Finding the roots of addiction in the instability of ‘free markets’

Addiction is big business and obscuring its roots is its ideological handmaiden. Despite the incessant chanting that everything that happens to you is solely your fault, social ills do have social roots.

We need not lay this “personal responsibility” mantra solely at the feet of neoliberal ideologues, for such beliefs pervade capitalist society, even among those who are critical of capitalism’s excesses. New age philosophy, for example, routinely blames the individual for all manner of personal misfortunes and overemphasizes personalities at the expense of collective effort.

An episode of Oprah that featured Nelson Mandela saw Oprah Winfrey repeatedly tell the former president that he had accomplished so much by himself; she was oblivious to his protestations that he could not have brought an end to apartheid except as part of the collective movement of which he was a part. On the personal level, a friend still angrily recounts an incident many years ago when she was mugged, went into a nearby New Age establishment to seek some help and instead was asked, “What did you do to draw in that negative energy?”

Reducing everything to personal activity obliterates that movements animated by organized groups accomplish social change (not the solo efforts of charismatic leaders), and by conveniently laying all fault for social ills at the feet of the marginal such reductions obscure larger social conditions.

AlcoholThe common responses to alcohol and drug addiction very much fall within this pattern. It is true that different personalities have differing susceptibilities to addictive behavior; nonetheless, this can’t be and isn’t anything close to a full picture. Solutions to addiction based on correcting individual behavior are hopeless without analyzing the role of dislocation in capitalist society, argues Bruce K. Alexander in his paper The Roots of Addiction in a Free Market Society. Published by the Canadian Centre for Policy Alternatives, the paper demonstrates that free markets, and the massive dislocation that results from them, are the ultimate causes of addictive behaviors.

Failure to focus on root causes will lead to failure

Writing in the context of a new policy put forth by the city of Vancouver a decade ago that sought to treat addiction through a focus on “four pillars” — treatment, prevention, law enforcement and harm reduction — Dr. Alexander argues that, although an improvement on traditional initiatives that focus on policing, such a focus is woefully short of tackling the root causes. He writes:

“[D]islocation is the necessary precursor of addiction. … [F]ree markets inevitably produce widespread dislocation among the poor and the rich. As free market globalization speeds up, so does the spread of dislocation and addiction.

In order for ‘free markets’ to be ‘free,’ the exchange of labour, land, currency, and consumer goods must not be encumbered by elements of psychosocial integration such as clan loyalties, village responsibilities, guild or union rights, charity, family obligations, social roles, or religious values. Cultural traditions ‘distort’ the free play of the laws of supply and demand, and thus must be suppressed. In free market economies, for example, people are expected to move to where jobs can be found, and to adjust their work lives and cultural tastes to the demands of a global market.” [page 1]

Ignoring these larger forces, argues Dr. Alexander, who has more than four decades of experience researching addiction, is responsible for the ineffectiveness of efforts to contain addiction.

“Attempts to treat or prevent addiction that ignore the connection between free markets, dislocation, and addiction have proven to be little better than band-aids. Addressing the problem of addiction will require fundamental political and economic changes. … [S]ociety, as well as individuals, must change. It requires moves towards good government and away from policies that undermine our ability to care for one another and build sustainable, healthy communities.” [page 2]

Dr. Alexander defines addiction more expansively than is ordinary, arguing that a compulsion for money, power, work, food or material goods are as dangerous and resistant to treatment as is addiction to illegal drugs. These addictions are a “desperate substitute” in the wake of dislocation from intimate ties between people and groups. This pattern is repeated in disparate societies around the world; no corner has been spared penetration by global capitalism during the past two centuries. Continual reinforcement is needed to maintain the consumption that is the engine of free markets.

“[E]stablished ‘free’ market societies require the continuing presence of powerful control systems. Carefully engineered management, advertising, taxation, and mass media techniques keep people buying, selling, working, borrowing, lending, and consuming at optimal rates, deliberately undermining the countervailing influences of new social structures that spontaneously arise in modern families, offices, factories, etc. Thus, opportunities to re-establish new forms of psychosocial integration are suppressed.” [page 9]

A pattern found across societies and times

The high rates of poverty, economic disparity, divorce, children diagnosed with “attention deficit hyperactivity disorder” and many other indicators of dislocation within U.S. society are well known, but Dr. Alexander draws on the disparate examples of the Indigenous peoples of Pacific Canada, Scottish peasants and British subjects who lived in the Canadian North in the employ of the Hudson’s Bay Company to illustrate his thesis.

Photo of Vancouver by Andrew Raun

Photo of Vancouver by Andrew Raun

Force was frequently applied to dislocate Indigenous populations. The founding of Vancouver as a port and railroad terminal required the uprooting of almost 100 First Nations villages and systematic destruction of Indigenous culture. Dr. Alexander writes:

“The natives’ lands, which had for centuries been sites for food gathering, communal houses, huge wood carvings, ancestral burial grounds, and invisible spirits became the basis of a free market in real estate almost overnight. Many of their complex cultural practices were outlawed or mocked out of existence. Their famous ‘potlatches,’ elaborate ceremonies in which rich natives gave enormous amounts of food and goods to others according to complex traditional, clan, and personal obligations were the antitheses of free markets. They were prohibited by law from 1884 until 1951.” [page 6]

Even in cases where there was relatively little direct violence or enslavement, military force and other sources of violence were waiting in the wings.

“Of course British authorities always had the lash, the gallows, and the artillery of the royal navy close at hand, and these were called into service at the slightest indication of organized resistance.” [page 25, note 50]

This was true for resistance on the British Islands as well. England’s establishment of a free market society by the early 19th century was achieved through mass displacement and, in the case of Scotland, destruction of cultural institutions that, although far from ideal, did provide social safety nets for the poorest and helped keep starvation at bay during periods of crop failures. Independent peasants were forced off the land so that elites could convert farming from supplying local consumption to producing products for export. This required

“a massive, forced eviction of the rural poor from their farms, commons, and villages and the absorption of some of them into urban slums and a brutal, export-oriented manufacturing system. Those who resisted these new realities too strenuously were further dislocated from their families and communities, by forced apprenticeship of their children, destruction of their unions and other associations of working people, elimination of local charity to the ‘undeserving poor,’ and by confinement in ‘houses of correction’ where they were encouraged to accept their new responsibilities with whips and branding irons.” [pages 9-10]

Those who refused to pull down their houses and leave had their homes burned down by the local sheriff after clan chiefs, induced to join English society, or English landlords bought their formerly inalienable land in the “free market.”

Racial ‘explanations’ for addiction are nonsense

Although it can not be said that there were no social problems among Canadian First Nations peoples before European contact, Dr. Alexander reports in his paper that he has found no mention by anthropologists of any behavior that could be termed addictive, which he attributes to the high level of “psychosocial integration” in societies that had high levels of communality and shared resources. He writes that the popular explanation for widespread alcoholism among Canadian natives (this would also apply to native peoples in the United States) — a racial “inability” to control themselves — is refuted by the lack of addiction before the European drive to wipe out their cultures and languages.

“It was only during assimilation that alcoholism emerged as a pervasive, crippling problem for native people, along with suicide, domestic violence, sexual abuse, and so forth. … ‘Civilization,’ as it came to [eastern Canadian] natives, was administered by militant Jesuits in a century of fanatical religious zeal. This meant destruction of the robust Huron religion and, hence, Huron culture itself, with dislocation as the consequence. Eventually every tribal culture in Canada was engulfed by the overpowering European culture, and every tribe succumbed to the ravages of dislocation, including epidemic alcoholism. Massive dislocation produced massive addiction.” [page 15]

The same pattern was found among dislocated Europeans. Dr. Alexander cites the example of Hudson’s Bay Company employees from Scotland’s Orkney Islands, valued by the company because they were used to far Northern conditions and life at sea, and known for their sobriety. They nonetheless succumbed to widespread alcoholism in the Canadian north, a problem the company could not stamp out no matter how many prohibitions it issued.

Prohibition has not worked in modern times, either — the crack cocaine epidemic of the 1980s served as fodder to intensify the “war on drugs.” Pervasive propaganda at the time that crack is “instantaneously” addictive is a “fabrication,” Dr. Alexander writes, noting this was falsely claimed for alcohol, heroin and marijuana at various times in the 19th and early 20th centuries. He argues that dislocation, not crack itself, is the cause of crack addiction and that, similar to other substances, most use it without falling into addiction.

Stable communities as the solution to addiction

The solution to reversing addiction, Dr. Alexander writes, is to reverse dislocation and stabilize communities. Doing so, however, requires considerable pushback against pervasive messages that spotlight individuals rather than social causes.

“Changing the terms of this debate is a huge task, since the current manner of speaking of addiction as an individual drug-using disease is maintained by an media army that has been launching this message for decades. People endure this barrage of disinformation partly because it complements a deeply-rooted North American ‘temperance mentality,’ which makes it seem natural to blame social problems on drugs and alcohol and partly because it profits many institutions and professions that treat, police, prevent, and ‘harm reduce’ the putative disease. Those who launch the public information barrage prosper because the ‘War on Drugs,’ which has drawn its justification from it, serves vital commercial and geopolitical purposes for vested interests with very deep pockets.” [pages 19-20]

The “war on drugs” is, for example, a useful tool for the U.S. government to justify continual interference in Latin America, punishing governments that do not fully yield to U.S. dictates, and it also suppresses competition to legal drugs peddled by the highly profitable pharmaceutical industry.

People need to belong to their society, “not just trade in its markets,” Dr. Alexander argues. Imposing fair labor standards and preventing multi-national corporations from pressuring local governments to rescind labor, health, safety and environmental standards would be a better solution than mass migration, as would rebuilding a proper social safety net. He concludes:

“On a global level, substantially reducing the addiction problem requires nothing less than exercising sensible, humane controls over markets, corporations, environments, public institutions, and international agencies to reduce dislocation. This cannot be achieved without conflict, because it will inevitably impede the pursuit of ever-increasing wealth and ever-freer markets. Of course it would be naive to hope for a return to any real or imagined golden age. However, it is at least as naive to suppose that society can continue to hurtle forward, ideologically blinded to the crushing problems that free markets create.” [page 22]

In a rational society designed to meet human need rather than private profit at any cost, this conclusion would be obvious. That it seems a fantastic goal is a morbid manifestation of the cancer that is our economic system.

Does Occupy Wall Street have a future?

Will Occupy Wall Street have more birthday celebrations? The movement marked its second anniversary with a daylong series of events in its New York City birthplace, but with smaller numbers than it has drawn for past events.

Having spent September 17 at series of rallies and marches, I have no interest in surmising the end of a movement into which so many have placed great hopes. But two years on from the electric beginnings of Occupy in Zuccotti Park and its rapid spread to hundreds of cities, it must be asked: What is the future for Occupy? Or has it accomplished its mission, to be supplanted by as yet unformed movements to carry forward the work of building a better world?

Photo by Mark Dunlea, via www.popularresistance.org

Photo by Mark Dunlea, via http://www.popularresistance.org

The Occupiers and allies ranged from a couple hundred to several hundred at the various rallies and marches — noticeably smaller than 2012’s first anniversary. A credible showing considering the breadth of events that included a march on the New York Stock Exchange, assemblies at Zuccotti Park, a rally in Washington Square Park focused on the Trans-Pacific Partnership, street theater in Times Square, a rally for a “Robin Hood” financial-industry tax near the United Nations and marches connecting some of these. And all this on a work day.

Nonetheless, such crowds do not constitute a mass movement. The organizing wasn’t helped by fissiparous tendencies; a painstaking effort to reach consensus was undermined by one organizer deciding to do his own thing with his own Occupy group. (An organizer involved in the anniversary preparations told me this was the most difficult organizing he had been involved with in his many years of movement work.)

Despite the “leaderless” ideal of Occupy, there are leaders within the remnants of Occupy and they are not necessarily working harmoniously. There is nothing unique happening here: There is no social movement or large organization where these problems do not arise. But they do not help an organization already on the wane. That Occupy is a dwindling movement is a development with multiple roots, not least of which is the violent repression of it soon after its exhilarating birth.

Speaking truth to power makes those in power angry

There is no mystery as to why that repression was unleashed — Occupy unambiguously critiqued the corporate dominance of our world, the gross inequality that is worsening, the lack of accountability on the part of the financial industry and — perhaps the highest crime — encouraging people to see social divisions in terms of class. Not by explicitly referring to class or using class terminology, but by popularizing the concept with the “1% vs. the 99%” narrative. There is considerable room for debate on the size of the elite that dominates capitalist society (there are those who argue for higher and lower figures than 1%), but that such an elite is recognizable is demonstrated in how quickly the concept spread.

The Department of Homeland Security coordinated the crackdown on Occupy across the United States and the FBI had its hand in the repression as well, branding Occupiers as “terrorists” and plotting to disrupt its events. Both agencies worked closely with not only local police departments but even with the country’s banks. Police eagerly attacked Occupy encampments and actions, such as Oakland, California, police firing tear-gas canisters at point-blank range. The New York City police destroying the Occupy Wall Street library certainly was emblematic.

The anger that fueled Occupy has not dissipated, nor have the issues that animate the movement. We should never underestimate the importance of naming the problem, of clearly opposing what is wrong. No matter the future, Occupy will always be the movement that provided the service of changing the conversation. Overnight, we went from wondering why there was no organized response from the Left, leaving a vacuum filled by the corporate-created Tea Party, to a new orientation in which the actual agents of economic collapse were placed in a metaphorical bulls-eye rather than the traditional scapegoats of minorities, immigrants and government.

The real problem is the system that enables the bankers, not the personalities of the bankers themselves, but even with its emphasis on banker greed Occupy was, and is, traveling on the right track. The same institutions sit atop the economic pyramid; there has been no accountability for those who brought on the worst downturn since the Great Depression. Governments around the world continue to be under the dominance of these same institutions and people. Discouragement that the energy created by Occupy has not led to any change is one factor in the movement’s decline. Even more so, the discouragement engendered by the violent response to Occupy, a resignation induced in many that nothing can change, is a factor — the very purpose of that violence.

Even leaderless groups have leaders

While acknowledging the considerable force of the factors in the preceding paragraph, we nonetheless should examine the structure of Occupy itself. The desire to not replicate past top-down patterns and integrate horizontal decision-making is admirable, but the idea that there should be no leaders doesn’t pass the test of the real world. Occupy has leaders, the same as any other organization, but when they are not acknowledged, accountability is eroded. Decentralization, ironically, opens opportunities for ambitious leaders to promote themselves.

Such leaders may be acting on what they perceive to be the organization’s best interest, or they may be acting in ways to undermine the organization. There is suspicion by some people involved in Occupy organizing that others who they viewed as acting in destructive ways may have been Democratic Party operatives seeking to disrupt the movement. I am in no position to know if that is true, but there is more than ample evidence that the consensus painstakingly created was subject to being disregarded despite the sanctity of consensus within Occupy Wall Street. Having competing events at the same time is one way to shrink crowds.

There is also no doubt that Democrats have variously sought to co-opt it or tried to destroy Occupy. Let us not forget who the occupant of the White House was when the Department of Homeland Security and the FBI unleashed coordinated violence upon it across the country. Such tactics, traditionally visited upon any U.S. movement that makes a direct critique on the system instead of acting for small reforms, are always supplemented with more subtle machinations.

Circling back to the structure of Occupy itself, a discussion of its tactics can’t be avoided. Occupy was reasonably clear about what it is against — but it is never enough to be against something. We also have to be for something.

Refusing to make demands became something of a fetish, even allowing for the slow process of building consensus at long assemblies and the diversity of opinions and backgrounds. Understanding the problem and naming the sources of the problem are the first concrete steps, without which progress is impossible. Concrete ideas and models should follow — goals to work toward.

Unwinding the disastrous policies that have brought the world to its present state won’t happen on its own or by moral persuasion, but through organized work that will have to clear giant roadblocks and face the hostility of the institutions and people who benefit from the current system and the governments they dominate through their wealth and power. The process is called “struggle” for a reason.

Perhaps Occupy is not the organizational model to create a sustained movement. Perhaps newer groups will have to continue the work of Occupy, in conjunction with groups already at work. Whatever its future, Occupy has been an indispensable part of the work to create a better world. We can only hope that it will continue to be there.

See also:

Attacks on critical thinking vs. cheers for scapegoating

The long arc of mass movements

‘End-game’ conspiracy or business as usual?

The so-called “end-game” memo authored by Timothy Geithner and recently brought to light by investigative journalist Greg Palast certainly is interesting, but does not “prove” that a secret cabal set up the world for a financial collapse. The present-day neoliberal misery has far deeper roots than a handful of officials, no matter how odious.

Photo by Steve Kaiser, Seattle

Photo by Steve Kaiser, Seattle

Last week, a memo written by former U.S. Treasury Secretary Geithner in 1997, when he was assistant secretary for international affairs in the U.S. Treasury Department, was published by Mr. Palast. The memo asked Lawrence Summers to directly call the chief executive officers of five key players in the financial industry — Bank of America, Citibank, Chase Manhattan, Goldman Sachs and Merrill Lynch — to discuss “the end-game of [World Trade Organization] financial services regulations.”

In his accompanying story, Mr. Palast gets a little hyperbolic:

“When a little birdie dropped the End Game memo through my window, its content was so explosive, so sick and plain evil, I just couldn’t believe it. The Memo confirmed every conspiracy freak’s fantasy: that in the late 1990s, the top US Treasury officials secretly conspired with a small cabal of banker big-shots to rip apart financial regulation across the planet.”

It isn’t a secret that the finance ministries of governments in the world’s advanced capitalist countries are captives of the global finance industry, nor that the U.S. Treasury Department is Wall Street’s personal branch of government. It’s no secret that industrialists and financiers hold decisive influence over governments. The system is called capitalism. Mr. Palast has done excellent investigative work for years and he has once again provided a valuable service with his publication of the Geithner memo. But interesting as the memo is for its confirmation of the close collaboration between financiers and government, it would be a mistake to place too much emphasis on personalities.

Mr. Palast himself seems to realize this, writing:

“Does all this evil and pain flow from a single memo? Of course not: the evil was The Game itself, as played by the banker clique. The memo only revealed their game-plan for checkmate.”

But then we are back to personalities:

“And the memo reveals a lot about Summers and Obama. While billions of sorry souls are still hurting from worldwide banker-made disaster, [Robert] Rubin and Summers didn’t do too badly. Rubin’s deregulation of banks had permitted the creation of a financial monstrosity called ‘Citigroup.’ Within weeks of leaving office, Rubin was named director, then Chairman of Citigroup — which went bankrupt while managing to pay Rubin a total of $126 million.”

Personal interest, yes, but ideology looms large

I’ve no argument against the accusation that Secretaries Summers and Rubin have personally enriched themselves to the tune of many millions of dollars. The facts speak for themselves. I am not suggesting that there is no personal interest at stake here; but the larger issue is that these Wall Street consiglieres are acting for ideological reasons. The logic of an entire economic structure led to deregulation and the disastrous consequences that flowed from it. The steps that culminated in the 2008 collapse that we continue to live with go back decades, before the careers of any of today’s capitalist mandarins.

The capitalist system has evolved into the present-day situation under its own inexorable demands. Our unholy Democratic triumvirate are merely the human material that fulfilled the necessary roles.

The problem isn’t greedy bankers, the problem is the system that enables the greedy bankers.

If those three hadn’t been there, someone else would have been and done the same. Has the switching between Democratic/Republican, or Liberal/Conservative, or Labour/Conservative, or Social Democratic/Christian Democratic, or Socialist/Union for a Popular Movement, made any difference in economic matters? The same dynamic that governs all enterprises under the capitalist system — expand or die — applies to the financial industry.

Enterprises that produce tangible goods and services compete for market share, swallowing each other as a natural strategy to become bigger. Ultimately, only a handful of corporations will dominate an industry, creating an effective monopoly that puts an end to competition and grants the executives and institutional shareholders who control them extraordinary wealth and power. The financial industry is no different, and deregulation is critically important to financiers’ ability to increase the size of their banks and hedge funds.

Relentless competition goads them (not reluctantly, of course) into demanding more deregulation, more privatization (to gain control of public wealth) and the opening of borders to capital. If a capitalist enterprise does not do this, its competitors will and put it out of business. As more wealth is amassed, the more power enterprises have to bend laws and rules more in their favor. The wealthier and more powerful the executives and financiers who control these enterprises become, the harsher the conditions they can impose on their employees.

A ventriloquist has to learn his lines

To put the “end-game” memo in perspective, Secretary Geithner was seeking to ensure that the U.S. government’s negotiating position was fully in alignment with the country’s largest financiers. His memo speaks for itself on this:

“Industry’s assessment of the prospects for success in December [1997] can be characterized as cautiously optimistic. … I believe the securities industry is broadly satisfied with the outlines of the deal.”

Secretary Geithner evidently believed that Secretary Summers would be the best person to discuss final negotiations with the pirates of Wall Street. Indeed, the latter speaks as a ventriloquist for the financial industry. I had low expectations for Barack Obama following his election, but when Secretary Summers’ selection as lead financial adviser was one of the president-elect’s first moves, I realized the Obama administration was going to be worse than I thought.

The World Trade Organization’s financial services regulations were implemented. The WTO announced in February 1999 that the regulations would go into effect because governments that accounted for more than 90 per cent of the global financial services market ratified the agreement. WTO rules forbid governments from limiting the size of financial firms; forbid “firewalls” that would separate commercial banking from risky speculation; and limits government oversight by subjecting domestic regulations to WTO review.

At that time, the WTO, as a global organization to which nearly all countries belong, was the primary treaty vehicle for imposing control over the world’s economies. The “Battle in Seattle” in late 1999, and subsequent global resistance, brought the process of using the WTO to further tighten control to a halt. As a result, there is now more stress on trade agreements such as the Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership. The European Union also exists to impose corporate dictatorship through erosion of national sovereignties and imposition of market “discipline,” which is nothing more than imposing the aggregate interests of the largest industrialists and financiers.

The ideas of the world’s industrialists and financiers have become the dominant ideas of the world — these are continually disseminated through endless repetition through mass media, schools and a plethora of other institutions. Promoted political leaders will be be drawn from among those who positions replicate the dominant ideas and they can’t take office without dependence on the money of industrialists and financiers. The “end-game” memo opens a window into this process, but we shouldn’t mistake the window for the edifice.

Power concedes nothing without a demand

We struggle because there is no alternative. We need to struggle because none of us can know when the spark will come. To not struggle is to give up.

Photo by Patrick Prémartin

Photo by Patrick Prémartin

I couldn’t help thinking about this subject again while helping out at an Occupy Wall Street information table last Sunday. As usual, there were many perspectives contending, but there was a distinct undercurrent of despair. Some articulated that as frustration that more people can’t be reached faster, but another subset was rooted in the idea that all is already lost, that we are already running out of time. From the latter it is a short journey toward giving up.

The process of organized resistance to injustice is called “struggle” for a reason — it is never easy. Frederick Douglass said it as well as it can said be a century and a half ago in words that will always bear repeating:

“Those who profess to favor freedom and yet depreciate agitation, are people who want crops without ploughing the ground; they want rain without thunder and lightning; they want the ocean without the roar of its many waters. The struggle may be a moral one, or it may be a physical one, or it may be both. But it must be a struggle. Power concedes nothing without a demand. It never did and it never will.”

During this process, success always lies over the horizon. Sometimes we struggle for something we won’t see in our lifetimes; history is replete with such examples. Sometimes we know we won’t see it in our lifetimes, but the call of a greater good animates us. Sometimes we do taste victory. But when? We can never know ahead of time.

One strike among many

Take Russia’s February Revolution of 1917, when the tsar was overthrown. People persevered for decades in conditions far worse than anybody in an advanced capitalist country faces. The movement waxed and waned; strikes and even peaceful marches were drowned in blood. St. Petersburg, then the capital, was racked by waves of strikes in the first weeks of 1917 amidst shortages of all kinds.

Put aside for the moment your opinion about the eventual course of Russian history; the people struggling to survive at this time shouldn’t be held responsible for the wrong turns the October Revolution later took. On one particular day, tens of thousands of women textile workers walked out, then went to the metal factories and asked the men working there to join them. They did, the strike spread and within two days a general strike took hold. In another five days, the tsarist régime was finished — one of the world’s most brutal dictatorships brought to an end.

Why that one day? Why that one strike among hundreds of actions? We can never know. The most we can say is that on that particular day, Russians had finally had enough. This amazing feat, overthrowing an autocratic régime that had endured for centuries, occurred as most of the leaderships of the various political parties and organizations were in Siberian exile, in foreign exile or in jail.

Yet there was no spontaneity at work. Russia’s socialists had tirelessly laid the groundwork, and although the tsar’s secret police had decimated their ranks and so many had paid with exile, banishment, hard labor, jail and execution, the ideas could not be stamped out. The talks of the socialist agitators, the words of the socialist newspapers, pamphlets and fliers, resonated with the experiences of Russians — not only in the cities, but in the countryside and in the army and navy. It was this practical work, carried out over many years, that provided the people of Russia with the tools necessary to understand, and then change, their conditions.

They changed their conditions even though most were so under-educated that they were illiterate; even though a omnipresent propaganda insisted that the tsar ruled as a direct representative of God and there could be no change; even though police, militaries, death squads and secret police promised swift retribution against anyone questioning the natural order, the only order that could be.

Dignity in the face of inhumanity

Take a more recent example, South Africa. The apartheid régime seemed impervious. Disdainful of world opinion, determined to hold power at any cost, murdering or shipping to island prisons its opponents with impunity, consigning the Black majority to grinding poverty and daily humiliation — how could optimism that a better day would come be sustained? Yet is was.

I remember vividly the day Nelson Mandela made his first speech after his release. The only picture we had of him had been that of a young man with a fierce expression. Now here he was, an older man with gray hair. I was startled by his appearance before remembering we were seeing him three decades older, all at once. I couldn’t quote to you a single word of what he said that day, but it was perhaps the most memorable speech I have ever witnessed. What I do remember is the dignity of Nelson Mandela. Dignity. He was not broken after 27 years in prison, not at all. But beyond that, the African National Congress leader was fully human.

He would not allow his humanity to be taken away, no matter how cruel his oppressors. Nelson Mandela made that speech because he was part of a movement. Only an organized movement could have brought that day. A movement willing to engage in struggle. Another African National Congress leader, Steven Biko, summarized a most important lesson in these words:

“The most potent weapon of the oppressor is the mind of the oppressed.”

Throwing up your hands in despair, declaring that nothing can be done so nothing should be started: You are oppressing yourself more effectively than any dictatorship, any sham democracy, any rule of financiers. To say “they” are too strong or too vicious, whomever “they” are, is to give up on living. Such an attitude is the surest route to your material conditions getting worse, to the next generation living under harsher conditions.

Everything of human creation is temporary. Everything of human creation will come to an end. Whether the next system will be better or worse, whether we or our descendants will be more or less free, is up to us.

Debt jubilee: Revolutionary change or reform to stabilize capitalism?

Debt has been a crucial lever in implementing austerity, both as an instrument and a moral cudgel. Eliminating debt, private and public, would have transformative effects — but would doing so be revolutionary or merely a reform to stabilize world capitalism?

Those are not the only two choices, of course, and the mere thought of a debt jubilee would send many a set of teeth gnashing. Debt jubilees are not a new idea; in fact they have existed since long before capitalism was born. But given the unprecedented level of debt, a jubilee today would entail unprecedented complexity.

The Australian economist Steve Keen has for several years energetically promoted the concept of a debt jubilee. His concept is to bail out people instead of banks, reasonably arguing that people would spend the money, reviving the economy. So in this formulation, radical as the concept of a jubilee is (and radical as the idea of helping working people instead of the super-wealthy is), it is conceived as a reform.

Professor Keen conceptualizes a jubilee in a form that would not cause damages to debt holders not responsible for the crisis, such as pension funds:

“Whereas only the moneylenders lost under an ancient Jubilee, debt cancellation today would bankrupt many pension funds, municipalities and the like who purchased securitized debt instruments from banks. I have therefore proposed that a ‘Modern Debt Jubilee’ should take the form of ‘Quantitative Easing for the Public’: monetary injections by the Federal Reserve not into the reserve accounts of banks, but into the bank accounts of the public — but on condition that its first function must be to pay debts down. This would reduce debt directly, but not advantage debtors over savers, and would reduce the profitability of the financial sector while not affecting its solvency.”

large money bills“Quantitative easing” is a government program of massive buying of assets from banks in an effort to promote increased lending and liquidity through increasing the money supply. A “quantitative easing for the public” would give money to everybody. Those with no debt would be free to spend it as they wish, and those who received more money than the size of their debt would similarly have no obligations once they wiped out their debt. Dramatic as this idea is, Professor Keen is no revolutionary; he seeks to put capitalism on a firmer footing:

“Returning capitalism to a financially robust state must involve a dramatic fall in the level of private debt — and the size of the financial sector — as well as policies that return the financial sector to a service role to the real economy.”

His reasoning is that economic recovery is impossible until private and government debt is paid down:

“The standard means of reducing debt — personal and corporate bankruptcies for some, slow repayment of debt in depressed economic conditions for others — could have us mired in deleveraging for one and a half decades, given its current rate. … That fate would in turn mean one and a half decades where the boost to demand that rising debt should provide — when it finances investment rather than speculation — will not be there. The economy will tend to grow more slowly than is needed to absorb new entrants into the workforce, innovation will slow down, and justified political unrest will rise — with potentially unjustified social consequences. … We should, therefore, find a means to reduce the private debt burden now, and reduce the length of time we spend in this damaging process of deleveraging.”

A radical idea, then, to save the system. A radical idea that is not at all revolutionary in the hands of Professor Keen. Considering the mass political movement required to force what would be an extraordinary change in the policies of the world’s central banks and finance ministries — institutions staffed by and run on behalf of financiers — would we be simply content to say, “Well, that’s it, then, we can all go home now”?

Revolutions as ‘transformations of common sense’

The U.S. activist and economist David Graeber also calls for a debt jubilee but, in contrast, conceives this as a revolutionary demand. Writing in the latest edition of The Baffler, Professor Graeber argues that world revolutions consist “above all of planetwide transformations of political common sense.”

Drawing upon the works of “world systems” theorist Immanuel Wallerstein, he argues that the revolutions of 1848 were successful even though none took power because the ideas behind it and the French Revolution widely took root. He similarly sees Russia’s October Revolution as responsible for the New Deal and European welfare states and, on less firm ground, that 1968 “changed everything” because of the personal liberations that grew out of it, including feminism.

Fear of communist revolutions, and large mass movements, did lead to the many advances of the mid-20th century. But as most of those advances have been reversed, it is more realistic to see them as simply reforms — and reforms can, and will, be taken back when movements subside. People can’t stay in the streets forever. The changes of personal liberation spawned by 1968 and beyond are not as susceptible to reversal, and, as with LGBT movements, continue to advance in some ways but, nonetheless, feminist gains in particular are under sustained assaults.

We should be careful to differentiate advances that threaten the system — such as major structural changes in the economic sphere — and those that don’t, such as same-sex marriage or women shattering glass ceilings, however much individual religious fundamentals or tradition-minded men believe themselves to be “threatened.” In no way do I wish to minimize the social gains made by women, LGBT communities, and racial and national minorities, nor ignore that social divisions are integral to the functioning of any system based on inequality and hierarchy. Such freedoms — still only partially attained and still requiring organized defense — are prerequisites for any concept of a better world to have meaning.

Economic inequality has steadily widened as class repression intensifies; objectification of women in mass media is ubiquitous, as exemplified by the pornification and coarseness of corporate-controlled mass culture; and nationalist and other xenophobias are gaining new traction under the impact of economic disintegration and the accompanying social disruptions. It seems premature to declare everything has changed, even keeping in mind that leaps in social zeitgeists are a process rather than a sudden jump.

A jubilee linked to other demands

Given the interconnectedness of struggles, is the idea of a debt jubilee in itself a “revolutionary demand,” as Professor Graeber declares it? In other words, would it actually overturn the current world system, or would it be simply a reform, albeit a welcome and thorough-going one on the scale of the New Deal? He does link the idea of a jubilee with the necessity of slowing down growth:

“We seem to be facing two insoluble problems. On the one hand, we have witnessed an endless series of global debt crises, which have grown only more and more severe since the seventies, to the point where the overall burden of debt — sovereign, municipal, corporate, personal — is obviously unsustainable. On the other, we have an ecological crisis, a galloping process of climate change that is threatening to throw the entire planet into drought, floods, chaos, starvation, and war. The two might seem unrelated. But ultimately they are the same. What is debt, after all, but the promise of future productivity? … [Producing more is] precisely what’s destroying the planet, at an ever-increasing pace.”

Thus, Professor Graeber argues:

“Why not a planetary debt cancellation, as broad as practically possible, followed by a mass reduction in working hours: a four-hour day, perhaps, or a guaranteed five-month vacation? This might not only save the planet but also … begin to change our basic conceptions of what value-creating labor might actually be. … The morality of debt and the morality of work are the most powerful ideological weapons in the hands of those running the current system. That’s why they cling to them even as they are effectively destroying everything else. It’s also why debt cancellation would make the perfect revolutionary demand.”

Such an outcome would require an extraordinarily strong global movement; in this conception a debt jubilee would be a means to an end and linked to broader structural change. For a debt jubilee to be “revolutionary” it would have to be one piece of a more comprehensive struggle. A debt jubilee by itself, in isolation, would be, as Professor Keen intends, a method of stabilizing capitalism. Indeed, he has shown that a jubilee could be brought about using standard capitalist-management tools in a different way.

Saving the current world system would be a temporary salve and nothing more; all the contradictions within it would resurface. But that system is of human creation. When new ideas gain secure social foundations, revolutions can happen — whether it is sovereignty residing in the people rather than a royal family designated by a god, or that democracy is possible only with everyone able to participate on an equal footing rather than only men of a society’s dominant ethnic or racial group, or that political democracy is an empty shell without economic democracy.

A better world can only arise from unleashed human imagination and creating unbreakable links among struggles.

Is today’s social destruction really the best humanity can do?

Millions of homes stand empty at the same time millions of people are homeless. Factories around the world are operated under capacity or are shuttered at the same time that millions of people are without work. The very people who brought down the world economy through reckless speculation continue to dictate that austerity be imposed on everybody else to pay for their bailouts.

Why are we supposed to believe this system “works”?

Long-term destruction of the environment for the sake of short-term profits. Intentional waste in packaging and in other aspects of production, and planned obsolescence. Unemployment and the destruction of productive capacity as the price to be paid to restore private profits.

Is this really the best humanity can do?

“Business cycles” — the euphemism for the alternating booms and busts of capitalism — are not a natural force of nature, ebbing and flowing like the tides. Tides are readily explained by the gravitational forces of the Moon and the Sun. Regular booms and busts (a separate phenomenon from the current structural crisis of capitalism) are explained by social forces.

Social need vs. lack of planning

Because there is no mechanism to determine social need, products of all sorts are produced until there is a glut, causing prices to fall and capitalists to reduce production through mass layoffs and shutting down facilities — destroying productive capacity until shrinking inventories create shortages that again stimulate demand. Layered over this dynamic is the deprivation created by the accumulation of capital into fewer hands, itself a contributor to instability.

The economist John G. Gurley summed up this process:

“The process of exploitation leaves purchasing power in the hands of a proletariat that enables it to purchase only an inadequate portion of the total products just turned out. The large remainder of the output must be fashioned and purchased by capitalists as part of the accumulation process. There is a continual threat, therefore, of too heavy a burden being placed on capitalist accumulation, a ‘burden’ that stems from the exploitation of labor. …

‘Underconsumption’ does not indicate that during phases of rapid accumulation and prosperity [the ‘boom’ portion of the business cycle] wages are depressed. … [T]he opposite occurs. But, while workers in these exhilaration phases are thus entitled to raise their consumption levels somewhat [because of their increased wages], it is never enough to lighten significantly the ‘burden’ on the capitalist class, which is soon made intolerable by a falling rate of profit. Thus, accumulation slows down until the previously favorable conditions for capitalists have been restored; and this involves principally the destruction of capital values and the replenishment of the reserve army of labor.”*

Regardless of a capitalist’s personality, the capitalist must accelerate this process of exploitation under the rigors of market competition. If a capitalist does not maximize his or her profits, a competitor will and put the first capitalist out of business. Expand or die is the inescapable law of capitalism.

The financial industry adds to this pressure, acting as a whip in addition to its more recognized role of parasitism. A management that does not maximize profits (which in turn maximizes stock prices), including imposing layoffs and wage cuts, will swiftly find its stock price in a nosedive, leaving the company vulnerable to an unfriendly takeover by a speculator seeking to profit from the reduced value of the company.

A speculator who gains control in such a situation will change the management, or simply sell off the company in pieces when that seems more profitable. Moreover, companies with stock traded on exchanges are legally required to maximize profits for shareholders, above all other considerations.

The entire system acts to concentrate more and more money into fewer and fewer hands as industries are consolidated into a handful of major competitors and competitive pressures force ever more reductions to overhead, especially the cost of wages. Although he wrote in the earliest day of capitalism, even Adam Smith acknowledged its inherent inequality in a passage in which he discusses the expense of a judiciary to adjudicate disputes:

“For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many. The affluence of the rich excites the indignation of the poor, who are often both driven by want, and prompted by envy, to invade his possessions.”**

Accumulation vs. environment

What Smith, or even Karl Marx a century later, could not have foreseen is environmental destruction so severe that the fate of humanity, and the planet, is at stake.

Corporations privatize the profits, but socialize environmental costs — they do not pay for pollution to the air or water; toxic waste left behind after production is moved elsewhere is usually cleaned up, if it all, at government cost. Thus the polluting corporation need not shoulder these “external” costs. Taxpayers are subsidizing corporate environmental destruction in addition to shouldering the cost to their health.

In the absence of planning, each corporation makes its individual decisions, so the costs of environmental destruction — in terms of pollution, disposal of toxic wastes and emission of greenhouse gases — add up without accountability. And as production is moved around the world, the environmental costs of rapid industrialization are repeated in new locations. The ability of capital to move at will induces governments to not ask for accountability, giving more license to polluters.

The race to the bottom not only encompasses lower wages and harsher working conditions, it means environmental destruction. At the same time, technological innovation is seen as the answer to its own problem; a falsity caused not only by a fetish for technology but because it does not require an analysis of the system behind all this.

John Bellamy Foster and Brett Clark, in the latest of a series of articles in Monthly Review sounding the alarm bells on the looming environmental catastrophe, wrote:

“Capitalism’s inability to engage in social and economic planning is reflected in decades of failed environmental policy. Although there have been some relatively minor environmental improvements, all attempts at comprehensive planning and action of the kind needed to avert what the scientific community is pointing to as a sure path of destruction have been systematically repulsed by the system. Instead technological change is invoked as a deus ex machina, allowing us to proceed along the current path of production, distribution, and consumption.”***

Permanent expansion vs. a finite world

A system built on continual expansion reaches a crisis when it can no longer expand. When almost all corners of the world are incorporated into the capitalist world market, there is no route to continued profitability for capitalists other than imposing wage cuts through increased threat of unemployment and the entire program of austerity. More machinery can be introduced, but as more capital-intensive machines lead to progressively smaller increments of overhead reduction, the competitive pressures to reduce costs will soon enough target wages and benefits.

The imposition of austerity around the world is not due to a mysterious inability to grasp the human costs or an inexplicable clinging to an ideology — it is the natural progression of capitalism, in which “markets” determine social outcomes. “Markets” are the aggregate interests of the most powerful industrialists and financiers.

As living standards continue to deteriorate, and even less production will be able to be sold because working people don’t have the money to buy, a vicious circle spirals downward. As profits come under more pressure, more austerity will be the only answer — it is the only answer capitalists can give under the logic of their system.

A new year is here. Once and for all, we need to rid ourselves of the idea that if only we explain the problems to political leaders who advance the interests of industrialists and financiers they would come to understand and turn against those interests. Capitalists aren’t going to change because it isn’t in their interest to do so, nor will they tolerate change to a system they dominate.

Linking hands and building a global social movement to create a better world is what will bring change.

* John G. Gurley, “Marx and the Critique of Capitalism,” anthologized in Randy Albelda, Christopher Gunn and William Waller (eds.), Alternatives to Economic Orthodoxy, pages 292-293 [M.E. Sharpe, 1987]
** Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, book V, chapter 1, part 2
*** John Bellamy Foster & Brett Clark, “Planetary Emergency,” Monthly Review, December 2012, page 8

Stagnation, not growth, is the norm for mature capitalism

Economic growth is supposedly the norm, necessitating that an explanation be found for slumps and stagnation. But are these reversed? Is stagnation is the norm with the periods of strong growth requiring explanation?

A two-decade “long depression” occurred after an 1870s bubble inflated by speculation in railroads and construction in North America and Europe burst; the Great Depression lasted more than a decade and ended only because of World War II; and stagnation had been the recent fate of the world’s advanced capitalist countries even before the economic crisis that broke out in 2007 and 2008.

There are no signs of any recovery; on the contrary unemployment remains high across North America and Europe, with consumer and governmental debt rising to unsustainable levels. This state of affairs is the new norm of capitalism, argue John Bellamy Foster and Robert W. McChesney in their newly released book, The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China.*

The authors, frequent collaborators in Monthly Review (of which Professor Foster is the editor), marshal an impressive collection of material to present an understanding of the capitalist dynamics that have brought the world to its present state of crisis and why that is the natural outcome of these dynamic forces, examining the crisis from a global perspective.

A structural crisis of capitalism is not the same as a standard “business cycle.” During the Great Depression, the U.S. economy moved through an entire cycle, but the “boom” period of the cycle merely gained back some of the dramatic losses of the early 1930s before the economy began sinking again in 1937. Periods of “epoch-making innovation,” such as that resulting from the steam engine or the automobile, have fueled growth for a time, but no such inventions are on the horizon today.

The reassertion of stagnation as normal state

Professors Foster and McChesney argue that, in the absence of such dramatic innovation, which have not occurred for several decades, stagnation is the expected norm, particularly in “mature” capitalist economies:

“The result was that the economy, despite its ordinary ups and downs, tended to sink into a normal state of long-run slow growth, rather than the robust growth assumed by orthodox economics. In essence, an economy in which decisions on [business] savings and investment are made privately tends to fall into a stagnation trap; existing demand is insufficient to absorb all of the actual and potential savings (or surplus) available, output falls, and there is no automatic mechanism that generates full recovery.” [page 12]

One way of conceptualizing that is to note that U.S. corporations are sitting on at least $2 trillion of cash — there are not enough investment opportunities to put that money, accumulated by a small number of hands, to good use. Investment decreases because demand decreases under the impact of stagnant or declining wages, and financial speculation increases.

The rise in the accumulated surplus leads to general deprivation. The “competitive capitalism” of the 19th century kept over-accumulation at bay through dramatic expansion but also through frequent bankruptcies, the authors write. In the modern era, they argue, there is a chronic buildup of excess capacity and thus stagnation, although regular business cycles continue. A lack of price competition caused by the consolidation of many industries into a small number of major competitors pushes prices higher, aggravating the erosion of living standards.

Price competition is ruinous to oligopolistic corporations, the authors argue, so they indirectly collude to prop up prices. (This requires no formal agreement when serious competitors can counted on one’s fingers.) Specific cases of price competition come in destructive forms, such as outsourcing huge amounts of production to countries with extremely low wages and sweatshop conditions. Firms compete through cutting production costs and by increasing market share through advertising and marketing techniques, rather on on retail pricing.

Thus, competition in a modern capitalist economy assumes a form drastically different than the mythological image of small firms competing on an even playing field commonly taught:

“Competition over productivity or for low-cost position remains intense, but the drastically diminished role of price competition means that the benefits of economic progress tend to be concentrated in the growing surplus of the big firms rather than disseminated more broadly by falling prices throughout the entire economy. This aggravates problems of overaccumulation. Faced with a tendency to market saturation, and hence the threat of overproduction, monopolistic corporations attempt to defend their prices and profit margins by further reducing capacity utilization. This, however, prevents the economy from clearing out its excess capacity, reinforcing stagnation tendencies. … Major corporations have considerable latitude to govern their output and investment levels, as well as their price levels, which are not externally determined by the market, but rather with an eye to their nearest oligopolistic rivals.” [page 37]

(The reference to “monopolistic corporations” in the quote above does not refer to a “pure” monopoly, but rather a handful of corporations that, as a group, act in a monopolistic manner — “monopolistic” and “oligopolistic” are used interchangeably throughout The Endless Crisis.)

“The stagnation tendency endemic to the mature, monopolistic economy, it is crucial to understand, is not due to technological stagnation, i.e., any failure at technology innovation and productivity expansion. Productivity continues to advance and technological innovations are introduced (if in a more rationalized way) as firms continue to compete for low-cost position. Yet this, in itself, turns into a major problem of the capital-rich societies at the center of the system, since the main constraint on accumulation is not that the economy is not productive enough, but rather that it is too productive.” [page 38]

Crisis is not a bolt from the blue

The current slump — ongoing stagnation following a steep downturn — is decades in the making. The Great Depression was ended by the massive spending needed to fight World War II, but the boom period of the 1950s and 1960s wound down as pent-up consumer demand was satiated, the final boosts from the automobile ran their course, the stimulus of the Vietnam War ended, and new productive capacity in Europe and Japan contributed to a global surplus. Professors Foster and McChesney demonstrate that financialization was the response to the stagnation that began to grip capitalist economies in the 1970s.

“[U]nable to find an outlet for its growing surplus in the real economy, capital (via corporations and individual investors) poured its excess surplus/savings into finance, speculating in the increase in asset prices. Financial institutions, meanwhile, on their part, found new, innovative ways to accommodate this vast inflow of money capital and to leverage the financial superstructure of the economy up to ever greater heights with added borrowing — facilitated by all sorts of exotic instruments, such as derivatives, options, securitization, etc. Some growth of finance was, of course, required as capital became more mobile globally. This, too, acted as a catalyst, promoting the runaway growth of finance on a global scale.” [page 42]

As a result, debt and financial profits increased much faster than the overall economy. Financialization rests on increasing asset prices; thus, a series of financial bubbles was necessary to keep the whole thing going. As instability increased, repeated central-bank interventions were necessary to deal with a steady outbreak of market and currency crises. The increasing power of financial institutions enabled them to induce governments to deregulate markets, encouraging ever more risky behavior.

The effect of these developments, the authors write, is a “stagnation-financialization trap,” whereby financial expansion has become the main fix for the system, which merely enables the cycle of crises to continue without dealing with the underlying structural weaknesses.

“Today’s neoliberal regime itself is best viewed as the political-policy counterpart of monopoly-finance capital. It is aimed at promoting more extreme forms of exploitation. … Neoliberal accumulation strategies, which function with the aid of a ‘predator state,’ are thus directed first and foremost at enhancing corporate profits in the face of stagnation, while providing further needed cash infusions into the financial sector. … Neoliberalism has also increased international inequalities, taking advantage of the very debt burden that peripheral economies were encouraged to take on, in order to force stringent restructuring on poorer economies.” [pages 44-45]

Thus, the system’s only answer has been attempts to re-inflate new asset bubbles. Globalization has only made this problem a global one:

“At the world level, what can be called a ‘new phase of financial imperialism,’ in the context of sluggish growth at the center of the system, constitutes the dominant reality of today’s globalization. Extremely high rates of exploitation, rooted in low wages in the export-oriented periphery, including ‘emerging economies,’ have given rise to global surpluses that can nowhere be profitably absorbed within production. The exports of such economies are dependent on the consumption of the wealthy economies, particularly the United States, with its massive current account deficit. At the same time, the vast export surpluses generated in these ‘emerging’ export economies are attracted to the highly leveraged capital markets of the global North, where such global surpluses serve to reinforce the financialization of the accumulation process centered in the rich economies.” [page 63]

International oligopoly supplants national oligopoly

The concomitant need for growth under the rigors of capitalist competition fuels corporate mergers; such combinations are necessary to buoy profits via increasing market shares when markets are mature. Because of globalization, the tendency toward oligopoly now takes place on an international scale.

This internationalization of oligopoly gives a false impression of renewed national competition, professors Foster and McChesney argue, because national firms are subsumed by international firms as part of the process of globalization. As under earlier, national scales, few corporations can survive this competition. The 500 largest corporations in the world collectively earn revenues of about 40 percent of world gross domestic product! [pages 76-77]

As ever more power accrues to the capitalists who reap the profits from these corporations, they can move production, or, as is standard in the apparel and computer industries, subcontract production to the places with the lowest wages and longest hours, thereby accumulating fantastic profits and reversing, for now, earlier downward pressures on profits.

“Corporations seek, by means of divide-and-rule strategies, to gain advantages over different local, regional, and national labor markets, benefiting from the reality that, while capital is globally mobile, labor — due to a combination of cultural, political, economic, and geographical reasons — for the most part, is not. Consequently, workers increasingly feel the crunch of worldwide job and wage competition, and giant capital enjoys widening profit margins as the world races to the bottom in wages and working conditions. …

The conflict between workers is engendered by capital through the creating of an industrial reserve army of the unemployed. This divide-and-rule strategy integrates disparate labor surpluses, ensuring a constant and growing supply of recruits to the global reserve army, which is made less recalcitrant by insecure employment and the continued threat of unemployment.” [pages 114-115]

Chinese wages, for instance, have remained at about five percent of the U.S. level since the Deng Xiaoping-led imposition of capitalism in the late 1980s because of hundreds of millions of displaced rural farm workers streaming into cities; rural incomes are still lower than average city wages.

Nonetheless, sweatshop pay and conditions are so poor in China that the pattern is workers staying for at most a few years then returning to their villages because physical survival under such conditions for much longer is impossible. That they can return is because the Chinese government has not yet succeeded in eliminating rights to the land held by villagers, a remaining vestige of the Mao era that, ironically, props up the sweatshop system. Those land rights are a social benefit that enables migrants to survive their stints working in sweatshops.

On such horrific conditions rests modern capitalism. Nor are workers, primarily in advanced capitalist countries, who have steady employment the norm, when viewed on a global scale. Using International Labour Organisation figures as a starting point, professors Foster and McChesney calculate that the “global reserve army” — workers who are underemployed, unemployed or “vulnerably employed” (including informal workers) totals 2.4 billion. In contrast, the world’s wage workers total 1.4 billion — far less! [pages 144-146]

Failure of orthodox economic ‘theory

The authors note that orthodox economics assumes that new industrial development will eventually employ all these people, a hope based on ideology and not on reality. The countries that industrialized in the 19th century, particularly Britain and other European countries, were far from able to absorb all their displaced farmers — each experienced massive emigration. But today’s developing countries can’t export their population; as a result, the economy can’t possibly grow fast enough to absorb all their reserve labor armies even if the global economy weren’t in a years-long slump.

China and India contain too large a reserve army of labor for wages to substantially increase there; therefore Chinese and Indian consumption will not be a path out of world economic crisis as many orthodox economists and political leaders have hoped, according to The Endless Crisis. Orthodox economics, dominated by rigid Chicago School thinking, completely failed to predict the financial meltdown and subsequent stagnation. The reason for that lies in orthodox economics existing as an ideological campaign that long ago severed itself from analyzing the real world.

“Their abstract models, geared more toward legitimizing the system than to understanding its laws of motion, have become increasingly otherworldly — constructed around such unreal assumptions such as perfect and pure competition, perfect information, perfect rationality … and the market efficiency hypothesis. … This is an economics that has gone the way of stark idealism — removed altogether from material conditions.” [page 5]

The Endless Crisis is a welcome, and very needed, departure from the usual apologetics for capitalist outcomes. Professors Foster and McChesney provide a single source for understanding the present economic impasse, laying out with devastating precision the reasons for the economic crisis, the inevitability of crisis, the inequality and instability inherent in the capitalist system, and the need to move to a more humane system. Transcending capitalism and creating a better world can only be accomplished internationally, with working people around the world linking together. The authors write:

“Never before has the conflict between private appropriation and the social needs (even survival) of humanity been so stark.” [page 63]

Past structural crises of capitalism could be overcome because there was still room to grow. But when there are no more new markets to conquer, deprivation for the many is the only way for the few to continue to accumulate in a system dedicated to that ever narrower accumulation.

* John Bellamy Foster and Robert W. McChesney, The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China [Monthly Review Press, New York, 2012]