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

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

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

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

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

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

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

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

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

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

Inequality on the rise

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

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

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

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

The past is not the future

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

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

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

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

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

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

Taking back the imagination

Of the many myths propping up capitalism few are more essential than the carefully tended concept of “imagination.” Capitalism supposedly unleashes the human imagination, enabling individuals to fulfill their potential and continually “disrupting” older systems to bring forth the new and improved. Shattering this mythology is one of the tasks of movements.

The ever active engineers of capitalist ideology, to be sure, possess the ability to shape human consciousness through the ability to exert decisive influence over of myriad of institutions. But to what end? Is the massive failure to meaningfully grapple with the myriad of crises not a failure of imagination?

It is imagination that is stifled under capitalism, argues Max Haiven in his engaging book Crises of Imagination, Crises of Power: Capitalism, Creativity and the Commons.* The crisis is capitalism, Professor Haiven argues: The fundamental amorality of the capitalist system itself is the cause of the world’s difficulties, not a lack of regulation nor the greed of individuals.

That message is present throughout the book. In the opening pages, Professor Haiven writes:

“[C]apitalism relies not only on the brutal repression of workers in factories and fields; it also relies on conscripting our imaginations. On a basic level, it relies on each of us imagining ourselves as essentially isolated, lonely, competitive economic agents. It relies on us imagining that the system is the natural expression of human nature, or that it is too powerful to be changed, or that no other system could ever be desirable. … While the system is ultimately held in place by the threat and exercise of very real violence and the concentration of very material wealth and power in the hands of the ruling class, its imaginary and imaginative dimensions cannot be ignored.” [pages 7-8]

Crises of ImaginationThe book is mostly a series of essays written for various publications that have been revised; this format is both strength and weakness. It is a strength because the author is able to present arguments on aspects of capitalist domination that receive less attention that they should, such as the neoliberal assault on education and the enclosures of the commons, not as a historical crime of the past but as an ongoing process happening today. It is something of a weakness because the various pieces of a full picture are not necessarily welded together, however much the cumulative effect of the author’s strands of thought do add up to a powerful argument.

One of these strands is a needed discussion of narrative — that is, the Right’s success at manipulating emotion versus the Left’s difficulties in gaining footholds in the popular imagination. There is not a level playing field here, of course. It is the very lack of content to Right-wing “values” that makes its rhetoric effective, Professor Haiven argues, because terms without content stand in for emotions, phobias and feelings. The Right uses emotion to get people to hate, whereas the Left is more “abstract, general and preachy.” Facts and statistics are important but insufficient by themselves. What is necessary are common values as the “bedrock” of revolutionary change.

Imagination as building block of social movements

Values should be flexible and negotiable, rather than fixed or dictated. Movement work and the creation of values should be a mutually reinforcing process. A central task, the author writes:

“is to imagine and build social formations that make the constant renegotiation of values central and operative. This is, for instance, the value of horizontal organizing and diversity in social movements: they force a constant questioning and recalibration of values not as hard, fixed and eternal ideals but as working models for collaboration.” [page 55]

Within capitalist logic, we are worthless and replaceable cogs, set at one another’s throats.

“[T]he Chinese teenager becomes a threat to my job because she can work for less and her company can attract the corporation that used to employ somebody like me. Meanwhile, it is my anonymous consumer appetites, driven by my dislocation from community and my need to survive in an austere world, that demands the conditions of that Chinese worker’s exploitation. And the unfortunate fact is that I’m effectively worthless in this equation too: I could choose to not buy the iPod, but someone else will. Everyone is utterly replaceable in this system.” [page 55]

And on their own. Financialization shifts risks to the individual, his or her retirement dependent on the mercy of stock markets far beyond his or her control; universities are reduced to neoliberal showpieces that convert students into individualized debtors with no mission beyond issuing a ticket for a future job; language is debased to co-opt the meaning of “creativity” to twist it into underpaid labor in a neoliberal workforce that does nothing more than hype mindless consumerism; and mass culture is reduced to the buying of corporate products.

The author produces compelling arguments detailing these and other outcomes of modern capitalist society. But the underlying economic processes and structures underlying neoliberal assaults on ever more aspects of public life are largely missing from Crises of Imagination. This is perhaps not an entirely fair criticism because the book is a philosophical work, not an economic one. The author himself concludes his introduction by humbly writing that “I cannot claim to have done anything particularly innovative” nor, he says, is the book an attempt at a systemic theory. Fair enough.

Professor Haiven is correct when he writes that confronting capitalist power today requires far more than cutting down the size of banks, that it is too simple to believe that finance is merely a force imposed on society from above, and that financialization imposes shifts in corporate behavior that lead to faster recourse to layoffs and moving production to low-wage havens. But it is puzzling to read that “the new paradigm subordinates capitalism itself to the increasingly short-term, ruthless and pathological imagination of ‘the market.’ ” [page 108]

I have no argument with that description of “the market,” but it obscures that such markets are indistinguishable from capitalism. Capitalist markets are nothing more than the aggregate interests of the most powerful industrialists and financiers, and can not be anything else. The very process of financialization — whereby financiers, acting as both whip and parasite, impose discipline on corporations to act ever more ruthlessly while simultaneously grabbing larger shares of the profits extracted from employees — is the product of the natural development of capitalism, not an intervention. Capitalism can not be separated from markets, much less “subordinated” to its own engine.

Taking back our imagination to overturn the concrete

But let us not go overboard with critiques. Crises of Imagination, while not necessarily, per its author, an innovative work, does formulate its arguments very well, with some original conceptions. For an example, in one of the book’s strongest chapters, on the “edu-factory,” Professor Haiven wittily draws an analogy between the subordination of the university to the interests of neoliberal capital accumulation and the show trials of the 1930s. He writes:

“The desperate self-privatization of the neoliberal university is the late-capitalist equivalent of the Stalinist show trial. The broken university, after years of secreted economic torture, is made to confess its own profligacy and lack of obedience to the austerity regime. Yet even this gaunt, emaciated, broken figure, which has betrayed all its once proud (perhaps vain) values, is not spared the cuts. The constant and unending attack on the university is a grim warning to all institutions and individuals from the oblique, unapologetic totalitarian power of global capital: ‘We do not care if we are wrong or if our policies are ineffective in their stated goals. We do not care if we have to kill you all and destroy the planet. We do not care if you know it. Money will rule.’ ” [page 139]

But we do not have to accept the permanent rule of industrialists and financiers. A radical rethinking of society can’t be accomplished without our taking back our imagination, although, the author cautions, current social relations are not simply ‘imaginary’ but are rooted in concrete power imbalances. But we can’t imagine or create a blueprint for the future because the future can’t be planned and any such blueprints would contain some of the poison of today’s world. As capitalism accelerates exploitation and dislocation, the possibilities for future forms of struggle also accelerate, although they will not automatically be liberatory.

The radical imagination emerges out of radical practice, but no single practice can be sufficient on its own, the author writes. Imagination is a process of collective doing; imagination creates reality and reality creates imagination. Professor Haiven concludes:

“A revolution is not made of good ideas, but rather by good ideas materialized in social spaces. Solidarity is not a matter of having the right political ideals and sympathies, but of building real, tangible relationships. … [I]magination as a shared capacity grows out of social cooperation, alternative-building and the establishment of a new commons.” [page 265]

The reader seeking an analysis of capitalist economics can find works more on point. But anybody wanting a sweeping polemic on the totalizing effects of capitalism — and polemic here is meant in the positive sense of the word, as a constructed argument logically built — will find a well-written, engaging weapon in their hands. A fine use of the imagination engaging with concrete reality.

* Max Haiven, Crises of Imagination, Crises of Power: Capitalism, Creativity and the Commons. Zed Books, London and New York; Fernwood Publishing, Black Point, Nova Scotia, Canada, and Winnipeg, 2014]

The ‘medicine’ of the Trans-Pacific Partnership as bitter as ever

The Trans-Pacific Partnership is as dangerous as ever. Denying access to medicines, increased surveillance of Internet usage and mandatory patents at the behest of multi-national corporations are some of the corporate goodies stashed in the TPP’s intellectual property chapter, revealed by WikiLeaks this month. Journalism could even be criminalized.

The more we know about the TPP, the worse it gets, which is why the governments of the 12 countries involved, led by the Obama administration, continue to negotiate in unprecedented secrecy. The latest text of the TPP’s intellectual property chapter shows very little change from an earlier draft also published by WikiLeaks. In a press release accompanying this month’s publication of the revised text, WikiLeaks says:

“[T]here are significant industry-favouring additions within the areas of pharmaceuticals and patents. These additions are likely to affect access to important medicines such as cancer drugs and will also weaken the requirements needed to patent genes in plants, which will impact small farmers and boost the dominance of large agricultural corporations like Monsanto.”

An analysis by Public Citizen explains:

“A rule [would] require the patenting of plant-related inventions, such as the genes inserted into genetically modified plants, putting farmers in developing countries at the mercy of the agriculture industry, including seed manufacturers such as Monsanto, and threatening food security in these countries more broadly.”

The architecture of Melbourne

The architecture of Melbourne

Monsanto, already attempting to gain a stranglehold over the world’s food supply, is hardly in need of yet more favorable treatment. Proprietary seeds and genetically modified organisms are Monsanto’s routes to control what you eat and what farmers grow. Once under contract, farmers are required to buy new genetically engineered seeds from the company every year and the Monsanto herbicide to which the seed has been engineered to be resistant.

Stealth ‘fast-track’ process needed to sneak TPP through Congress

Concomitant to the secrecy shrouding the TPP is the stealth needed to pass the “free trade” treaty. The Obama administration is seeking to be given “fast-track” authority by Congress. Under the fast-track process, Congress cedes its right to make any changes, limits its time to debate, and must schedule a straight yes-or-no vote (no amendments allowed) in a short period of time. Some of the worst “free trade” deals have been approved in this manner, and the importance of fast-track is shown in that the last U.S. trade pact approved, with South Korea, was approved in 2007 — literally one minute before fast-track authority expired!

A fast-track bill, known as Camp-Baucus for its two sponsors, was essentially dead on arrival early this year due to widespread opposition in Congress, mostly by Democrats but also some Republicans. That this arose was because of organized activist work by groups across the United States. But Democratic Senator Ron Wyden, last April, signaled his intention to introduce a new fast-track bill, which he rebranded “smart track.” U.S. activists widely speculate that either Senator Wyden’s thinly disguised “smart track” bill or a more openly fast-track bill, perhaps written by Republicans in the House of Representatives, will be introduced in Congress following the November election with the intention of ramming it through a lame-duck session.

U.S. activists for the past year and a half have focused on stopping fast-track in Congress because it will be virtually impossible to pass the TPP otherwise. Other countries have signaled their reluctance to agree to a final TPP text unless Congress grants the Obama administration fast-track authority. Without such authority, Congress would retain the right to make changes to an agreed-upon treaty, potentially unraveling any deal. The Canadian government, in late September, made this reluctance explicit.

Washington Trade Daily recently reported that the Canadian ambassador to the U.S., Gary Doer, said Canada and other negotiating countries won’t conclude negotiations until the Obama administration has the “political muscle” of trade-promotion authority (the formal name for fast-track). Thus, activists advocate no lessening of vigilance against new attempts to introduce fast-track legislation. A Week of Action Against Fast Track is being organized for November 8 to 14 in the U.S. In Australia, a series of rallies opposing the TPP are taking place this week in Sydney and Canberra.

These efforts come against a renewed push for a completed deal; negotiators are meeting this week, to be immediately followed on October 25 by a ministerial-level meeting in Sydney.

Criminalizing your right to know

There is much to oppose in the Trans-Pacific Partnership itself. A trade-secrets provision in the leaked intellectual property chapter is written in a way that makes it possible for reporting the contents of a future trade deal to be prosecuted. The article in question states:

“In the course of ensuring effective protection against unfair competition … each Party shall ensure that natural and legal persons have the legal means to prevent trade secrets lawfully in their control from being disclosed to, acquired by, or used by others (including state commercial enterprises) without their consent in a manner contrary to honest commercial practices.”

Criminal penalties would be mandatory for:

“the unauthorized, willful access to a trade secret held in a computer system; the unauthorized, willful misappropriation of a trade secret, including by means of a computer system; or the fraudulent (or unauthorized) disclosure of a trade secret, including by means of a computer system.”

WikiLeaks’ publication of this text would be a criminal matter under this provision. This provision would make it mandatory for signatory governments to enact strict laws protecting undefined “trade secrets.” The text of the TPP itself is classified as a secret! Legislators and the public are excluded from seeing the text. In the United States, the only people other than negotiators to have access to the text are 605 “advisers,” who are almost all executives of multi-national corporations or corporate lobbyists.

The Age newspaper of Melbourne summarizes the threat to journalism this way:

“The leaked treaty text shows that in an effort to deal with ‘unfair competition,’ largely from Chinese industrial espionage, the United States has pushed ahead with proposals to criminalise disclosure of trade secrets across the Pacific Rim. The draft text provides that TPP countries will introduce criminal penalties for unauthorised access to, misappropriation or disclosure of trade secrets, defined as information that has commercial value because it is secret, by any person using a computer system.  …

There are no public interest or free speech exemptions. Criminalisation of disclosure would apply to journalists working for commercial media organisations or wherever the leak was considered harmful to the ‘economic interests’ of any TPP country.”

Barriers to cheaper generic medications

Other rules in the TPP intellectual property text would raise barriers to generic medications becoming available and mandating that the terms of patents be extended on demand by patent holders. The United States and Japan even propose language that would require intellectual property enforcement to be elevated above any other legal consideration! The U.S. is also seeking the criminalization of copyright infringement, even in cases where there is no attempt to gain financially, such as a fan posting a work, and would also mandate that Internet service providers remove content upon a corporation’s demand to avoid legal penalties.

The linchpin to enforcement of draconian rules — the worst of which are put forth by the United States with Japan often seconding — is the “investor-state dispute mechanism.” That is a requirement that governments submit to binding arbitration in secret tribunals when an “investor” wants a law changed; the judges in these tribunals are corporate lawyers.

The dispute mechanism is not directly mentioned in the intellectual property chapter, but the one article that purports to uphold national sovereignty is contradicted by another article that mandates that multi-national corporations be given the same rights as national corporations. That clause, standard in “free trade” agreements, is a battering ram used by the secret tribunals to order the withdrawal of laws safeguarding environmental, safety, health or labor standards. These rulings, in turn, become precedents that are used to hand down future harsher decisions.

The Trans-Pacific Partnership, however, is far from the only danger to working people. There is also the Transatlantic Trade and Investment Partnership between the U.S. and the E.U.; the Trade In Services Agreement that would eliminate the ability of governments to regulate the financial industry (50 countries are in on this one); and the Canada-European Union Comprehensive Economic and Trade Agreement. Each of these are designed to elevate corporations to the level of a country, although in practice, because of tribunal precedents, they would elevate corporations above national governments.

“Free trade” agreements have little to do with trade, and much to do with imposing the domination of capital in as many spheres of life as possible. They are massive failures for working people in all countries. They offer, and can offer, nothing but a race to the bottom. Attempting to reform a race to the bottom is a fool’s errand. The TPP and its equally vile cousins must be defeated, and a complete re-conceptualization of trade and who should benefit from trade, substituted. That in turn requires directly challenging prevailing economic systems, otherwise we will be shoveling against the tide.

Clean water as an impediment to corporate profits

An Australian mining company insists its “right” to a guaranteed profit is superior to the right of El Salvador to clean drinking water  — and an unappealable World Bank secret tribunal will decide if that is so.

Drinking water is the underdog here. It might be thought that Salvadorans ought to have the right to decide on a question as fundamental as their source of water, but that is not so. It will be up to a secret tribunal controlled by corporate lawyers. And as an added bit of irony, the hearing began on El Salvador’s Independence Day, September 15. Formal independence, and actual independence, alas, are not the same thing.

The case, officially known as Pac Rim Cayman LLC v. Republic of El Salvador, pits the Australian gold-mining company OceanaGold Corporation against the government of El Salvador. OceanaGold is asking for an award of $301 million because the Salvadoran government won’t give it a permit to open a gold mine that would poison a critical source of drinking water on which millions depend.

Cerro Cacahuatique, El Salvador (Photo by Amilcar moraga)

Cerro Cacahuatique, El Salvador (Photo by Amilcar moraga)

OceanaGold — or, more specifically, its Pacific Rim subsidiary, which it bought in November 2013 — has spent only a small fraction of the $301 million. That sum isn’t an attempt to recover an investment; it represents the amount of profits the corporation alleges it would have pocketed but for El Salvador’s refusal to give the company a permit. (El Salvador has had a moratorium on new mining permits since 2008.)

So here we have an increasingly common scenario under “investor-state dispute mechanisms” — environmental laws designed to safeguard human and animal health are challenged as barriers to corporate profit. Not simply to recover an investment that didn’t pan out, but supposed future profits that a company claims it would have earned. Should El Salvador prevail, it would still have lost because it will spend large sums of money to defend this case, money that could have been used for the welfare of its people.

An added insult in this case is that it is being heard not under one of the “free trade” agreements that elevate corporations to the level of (or above) a country, but under an El Salvador law passed by the former Right-wing government that has been since reversed. Pacific Rim originally sued El Salvador under the Central American Free Trade Agreement, but the case was dismissed because Canada, where Pacific Rim had been based before its acquisition by OceanaGold, is not a party to CAFTA. But the tribunal allowed the suit to be re-filed under an El Salvador law that granted corporations the same right to sue in secret tribunals ordinarily found only in “free trade” agreements.

Lawyers for corporations sit in judgment

The tribunal judging El Salvador is known as the International Centre for the Settlement of Investor Disputes (ICSID) — an arm of the World Bank. Neither the public nor the press are allowed to witness ICSID hearings and there is no appeal to its decisions. Under the “investor-state dispute mechanism,” governments legally bind themselves to settle “disputes” with “investors” in the secret tribunals. Cases are decided by a panel of three judges selected from a roster. The judges are appointed to the roster by the national governments that have signed on to ICSID.

Because ICSID, similar to other arbitration panels, does not have rules against conflicts of interest, most of the judges are corporate lawyers who specialize in representing corporations in these types of disputes. To provide just one example, one of New Zealand’s selected judges is David A.R. Williams, who is currently representing Philip Morris in its suit seeking to force Australia to overturn its tobacco regulations, which were ruled legal by Australia’s High Court.

The three judges in this week’s hearing are V.V. Veeder of Britain, Brigitte Stern of France and Guido Santiago Tawil of Argentina. Mr. Veeder and Mr. Tawil are veteran corporate lawyers; the former has carefully omitted any mention of who his clients are in his CV, while the latter’s bio page boasts he has assisted in the privatization of Argentina’s assets while representing corporations in several industries. To put that in some perspective, an austerity program was imposed in the early 1990s in conjunction with selling off state enterprises at below-market prices. This fire sale yielded $23 billion, but the proceeds went to pay foreign debt mostly accumulated by the military dictatorship — after completing these sales, Argentina’s foreign debt had actually grown.

The third member of the tribunal, Ms. Stern, is an academic regularly called on to arbitrate investor-state disputes. One of her previous rulings awarded Occidental Petroleum Corporation $2.3 billion against Ecuador because Ecuador had canceled an Occidental contract over a dispute in which the tribunal agreed that Ecuadoran law had been violated. The oil company was in the wrong but was given a windfall anyway!

Among the precedents these three ICSID judges will consider are separate rulings ordering Canada to reverse bans on PCBs and on the gasoline additive MMT, both dangerous to human health, because the bans hurt corporate investments.

Didn’t meet its obligations, but so what

The former Right-wing Arena government of El Salvador in 1999 passed a law enabling “investors” to sue the country in ICSID, thereby circumventing the local judiciary, as part of its effort to encourage foreign investment. A subsequent Right-wing government yielded to public pressure in 2008 by issuing the mining-permit moratorium, and the Farabundo Martí National Liberation Front (FMLN) administrations of Mauricio Funes (elected in 2009) and Salvador Sanchez Ceren (elected in 2014) have kept the moratorium in place.

In addition to the general moratorium, the Salvadoran government cites not only environmental and health concerns specific to the mine, but also says Pacific Rim has failed to meet its legal obligations nor has it secured more than a small fraction of the local permissions it must have to develop the land it seeks to mine. Some observers fear that a ruling in favor of OceanaGold could lead to violence in a country in which 70,000 were killed in a civil war a generation ago. Luke Danielson, a researcher with the Sustainable Development Studies Group, told the Inter Press Service news agency:

“This mining project was re-opening a lot of the wounds that existed during the civil war, and telling a country that they have to provoke a civil conflict in order to satisfy investors is very troublesome.”

Local communities are shut out of arbitration forums like ICSID, but it is community organizing that is responsible for the, so far, successful pushback against environmentally destructive mining. The National Roundtable Against Metallic Mining, or “La Mesa,” is an organization of civil society groups that has led the opposition to OceanaGold. Several corporations have prospected in El Salvador’s inland highlands areas since the Right-wing Arena government passed the law allowing investors to sue in ICSID.

A now closed mine in the area, on the San Sebastian River, operated by the U.S. company Commerce Group, left behind water too dangerous to touch, never mind drink. The El Salvador Ministry of the Environment and Natural Resources tested the river and found cyanide levels nine times above the maximum allowable limit and iron levels more than 1,000 times the maximum allowable limit. So polluted is the river that it runs yellow, orange or red at times.

Mining for gold is a process that uses large amounts of dangerous chemicals in the extraction. A National Geographic blogger, Vladimir Pacheco, writing about OceanaGold’s proposed mine, reports:

“The cyanide-leach processes at the company’s El Dorado mine will use approximately 900,000 liters of water a day. In comparison, it would take 30 years for an average Salvadoran family to use that amount of water. … Will water needed for the project aggravate the already perilous state of water access in the country? A study by the Ministry of Environment found that only two percent of the rivers contain water that can be made fit for human consumption, or used for irrigation or recreational activities and in another study the Global Water Partnership warns that water supply in El Salvador is hovering on the threshold of 1,700 cubic metres of water per person per year, the upper limit for the definition of water stress.”

Fighting back but at a cost

La Mesa has continued its struggle against mining and for the ability to decide its own pattern of development despite the violence that often seems to accompany mining. Three anti-mining activists were murdered in a six-month span in 2009. A report on Salvadoran activists published last year by Common Frontiers, a Canadian coalition, said:

“The fact that the government of El Salvador stopped issuing mining permits to companies was a real boost for their movement but at the same time it brought a significant shift in Pacific Rim’s tactics towards them. The company is accused of utilizing kidnapping, intimidation and even murder against community members opposed to the mining project.”

OceanaGold, which now owns Pacific Rim, did not address these charges in its glossy Fact Book 2014, but did have this to say:

“We have a staunch commitment to making sure our operations enrich, empower and improve the lives of our stakeholders, by creating a positive, long-lasting legacy that respects human rights and delivers enduring benefits and opportunities beyond the life cycle of our operations.” [page 28]

The Philippines Commission on Human Rights might beg to differ. In 2011, the commission recommended that the Filipino government revoke OceanaGold’s license to operate because of “alleged violation of the rights of the indigenous people of Barangay Didipio in Kasibu, Nueva Vizcaya,” including forced evictions. (The license was not revoked, and the mine is operating.)

La Mesa calls OceanaGold’s suit “a “direct attack against the sovereignty and legitimate right of the Salvadoran population to reject an industry that is a threat to our lives.”

This history is not likely to be under consideration by the ICSID tribunal. It is not known when it will hand down a decision, although it is likely to be at least several months. Two fundamental questions that can’t be avoided are: Does a community have the right to make decisions on its own development? Do multi-national corporations have the right to a guaranteed profit without regard to the cost imposed on communities?

That such questions must be asked — and that “no” to the first question and “yes” to the second are increasingly common answers — is emblematic of dictatorship, not democracy.

The lag in wages vs. productivity costs you hundreds of dollars per week

Working harder and making less isn’t a great deal for you, although it certainly is good for corporate profits. The ongoing pattern of stagnant pay as worker productivity increases, having raged unabated since the 1970s, now costs an average United States household $18,000 per year in lost income.

By no means a pattern limited to the U.S., the average Canadian household is short at least $10,000 per year because of pay lagging productivity gains. Wages have begun to decline in Britain, as well as elsewhere.

By now, studies demonstrating these trends risk finding themselves in the category of “the Sun will rise in the east tomorrow.” But although the Earth’s rotation is an immutable phenomenon of nature, getting screwed at the workplace need not be. For now we are, and for North Americans in particular this has gone on for more than three decades. A new study by the Economic Policy Institute, written by economist Elise Gould, reports:

“Between 1979 and 2013, productivity [in the U.S.] grew 64.9 percent, while hourly compensation of production and nonsupervisory workers, who comprise over 80 percent of the private-sector workforce, grew just 8.0 percent. Productivity thus grew eight times faster than typical worker compensation.” [page 4]

As a result of that under-compensation, according to the Economic Policy Institute study:

“By 2007, the growing wedge between economy-wide average income growth and income growth of the broad middle class (households between the 20th and 80th percentiles) reduced middle-class incomes by nearly $18,000 annually. In other words, if inequality had not risen between 1979 and 2007, middle-class incomes would have been nearly $18,000 higher in 2007.” [page 3]

Might your personal finances be easier with that extra money?

(Graphic by Economic Policy Institute)

(Graphic by Economic Policy Institute)

Another way of conceptualizing this trend is the share of wages and salaries as a percentage of gross domestic product. Fred Magdoff and John Bellamy Foster, writing in the March 2013 edition of Monthly Review, calculate that wages and salaries constituted 53 percent of U.S. GDP at the start of the 1970s but only 44 percent in 2011. The authors, however, caution that even that statistic understates the decline in wages because it includes the salaries of chief executive officers and other high-level executives, whose compensation has risen. They write:

“Thus, although the wage share of income has sharply dropped in the U.S. economy, this decline has not been shared equally, and applies mainly to what is properly called the working class, i.e., the bottom 80 percent or so of wage and salary workers.” [page 7]

The problem is bigger than your degree

The canard that an “education gap” is responsible for rising inequality — perhaps the favorite excuse of Right-wing commentators, simply isn’t true. The Economic Policy Institute study reports real (inflation-adjusted) hourly wages for workers with a college degree has increased all of 1.6 percent from 2000 to 2013. As a result:

“[T]he gap between the wages near the top of the wage distribution and the middle … has grown much faster since 1995 than has the wage gap between those with a four-year college degree and those with a high school degree.” [page 21]

It’s not as if there is no money for raises: U.S. publicly traded companies are sitting on $5 trillion in cash, five times the total during held during the mid-1990s.

(Graphic by Economic Policy Institute)

(Graphic by Economic Policy Institute)

Canadian workers have fared little better. A Canadian Centre for Policy Alternatives paper found that, although Canadian wages are flat since 1991, the average weekly wage would be $200 per week higher if wages had kept up with gains in productivity. That adds up to about $10,000 per year. As in the U.S., low-wage workers fared the worst, the paper said:

“After adjusting for inflation, the average provincial minimum wage has decreased from $9.14 to $7.32 between 1976 and 2006 in terms of 2006 dollars.” [page 8]

Wage decay is a more recent pattern in Britain, but wages there have suffered what the London School of Economics and Political Science calls “unprecedented falls.” A school study, lamenting that “the long US experience of stagnant real wages might be viewed as a warning sign for the UK,” found that British wage growth has lagged productivity growth for more than a decade. The study, released earlier this year, says:

“The real wages of the typical (median) worker have fallen by around 8-10% — or around 2% a year behind inflation — since 2008. Such falls have occurred across the wage distribution, generating falls in living standards for most people, with the exception of those at the very top.”

There is no returning to a Keynesian past

It’s not uncommon for those angered or depressed by the neoliberal onslaught of recent decades to advocate a return to Keynesianism. Alas, it is not so simple to do that, nor would it actually provide a solution to today’s economic crises. For one thing, it is not a matter of a leader somewhere decreeing that we shall now have neoliberalism instead of Keynesianism, or that another leader can simply reverse the policies.

The mid-20th century Keynesian moment was a product of a particular set of circumstances that can’t be repeated. The New Deal and the rising wages following World War II were the products of mass movements — communist, socialist and union — that simply do not exist today.

Mid-20th century Keynesianism depended on an industrial base and expanding markets. A repeat of history isn’t possible because the industrial base of the advanced capitalist countries has been hollowed out, transferred to low-wage developing countries, and there is almost no place remaining to which to expand. U.S. capitalists could tolerate rising wages then because of enormous export opportunities in the wake of the destruction of European and East Asian industry due to World War II and because of long pent-up domestic demand that couldn’t be fulfilled during the Great Depression and the war.

The rest of the world eventually got on its feet, increasing competition, and eventually profit rates began to come under pressure. The neoliberalism that began to take hold in the 1970s, and the accompanying financialization of the economy, were a response by capitalists to what, for them, were deteriorating conditions. Margaret Thatcher and Ronald Reagan may have ushered in the age of neoliberalism, but they were the political instruments of corporate offensives. In the U.S., neoliberalism could be said to have begun during the Carter administration, when then Federal Reserve chairman Paul Volcker unilaterally began to raise interest rates sky high, inducing the deep recession of the early 1980s.

We are living in very different times than the post-war years; the neoliberal offensive is the natural development of capitalism and the manic competition that mandates capitalists to grow or die. Even were it possible to bring back Keynesianism through legislation, it would at best be a temporary balm; the capitalists who are saved through such policies re-gain the power to again impose their preferred policies. There is no salvation in attempting to “stabilize” what is inherently unstable nor any realistic prospect that what is structurally unfair and unequal can be made just.

The advances that are the fruits of the 20th century’s mass movements have largely been erased, with no end to the race to the bottom. This century’s mass movements will have to aim much higher than mere reforms.

Please make your comment after we make our decision

Taking a page from their United States counterparts, European Union trade negotiators apparently interpret the word “consultation” as a synonym for “ignore.” Fresh evidence for this attitude toward the public was provided thanks to a leak of the final text of the proposed “free trade” agreement between Canada and the EU.

Although the E.U. trade office, the European Commission Directorate General for Trade, promotes a process of public consultation on its web site, it isn’t the public who gets listened to. The final text of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) includes language mirroring corporate wish lists unchanged from previous drafts despite the fact that the E.U. trade office has not had time to analyze comments submitted by the public.

This farce of a “consultation” process mirrors the secretive negotiations in the better known Trans-Pacific and Transatlantic trade agreements. Corporate lobbyists are well represented in these talks, but the public, watchdog groups and even parliamentarians and legislators are barred from seeing the text. The CETA text is also secret, but was leaked by the German television news program Tagesschau, which published the entire 521-page document on its web site. Yep, 521 pages.

The Rideau Canal in Ottawa (photo by John Talbot)

The Rideau Canal in Ottawa (photo by John Talbot)

Critical to understanding the CETA text is Section 33, the portion simply labeled “dispute settlement.” Under that bland heading a reader finds the muscle — what is known as an “investor-state dispute mechanism.” These “mechanisms,” found in many bilateral and multilateral trade deals, are corporate-dominated secret tribunals that hand down one-sided decisions with no oversight, no public notice and no appeals. Governments that agree to these mechanisms legally bind themselves to mandatory arbitration with “investors” in these secret tribunals on which most of the judges are corporate lawyers who represent the “investors” in other legal proceedings.

Kenneth Haar, a spokesman for the watchdog group Corporate Europe Observatory, in an interview with the EurActiv news site, called the dispute mechanism “an outright danger to democracy,” and said:

“The Commission is not really serious about its own consultation. It’s more about image than substance. … I think those who chose to respond to the Commission’s consultation are being ridiculed.”

Decisions will be final and unaccountable

Employing the standard sweeping language, CETA’s Article 14.2 (the articles here are numbered “14” even though they are found in Section 33) states: “[T]his Chapter applies to any dispute concerning the interpretation or application of the provisions of this Agreement” [page 472]. Article 14.10 goes on to declare, “The ruling of the arbitration panel shall be binding on the Parties. … The panel shall interpret the provisions referred to in Article 14.2 in accordance with customary rules of interpretation of public international law” [page 476].

“Customary” international law is whatever one of these secret tribunals says it is. Environmental regulations, “buy local” laws or any other government action that a corporation claims will hurt its profits can be, and frequently are, ruled illegal by these tribunals when adjudicating disputes under existing trade agreements. Such rulings set precedents that become “customary” international law.

In case these “customary” laws are not clear, on page 480 of the CETA text is Article 14.16, which would supersede national law:

“No Party may provide for a right of action under its domestic law against the other Party on the ground that a measure of the other Party is inconsistent with this Agreement.”

Your law was passed in a democratic process? Too bad — it will be overruled if an “investor” doesn’t like it.

CETA’s proposed rules are consistent with what is being secretly negotiated in the Transatlantic Trade and Investment Partnership between the U.S. and E.U., and in the Trans-Pacific Partnership being negotiated among 12 Pacific Rim countries. A majority of the world’s economy would be removed from any possibility of democratic control should these three trade deals come into effect.

The watchdog group Council of Canadians warns:

“The Harper government has thrown Canadian municipalities under the bus, forever banning ‘buy local’ and other sustainable purchasing policies that help create jobs, protect the environment and support local farmers and businesses. The Harper government has also agreed to lengthen patents and give new monopoly protections to already profitable brand name drug companies, which will needlessly add hundreds of millions to the cost of prescription drugs in Canada.”

Not even water would be exempt. If a water system is privatized and a local government chooses to re-municipalize it because rates have risen while service declines (as has routinely occurred on both sides of the Atlantic), the investor would be able to hold out for an extra windfall under the terms of the trade deal.

Only corporate lobbyists need apply

Although the public, and public-interest groups, are not heard, corporate lobbyists are. For example, there are 605 “advisers” with access to the text of the Trans-Pacific Partnership and who shape U.S. negotiating positions. Virtually every one is an executive of a multi-national corporation or a corporate lobbyist working for an industry association.

It is little different in Europe. Corporate Europe Observatory reports that 92 percent of the closed-doors meetings of the E.U. trade office have been with corporate lobbyists, while only four percent have been with public-interest groups. The trade office has gone so far as to actively solicit the involvement of corporate lobbyists. That perspectives other than those of multi-national capital are not considered can be inferred from the very way public input is solicited, the Observatory said:

“How would the average citizen respond to questions such as: ‘If you are concerned by barriers to investment, what are the estimated additional costs for your business (in percentage of the investment) resulting from the barriers?’ So, clearly, the close involvement of business lobbyists in drawing up the EU’s position for the [Transatlantic Trade and Investment Partnership] talks is a result of the privileged access granted to them.”

It’s no different for CETA, and the same dynamic exists across the Atlantic. Former U.S. Trade Representative Ron Kirk once admitted that if people knew what was in the Trans-Pacific Partnership, it would never pass. It is important to remember that these massive “free trade” deals are not simply business as usual — they go well beyond even the draconian rules of the North American Free Trade Agreement.

So although the competitive pressures of each country attempting to give an advantage to its multi-national corporations does mean that maneuvering through differing interests requires lengthy negotiations — not to mention the sometimes conflicting interests of various industries — at bottom there is a unifying class interest in the overall project. It is true that the U.S. adopts the hardest line in the trade negotiations it participates in (before we even get to the military muscle it applies to force open Southern countries), yet the absence of the U.S. from a Canada-European Union trade deal has made no practical difference to its outcome.

That different countries, different administrations, reach similar one-sided “free trade” agreements in which “investors” are allowed to overrule national laws, and labor, safety and environmental regulations are “harmonized” at the lowest level, is a product of capitalist competition. The rigors of that structural competition mandate expansion and growth — as local markets mature, capital has no choice, if it is to survive relentless pressure from competitors, other than opening new markets and relentlessly cutting costs to maintain profit levels. “Free trade” agreements represent one of the most effective ways to accomplish that.

Popular revolts against these agreements must be continued, and strengthened, but there will be no end to them as long as economic and social decisions are allowed to be made by “markets,” which are not disembodied entities sitting dispassionately on an Olympian throne but rather are the aggregate interests of the most powerful industrialists and financiers.

Freedom for capital, not people

Libertarianism is a philosophy of might makes right. The natural philosophy for the age of neoliberalism, as well demonstrated by the Koch brothers, but also, it would appear, a justification for the ugliest elements of United States history.

Consider the following words of Ayn Rand:

“Now, I don’t care to discuss the alleged complaints American Indians have against this country. I believe, with good reason, the most unsympathetic Hollywood portrayal of Indians and what they did to the white man. They had no right to a country merely because they were born here and then acted like savages. The white man did not conquer this country. …

Since the Indians did not have the concept of property or property rights — they didn’t have a settled society, they had predominantly nomadic tribal ‘cultures’ — they didn’t have rights to the land, and there was no reason for anyone to grant them rights that they had not conceived of and were not using. …

What were they fighting for, in opposing the white man on this continent? For their wish to continue a primitive existence; for their ‘right’ to keep part of the earth untouched — to keep everybody out so they could live like animals or cavemen. Any European who brought with him an element of civilization had the right to take over this continent, and it’s great that some of them did. The racist Indians today — those who condemn America — do not respect individual rights.”

A U.S. Air Force plane drops a white phosphorus bomb on Vietnam in 1966.

A U.S. Air Force plane drops a white phosphorus bomb on Vietnam in 1966.

The occasion for Ayn Rand’s cold-blooded, racist words was her speech to the graduating class of the U.S. Military Academy at West Point on March 6, 1974. She said the above during the question-and-answer session, but the text of the actual talk wasn’t much more humane. During her talk, among many head-slappers, the infamous philosopher of greed said:

“Something called ‘the military-industrial complex’ — which is a myth or worse — is being blamed for all of this country’s troubles. Bloody college hoodlums scream demands that R.O.T.C. units be banned from college campuses. Our defense budget is being attacked, denounced and undercut by people who claim that financial priority should be given to ecological rose gardens and to classes in esthetic self-expression for the residents of the slums.”

Civilizing them with a gun

I recall someone named Dwight Eisenhower raising concerns about a “military-industrial complex.” It seems to me he was in a position to know what he was talking about, even if he waited until the end of his career to provide a warning after devoting so much of it building up said complex.

At the time of the West Point talk, three million Vietnamese were dead due to a war nearing its conclusion. Was it valid to protest? Among other feats, the U.S. leveled major cities — 77% of the buildings in Hue, one of Vietnam’s biggest cities, were completely destroyed. Dams were blasted away, allowing salt water from the South China Sea to flood farmland, making the growing of food impossible.

In South Vietnam, 9,000 of 15,000 hamlets were damaged or destroyed, as were 25 million acres of farmland and 12 million acres of forest. Killed were 1.5 million cattle. In North Vietnam, 34 of the largest 36 cities suffered significant damage, with 15 completely razed, while 4,000 of about 5,800 communes were damaged. More than 1 million acres of farmland and 400,000 cattle were destroyed in the North. (These statistics are from Manufacturing Consent by Noam Chomsky and Edward S. Herman.)

The Vietnamese were ungrateful for this exemplary treatment, in the imperialist mind, similar to the ungrateful Native Americans who are “racist” because they have failed to appreciate the lessons in civilization they were being taught while the subjects of a genocide.

I don’t see why the above words of Ayn Rand should be considered any different than Nazi pronouncements on Jews.

Domination in the age of financialization

Although there is a temptation to think of libertarians as young conservatives who want to smoke marijuana — a picture sometimes true of libertarian followers — when libertarian leaders talk about “freedom,” what is really meant is freedom for the holders of capital to pursue profit maximization without limits. The cult of the market is a logical expression of the extreme individualism embodied in libertarianism.

One of the most influential articulators of that was Friedrich Hayek. The Austrian School economist asserted that solidarity, benevolence and a desire to work for the betterment of one’s community are “primitive instincts” and that human civilization consists of a long struggle against those ideals. “The discipline of the market” is the provider of civilization and progress, he wrote.

Thus, unregulated capitalism is “civilization” and anything else is a product of “primitive” group instincts that have survived from our prehistoric hunter/gatherer ancestors in the Hayekian worldview.

From these ideas, it is a small step to the concepts of “money equals speech” and “corporations are people” promulgated by the U.S. Supreme Court. This is an extension of “shareholder rights” to the political sphere — the more you own, the more say you have. A form of conquest and domination for the age of financialization.

If there is no community, no common interest, then why can’t someone, anyone, take whatever they want from the less strong? Give Ayn Rand credit for one thing: She stripped away all the accretions of individualist verbiage, all the rarefied theory of orthodox economics, and enunciated with unusual clarity what lies at the core of capitalist triumphalism. It hasn’t served the world very well.