “temporary” mail carriers who have inferior wages and benefits, setting a up a two-tier system in which newer workers have lower pay, not fundamentally different than the new two-tier pay systems at General Motors — taxpayers loaned the money to GM to keep it afloat, and the reward is more austerity. These deals in turn serve to depress wages elsewhere by setting lower standards.

In the meantime, tens of thousands of Postal Service jobs have already been eliminated. A statement issued by Detroit Workers’ Voice, analyzing the attacks on postal unions, says:

“Postal workers are being run over time after time, and the strategy of the leadership of the postal unions has proved completely ineffective in stopping this. Yes, the union leaders sometimes have snappy criticisms against management. But they collaborate with management. Thus, when new contracts with management help the USPS decimate the workforce, the main union officials hide the setbacks or justify them. Insofar as there is struggle against the USPS bosses, it is within strict limits. Organizing the rank and file for struggles within the postal facilities is avoided. Public actions of any kind are rare. Militant action that would really press management is off limits.”

Postal Service unions, of course, are hardly unique in their timidity. Fightbacks are possible, as the Chicago teachers’ union demonstrated last year. The Chicago teachers spent months preparing parents and the city as a whole for a possible strike as neoliberal Mayor Rahm Emanuel sought to break the union and replace public schools accountable to the public with private, non-union charter schools under corporate control.

There were critics who complained that the teachers didn’t win many advances and ended the strike too quickly, but it is more realistic to analyze the strike in a fuller context — given the totality of the circumstances, the Chicago teachers won as much as they could have and would have begun to jeopardize the massive public support behind them, an indispensable force as the city’s other unions did nothing to help.

No union, no matter how militant, can win substantial gains without a movement that mobilizes sustained support from those unionized, non-unionized and unemployed — a movement that acts on the understanding that an injury to one is an injury to all. Unions aren’t making efforts to create that support, instead at most narrowly attempting to slightly slow down the defeats to their specific memberships. The structural causes of our present-day world of austerity are far larger than any union federation nor are they contained with any single geographical unit. The entire history of capitalism has led us to today’s world.

An injury to one, or to one group of employees, truly is an injury to all. Enormous power is concentrated into the hands of financiers and industrialists, and there are no limits to the injuries they and the politicians who serve them intend to inflict. Putting our heads in the sand and hoping it’s the other person who gets it only delays the injury to one’s self and makes it worse when they come for you.

Never mind! IMF now says austerity mistakes don’t matter

It did seem too good to be true. The International Monetary Fund last week issued its second paper in three months acknowledging that the damaging effects of austerity measures on economies is much stronger than previously assumed. Unlike October’s quiet admission of error, however, this time IMF researchers say colossal miscalculations don’t matter.

Perhaps the IMF is taking back the bureaucratically couched, quiet mea culpa it genteelly issued last October? Being an orthodox economist evidently means never having to say you are sorry. It does mean that if reality doesn’t match the theory, then it is reality that must be changed.

Readers may recall that in October 2012 the IMF slipped into its World Economic Outlook, in which it forecast that the global economic growth rate would continue to decline, this interesting line:

“Public spending cutbacks and the still-weak financial system [are] weighing on prospects.”

That is as close to an admission as we are likely to receive from the IMF, the World Bank or other financial institutions that the austerity that they relentlessly impose weakens economies. Perhaps some at the IMF are getting cold feet at such an admission, or, more likely, such ideologically inconvenient pronouncements received more attention than expected given the tepid language buried in an otherwise routine paper.

Thus we have last week’s interesting development, in which two IMF researchers published a further study on the IMF web site that confirmed the catastrophic mis-calculations in applying austerity, but concluded that the mistakes don’t matter and austerity must be imposed anyway. As a hedge, the paper’s front page declares it is not an official IMF document and does not necessarily represent the viewpoints of the IMF.

The IMF did see fit to publish the paper and one of the authors is its director of research, so let’s nonetheless take it seriously. As seriously as an ideological paper can be taken, even if its pre-selected conclusion is masked by jargon and mathematical formulae, and clearly intended for an audience of professional economists. There is no reason for us not to peer over their shoulders, especially as austerity has very real implications for us.

Swing an axe, get bloodletting

This debate over austerity revolves around assumptions as to the effect of spending cuts. As I wrote in my October 10 post on the IMF’s quiet confession:

“[I]t seems that governments applying austerity programs over-estimated the savings to be accrued from them. The IMF said a common figure used by governments was to assume that for each dollar lost in government spending, 50 cents is erased from gross domestic product, an assumption used when creating austerity budgets. But, the fund said, its study of the issue has found that, since the economic collapse that began in 2008, for each dollar cut from government spending, GDP is reduced from 90 cents to $1.70. In other words, the result of austerity is that it has accelerated economic contraction.”

A simple look around us confirms that finding. Stagnation or renewed economic contraction is the continuing result in the world’s advanced capitalist countries. Eurozone unemployment, for example, has risen to 11.8 percent.

Sidestepping any examination of ideological bias — not surprisingly, since that would implicate the IMF itself not to mention the entire universe of orthodox economists — authors Olivier Blanchard and Daniel Leigh refer only to “growth forecast errors” and offer a series of ideas as to the source of these innocent errors. The authors’ calculations found nearly identical errors as those mentioned two paragraphs above in calculating the effects of imposed austerity since the onset of the global economic crisis in 2008. From that, they write:

“In other words … growth disappointments should be larger in economies that planned greater fiscal cutbacks. This is what we found.” [page 3]

These “disappointments” were significant — the authors said the extra loss, beyond economists’ calculations, was nearly one percent of economic output for each one percent cut in spending, a result they found consistently in the more than two dozen countries they analyzed. Similarly bad forecasts were made by the European Commission, the Organisation for Economic Co-operation and Development and the IMF. Nonetheless, the authors conclude:

“[O]ur findings that short-term fiscal multipliers have been larger than expected do not have mechanical implications for the conduct of fiscal policy. Some commentators interpreted our earlier box as implying that fiscal consolidation should be avoided altogether. This does not follow from our analysis.” [page 6]

Finding a tree instead of a forest

Among the reasons offered for the “errors” in calculating the net effects of austerity programs are that zero interest rates can’t be cut further; that consumption is more dependent on current income than future income due to the tightening of credit; and the effect of cuts become amplified when “there is a great deal of slack in the economy.” The last of those three lead the IMF researchers to conclude that the “errors” in calculating economic effects only apply from the onset of the 2008 collapse; before that everything was fine.

Unless you lived in a developing country in which IMF-imposed austerity was applied. The authors likely do not. But, for now, they acknowledge that the “errors” in the effect of spending cuts for 2008 and beyond resulted in forecasters consistently under-estimating the rise in unemployment and the decline in demand. In the fifth year of economic crisis, the IMF researchers wrote:

“[W]e find that planned fiscal consolidation is associated with significantly lower-than-expected consumption and investment growth. … [I]nvestment varies relatively strongly in response to overall economic conditions.” [page 18]

Um, well, yes. When wages decline and unemployment rises, demand is reduced and corporations would rather sit on their cash, buy back their stock or speculate. Why should they invest when they have trouble selling what they already produce? In advanced capitalist countries, consumer spending accounts for 60 to 70 percent of the economy and if working people don’t have the money, they aren’t going to spend it if they are also trying to reduce their debt. Debt accumulated because that was the only way they could maintain living standards when wages have stagnated or declined since the 1970s.

The competitive pressures on corporations to increase their profits leads them to move production to the places with the lowest wages; that buoys profits for a time but the resulting fall in wages and rise in unemployment in the places where production is shuttered means weaker demand. Weaker demand results in increased pressure on profits, and round and round we go. Austerity, at bottom, is governments enforcing the demands of the most powerful industrialists and financiers for ever more profits.

Competitive pressures force corporations to act in such a manner, and the immense capital accumulated by the biggest capitalists grants them decisive power, ensuring that their interests become paramount when governments implement policy. The International Monetary Fund and World Bank are multi-national instruments of the most powerful capitalist governments, which in turn reflect the aggregate interests of their most powerful industrialists and financiers. If we keep that in mind, we need not fall off our chairs when an IMF paper, having laid out the damage done by austerity programs, nonetheless concludes:

“[O]our results should not be construed as arguing for any specific fiscal policy stance in any specific country. In particular, the results do not imply that fiscal consolidation is undesirable. Virtually all advanced economies face the challenge of fiscal adjustment in response to elevated government debt levels and future pressures on public finances from demographic change.” [page 20]

Thus the dramatic conclusion: The economic decline resulting from austerity has been badly under-estimated; therefore we must have more austerity. Ideology this may be, but it’s an ideology concocted to continue capitalist business as usual — it’s not an ideology that inexplicably drops from the sky. The dismal “science” indeed.

Solo geniuses who scorn the society that provides the shoulders they sit on

By Pete Dolack

The lone inventor is an archetype of long standing. The image remains, but, particularly in the United States, the image of the inventor has morphed from Thomas Edison and his cluttered laboratory to the hard-charging entrepreneur who single-handedly builds businesses.

The change in imagery mirrors the emphasis on wealth in U.S. popular culture, and the tendency to either defer to or scorn people based on perceptions of their wealth. Such imagery also serves as a particularly enticing carrot to dangle in front of those who aren’t millionaires, allowing them to entertain ideas that, if only they work hard enough, they too can accumulate fortunes.

Nobody creates a product, builds a company or makes a scientific discovery all on their own. There are engineers who design the product’s physical form, assembly-line workers who assemble the product and advertising agencies who create the demand for the product. For scientific discoveries, there are public investments in equipment or laboratory facilities, and scientific discoveries are often the basis for new products. For any of these, there are schools and universities, often paid for with public money, that provided the education that developed the skills of the creator or discoverer.

Then there is the social structure that enabled the millionaire to become wealthy through an invention or the creation of a popular product or through rising to the top of a large corporation or simply through being a popular entertainer or athlete. (We’ll set aside for now the fact that inheritance is the path most often trod to wealth.)

It appeared that the foundation of financial success was going to become a focus of the otherwise intellectually arid presidential campaign between Barack Obama and Mitt Romney. For one day last week (prior to the movie-theater massacre in Aurora, Colorado) the two campaigns traded barbs over a speech President Obama made the previous week in Roanoke, Virginia, in which he pointed out that business leaders often ignore the social capital behind their success. He said:

“There are a lot of wealthy, successful Americans who agree with me — because they want to give something back. They know they didn’t, look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something, there are a whole bunch of hard-working people out there.

“If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business, you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.

“The point is, is that when we succeed, we succeed because of our individual initiative but also because we do things together. There are some things, just like fighting fires, we don’t do on our own. I mean, imagine if everybody had their own fire service. That would be a hard way to organize fighting fires.”

There is nothing in the above quote that should strike any rational U.S. citizen as controversial. President Obama made the requisite genuflection to “American exceptionalism” — an ultra-nationalistic slogan used within the United States to portray the country as superior to all others in all categories, a vapid capitulation to xenophobia that is mandatory for any major office-holder. But in this specific context, “this unbelievable American system” is not out of place since the subject at hand is the ability to amass wealth. Having made the ritualistic genuflection, the president felt free to acknowledge that government investment is behind many a private fortune (or perhaps he accepts he has to do something to recapture the populist image he crafted in 2008 after spending most of first term thumbing his base in the eye).

Government research, after all, did create the Internet; President Obama did not mention that government research created the World Wide Web, perhaps because it was European, rather than U.S., money that created that. Private businesspeople simply found ways to get rich off what others invented. Thus we have the spectacle of Microsoft founder Bill Gates becoming for a time the richest person on Earth because his company aggressively wields its monopoly status in personal-computer operating systems while making inferior products at the same time the people who invented the Internet and its architecture earned no fortunes.

Mr. Gates’ billions enables him to be a prime mover behind the privatization of education and compels the corporate mass media to portray him as a genius whose every word is a golden pearl. The inventors of the Internet and its architecture — although it is their work in government laboratories that made possible the Silicon Valley moguls’ fortunes — are obscure. Indeed, we would have to do research to learn their names.

There are many examples of industries similarly booted up by government investment — among them, cellphones, GPS technology and medical equipment. That is a simple fact; it is only the pervasiveness of capitalist ideology that makes such a statement in any way controversial. The Obama administration bends over backwards to benefit business: Showering subsidies on them, giving bailouts with no strings attached, promoting their interests with “free trade” agreements with a variety of countries, and discarding most of his promises to ease the extreme tilt against employees in labor relations.

Indeed, one of the very first people President Obama picked to staff his administration was Lawrence Summers, one of the leading ideologues of neoliberalism. Mr. Summers has distinguished himself in various ways, including in imposing austerity on Russia and other countries from posts at the World Bank and the U.S. Treasury Department. He once infamously, while the World Bank’s chief economist, wrote in an internal memo that Africa was “vastly UNDER-polluted” (emphasis in original) and “I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.”

So said the person whom President Obama picked to be his lead economic adviser. During the 2008 campaign, the public’s exhaustion with George W. Bush and Dick Cheney and their administration’s unilateral foreign policy led to Barack Obama becoming the embodiment (realistically or not) of a widely desired change. At the same time, the disapproval of a significant number of capitalists over the narrowness of the Bush II/Cheney administration in promoting the interests of a handful of industries (in particular energy) instead of pursuing more general business interests and a desire for a White House that would be less quick to alienate allied countries led to an unusual split among elites who normally overwhelmingly prefer Republicans.

The interests of powerful capitalists and the interests of the rest of the country are far from aligned, and it should come as no surprise that the interests of capitalist elites are dominant in the Obama administration. The capitalist elites who backed him desired a calm, steady hand at the helm of empire, and that is what they have received: Military interventions are coordinated with allied capitalist countries, the fig leafs of United Nations resolutions are obtained, Nato allies are treated as partners (albeit junior partners) and not as flunkies to be ordered about; a soothing public demeanor to mask harsh policies; and conducting the arm-twisting of foreign governments behind closed doors. Those elites are dependent on selling their products in stable foreign markets.

It is precisely the concept of “American exceptionalism” that provides a crucial ideological underpinning for unending interference in the affairs of other countries. All presidents have to carry out the duties of the belief in “American exceptionalism” and could do not do so without a firm personal belief in it themselves. A president or any other high government official can (and does) convince themselves of their duty to act on the “exceptionalism” but all that is exceptional is that it happens to be the United States that is the center of the capitalist system and possesses the military muscle to maintain it.

The “duty” carried out in the name of this “exceptionalism” is a “duty” to assert the interests of multi-national corporations. That the country voted by a solid majority to put an end to wars and corporate domination was of no consequence.

Having low expectations for the president, I did not expect “change,” although the extent of the willingness of the Obama administration to give almost nothing to its base is a surprise. For some time, it is has been apparent that the main theme of the re-election campaign would be “You have to vote for us, the Republicans are even worse.” But it is useless to see this in terms of “selling out” or “ineptitude” or “softness.” The Obama administration is simply reflecting the dominant sources of power within the U.S., and that is not going to change without a countervailing mass movement.

Governments around the world are at the mercy of the largest capitalists within the advanced capitalist countries; interests that are distilled into the pressures applied by financial markets. A country at the center of the world capitalist system, the United States, experiences such pressures primarily from its domestic capitalists, although those capitalists’ business interests are intimately tied with peer capitalists around the world in today’s global economy. Most countries experience market pressures as external forces.

As an example, let us briefly examine South Africa in its first years after the apartheid system was overthrown in a negotiated process forced by a massive international popular movement backing the African National Congress. During the long years of struggle by the ANC and pitiless repression by the National Party, the apartheid-era rulers in South Africa, the guiding document of the ANC was its “Freedom Charter.”* The charter, adopted after democratic consultations in 1955, calls for the right to work; to decent housing; freedom of thought; and nationalization of mines, banks and “monopoly industry” and land distribution so that all South Africans can share in the wealth of their country.

Although the ANC had the moral authority to carry out its program, its negotiators tragically (and unwittingly) gave up all economic control, forfeiting their ability to carry out any aspect of their program, with the result that, two decades later, the economy is firmly in the hands of its numerically minuscule White business elite (which is tied to international markets) and South Africa remains among the world’s most unequal countries. The country’s eyes were on the political talks between Nelson Mandela and F.W. de Klerk, in which the ANC decisively was the victor against the National Party’s attempts to dilute its loss of government control.

But in the parallel economic talks, which drew little attention, the ANC gave everything away. The central bank would be independent of government (as financiers demanded), National Party government finance officials would remain in office and the ANC government would sign on to everything demanded by the World Bank, the International Monetary Fund and all international trade agreements. Having done so, the ANC took office handcuffed, and having tied themselves to financial markets, those markets applied further discipline by attacking the South African economy at the first sign of anything that displeased them. From pleasing markets and giving financiers repeated assurances, it proved a short path to President Mandela’s successor, Thabo Mbeki, imposing austerity — a 180-degree turn from the Freedom Charter.

The mythology that markets know best is intimately linked with the mythology that the economy should be entrusted to financial elites and those elites’ intellectual servants, neoclassical economists. The mythology of the solo genius justifies massive inequality because the “solo genius” single-handedly created a popular product and thus single-handedly brought prosperity upon the land. For such selfless services, the solo genius must be compensated with fantastic wealth.

The “magic of the market” takes care of the compensation. For a young, growing company, the preferred route is the initial public offering. The IPO does indeed shower riches upon the founder, a small circle of his or her insiders, and the investment banks who take care of the details. If that money comes out of the wallets of everyday investors, well that’s the market for you. This system reached near-perfection in the Facebook IPO earlier this year. The key to an IPO is to price the stock high enough so that the money largely accrues to the insiders (who possess most of the stock through pre-IPO awards) but not so high that the stock price plummets afterward (making the scam too obvious) nor so low that a significant post-IPO stock-price rise means that some money was lost to investors.

Thus Facebook chief executive Mark Zuckerberg wound up with $18 billion, Facebook’s investment bankers and insiders received substantial windfalls and all those who bought in after the opening bell are out of luck. The stock price never has returned to its opening-day level. Oh well, a “long-term hold” as they say in financial-analyst circles.

Facebook’s current popularity is undeniable, but what of value did Mr. Zuckerberg create? Perhaps Facebook will be an exception, but Internet sites tend to be cyclical fads. What was once popular can rapidly become passé. Does he, or anyone, really deserve $18 billion for a few years of work? Did he work tens of thousands of times harder than the average employee of a U.S. company? Remember, what he, and other Internet moguls, created was built on the creation of people who didn’t get rich or famous, and who created it through public investment — that is, in a government facility.

It would seem that the carrot of a multibillion-dollar payoff is not necessary for technical progress. People invent, people create works of art, people write, people aspire every day without outlandish renumeration. Often without it at all. Inventions are made routinely in government laboratories, in university laboratories and in corporate laboratories — and in each of these, it is the government, university or corporation and not the inventor who owns the rights to the invention. Many others toil on their own to create an invention, with only slim chances of making a fortune out of it. Some of these people undoubtedly are motivated by the potential for enrichment, but the overwhelmingly majority will never see it — either they will fail, or their success will lead to little or no money.

Why should one person amass $18 billion and so many other get nothing? Why should a lucky handful of people amass billions of dollars and then get to claim they did it all on their own with no help at all? President Obama’s reference to “this unbelievable American system” is true here in the sense that a few people are able to amass fantastic riches. But it is glaring inequality that enables the accumulation, and the accumulation comes on the backs of employees. Without a system that does not simply tolerate, but celebrates and causes, massive inequality, the superrich whom Governor Romney is so fast to promote as solo geniuses who had no help (no surprise as this is the myth he spins for himself) would not be the superrich.

Without the infrastructure that government provides in the form of educational institutions, a court system that adjudicates commercial disputes, means of coercion such as police and the military to suppress dissent at home and abroad, an ever larger basket of subsidies, “free trade” agreements that promote corporate interests above human rights, and a transportation infrastructure such as expressways that are mostly free, billionaires would not be able to become billionaires. And yet they continually whine that “government” is in the way.

In a better world, government would be the product of public demand and benefit. Instead, it is the reflection of the arrayed social forces within a given society — in an advanced capitalist country, that is its most powerful industrialists and financiers. The constant chatter of government “getting in the way” of business interests and of entrepreneurial geniuses single-handedly creating wealth should be laughed at for the joke those mythologies are.

* This and the next two paragraphs based in part on Naomi Klein, The Shock Doctrine: The Rise of Disaster Capitalism, pages 194-217 [Metropolitan Books, 2007]

More for the one percent, less for the 99 percent

By Pete Dolack

Although it may appear that manufacturers and financiers have different interests, they have a symbiotic relationship. There is a continual rivalry between them, but the push and pull of that rivalry shouldn’t be mistaken for a contradiction.

To be clear about what we are discussing here, capitalists broadly divide into two basic camps: industrialists (producers and distributors of tangible goods and services) and financiers (those whose business is financial transactions). A frequent “reading” of that divide is to imagine that bankers reign unchallenged at the top, subordinating even industrialists.

It is true that the two camps have different interests that sometimes conflict. But there is no neat division between the two; the two groups partially overlap and, ultimately, neither is independent from the other. Theirs is a relationship of mutual benefit and not a case of a “real” economy hijacked by a “fictitious” financial economy. Any rivalry between them, and any rivalry among specific capitalists, is quickly set aside when it comes to ensuring the functioning of the system that enriches both camps.

As an example, let’s examine three items that surfaced in the news during the past couple of weeks.

• Apple Inc. announced it would buy back shares of its stock and begin paying cash dividends.
• The United States Congress approved a bill that would exempt from existing oversight rules most companies preparing to issue initial public offerings.
• The Federal Reserve gave passing grades in its “stress tests” to almost all of the largest U.S. financial institutions, giving them green lights to hand out huge payouts to insiders.

Apple apparently reacted to mounting grumbling from within the financial industry that it is sitting on too much cash. The New York Times, on March 20, reported that Apple possesses nearly US$100 billion in cash and that, even after handing some of it to shareholders, its hoard of cash is expected to grow. Apple certainly earns a big profit: it reported net income of $26 billion on sales of $108 billion for its 2011 fiscal year, and also reported that its cash on hand had increased more than fourfold in the past five years.

In response to what is genteelly called “market pressure,” Apple will spend $45 billion during the next three years to buy back stock and to pay out dividends to shareholders. A stock buyback is when a company offers to buy stock from its shareholders at a premium to the trading price, giving a profit to those who accept the offer and leaving fewer shareholders to share in the profits for those who hold on to the stock. A stock buyback is another way to distribute profits.

The sharp-eyed reader may have noticed that none of the cash is going to, say, employees at the sweatshops who churn out Apple’s products for pennies. I touched on that issue in my Feb. 29 post on the exploitation of Chinese labor by non-Chinese multinational corporations. Chinese laborers earn, on average, about five percent of U.S. wages and endure work days of 12 or more hours six and seven days a week. A recent commentary in The Guardian noted that employees at Foxconn, Apple’s best-known sweatshop, work up to 16 hours a day while being forbidden to talk, with only a few minutes for toilet breaks. The factory came to the world’s attention after a rash of suicides by employees, so grim were the conditions.

We of course are bombarded with messages extolling the genius of the recently deceased Steven Jobs, the Apple founder who is said to have single-handedly created a desirable line of gadgets. (This post is being written on one of them.) Jobs was something of a visionary, but he had a staff of engineers to help him bring those products to tangible form, and an army of sweatshop workers to manufacture them.

Could Jobs have designed, built prototypes and assembled the finished products all by himself? I think not. It was the employees of Apple and Apple’s contractors who did those things. Why shouldn’t they get some of the rewards? Yet in the capitalist system, such a thought is beyond the pale. Profits — and all the money that originates in profits that is siphoned off by financiers — are created by paying employees much less than the value of what they produce. An infinitesimal portion, for those Foxconn sweatshop workers.

The more intense the exploitation, the bigger the profits. (I will take up this concept in more detailed fashion in future posts.) Industrialists and financiers argue over which gets the bigger piece of the pie, but they agree they should have the pie to themselves.

Dividends, of a somewhat different form, are part of the story of the second example, that of the congressional bill eliminating consumer protections in initial public offerings. In one of those wonderful Orwellian touches the U.S. Congress, in particular Republicans, are so capable of, the bill was given a title that would give it the acronym “JOBS Act.”

It would seem that the “JOBS Act” primarily will promote jobs at stock-market boiler rooms that peddle dubious stocks, unless we count the retirees who will have to go back to work when the next wave of scandals crests. The act will exempt “emerging growth” companies (that’s a euphemism for “smallish”) from financial-disclosure and corporate-governance rules for five years after an initial public offering (the conversion from a privately owned company to one that has stock traded on a stock market).

Regulations put in place after the corporate scandals of the past decade, such as the auditing requirements of the Sarbanes-Oxley Act, will not apply to “emerging growth” companies. Congress, however, has an expansive view of what falls into this category: companies with annual sales of up to $1 billion, vastly bigger than the growing small businesses the act’s supports claim to be helping.

The bubbles of the past two decades, the precursors to the current economic malaise, were inflated partly due to the lack of financial controls and oversight. So the solution put forth by capitalists, via their loyal congressional members, is to encourage a new bubble through reducing regulation. Less regulation means more short-term profits. That inflating asset bubbles is mistaken for a functioning economy speaks volumes.

And that brings us to the third of the three examples, that of the Federal Reserve allowing major financial institutions to resume business as usual. The “stress tests” administered to the 19 largest U.S. financial corporations — promoted as an examination to determine if the banks have enough reserves to withstand another economic downturn — are a public relations exercise designed to “assure” the public that the crisis is safely in the past and all is now well. Almost all passed.

We can breath a sigh of relief because those banks that passed can now shower their insiders with gigantic piles of money. The banks are now free to, here we are again, buy back stock and pay out bigger dividends. In an odd touch, JP Morgan Chase & Co. said two days before the Federal Reserve’s announcement granting permission that it would spend US$15 billion to buy back stock and raise its dividend payments sixfold. The New York Times reported that the $12 billion dedicated to the stock buybacks in 2012 alone would consume roughly two-thirds of the year’s expected earnings. JP Morgan was far from alone; almost every other big bank immediately said it would buy back stock, increase dividends or do both.

These are the same banks that were bailed out three years ago and continue to receive money from the Federal Reserve nearly interest-free. Many have operations in the European Union, where the European Central Bank is loaning money to banks at one percent interest, so that those banks can then buy the bonds that E.U. national governments are issuing at four, five or six percent interest.

Let’s summarize this process in two paragraphs: Governments borrow money from the rich and from corporations instead of taxing them, then have to pay higher interest rates on those borrowings because the rich and the corporations complain that too much is being borrowed. To ameliorate the demand for higher interest rates, the governments’ central banks are lending money nearly interest-free to the financial institutions and corporations so that they will continue to buy the governments’ loans at the higher interest rates. In exchange for continuing to buy government debt (which will earn them a nice profit because they are using the cheap money to buy the debt), the financial institutions demand that the governments cut social services, lay off workers, sell assets and impose other austerity measures.

As a result of the austerity, governments take in less revenue, so they have to borrow more from the rich and corporations, who have hoarded the country’s wealth, at the same time the governments’ central banks are giving financial institutions more cheap money and giving them the green light to hand out more money to insiders, leaving them more vulnerable to the next economic downturn, when, because they are “too big to fail,” they are confident they will receive another bailout.

Industrialists extract profits from their employees, with some of those profits going to financial institutions, in the form of interest on loans, as payouts to stockholders and as fees for services, and some of it goes there for purposes of speculation. Financiers can do nothing without pools of money, which are created in production. Financial speculators demand ever more profits and the top executives who deliver them can give themselves ever more stratospheric pay checks and bonuses. Mutual greed requires more be extracted, even though the profits are vastly beyond any reasonable need for investment or personal consumption.

The less given to employees, the more those at the top have to play with. Until we say no.

Chinese exploitation and multi-national corporate profits

By Pete Dolack

The extent to which multi-national corporations are profiting from super-low Chinese wages is often obscured in the rush to point nationalist fingers at China’s economic policies. In the corporate media the subject generally remains a taboo.

One way of shining some light on that profiteering is this: During the mid-2000s, Wal-Mart was China’s fifth-largest export market. In other words, there were only four countries that imported more goods than Wal-Mart, the world’s biggest retailer, did by itself.

By now, Wal-Mart has slipped a bit down the charts because the volume of Chinese exports continues to grow; but the company would remain among the top ten destinations were it a country by itself. Wal-Mart is hardly unique among multi-national corporations, but, true to its general business practices, is perhaps the most ruthless in not simply exploiting Chinese workers but in accelerating the trend of moving manufacturing to the location with the lowest wages.

Other major United States retailers began procuring clothing items from Asian subcontractors before Wal-Mart, but the relentless drive to have the lowest costs forced an acceleration in the shift of production to countries with the most exploitable populations. If a manufacturer wants to continue to have contracts to supply Wal-Mart, then it has no choice but to ship its operations overseas because it has no other way to meet Wal-Mart’s demands for ever lower prices.

Eighty percent of Wal-Mart’s suppliers are located in China. And because the company is so much bigger than any other retailer, it can dictate its terms. Gary Gereffi, a professor at Duke University, said in an interview broadcast on the PBS show Frontline that “No company has had the kind of economic power that Wal-Mart does, to be able to source products from around the world. … Wal-Mart is able to transfer whole U.S. industries to overseas economies.”

Because of its size and its innovation in computerizing its inventory and tightly managing its suppliers, coupled with its willingness to squeeze its suppliers to the exclusion of all other factors, Wal-Mart holds life or death power over manufacturers, Gereffi said:

“Wal-Mart is telling its American suppliers that they have to meet lower price standards that Wal-Mart wants to impose. The implication of that in many cases is if you’re going to be able to supply Wal-Mart at the prices Wal-Mart wants, you have to go to China or other offshore locations that would permit you to produce at lower cost. … Wal-Mart’s giving them the clear signal that you can’t be a Wal-Mart supplier if you can’t produce at substantially lower prices. … You can go to China, or, in many cases, many U.S. suppliers can’t make that move, and they just go out of business, because Wal-Mart is the dominant company for many U.S. suppliers. If they can’t go offshore, those suppliers end up going out of business.”

And Wal-Mart leverages this power further by contracting to make products with its own name (“private-label products” in retailing lingo) and undercutting makers of traditional branded products, who can’t survive unless they, too, drive down their costs. This only accelerates the race to the bottom.

Nonetheless, let us not lay all the blame for corporate globalization at the doorstep of Wal-Mart headquarters. 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.

Fully two-thirds of China’s exports are shipped from factories wholly or partially owned by non-Chinese companies. The world’s multi-national corporations profit immensely from China’s low wages and like the current Chinese system just as it is.

As I noted recently in my Feb. 9 post, extraordinarily low wages and harsh working conditions endured by Chinese workers are fueled by a steady flow of peasants from the countryside (where wages are even lower) to the cities. Most of these workers, often young women, intend to return to the countryside.

Working conditions are too harsh to endure, and wages are so low that it can literally be impossible to survive on them, report John Bellamy Foster and Robert W. McChesney in an excellent article in the February 2012 edition of Monthly Review:

“The eighty hour plus work weeks, the extreme pace of production, poor food and living conditions, etc., constitute working conditions and a level of compensation that cannot keep labor alive if continued for many years—it is therefore carried out by young workers who fall back on the land where they have use rights, the most important remaining legacy of the Chinese Revolution for the majority of the population. Yet, the sharp divergences between urban and rural incomes, the inability of most families to prosper simply by working the land, and the lack of sufficient commercial employment possibilities in the countryside all contribute to the constancy of the floating population, with the continual outflow of new migrants.”

The world’s attention on those harsh conditions have lately centered on the Foxconn electronics factory, manufacturer of Apple computer and phone products, after a rash of suicides by employees who could no longer endure their prison-like conditions. Foxconn executives showed their humanity and compassion when their response was to install nets to catch future suicide attempts. But as with Wal-Mart, Apple is far from alone in exploiting low-wage workers; in fact, these companies are the norm and not the exception.

Here are but three examples, each a separate investigation conducted by the Institute for Global Labour and Human Rights:

• Workers at the Meitai factory are prohibited from talking, raising their heads or putting their hands in their pockets. They are fined for being one minute late, for not trimming their fingernails or for stepping on the grass, and are searched on the way in and out of the factory. Workers sit on hard wooden stools twelve hours a day, seven days a week, for a base pay of 64 cents an hour. The Meitai factory produces computer equipment for companies including Dell, Microsoft, IBM and Hewlett-Packard.
• Workers at the Jabil Circuit factory work twelve-hour shifts, seven days a week — they are at the factory 84 hours a week. They are prohibited from sitting down and are paid 93 cents an hour. Workers who make a mistake are forced to write a “letter of repentance” begging forgiveness, which they must read aloud in front of all their co-workers. This factory produces circuit boards for Whirlpool, General Electric, Hewlett-Packard and Nokia.
• Base wages at the Yuwei Plastics and Hardware Product Company are 80 cents an hour for 14-hour shifts performed seven days a week. During the peak season, workers toil 30 days a month, often drenched in their own sweat. Safety equipment is turned off to speed up production. The punishment for missing one day of work is to be docked three days’ wages. Yuwei produces auto parts for Ford, General Motors, Chrysler, Honda and Volkswagen.

These are the prices that millions of people are forced to pay so that more money can be distributed upward. The profits from these reductions on labor costs are distributed to high-ranking corporate executives and to shareholders. It pays to be cheap: Wal-Mart reported net income of US$16.4 billion on revenue of US$419 billion for its fiscal year ending on Jan. 31, 2011. Four members of the Walton family, descendants of the company founder, are each among the 22 richest people in the world, according to Forbes magazine — they are collectively worth 73 billion dollars.

One final thought related to Apple. The New York Times columnist Paul Krugman recently wrote that, although Apple is the largest U.S. corporation by market value, it employs only 43,000 people in the U.S., but indirectly 700,000 overseas through its subcontractors. By contrast, 50 years ago, General Motors was the largest U.S. corporation but employed ten times as many U.S. workers as does Apple. Those were union jobs, not sweatshop jobs.

Chinese workers make about five percent of what workers in the United States earn. I strongly suspect that Apple products are not sold at five percent of what they would be had they been produced domestically. Good for corporate profits, but not good for working people.

As wages are driven down further, who will be able to afford the products that are made? If wages fall below a level at which employees can remain alive, what does that portend for the future? That such a question can even be asked illustrates the insanity of our economic system.

The trojan horse of Ron Paul-style libertarianism

By Pete Dolack

The Occupy movement has brought together people from a variety of places along the political spectrum, generally somewhere on the Left. The main exception are Ron Paul followers — or perhaps it might be more accurate to say Ron Paul fanatics, as “follower” falls well short of capturing the zeal of those whom the Texas libertarian attracts.

But what is it that attracts Ron Paul followers who, in whatever disjointed fashion, align themselves with the Occupy movement and articulate what is perhaps the most basic Occupy critique: Corporations have far too much power.

Let’s start with the basic libertarian philosophy, which boils down to “government is always bad.” (Ron Paul followers thus would seem to be more at home among tea partiers or the business wing of the Republican Party, where indeed many gravitate.) To put a bit of flesh on the bones, libertarianism can be described as a belief in complete freedom of commerce, of minimal government involvement in the economy or social affairs, and of allowing the “market” to determine economic and social outcomes. An intellectually honest libertarian, then, would be against government laws interfering in adults’ personal lives. The typical conservative opposes government regulations, but only when it comes to commerce; such beliefs suddenly vanish when it comes to social issues, and thus we have the towering hypocrisy of Republicans thundering against government simultaneous with demands that government control women’s bodies, regulate what happens in the bedroom and decide who can or can’t have a full legal partnership with the person they love.

Representative Paul is not consistent, either — he, too, believes that women are not capable of making decisions about their own bodies and thus opposes abortion. The again, if one sees women as simply carriers of fetuses, and thus lesser beings or commodities rather than full-fledged human beings, maybe it isn’t necessarily inconsistent. (One clue as to why his followers skew heavily toward men. Actually, straight White men, as will see presently.) And his belief in ending military adventures overseas is based on old-fashioned isolationism, not on any notion of solidarity or of a common humanity.

It pays to check under the hood. Having spent many days at the Occupy Wall Street encampment in New York City’s financial district, I did have the chance to talk to a few Ron Paul followers; there always seemed to be one among the sign-holders that daily lined the Broadway side of the encampment. Reluctant as I am to generalize, they were consistently the most fixed in their beliefs. What none of those to whom I talked would consider is what the result would be should their libertarian utopia actually be implemented.

A brief sojourn on the nature of power in a capitalist country. A short-hand way of describing power relations might be that the possessors of capital rule. The system is called “capitalism” and those who succeed in it accumulate a massive amount of capital. Any one person, no matter how industrious, can only do so much work, so businesses are formed and employees hired. When the business gets big enough, it is incorporated as a corporation. (There are many suffixes, but let’s stick to one word.) The founder, the founder’s immediate top executives, and eventually their successors, run the corporation to make money. The corporation has to produce a product or service that customers are willing to buy, yes, but to do so in a manner that enables the executives at the top to earn big money and, if the company is big enough to be listed on a stock exchange, the shareholders are expecting a share of the profits, too.

This pot of money is created because the executives pay the employees much less than the value of what they produce. The difference between the value produced and the wage paid is the source of corporate profit, the extraordinary salaries and bonuses paid to those at the top and the dividends paid out to shareholders.

Those few who benefit from the work others perform — the one percent, to use the Occupy Wall Street formulation — quite naturally like the arrangement. And since we have the most greedy lusting for ever bigger pots of money, and competition between the executives of the corporation and the shareholders of the corporation as to which gets the bigger portion of the pot, ways must be found to extract more money (i.e, “capital”). Competition plays an indispensable role; if a corporation doesn’t increase its profits, the financiers who constitute most of the shareholders will dump its stock and buy the competitors’ stock. The competitor will be better positioned, and might put the first corporation out of business. There are various paths to boosting profits, but ultimately the corporation has to cut costs. At first, cost-cutting can be done through buying machinery or developing more efficient production techniques. But competitors will do the same. Given enough time, the path to boosting profits must rest on reducing the cost of labor — cutting wages, cutting benefits and moving production to countries with much lower labor costs. We are paying the collective price for all this right now.

As more money concentrates into fewer hands, an elite develops that accumulates more money than it can possibly spend on yachts, mansions and other luxuries. Some of their money will spent on buying political influence — “market forces” work in their favor, but they want to be sure that “political forces” do so as well. There may be vastly more working people than elites, but those elites have the money to give to political office holders, to buy and control mass media outlets, to create “think tanks” and other institutions to disseminate their preferred message, and (because of their ability to make big donations) to control non-economic institutions such as schools. We working people sure can’t do any of that.

The only check against that process — which accelerates as more flows to the top, leaving still less for everybody else — is political and social activism. But as the power of the one percent grows, and the struggle of working people to survive becomes more acute, the ability of the elites to further bend the rules in their favor and the difficulty of working people to influence public policy increases, the power of corporations steadily grows. A corporation is not an abstract entity — it is an organization that is run in a dictatorial fashion from the top, and the structure that enables the concentration of wealth. The corporation is simply the legal entity to accomplish that, as would be the case with or without the added benefit of “corporate personhood.”

Now, back to libertarianism. If corporate power (really the concentrated power of a minuscule elite) has become so strong despite the checks and balances built into the modern political system, and that power continues to strengthen, what would happen if the checks and balances were removed? What would happen if we allowed “markets” to determine all outcomes? The answer should be obvious. A “free market paradise” such as that advocated by Rep. Paul and other libertarians, would mean the end of what is left of our social safety net. No more minimum wage, no more Social Security, no more laws against discrimination in the workplace, no more safety rules, no more consumer-protection laws, no more environmental protection. Indeed, Rep. Paul again said the Civil Rights Act of 1964 was wrong because it “destroyed the principle of private property,” according to a Jan. 1, 2012, report in The Huffington Post.

One Ron Paul supporter I talked to was certain that “property rights” would safeguard us in lieu of laws enforced by government. We’re a few blocks from the Hudson River, I said to him, then asked what would stop a chemical company from building a plant on the river, dumping its waste into the river and belching toxic substances from smokestacks. “Property rights” would come to the rescue, he replied, because the “owner” wouldn’t allow that. The owner of the property would be the company operating the hypothetical chemical plant, and it is precisely “property rights” that would enable the company to build the plant and the lack of government oversight that would enable it to pollute in a dangerous manner. To this answer, he replied that “the owner of the river wouldn’t allow that to happen.”

The river does not have an “owner,” I pointed out, and I should have added that, without any government, there would not be an official entity to defend the integrity of the river. He didn’t have a response, and allowed the discussion to lapse. His belief that there should not be a federal government rested on a conviction that state government would be better because it is more local. He might have wished that a state government might be the “owner” of the river (although his actual belief system would require that the river should have a private owner), but that would be no good here, either, because the Hudson is, after all, half in New York and half in New Jersey as it nears its outlet. Pollution is not likely to observe state boundaries. And rivers should not be privatized.

This conversation had begun when I asked him what he thought of the racism in Ron Paul’s newsletters of the past; they were full of vicious White-supremacist and homophobic comments. His answer was a near perfect neologism: “I could write anything under your name and send it out without your knowing.” I replied that wouldn’t be possible as I would swiftly take legal and other action against someone doing that and put a fast end to it. Rep. Paul’s claims that he had no knowledge of what went out under his name for a period of several years is quite simply as lame an excuse as could be put forth — and his followers blindly repeat it. What we have here is the “true believer” syndrome: I want to believe it, therefore it is. Such a thing is hardly unknown elsewhere, it must be admitted, but rarely does it achieve such perfection. Incidentally, the above conversation was by no means the most fruitless; other Ron Paul followers were still more relentless. (I’ll take up “End the Fed” in a future post.)

Part of the confusion arises from the demonization of that concept known as “government.” The “government” is not a disembodied entity somehow detached from society, but rather is a reflection of the social forces within society. In a society in which “free markets” are the basis on which most outcomes are decided, those people and institutions that accumulate the most money — and therefore control employment, bend the political process to their preferred outcome and wield their wealth to influence or control other institutions — will be the decisive agents. Their decisions will be to benefit themselves, inevitably at the expense of everybody else.

Such dominance does not mean absolute control. Popular pressure can, on occasion, assert itself as last month’s online campaign to halt the Stop Online Piracy Act demonstrated. But sweeping away government — or reducing government to two functions (enforcing contracts and maintaining a military force) as Chicago School ideologues demand — means that the “market” will determine all outcomes. The “market” would mean concentrated corporate power would decide all outcomes, especially economic outcomes. Life would be much harder than it is now, with no recourse.

That industrialists and financiers would love such an outcome is quite understandable. What isn’t is why any working person would want it. And the scenario just sketched it precisely what libertarians, Ron Paul included, would deliver if they actually were handed power.

The magic elixir that makes so many working people believe that government is source off all problems (although it was a corporation that laid you off or moved your job to the Global South) is that mystical word “freedom.”

“Freedom” is equated with individualism — but as a specific form of individualism that is shorn of responsibility. Industrialists and financiers are presented as individuals to be emulated, and their special interests are presented as the interest of all of society. More wealth for the rich (regardless of the specific ideologies used to promote that goal, including demands for ever lower taxes) is advertised as good for everybody despite the shredding of social safety nets that accompanies the concentration of wealth. Those who have the most — obtained on the backs of those with far less — have no responsibility to the society that enabled them to amass such wealth.

Imposing harsher working conditions is another aspect of this individualistic “freedom,” but freedom for who? “Freedom” for industrialists and financiers is freedom to rule over, control and exploit others; “justice” is the unfettered ability to enjoy this freedom, a justice reflected in legal structures. Working people are “free” to compete in a race to the bottom set up by capitalists — this is the freedom loftily extolled across the corporate media.

Utopias have a way of becoming dystopias, and the corporate utopia on offer by libertarians — be they in the Cato Institute, in corporate boardrooms, in the tea parties or in the Ron Paul campaign — is a most dystopian trojan horse.