World Bank solution for lack of jobs: Cut worker protections

The World Bank is in the process of completing its “World Development Report 2019: The Changing Nature of Work” and, surprisingly, the latest draft version opens with quotes from Karl Marx and John Maynard Keynes. Has the World Bank suddenly lost sight of its purpose and will now take up the cause of working people?

Well, you already know the answer to that question, didn’t you?

Only a few paragraphs down we begin to see where this paper is heading. After a bit of perfunctory hand-wringing over disruptions caused by robotics, we read the problem is “domestic bias towards state-owned or politically connected firms, the slow pace of technology adoption, or stifling regulation.” And although some jobs are disappearing, fear not because “the rise in the manufacturing sector in China has more than compensated for this loss.”

Oh, so we should all move to China to get new jobs.

Never mind that the highest minimum wage for Chinese workers, that mandated in Shanghai, is $382 per month. In some places the minimum wage is half that, if workers are fortunate enough to be paid regularly. And that millions of rural Chinese are being driven into cities to become sweatshop workers, so for now there won’t be enough work for the rest of the world. Then again, letting bosses have the upper hand is what the World Bank has in mind. No, its economists haven’t forgotten what the institution’s purpose is nor why it exists.

A Chinese-owned factory in Lesotho (photo by K. Kendall)

So what to do? The World Bank report does suggest not allowing corporations to dodge taxes to the degree that they do. Very well, but even if taxes were collected at the statutory rates, that would still leave corporations vastly under-taxed. No suggestion by the bank, of course, that corporations actually pay a fair tax rate. Corporations currently account for a paltry nine percent of U.S. tax receipts; in the 1950s, they accounted for 30 percent or more. Similarly, in Canada personal income taxes account for three and a half times more revenue than do corporate income taxes; these were equal in 1952.

There is much discussion of “investing in human capital,” a particularly favored mantra of the World Bank. What does that mean? Capitalists are likely to interpret such talk — rather common in NGO circles these days — to mean demanding more skills or degrees from prospective workers, but in the United States graduates with doctorate degrees are being forced to take jobs in academia as part-time adjuncts, and plenty of folks in other fields are “over-educated” already for the jobs they hold. This concept comes from the idea that the problem is that there aren’t enough skilled people for all those wonderful jobs that are out there, just over the rainbow. But in the real world, as opposed to Right-wing think tanks, that is not so.

A 2014 report issued by the National Employment Law Project found that higher-wage jobs were created at a much lower rate during the “recovery” from the 2007-08 economic collapse than had been lost; conversely, low-wage jobs (paying less than $13.33 per hour) were created twice as fast as they had been lost. In separate studies, the Economic Policy Institute found that long-term unemployment is elevated for workers at every education level (and was increasing at a somewhat higher rate for those with some college or a four-year college degree than the average), and that the so-called “skills mismatch” is a myth.

So we come to the real “solution” in the minds of World Bank officials: Cut worker-protection laws.

Aw, you really aren’t surprised, are you?

(Graphic by Real-World Economics Review)

Here’s a key passage in the report: “Rapid changes to the nature of work put a premium on flexibility for firms to adjust their workforce, but also for those workers who benefit from more dynamic labor markets.”

Dynamic for who? What we have here are code words meaning make it easier to fire people. And that’s the real takeaway message, no matter the lofty rhetoric about governments creating a new social contract. “Creating jobs” and “investing early in human capital” are two elements of the World Bank paper’s suggested new social contract. Unfortunately, there are no thoughts on how new jobs might be created when capitalists are in a frenzy of eliminating jobs to maintain their profit rates and survive relentless market competition. More schooling, which is what “investing early in human capital” amounts to, is fine by capitalists, as long as they don’t have to bear any of the costs. It’s up to students to take on more debt to create this new “human capital.”

Contrast this happy talk with the reality of the capitalist workplace. A report just issued by Democratic U.S. Representative Keith Ellison found the average ratio of CEO-to-median-worker pay is 339-to-1. That ratio among the 500 biggest U.S. corporations is as high as almost 5,000-to-1. Nope, I don’t think the boss works thousands of times harder than you do. At McDonalds, for example, the CEO’s annual salary could be used to pay the yearly wages of 3,101 workers making the chain’s median pay.

The sort of societal priorities and imbalances of power that enable such appalling inequality might be summed up by the uses to which money is put. In Los Angeles, a new football stadium is being built and the estimated cost of it is now estimated at $4.9 billion. That figure has risen considerably and likely will again. Given all the homelessness in Los Angeles, and all the other social problems, what could have been done with $4.9 billion?

The number of homeless people in California is estimated at 130,000. Doing something about that might be one way to “invest” in human development, and doing so might even save money. A Rand Corporation study carried out for Los Angeles County found that homeless people who are provided stable shelter make fewer trips to the emergency room and are arrested less frequently, to the extent that the cost of the housing is more than offset.

Oops, but that’s not profitable for the well-connected as throwing money at stadium boondoggles or cutting jobs. But if you earn enough degrees, perhaps you’ll fulfill the World Bank’s prophesy by landing a job at a Chinese sweatshop.

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Hiding the real number of unemployed

Your government believes that exhausting your unemployment benefits is a cause for celebration — because you are no longer unemployed!

Huh? Well, there is a slight of hand here. Only working people who are receiving unemployment benefits are counted as “unemployed” in official statistics issued by countries around the world. Thus the actual unemployment rates are much higher than the “official” rates, generally about twice as high. Most governments make it difficult to find the actual rate, and the corporate media does its part by reporting the official rate as if that includes everybody.

Then there is the matter of how much of a given national population is actually engaged in paid employment, another useful number difficult to discover. Finally, we can consider wages, both how fast they might be rising as compared to inflation and whether they are increasing in concert with increases in productivity.

To cut to the chase, things ain’t so hot. But you already knew that, didn’t you?

The Blue Mountains from the lookout in Blackheath, Australia (photo by Gemm347)

Let’s start our global survey with the United States, where, contrary to expectations, the real unemployment figure is easier to discover than most other places. Perhaps the Trump régime hasn’t gotten around to suppressing it, busy as it is hiding scientific evidence about global warming, pollution and other inconvenient facts. The official U.S. unemployment rate for May was reported as 3.8 percent, the lowest it has been in several years, and less than half of what it was during the post-2008 economic collapse. Predictably, the Trump administration was quick to take credit, although the trend of falling employment has carried on for eight years now.

Nonetheless, you might have noticed that happy days aren’t exactly here again. The real U.S. unemployment figure — all who are counted as unemployed in the “official” rate, plus discouraged workers, the total of those employed part time but not able to secure full-time work and all persons marginally attached to the labor force (those who wish to work but have given up) — is 7.6 percent. (This is the “U-6” rate.) That total, too, is less than half of its 2010 peak and is the lowest in several years. But this still doesn’t mean the number of people actually working is increasing.

Fewer people at work and they are making less

A better indication of how many people have found work is the “civilian labor force participation rate.” By this measure, which includes all people age 16 or older who are not in prison or a mental institution, only 62.7 percent of the potential U.S. workforce was actually in the workforce in May, and that was slightly lower than the previous month. This is just about equal to the lowest this statistic has been since the breakdown of Keynesianism in the 1970s, and down significantly from the peak of 67.3 percent in May 2000. You have to go back to the mid-1970s to find a time when U.S. labor participation was lower. This number was consistently lower in the 1950s and 1960s, but in those days one income was sufficient to support a family. Now everybody works and still can’t make ends meet.

And that brings us to the topic of wages. After reaching a peak of 52 percent in 1969, the percentage of the U.S. gross domestic product going to wages has fallen to 43 percent, according to research by the St. Louis branch of the Federal Reserve. The amount of GDP going to wages during the past five years has been the lowest it has been since 1929, according to a New York Times report. And within the inequality of wages that don’t keep up with inflation or productivity gains, the worse-off are doing worse.

The Economic Policy Institute noted, “From 2000 to 2017, wage growth was strongest for the highest-wage workers, continuing the trend in rising wage inequality over the last four decades.” The strongest wage growth was for those in the top 10 percent of earnings, which skewed the results sufficiently that the median wage increase for 2017 was a paltry 0.2 percent, the EPI reports. Inflation may have been low, but it wasn’t as low as that — the typical U.S. worker thus suffered a de facto wage decrease last year.

What this sobering news tells us is that good-paying jobs are hard to come by. An EPI researcher, Elise Gould, wrote:

“Slow wage growth tells us that employers continue to hold the cards, and don’t have to offer higher wages to attract workers. In other words, workers have very little leverage to bid up their wages. Slow wage growth is evidence that employers and workers both know there are still workers waiting in the wings ready to take a job, even if they aren’t actively looking for one.”

The true unemployment rates in Canada and Europe

We find similar patterns elsewhere. In Canada, the official unemployment rate held at 5.8 percent in April, the lowest it has been since 1976, although there was a slight decrease in the number of people working in March, mainly due to job losses in wholesale and retail trade and construction. What is the actual unemployment rate? According to Statistics Canada’s R8 figure, it is 8.6 percent. The R8 counts counts people in part-time work, including those wanting full-time work, as “full-time equivalents,” thus underestimating the number of under-employed.

At the end of 2012, the R8 figure was 9.4 percent, but an analysis published by The Globe and Mail analyzing unemployment estimated the true unemployment rate for that year to be 14.2 percent. If the current statistical miscalculation is proportionate, then the true Canadian unemployment rate currently must be north of 13 percent. “[T]he narrow scope of the Canadian measure significantly understates labour underutilization,” the Globe and Mail analysis concludes.

Similar to its southern neighbor, Canada’s labor force participation rate has steadily declined, falling to 65.4 percent in April 2018 from a high of 67.7 percent in 2003.

Mount Meager volcanic complex, British Columbia (photo by Dave Steers)

The most recent official unemployment figure in Britain is 4.2 percent. The true figure is rather higher. How much higher is difficult to determine, but a September 2012 report by Sheffield Hallam University found that the total number of unemployed in Britain was more than 3.4 million in April of that year although the Labour Force Survey, from which official unemployment statistics are derived, reported only 2.5 million. So if we assume a similar ratio, then the true rate of unemployment across the United Kingdom is about 5.7 percent.

The European Union reported an official unemployment rate of 7.1 percent (with Greece having the highest total at 20.8 percent). The EU’s Eurostat service doesn’t provide an equivalent of a U.S. U-6 or a Canadian R8, but does separately provide totals for under-employed part-time workers and “potential additional labour force”; adding these two would effectively double the true EU rate of unemployed and so the actual figure must be about 14 percent.

Australia’s official seasonally adjusted unemployment rate is 5.6 percent, according to the country’s Bureau of Statistics. The statistic that would provide a more realistic measure, the “extended labour force under-utilisation” figure, seems to be well hidden. The most recent figure that could be found was for February 2017, when the rate was given as 15.4 percent. As the “official” unemployment rate at the time was 5.8 percent, it is reasonable to conclude that the real Australian unemployment rate is currently above 15 percent.

Mirroring the pattern in North America, global employment is on the decline. The International Labour Organization estimated the world labor force participation rate as 61.9 percent for 2017, a steadily decline from the 65.7 percent estimated for 1990.

Stagnant wages despite productivity growth around the world

Concomitant with the high numbers of people worldwide who don’t have proper employment is the stagnation of wages. Across North America and Europe, productivity is rising much faster than wages. A 2017 study found that across those regions median real wage growth since the mid-1980s has not kept pace with labor productivity growth.

Not surprisingly, the United States had the largest gap between wages and productivity. Germany was second in this category, perhaps not surprising, either, because German workers have suffered a long period of wage cuts (adjusted for inflation) since the Social Democratic Party codified austerity by instituting Gerhard Schröder’s “Agenda 2010” legislation. Despite this disparity, the U.S. Federal Reserve issued a report in 2015 declaring the problem of economic weakness is due to wages not falling enough. Yes, the Fed believes your wages are too high.

The lag of wages as compared to rising productivity is an ongoing global phenomenon. A separate statistical analysis from earlier this decade also demonstrated this pattern for working people in Canada, the United States, Britain, France, Germany, Italy and Japan. Workers in both Canada and the United States take home hundreds of dollars less per week than they would if wages had kept up with productivity gains.

In an era of runaway corporate globalization, there is ever more precarity. On a global scale, having regular employment is actually unusual. Using International Labour Organization figures as a starting point, John Bellamy Foster and Robert McChesney calculate that the “global reserve army of labor” — 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. Writing in their book The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China, they write:

“It is the existence of a reserve army that in its maximum extent is more than 70 percent larger than the active labor army that serves to restrain wages globally, and particularly in poorer countries. Indeed, most of this reserve army is located in the underdeveloped countries of the world, though its growth can be seen today in the rich countries as well.” [page 145]

Having conquered virtually every corner of the globe and with nowhere left to expand into nor new markets to take, capitalists will continue to cut costs — in the first place, wages and benefits — in their ceaseless scrambles to sustain their accustomed profits. There is no reform that can permanently alter this relentless internal logic of capitalism. Although she was premature, Rosa Luxemburg’s forecast of socialism or barbarism draws nearer.

If you incentivize pollution, you incentive death

The cost of pollution in human lives is often abstract due to the long-term nature of such deaths. The cost, however, is quite concrete: A new report estimates that 4.1 million people died as a result of ambient air pollution in 2016. And that’s a conservative estimate.

Globally, only five causes of death took a higher toll. (High blood pressure and smoking were the leading causes.)

That sobering report was issued this month by teams of researchers at the Health Effects Institute and the Institute for Health Metrics and Evaluation. Their report, State of Global Air 2018, sought to analyze worldwide air pollution exposures and health impacts; data for 2016 is used because that is the most recent data available. The report states:

“Worldwide exposure to PM2.5 contributed to 4.1 million deaths from heart disease and stroke, lung cancer, chronic lung disease, and respiratory infections in 2016. PM2.5 was responsible for a substantially larger number of attributable deaths than other more well-known risk factors (such as alcohol use, physical inactivity, or high sodium intake) and for an equivalent number of attributable deaths as high cholesterol and high body mass index. Ozone, another important component of outdoor air pollution, whose levels are on the rise around the world, contributed to 234,000 [additional] deaths from chronic lung disease.”

“PM2.5” refers to particulate matter less than or equal to 2.5 micrometers in aerodynamic diameter. Because particle pollution can travel deep into the lungs and cause or aggravate heart and lung diseases, there are numerous health hazards associated with it, including reduced lung function, development of respiratory diseases in children, aggravation of existing lung diseases and premature death of people with lung diseases, according to a U.S. Environmental Protection Agency overview that the Trump administration appears to not have gotten around to censoring. Sources include incomplete combustion, automobile emissions, dust and industrial activity.

Smog in Kuala Lumpur, Malaysia (photo by Hafiz Noor Shams)

This pollution is a global problem — the State of Global Air 2018 report notes that 95 percent of the world’s population lives in areas exceeding World Health Organization guidelines for healthy air, and almost 60% live in areas that do not meet even the WHO’s least-stringent air quality target. That widespread pollution adds up. The report states that “In 2016, long-term exposure to ambient PM2.5 contributed to 4.1 million deaths and to a loss of 106 million [disability-adjusted life-years], making PM 2.5 exposure responsible for 7.5% of all global deaths and 4.4% of all global DALYs.” (The term “DALY” refers to losses of healthy life and are calculated as the sum of the years of life lost from a premature death and the years lived with disability.)

Different countries have different source characteristics. In China, for example, industrial coal, transportation and residential biomass burning are the major sources of deaths attributable to air pollution, accounting for more than 400,000 deaths. In India, residential biomass burning is by far the single biggest culprit, responsible for an estimated 268,000 deaths. China has recently begun to slowly reverse an earlier rise in air-pollution deaths, but these remain on the increase in India. The report estimates that India could avoid up to 1.2 million deaths in 2050 through instituting more aggressive measures rather than simply keeping current practices in place.

Further costs of pollution

The actual global total of 4.1 million might actually be an under-estimate. The report says its calculation does not include causes of death and disability for which evidence for a causal relationship with exposure to ambient PM2.5 is growing, such as the development of asthma in children, low birth weight and pre-term birth, type 2 diabetes and neurological disorders.

By no means does the State of Global Air 2018 report exhaust the literature of the toll of pollution. A United Nations study, Towards a Pollution-Free Planet (an advanced copy of which was posted in December 2017), cites the World Health Organization estimate that 12.6 million people died from environmental causes in 2012, or almost one-quarter of the world’s deaths that year. The cost of pollution is enormous, not only in lives shortened but in economic costs. The UN study says:

“In 2013, the global welfare costs associated with air pollution were estimated at some $5.11 trillion. The welfare costs from mortality relating to outdoor air pollution were estimated at $3 trillion; for indoor air pollution the figure was $2 trillion. … With regard to human health, the welfare cost of mortality from unsafe water is considerable in many developing countries. In 2004, losses stemming from inadequate water and sanitation services in developing countries were estimated at $260 billion per year – the equivalent of 10 per cent of gross domestic product (GDP) for some poor countries.”

Although deaths from pollution are much higher in developing countries, the total is significant in the advanced capitalist countries. Earlier studies, for example, estimated 200,000 premature deaths in the United States annually and 29,000 per year in Britain.

Alberta oil sands (photo by Eryn Rickard)

What is often missed in these sorts of reports is the externalization of costs. Industrial activity by large corporations is responsible for a significant amount of deadly pollution — but those corporate entities don’t bear the costs of that pollution. Rather, the costs are externalized onto society, leaving the profits to be grabbed by a handful of executives and speculators while the rest of the world must absorb the costs.

These economic costs are not insignificant. One corporate report, not intended for the public’s eyes, estimates that external costs total US$7.3 trillion per year, with greenhouse-gas emissions accounting for more than one-third of that total. The report, “Natural Capital at Risk–The Top 100 Externalities of Business,” finds that coal-fired power in East Asia and North America alone account for $770 billion per year in damage from the impacts of greenhouse-gas emissions and air pollution. These social costs exceeded the value of these sectors’ production value. Those two were among the top three sources of damages, along with South American cattle ranching, estimated to cost $350 billion.

It’s awful for us but great for profits

Getting closer to assessing responsibility, a separate United Nations report found that the world’s 3,000 biggest corporations cause $2.2 trillion of environmental damage in 2008. That total represents one-third of those corporations’ profits. This report appears never to have been released, although The Guardian was able to report briefly on its contents in February 2010. The true environmental cost, however, might have been yet higher, The Guardian reported:

“The biggest single impact on the $2.2tn estimate, accounting for more than half of the total, was emissions of greenhouse gases blamed for climate change. Other major ‘costs’ were local air pollution such as particulates, and the damage caused by the over-use and pollution of freshwater.”

All the more absurd then, that fossil fuels are subsidized to enormous extents — $5.6 trillion per year. That, unfortunately, is not a misprint. That total comes from calculating not only the huge direct government subsidies and tax breaks provided to fossil-fuel companies, but the cost of environmental damages borne by the public rather than the corporations themselves. The subsidized cost of air pollution and global warming combined account for two-thirds of the $5.6 trillion total, according to the researchers who prepared the working paper, “How Large Are Global Energy Subsidies?.”

Although some of these reports, by implication, hint at the corporate responsibility for these massive costs, none dare to address the system that encourages such waste, instead offering boilerplate advice that humanity pollute less. The State of Global Air 2018 report discussed above, for example, concludes with a recommendation that “decision-makers” should be engaged in “identifying and taking action to control the major sources that contribute to them” and see to it that less coal is burned. The United Nations report Towards a Pollution-Free Planet, also discussed above, suggests a “framework for action” that is “founded on strong science to ensure that burdens and negative effects are not simply shifted from one area to another.”

There is nothing wrong with such suggestions, but if the source of the problem is never mentioned, how is a solution to be found? The massive environmental problems the Earth faces are not some deus ex machina or a natural variable such as ocean tides. They have concrete sources, rooted in the global economic system. Capitalism requires constant growth for which all incentives are for planned obsolescence, more growth, more industry and more pollution. That pollution in turn is mostly the result of activity by large corporations that are unaccountable and thus able to foist the costs of their activities onto society.

Once again, it is impossible to have infinite growth on a finite planet. The current global rate of consumption is 1.7 Earths for the provision of resources and the absorption of waste. It is impossible to indefinitely consume more than can be replenished, nor can rational and sustainable consumption and resource-use patterns be maintained in a system in which prices, taxation and incentives are so badly out of alignment with the environment. Our future ability to prosper can only be based on a steady-state economy that provides for need rather that private wealth accumulation, an impossibility under a system based on relentless competition.

Fooled again? Trump trade policy elevates corporate power

Given the Trump administration’s all-out war on working people, a government by billionaires and for billionaires considerably more blatant in its class warfare than the ordinary White House, it has long puzzled me that some activists insist on giving it the benefit of the doubt when it comes to trade issues.

The Trump administration’s previously stated goals on what it seeks to achieve in the North American Free Trade Agreement (NAFTA) negotiations should have been sufficient evidence. But with this month’s issuance of the “National Trade Estimate Report on Foreign Trade Barriers” it should be painfully obvious that the Trump régime’s intent is to extend the dominance of U.S.-based multinational corporations into every aspect of life in as many corners of the globe as possible.

Directly contrary to Donald Trump’s hollow promises on the campaign trail, his administration released in July 2017 its “Summary of Objectives for the NAFTA Renegotiation.” This 18-page paper was written with boilerplate language that reads as if it was lifted from the Trans-Pacific Partnership, and some of the language appears to be repeated word for word. The intention is to strengthen corporate power, not promote the interests of working people.

Bárrás mountain, Norway (photo by Ville Miettinen)

As Friends of the Earth said at the time in its analysis of the Trump administration’s NAFTA objectives:

“Trump’s statement indicates he plans to step up his war on public health and the planet by modeling NAFTA’s provisions related to environmental regulation on the TPP. These objectives appear to set the stage for a stealth attack on strong regulation of food, agriculture, chemicals, and biotechnology.”

I was thus quite surprised recently when discussing NAFTA on the Eco-Logic environmental program on WBAI radio in New York when, summarizing the Trump NAFTA paper, I was quite rudely interrupted and addressed in a most condescending manner by another guest, the head of a Washington non-governmental organization (NGO) who purported to “correct” me by claiming that Trump’s trade advisers say they want to do away with the secret tribunals that corporations use to overturn government laws and regulations.

I was appearing on Eco-Logic as a representative of a grassroots organization I have worked with for several years, Trade Justice New York Metro, but even I as a lowly community organizer and not the head of a connected NGO know that campaign promises are meaningless. The Trump administration has put its intentions in print, and it would be folly to ignore what administration officials themselves say is their policy. There has been no attempt to do away with the private tribunals (the “investor-state dispute system”) in the NAFTA talks, only a push to eliminate panels that decide anti-dumping cases. This is simply because the White House wants to make it easier for U.S. companies to be able to sell excess production on the cheap across the border.

Trump administration takes aim at the world

In its National Trade Estimate Report (prepared by the Office of the U.S. Trade Representative, headed by nationalist Robert Lighthizer), the Trump administration takes direct aim at no less than 137 countries. And, for the few that were missed, the report’s introduction warns “As always, the omission of particular countries and barriers does not imply that they are not of concern to the United States.”

The report defines “trade barriers” in this way: “government laws, regulations, policies, or practices that either protect domestic goods and services from foreign competition, artificially stimulate exports of particular domestic goods and services, or fail to provide adequate and effective protection of intellectual property rights.”

You’ll note the absence of labor, safety, health or environmental standards, and the concern for “intellectual property rights” contrasts with the complete lack of regard for what other countries might see as their right to protect their own economy. This concern only with corporate profits, at the expense of all other human considerations, is hardly new of course. U.S. negotiators during the Obama administration consistently pushed for the most draconian rules for the Trans-Pacific Partnership, particularly on intellectual property. Any “investor” — defined as any person or entity that has “an expectation of gain or profit” in any form of participation in any enterprise, holds any financial instrument, possess any intellectual property right or has a “tangible or intangible” right in any “movable or immovable property — would have eligible to sue governments under the rules of the TPP.

The Rideau Canal in Ottawa (photo by John Talbot)

Health care, and government policies to make medicines more affordable, such as those of New Zealand, was at direct risk under TPP.

Nothing has changed. Any attempt by any government to place health or environmental concerns at least level with corporate prerogatives is what actually constitutes a “trade barrier” in the eyes of the Trump administration, true to its composition of a cabinet stuffed with billionaires and its managerial ranks with a fleet of Goldman Sachs alumni.

No country too small to be a target of U.S. capital

Let’s take the example of Norway. Not a socialist paradise as some U.S. liberals of the Bernie Sanders persuasion imagine, but nonetheless a country that does make efforts to ameliorate the conditions of capitalism and certainly a much more civilized place than the United States. Norway has an interesting relationship with the European Union, formally outside but part of the EU common market. Thus it is required that Oslo implement EU law, which it dutifully does with the exception of a couple of areas, including fishery policy, where it maintains independence.

The U.S. enjoyed a small trade surplus with Norway in 2017. Given Norway’s small population of five million one might believe the White House has bigger targets at which to aim. But no country is too small to feel the wrath of U.S. multi-national capital. The National Trade Estimate Report complains that Norway expects food that it imports to be proven safe. The nerve! The report says:

“Norway has effectively banned the importation of agricultural biotechnology products by implementing extremely restrictive policies for crops derived from such technology. The restrictions include prohibiting farmers from cultivating biotech crops and using biotech feed for farm animals. The United States continues to press Norway to recognize the applicable science on the safety of such products and accordingly to open its market to U.S. exports of such products. … Norway applies regulations developed by the European Union that ban imports of beef from animals treated with hormones, despite the absence of scientific evidence demonstrating that this practice poses any risk to human health.” [page 347]

Scientists, and not only EU officials, would differ. Note that in the Trump régime’s conception it is not up to the producer of a new product to prove it is safe; it’s up to consumers, or agencies designed to protect consumers, to prove it’s not safe after the fact. This backward formulation, unfortunately, is consistent with U.S. regulatory practice regarding chemicals.

Consistent with its attitude toward Norway, the Trump administration alleges the European Union raises “a proliferation of technical barriers.” [page 155] By no means can the EU be said to be immune to corporate pressure. But the EU does not have a policy of favoring U.S. corporations and has limitations in how far it can lower regulatory standards due to grassroots mobilization despite its best efforts to insulate itself from public opinion.

European Union, Canada and Mexico aren’t forgotten

The Trump administration’s complaints about the European Union go on for 47 pages, covering a vast array of industrial and agricultural products. We get to the heart of the matter on page 157, where the trade report complains that “technical committees that draft the European standards generally exclude non-EU nationals” and thus “The opportunity for U.S. stakeholders to influence the technical content of EU legislation setting out essential requirements (i.e., technical regulations) is also limited.”

Yes, if only Brussels would allow U.S. corporations to dictate their standards. We can all imagine the shrieking that would be heard if Europeans were to demand they dictate regulatory practices to Washington. Nationalism, in the end, is always a one-way street.

Canada and Mexico, of late subject to U.S. demands in the NAFTA re-negotiations, are not spared in the trade report, either.

The U.S. enjoyed a trade surplus with Canada in 2017, contrary to the nonsense that President Trump routinely utters. As expected, the trade report dwells on Ottawa’s protective measures for its dairy farmers and does not fail to complain about aid to Québec’s Bombardier company while not mentioning the massive corporate welfare doled out to U.S. corporations at the federal, state and local levels. But we again get to the crux of the matter when we read the complaint that Canada dares to uphold food-safety standards.

The trade report complains that “Canada’s Seeds Act generally prohibits the sale or advertising for sale in Canada, or import into Canada, of any variety of seeds that is not registered with Canada’s Food Inspection Agency.” [page 80] This is alleged to be unfair because the Canadian agency “verify[s] claims made which contributes to a fair and accurate representation of varieties in the marketplace.” Quelle horreur! How dare those Canadian bureaucrats value the safety of food above corporate profits!

Despite U.S. corporations using Mexico as a low-wage haven with low environmental standards that can be ignored, several items that met the displeasure of the White House were listed, among them Mexico’s intention to set standards for energy efficiency, alcohol and plumbing fixtures. The trade report complains that Mexico requires licensing for companies that seek to export steel there, an irony considering the Trump administration’s imposition of steel tariffs.

Although the trade report goes on to complain about other countries enforcing health and safety standards, its authors, with a straight face, claim to be upholding higher standards, asserting that the report “highlights the increasingly critical nature of standards-related measures (including testing, labeling and certification requirements) and sanitary and phytosanitary (SPS) measures to U.S. trade policy.” Perhaps in an Orwellian sense. It would be more accurate to say that U.S. trade policy, as with foreign policy in general, is best defined as “he who has the gold gets to make the rules.”

Watch out, world: The Trump gang is coming for you. Trump trade policy is set by economic nationalists determined to deepen the dominance of U.S. corporate power at the expense of working people everywhere, U.S. working people not excepted. It is the height of naïveté to expect anything else.

Reversing past oppression, Cooperation Jackson builds a better future

If thinking big were all it took to be a success, then Cooperation Jackson would be one of the biggest successes ever seen. It is far too early to know what the future will hold for what must be the most thorough-going experiment in economic democracy in the United States today, but no one can possibly accuse Cooperation Jackson of not having a clear vision nor of not being serious students of history.

The experiment in Jackson, Mississippi, is the intellectual product of many years of experience by seasoned activists and a mobilized community drawing lessons from centuries of enduring racism and state terror, and the communal traditions used to survive the slavery, feudalism and apartheid of the United States South, while at the same time integrating concepts from progressive thinkers across several continents. Cooperation Jackson faces long odds, not least because of the extreme hostility of Mississippi’s conservative state government and the forces of gentrification that are taking aim at their impoverished city, in particular the organization’s neighborhood base.

The history, intentions and current struggles of this most interesting project are laid out in detail in the book Jackson Rising: The Struggle for Economic Democracy and Black Self-Determination in Jackson, Mississippi.* And although the untimely, sudden death of one of the project’s leaders, Chokwe Lumumba, was a significant blow, by no means has the project come to a halt. That is one of the consistent messages of Jackson Rising, which contains essays by several writers, both participants and sympathetic journalists. It also a project intended for replication elsewhere, for socialism in one city is not possible, of which Jackson’s cooperators are acutely aware.

This is a project rooted firmly in Black struggle. The concept of the People’s Assembly, a core institution of Cooperation Jackson, is drawn from prayer circles organized clandestinely by enslaved Africans and the “Negro Peoples Conventions” that convened during Reconstruction. Black communities struggling for community control and economic self-sufficiency were built during the early 20th century, although these fell victim to continual violence directed against them, and cooperatives were frequently used forms across the 19th and 20th centuries. Traditions of resistance were renewed during the Civil Rights Movement of the 1950s and 1960s; peoples assemblies were a common form of organization during that time.

Other historical projects were simply organized to find paths out of deep rural poverty. Two cooperative farms in Mississippi were begun in the early 1970s; local Whites responded by poisoning the Black farmers’ water supply and killing their cows. In Alabama, Black farmers found a market in New York that would pay three times what they had been getting for their cucumbers. The growers’ cooperative rented a truck to deliver the produce, only to have state troopers pull the truck over and hold it for 72 hours; racist Governor George Wallace had declared he could impound any vehicle for 72 hours without explanation. When the farmers got their track back, the cucumbers had been ruined.

Repression is what the activists of an organization calling itself the Provisional Government of the Republic of New Afrika faced. An agreement had been made to buy land from a Black farmer west of Jackson. As hundreds of people walked the road to their new land, they faced an armed phalanx of local police, state police, the FBI and the Ku Klux Klan, telling them they would not be celebrating that day, punctuating their threats with racial slurs. The crowd decided to go ahead anyway, and in a story often told by Mayor Lumumba, the roadblock “opened up just like the Red Sea.” Nonetheless, heavy government repression, including mass arrests, brought this effort to build an egalitarian community to an end.

Building community organizations

Years later, some of these organizers, including Mayor Lumumba, would return. In 2005, the Malcolm X Grassroots Movement (MXGM) organized the Mississippi Disaster Relief Coalition in the wake of Hurricane Katrina, and in subsequent years the coalition transformed into the Jackson People’s Assembly. The Assembly, according to one of the lead organizers, Kali Akuno, was “organized as expressions of participatory or direct democracy,” guided by committees organized by it but in a non-hierarchal arrangement [page 74]. Doing so was part of an “inside-outside” strategy in which the movement would be based on the widest possible grassroots and community participation while at the same time seeking to gain a foothold in local government. Mr. Akuno wrote:

“MXGM firmly believes that at this stage of the struggle for Black Liberation that the movement must be firmly committed to building and exercising what we have come to regard as ‘dual power’ — building autonomous power outside of the realm of the state (i.e. the government) in the form of People’s Assemblies and engaging electoral politics on a limited scale with the expressed intent of building radical voting blocs and electing candidates drawn from the ranks of the Assemblies themselves. … [W]e cannot afford to ignore the power of the state.” [page 75]

The goal of engaging in local elections is to lessen the repressive power of the state and contain the power of multi-national corporations:

“We also engage electoral politics as a means to create political openings that provide a broader platform for a restoration of the ‘commons,’ create more public goods utilities (for example, universal health care, public pension scheme, government financed childcare and comprehensive public transportation), and the democratic transformation of the economy. One strategy without the other is like mounting a defense without an offensive or vice versa. Both are critical to advancing authentic, transformative change.” [page 75]

The Jackson activists believe that assemblies should engage a minimum of 20 percent of the people of a given geographic area. This minimum level of participation ensures that there are sufficient numbers of people to have the capacity to implement decisions and achieve desired outcomes. There exist three different types of assemblies — united front or alliance-based in which the participants are mobilized members of organizations; constituent in the form of a representative body; and mass assemblies of direct participation by the widest number of people. Jackson’s assemblies tend to be the second (constituent) form but can act as mass bodies during periods of crisis [pages 87-89]. Mass assemblies (such as what was seen at Occupy Wall Street) require vast amounts of time and thus tend not to be sustainable.

Jackson activists have found sustained success with their more constituent model. Work centered in Ward 2, where MXGM and other activists did much of the organizing, although students also played a role and neighborhood churches provided meeting spaces and participants. The Ward 2 assembly began having a positive impact on city issues, and from this work participants decided they wanted an ally on the city council. Chokwe Lumumba was asked to run for the ward’s council seat. He won, and in turn the assembly deepened its inside and outside work. For the next election, he ran for mayor, and won that office in a landslide, replacing a three-term incumbent closely tied to regional business elites seen as unresponsive to community needs.

Organizing for a city government that will be responsive

Kamau Franklin, a veteran activist with MXGM, noted that electing Black officeholders in itself does not necessarily translate into community empowerment. He wrote:

“[T]he majority Black centers in the south are dominated by moderate Black Democratic Party careerists. The political void left by the retreat of the Black social movements in the 1950s, 1960s and 1970s was filled by ‘safe’ politicians who did not do much to upset the economic balance of power that favored white power brokers and embraced moderate Democratic Party rhetoric and positioning on governing. As a result, Jackson is in many ways like post apartheid South Africa, where Black electoral power never translated into actual political power, and in the main only supported the Black petty-bourgeois class happy to live off the scraps of the minority white capitalist class that really calls the shots.” [page 70]

Mayor Lumumba, upon taking office, did not forget who he was nor who put him in office. Not only did he pledge “the highest provision” of public services, including economic development, education and transportation, but he also declared a goal of building a “dynamic ‘new economy’ rooted in cooperative development and anchored by green jobs, living wages and strong worker protections. His administration’s policies would be rooted in human rights and driven by community groups that would have a say in city budgeting. [page 99]

The new administration faced serious challenges, including finding the money to rebuild a crumbling and out-of-date water system that was under a federal order to be fixed. The city’s infrastructure was sub-standard and the previous administration had sought to cut an already limited bus system; Mayor Lumumba worked with city residents to secure a one percent city sales tax to help raise necessary revenue. He also gave full city support for a conference at which the grassroots project Cooperation Jackson would be formally launched.

Jackson city center (photo by A W A)

These activities were part of an inside-outside strategy, taking advantage of opportunities, wrote educator and organizer Ajamu Nangwaya:

“More often than not, we are likely to experience betrayal, collaboration with the forces of domination by erstwhile progressives or a progressive political formation forgetting that its role should be to build or expand the capacity of the people to challenge the structures of exploitation and domination. I am of the opinion that an opportunity exists in Jackson to use the resources of the municipal state to build the capacity of civil society to promote labor self-management. … As revolutionaries, we are always seeking out opportunities to advance the struggle for social emancipation. We initiate actions, but we also react to events within the social environment. To not explore the movement-building potentiality of what is going on in this southern city would be a major political error and a demonstration of the poverty of imagination and vision.” [pages 110-111]

Tragically, Mayor Lumumba would die suddenly from heart problems less than a year into his term and on the eve of introducing more radical measures for city council approval. The establishment Democrats retook city government, withdrawing all support for the cooperation project and the conference. Nonetheless, the Jackson State University president supported the conference despite the new mayor’s hostility, and during it organizers formally announced Cooperation Jackson.

The vision of Cooperation Jackson

Cooperation Jackson is a product of the MXGM and New Afrikan People’s Organization, and is “specifically created to advance a key component of the Jackson-Kush Plan, namely the development of the solidarity economy in Jackson, Mississippi, to advance the struggle for economic democracy as a prelude towards the democratic transition to eco-socialism” [page 3]. (“Kush” is a designation for 18 contiguous counties forming a Black-majority region along the Mississippi River and west of and adjacent to Jackson.) Organizers stress that all people are a part of this project, that the resources of society should be equally available to all residents, but as a Black majority region, that majority is entitled to a exercise a majority of political and social power [page 128]. Black residents comprise 85 percent of Jackson’s population but prior to Mayor Lumumba’s administration, Black businesses received only five percent of regional contracts.

Cooperation Jackson has four fundamental ends:

  • To place ownership and control over the primary means of production directly in the hands of the Black working class of Jackson.
  • To build and advance the development of ecologically regenerative forces of production in Jackson.
  • To democratically transform the political economy of Jackson, the state of Mississippi and the Southeast U.S.
  • To attain self-determination for people of African descent and the “radical, democratic transformation” of Mississippi as a prelude to a national transformation.

As Mr. Akuno wrote in outlining the program in Jackson Rising’s opening chapter:

“A population or people that does not have access to or control over those means [of production] and processes cannot be said to possess or exercise self-determination. The Black working class majority in Jackson does not have control or unquestionable ownership over any of these means or processes. Our mission is to aid the Black working class, and the working class overall, to attain them.” [page 5]

The project seeks to build productive forces, break the status quo of an economy based on resource extraction and commodity agriculture for export, and replace that failed economy with one that stimulates self-organization and is environmentally sustainable. Instead of capitalist development by and for elites, Cooperation Jackson instead seeks to enable communities to take the central role in development through autonomous organizations and control over local governments.

Jackson is envisioned as a “hub of community production,” anchored by 3-D print manufacturing for community consumption. There is no short cut in a process that has only begun and has a long way to go, Mr. Akuno writes:

“In the Jackson context, it is only through mass organization of the working class, the construction of a new democratic culture, and the development of a movement from below to transform the social structures that shape and define our relations, particularly the state (i.e. government), that we can conceive of serving as a counter-hegemonic force with the capacity to democratically transform the economy. …

We strive to build a democratic economy because it is the surest route to equity, equality, and ecological balance. Reproducing capitalism, either in its market oriented or state-dictated forms, will only replicate the inequities and inequalities that have plagued humanity since the dawn of the agricultural revolution. We believe that the participatory, bottom-up democratic route to economic democracy and eco-socialist transformation will be best secured through the anchor of worker self-organization, the guiding structures of cooperatives and systems of mutual aid and communal solidarity, and the democratic ownership, control, and deployment of the ecologically friendly and labor liberating technologies of the fourth industrial revolution.” [pages 6-7]

The core institutions of Cooperation Jackson

Four interconnected institutions form the base of Cooperation Jackson:

  • A federation of cooperative businesses and mutual-aid networks.
  • A cooperative incubator that will provide basic training and business plan development.
  • A cooperative school and training center to teach economic democracy.
  • A cooperative credit union and bank.

Vertical supply chains are planned to be created through these networks. As one example, a cooperative farm would supply a café and catering business, the waste from the café would be sent to a yard-care and composting cooperative, which would in turn supply the farm, socializing the production process.

Key to creating this federation of cooperatives is staving off gentrification. The neighborhood where Cooperation Jackson is based has large amounts of vacant lots and abandoned buildings, but because it is near downtown, real estate developers and the city capitalist elite are hungrily eyeing the area. The backers of Cooperation Jackson are buying land to create an “eco village” that is intended to include quality, “deeply affordable” cooperative housing, a grocery and the other coop projects, all powered by solar energy. The larger goal is for the city of Jackson to become self-sustaining through comprehensive recycling, composting, local food production, links to regional organic farms, a city solar-power system and zero-emission public transportation.

Fannie Lou Hamer statute

Integrated with this project is a community-production initiative that will feature education and training to use 3-D print manufacturing technology and other new technologies. Envisioned are development programs to create employment; commercial manufacturing to provide 3-D-printed products, specialty products and tools; and community production to directly fill local needs and further develop technology. None of this will be done in a political vacuum — also envisioned are union-cooperative initiatives to train the “future generation of working class militants”; the formation of a class-based union encompassing all trades; movements to boost worker rights; the unionization of existing businesses; and the building of democratic unions in the cooperatives, in Jackson and across Mississippi.

This can’t be a Jackson-only project in the long run. There cannot be “socialism in one city,” of which the Cooperation Jackson organizers are acutely aware. Organizers hope for this project to be replicated in other cities of the Southern U.S., and for strong links to be developed between urban centers and farms. “We do not believe that socialism, or economic democracy, can be built in isolation on a local level, as it is neither economically viable or ecologically sustainable,” Mr. Akuno noted [page 33]. Economic transformation is a necessity, founded on an explicit rejection of capitalist social relations.

To that end, cooperatives serve an additional function as training grounds for working people to manage without bosses. The relationship among cooperatives in turn must be based on building an integrated system, not competition. As Mr. Akuno and Dr. Nangwaya summarize in a separate article discussing the principals of economic democracy:

“Our character and psychological predisposition have been shaped under undemocratic, authoritarian relations and processes and our possession of the requisite knowledge, skills and attitude of self-management and participatory self-management is uneven. As a result, we tend to demonstrate behaviors that are not unlike our oppressors and exploiters. Critical education is essential to the process of exorcising the ghosts of conformity within the status quo from the psyche and behavior of the oppressed to enable the development of a cultural revolution. … [T]raining and development programs, the constant dissemination of critical information, and mass educational initiatives are central to the goal of preparing the people for self-management and self-determination.” [page 53]

Spaces in a “weak link” of capitalism but difficulties persist

Mississippi is the poorest state in the United States, with one-third of its children living below the poverty line, a line set very low. The state is at or near the bottom in a variety of economic indicators. Top-down economic development may have made a few capitalists rich, but it has done little for the working people of Jackson — almost one-third live in poverty and median household income is barely more than half the U.S. average, according to U.S. Census data.

Yet it is Mississippi’s status as a “weak link” in capitalism that provides the space for a project like Cooperation Jackson, organizers argue. Agricultural and industrial production are constrained by White elites who pursue a strategy of containment to fetter the Black population by curtailing its access to capital and living wages. The long memory of Black repression makes the population in the Black-majority “Kush” region willing to take actions to reverse their situation. A combination of favorable demographics, a mobilized population and elevated political consciousness make the area ripe for a project like Cooperation Jackson, organizers say [pages 229-230].

And although that organizing work primarily takes place at the grassroots level, there will remain the electoral component. Taking office with open eyes, Mayor Lumumba stated that with his election the movement would be engaging with, not wielding, state power. The electoral side of the movement has three components: mass education, preparatory battles (picking issues that can be framed in ways that resonate for multiple communities), and building “operational fronts” that are coalitions in differing combinations depending on circumstance. Thus electoral work is to support movement work, not the reverse. Through continued organizing, the movement was able to retake the mayor’s office in June 2017 when Chokwe Antar Lumumba, son of the former mayor, was elected handily.

But foothold in City Hall or not, Cooperation Jackson remains in its earliest stages. Progress has been slow — as of early 2017, the cooperative café has struggled to get its permits, legal problems have delayed the buying of a building for 3-D manufacturing, raising money has been difficult, and land for the urban farm is polluted and in need of cleaning [page 278]. And the state government remains hostile.

Jackson Rising provides an excellent tool for understanding this extraordinary program, providing several voices, mostly of those involved in the work, and although a work of optimism the book is frank in discussing the problems and obstacles Cooperation Jackson faces. The book suffers from insufficient editing at times; typos proliferate in some articles and that is an unnecessary distraction. But do not let that deter you. Readers wanting to gain a firm understanding of the project, and the breathtaking range of influences it blends, should read this book.

Yes, the odds are against its success. At one point, an organizer acknowledges that criticisms that the project might be “overreaching” might contain some truth. Yet what else can be done but to attempt the impossible? Everybody who believes a better world is possible should be rooting and providing support for Cooperation Jackson.

* Kali Akuno and Ajamu Nangwaya (editors), Jackson Rising: The Struggle for Economic Democracy and Black Self-Determination in Jackson, Mississippi [Daraja Press, Montréal 2017]

Imagine having so much money you can spend it on Instagram “influencers”

That so much money concentrates at the top that capitalists can’t find useful outlets for it, and that capitalism produces huge amounts of junk we don’t need or want, was reinforced for me upon reading a New York Times article on what apparently has become a war against Instagram bots.

You can’t make this up, can you? So much capital is thrown into marketing that huge sums of money are thrown at Internet “influencers” who apparently are “influencers” because they have large numbers of followers on Instagram. The problem here, from the marketers’ perspective, is that large numbers of those followers are fake. They’re bots created to inflate the size of followings.

Although I couldn’t read this business-section article without laughing at the absurdity of this, it did also nicely illustrate the tremendous amount of waste in capitalist production. You’ve got to have a lot of capital lying around to afford spending on buying posts on Instagram. There is good money in this, it seems, for those who succeed at positioning themselves as “brands” as opposed to, say, human beings.

Because every space is a canvas for advertising

In one example, the Times article quoted an “influencer” who “said that she charged about $1,200 for a branded post. She added that she knew people with two million followers who charge $40,000 per post.”

With a straight face, the Times article casually referred to companies that exist to “connect brands with influencers” and discussed other companies that exist to ferret out Instagram accounts with high numbers of bots among their followers. The article said: “The interest in such firms reflects how easy it is to fake popularity on platforms like Instagram, where bots seem to run unchecked even on accounts where people have not paid for them.”

Apparently, Instagram’s response to this “problem” is to reduce access to its data. That prompted this reaction from another “influencer” in the article: “It will be unfair until Instagram really just cleans out the bots and the lurkers.”

Altogether now: Awwwwww.

Your intrepid blogger does his best to maintain his revolutionary optimism, but reading articles like this does sometimes make me despair for the future. I know such people are a small slice of overall humanity, but, still, there are large numbers of such people who hopelessly swallow capitalist ideology. What if the vast sums of money thrown around in marketing campaigns instead went to more useful functions, such as affordable housing, clean water, environmental cleanups and repairs to our crumbling infrastructure, to point out only a few needs. The investment needed to modernize and maintain school facilities is estimated to be at least $270 billion, a fraction of what is spent on marketing.

We are talking about huge sums of money here: Estimates of the money spent on marketing in the United States per year range from $460 billion to $1.07 trillion. (The former estimate is from the book Marketing by Charles W. Lamb, Joseph F. Hair Jr., and Carl McDaniel and the latter estimate is from the Metrics 2.0: Business & Market Intelligence web site.)

Such numbers provide an expensive hint that too much stuff that don’t fill a need is produced. The size of the marketing and advertising industries wouldn’t be so gigantic otherwise. Production under capitalism is for private profit, not to meet human needs. To achieve those profits, vast efforts must be made to induce spending.

The latest Internet scandal, the harvesting of data from 50 million Facebook users by the secretive company Cambridge Analytica, can be seen in this light. The immediate scandal is that Cambridge Analytica, a company created by extreme Right hedge-fund billionaire Robert Mercer and former Trump consigliere Steve Bannon, sought to manipulate elections in furtherance of their fascistic ideology. But there are plenty of multi-national corporations who would dearly love to get their hands on such troves of data. Whose to say some haven’t already? We don’t know.

Perhaps enough of these episodes will induce some naïve technology fetishists to re-examine their thinking. Why should corporate spying be more tolerated than government spying? An ex-son-in-law of a friend, prompted by being asked what he does for a living, actually saw himself as providing a necessary service when he explained how he works for a technology company to tailor advertising to the profile of a user, complaining that non-tailored advertising “would be a waste” — for the recipient of the advertising!

Those who work to create a better world sure have a lot of work to do.

China can’t save capitalism from environmental destruction

A year ago at the World Economic Forum, China’s president, Xi Jinping, won plaudits from Davos elites for his commitment to open trade. Of course, because China’s economy is heavily dependent on exports, so-called “free trade” is in its interest, so President Xi’s stand was no surprise.

What has drawn less attention are President Xi’s statements on the environment, something the elites of capitalism find rather less convenient. This past October, at the 19th Chinese Communist Party Congress, for example, he delivered this statement: “Man and nature form a community of life; we, as human beings, must respect nature, follow its ways, and protect it. Only by observing the laws of nature can mankind avoid costly blunders in its exploitation. Any harm we inflict on nature will eventually return to haunt us. This is a reality we have to face.” He set a goal of “restor[ing] the serenity, harmony, and beauty of nature” and elevated the environmental-protection agency to the level of a ministry.

Given China’s huge contribution to global warming and the heavy pollution it suffers from, such statements are welcome. But does this truly mean that China will now become a country that puts the environment first and, perhaps, save capitalism from its excesses? That is very unlikely, given Beijing’s integration into the world capitalist system and the dynamics of capitalism, in which all incentives are for more growth — a system that requires growth.

Air Pollution in Hong Kong (photo by Yym1997)

In addition to the basic laws of capitalism, an interesting paper by Richard Smith, an economic historian who frequently writes on the impossibility of “green capitalism,” argues that the nature of China’s system is a further barrier to any turn toward environmental primacy. In his paper, “China’s drivers and planetary ecological collapse,” Dr. Smith argues that despite the power that President Xi has seemingly gathered into his hands, changing the country’s economic incentives are far beyond his capability. Dr. Smith writes:

“Xi Jinping cannot lead the fight against global warming because he runs a political-economic system characterised by systemic growth drivers — the need to maximise growth beyond any market rationality, the need to maximise employment, and the need to maximise consumerism — which are, if anything, even more powerful and even more eco-suicidal than those of ‘normal’ capitalism in the West, but which Xi is powerless to alter. These drivers are responsible for China’s irrational ‘blind growth,’ ‘blind production’ and out-of-control pollution, what Xi himself describes as ‘meaningless development at the cost of the environment.’ ” [pages 4-5]

Three factors drive Chinese growth, Dr. Smith writes: import-substitution industrialization (the need to compete successfully as a national economy against the U.S. and other leading capitalist countries); employment generation (the main reason for Chinese authorities to not allow companies to go out of business); and consumerism. In his paper, he argues that, for all the market reforms introduced in recent decades, China’s state-owned enterprises don’t operate by the rules of the market. He writes:

“For all the market reforms since 1978, the government has not allowed a single major SOE to fail and go bankrupt, no matter how inefficient, no matter how indebted, because those industries serve a different purpose. They do not exist just to make money. They exist to fulfil the wishes of China’s Communist Party rulers, especially as they contribute to import substitution and national industrialisation.” [page 6]

Tens of millions laid off from state enterprises

Ensuring social stability is unarguably a goal of Chinese leaders, but Dr. Smith appears to under-estimate the extent of ordinary capitalist behavior of Chinese state-owned enterprises (SOEs). A 2006 paper published by the China Labour Bulletin, “Swimming Against the Tide,” notes not only the continuing consolidation of SOEs, but the resulting mass loss of jobs resulting from those restructurings. The report says:

“In the late 1990s, however, the government massively intensified the restructuring of SOEs. This process disenfranchised and marginalized tens of millions of workers, while at the same time creating a new class of powerful capitalists with close and highly influential links to local government. Crucially, at this time, the central government seemed to abandon any thoughts of additional remedial measures and basically gave local government officials and SOE managers free rein to carve up the state’s assets between them.

From 1995 to 2002, SOEs cumulatively laid off as many as 30 million workers. … Meanwhile, SOE managers used their power and connections with local governments to work behind the scenes to secure enterprise assets at ridiculously low prices, elevating themselves from being mere managers to actual owners of the enterprise. According to one survey, over 20 percent of the private enterprises created in the first half of 2006 emerged from the restructuring of state-owned and collective enterprises.”

Beijing (photo by ahenobarbus)

Minqi Li, in his book, The Rise of China and the Demise of the Capitalist World Economy, in examining the development of the Chinese economy, pulled no punches in describing the lack of concern for working people:

“Throughout the 1990s, most of the state and collective-owned enterprises were privatized. Tens of millions of workers were laid off. The urban working class was deprived of their remaining socialist rights. Moreover, the dismantling of the rural collective economy and basic public services had forced hundreds of millions of peasants into the cities where they became ‘migrant workers,’ that is, an enormous, cheap labor force that would work for transnational corporations and Chinese capitalists for the lowest possible wages under the most demanding conditions. The massive influx of foreign capital contributed to a huge export boom.” [pages 64-65]

By July 2017, SOEs accounted for just 16 per cent of China’s jobs and less than a third of industrial output, according to an HSBC report.

Capitalist dynamics are firmly in place in China’s economy, a development that will only intensify, given the Communist Party leadership switching the role of the market from “basic” to “decisive” in 2013 at a key Central Committee plenum, and the continuity with this course that was laid down by the party at the October 2017 party congress, again stressing the “decisive role” of the market.

Waste, planned obsolescence add to consumerism

Nonetheless, Dr. Smith is correct is noting that there is more state guidance of the economy than in ordinary capitalist economies. China is by far the biggest consumer of industrial raw materials, a function of the country’s frenzied pace of investment. Wastefulness extends to consumer items as well, he writes. Planned obsolescence is out of control. Because of the incentives to produce beyond any rational demand, unnecessary infrastructure, to the point of “ghost cities,” is built; buildings are demolished after a couple of decades; and large appliances, such as refrigerators, are designed to break down within only a few years to spur more consumption.

He argues that the introduction of market reforms has amplified, instead of reducing, tendencies in the old bureaucratic economy toward redundant investment. Provincial and local officials seek to build their own industrial bases, which discourages cooperation and efficiency. Although the Communist Party can remove millions of people to clear the path for construction projects, it can’t enforce dictates on the environment or excess development. There are too many interests, according to Dr. Smith:

“[M]inisterial officials, provincial governors, local officials, and SOE bosses mostly need not worry. Why is that? How is it that a highly centralised neo-totalitarian police state cannot force its own subordinate officials to obey its own orders, laws, rules, and regulations? This is a most interesting question. The answer, I suggest, is to be found in the collective nature of China’s ruling class. Beijing can’t systematically enforce its writ against resistance from below because it can’t systematically fire subordinates for insubordination: they’re not just employees, as in capitalism. They’re Communist Party members, members of the same ruling class as the leaders in Beijing.

If you’re head of a ministry or an SOE, especially a big ‘national champion’ SOE that Beijing wants to forge into a world-beating industrial competitor, then Beijing is willing to overlook your pollution. … China’s coal and oil ministries and its giant SOEs are very powerful and profitable, with millions of party bureaucrats and employees. Heads of large SOEs have ministerial rank. Of the 120 SOEs directly managed by the central government, fully fifty-four heads of those firms enjoy ministerial rank. They like things the way they are and they intend to keep them that way.” [page 16]

China’s de-centralized administration leaves each province striving to achieve as high a measure of self-sufficiency as possible. This includes energy, meaning that energy is produced for local consumption, and not necessarily in an economically rational manner:

“In 2015, China spent a record $102 billion on wind, solar, geothermal, and other low- or no-carbon renewable energy. Yet in 2016 wind turbines produced just 4 percent of China’s electricity generation, and solar barely reached 1 percent. By comparison, the US invested just $44 billion in 2015 but in 2016 wind produced 6.9 percent of its electric generation — nearly double China’s production with less than half the investment. The reason China produces so little renewable energy despite all the investment is that so much of its renewable energy is ‘curtailed’ (wasted). Nationally, the government concedes that about 21 percent of wind energy is curtailed, as much as 40 percent in some provinces and even more than 60 percent in Xinjiang (ironically, the province with the most installed wind power).” [page 22]

Enough housing for half the world’s population

That investment will continue at a breakneck pace is exemplified by news that when all the plans for new housing are added up, there will be enough housing in China for 3.4 billion people by 2030, which an article reporting this in Shanghaist dryly notes “seems a tad excessive.” The source of this overdevelopment, Shanghaist reports, is “more than 3,500 county-level new urban areas planned by local governments.”

Just one project, the Xiongan New Area, will cover an area three times the size of New York City, The Guardian reports. This planned city, near Beijing, set off a real estate frenzy so intense that it was said to create gridlock on roads leading to the area, and land prices were reported to have doubled in hours after the government announced its plans. And of course Chinese investment is not limited to within its borders. People’s Daily Online estimates that as of 2016, approximately 30,000 Chinese companies had invested $1.2 trillion in China’s “One Belt, One Road” infrastructure initiative.

People’s Grand Hall in Chongqing (photo by Chen Hualin)

Private profit, and all the problems that revolve around that, has become the driving force of the Chinese economy. Timothy Kerswell and Jake Lin, in their recent Socialism and Democracy article, “Capitalism Denied with Chinese Characteristics,” noted that SOEs operate like like private firms and are controlled by “a handful of wealthy businessmen and executives, who mostly are the [party] princelings and their families.” By the early 21st century, they wrote:

“Urban China had gone from a highly protected ‘iron rice bowl’ system that guaranteed state workers’ permanent jobs, cradle-to-grave benefits — and a relatively high degree of equality — to a market-determined contract-based employment system at its core, and massive informal and unprotected sectors at its periphery.” [page 45]

Land speculation on the part of local governments is rapidly paving over farmlands, another contributor to global warming. Land sold to commercial interests can be 40 times higher than what is paid to farmers, Dr. Kerswell and Dr. Lin write:

“In many respects, urbanization in China can be understood as the process of local government driving farmers into buildings while grabbing their land. The pseudo-collective-ownership of rural land has also increasingly become a front for rural cadres’ rampant corruption and cronyism in pursuit of personal interest in the process of transferring use rights. From 2005, surveys have indicated a steady increase in the number of forced land requisitions, and about 4 million farmers were losing their land annually.” [page 39]

Incentives for more investment, more global warming

This is not a system that is going to give priority to the environment. And because so much of China’s sweatshop-based economy is built on assembling parts made elsewhere into final products — first the parts are shipped from around the world and then the final product is sent elsewhere as well — the transport inherent in these global production chains hugely contributes to pollution and global warming. So however much we might quibble with Dr. Smith’s characterization of SOEs, he is quite correct that all incentives are for China’s contribution to global warming to continue to increase and thus Beijing can not contribute to reversing global warming and future environmental collapse.

There is no substitute to consuming less. Dr. Smith concludes his paper with these lines:

“[T]he only way to effectively meet the climate emergency we face is with an emergency shutdown of useless, superfluous, unnecessary and harmful industrial production around the world, but most particularly in China and the United States, the biggest polluters. … If the Chinese don’t organise a rationally managed retrenchment and shutdown of unsustainable industries, Mother Nature is going to shut those industries down for them and in a much less pleasant manner. There’s no way around this very inconvenient truth: Making too much staff has to stop.” [page 27]

Not that Beijing should be asked to shoulder all blame. Western multi-national corporations willingly moved their production to China, greatly adding to global warming. Nor should Western capital’s role in facilitating Chinese projects be soft-pedaled. The World Bank provided loans for the Three Gorges Dam project that displaced 1.3 million people, and Canadian, French, German, Swiss, Swedish and Brazilian capital were also necessary to build the dam.

It’s hard to avoid the argument that the Western peoples were allowed to enjoy highly consumptive lifestyles, and it would be unfair to force lower living standards on those in the global East or South. That is a reasonable argument. But we only have one Earth, and humanity is consuming resources far beyond sustainability — at the rate of 1.6 Earths. If the entire world consumed at the rate that the U.S. does, we’d need four Earths. (Kuwait is tops in this category, with a ratio of 5.1 Earths, followed by Australia at 4.8.)

Such consumption is quite impossible in the long run. Those living in the advanced capitalist countries are going to have to consume much less. Yet that is impossible in a global economic system that requires growth, and will not provide jobs for those dependent on polluting industries. Industrializing the solar system, even if that proves possible, would only delay the inevitable. We can have a sustainable future with production geared toward human need, or we can continue to produce for private profit until we find out the hard way that you can’t eat money.