Any way you calculate it, income inequality is getting worse

A flurry of new reports have provided yet more data demonstrating that inequality is getting worse. All right, this does not qualify as a shock. But it really isn’t your imagination.

The economic crisis, nearly a decade on now, has been global in scope — working people most everywhere continue to suffer while the one percent are doing just fine. One measure of this is wages. A newly released report by the Organisation for Economic Co-operation and Development finds that median wages in the OECD’s 35 member countries are still below where they were in 2007. For the bottom 10 percent of wage earners, the news is worse; wages for this bottom decile have declined 3.6 percent since 2007. But wages have risen for the top 10 percent.

Graphic via the Institute for Policy Studies

Graphic via the Institute for Policy Studies

The report on wage inequality by the OECD, the club of the world’s advanced capitalist countries and a few of the biggest developing countries, also found that inequality has increased in most of those countries. No part of the world has been immune. The report, “Income inequality remains high in the face of weak recovery,” states:

“The crisis has not only heavily affected the number of jobs but also their quality. … Even in countries where labour market slack has been re-absorbed, low-quality jobs and high disparities among workers in terms of work contracts or job security weigh heavily on low-earning households and contribute to maintaining high levels of income inequality. Wages have stalled in most countries, including those that were largely spared by the recession (e.g. Japan) and fallen in those hard hit (e.g. Greece, Portugal, Spain, and the United Kingdom).”

Chile and Mexico are the most unequal countries among the OECD members, followed by the United States, as measured by the gini coefficient. Iceland, Norway and Denmark are the least unequal. (The gini coefficient, the standard statistical measure of income distribution, is equal to zero if everybody has the same income and to one if a single person takes all income.) To put that scale into some tangible form, Iceland’s gini coefficient is 0.24 and Chile’s is 0.46.

Global inequality worse than any country’s

The world’s most unequal country is South Africa at 0.65. Calculating this scale on a global basis gives a better idea of the scale of inequality but is a difficult statistic to find. One measure, as calculated for a United Nations Food and Agricultural Organization paper, estimates the world gini coefficient in 2005 was 0.68, significantly higher than in the 19th century but a bit lower than it had been in 1981. That’s higher than South Africa. The Economist, crunching data from several sources, estimates a global gini coefficient of 0.65 in 2008, a very slight dip from the 1980s peak.

Global inequality has very likely worsened since but no more recent statistics appear to be available.

Rising inequality has been particularly acute in the global center of world capitalism, the United States, and a quick examination of trends there are useful as capitalists elsewhere seek to emulate the new U.S. gilded age. Those at the top of the pyramid are grabbing ever more. The Economist reports:

“Including capital gains, the share of national income going to the richest 1% of Americans has doubled since 1980, from 10% to 20%, roughly where it was a century ago. Even more striking, the share going to the top 0.01%—some 16,000 families with an average income of $24m—has quadrupled, from just over 1% to almost 5%. That is a bigger slice of the national pie than the top 0.01% received 100 years ago.”

Another new study, by economists Thomas Piketty, Emmanuel Saez and Gabriel Zucman, found that the average pre-tax income of the bottom 50 percent of U.S. adults is flat since 1980 in inflation-adjusted dollars — and this includes government transfers, other public spending and the value of job-derived fringe benefits — and thus the share of national income going to the bottom half of United Statesians declined to 12 percent in 2014 from 20 percent in 1980. The top one percent, meanwhile, hauled in 20 percent of income in 2014. Another way of looking at this inequality, the authors write, is that the top one percent of U.S. adults earned on average 81 times more than an adult in the bottom 50 percent. This ratio was 27 times in 1980.

The top of the pyramid does well around the world

To zero in on the tip of the pyramid, the U.S. Internal Revenue Service released a report this month on the 400 tax returns showing the highest incomes reported to it. Those 400 taxpayers reported an aggregate income of $127 billion in 2014 — a fourfold increase in inflation-adjusted dollars since 1980. Those 400 taxpayers by themselves accounted for 6 percent of all interest income and 11 percent of all capital gains (profits from financial assets such as stocks and bonds). To put that in perspective, 149 million tax returns were filed in the U.S. in 2014. Stock-market bubbles and other forms of financial speculation truly are the province of the super-wealthy.

In Canada, Statistics Canada reports that, in 2013, the top one percent grabbed 10.3 percent of income; the average Canadian in this grouping received $450,000 that year. In Britain, the top one percent have doubled their income since 2005, collectively adding another £250 billion to their wealth. Meanwhile, a fifth of Britons live below the poverty line and life expectancy in some areas is lower than in many developing countries, The Independent reports. Australian inequality has not yet reached the above levels, but is getting wider — the percentage of total Australian income grabbed by the top 0.1 percent there has more than doubled since 1980.

Again, nothing here is going to make you fall off your chair in shock. The question becomes: What will we do about all this? This is the internally logical result of the development of capitalism — the upward distribution of income as exploitation accelerates through work speedups, layoffs, movement of production to low-wage havens and the panoply of deregulatory measures resulting from corporate capture of governments.

So-called “free trade” agreements, with their use of clauses enabling multi-national corporations to use secret private tribunals controlled by their lawyers to overturn laws they don’t like, are an exemplary example of the processes used to ratchet up inequality, even if but one of many manifestations. Capital is international and our resistance to it must be international as well. The rise of far right and even fascist movements across Europe and in the United States, decked in the cloaks of nationalism and fake populism, is all the more dangerous because the scapegoating that is always front and center in such movements deflects attention from the real problems.

If the beginning of the end of capitalism is upon us — admittedly something that none of us can yet be certain of — then the need to build movements that can move societies toward a better world is all the more a necessity. Even if the final decay of capitalism has arrived, that decay is likely to unfold over decades unless a global Left movement, uniting the variety of social and environmental movements and struggles across borders, can speed up the process. The only alternative is for inequality to get worse and the repression necessary to impose that inequality to get still more severe.

Conceptualizing cooperatives as a challenge to capitalist thinking

As capitalism lurches from crisis to crisis, and a world beyond capitalism becomes a possibility contemplated by increasing numbers of people, finding a path forward becomes an ever more urgent task.

That path is likely to contain a multitude of possibilities and experiments, not all of which will prove viable. Psychological barriers will surely be a major inhibition to overcome; possibly the biggest roadblock given the still ubiquitous idea of “there is no alternative” that has survived despite growing despair at the mounting inequality and precarious futures offered by capitalism. In short, a viable alternative to the capitalist structure of enterprises and society is urgently necessary.

cooperatives-confront-capitalismCooperatives represent a “counter-narrative” to the idea, inculcated in us from our youngest ages, that a small group of bosses are naturally entitled to exert leadership and thus are the only people with the capabilities of running an enterprise, argues Peter Ranis in his latest book, Cooperatives Confront Capitalism: Challenging the Neoliberal Economy.* Putting to use his considerable knowledge of Argentine and Cuban cooperatives, and combining that with a challenging argument about the possibilities of worker cooperatives in the center of world capitalism, the United States, Professor Ranis argues that the cooperative form can indeed posit a challenge to capitalist hegemony.

In his opening chapter, in answering his own question “Why worker cooperatives?,” in the context of working people building a Gramscian “counter-hegemony,” he writes:

“This requires a working class movement that moves beyond wages, hours and working conditions and into the realm of owning and maintaining production that leads to controlling local economies that demonstrate working-class capacity for impacting on societal economies and, by extension, politics and the concomitant public policy. Cooperatives would, indeed, be the key ingredient to a proletarian hegemonic outcome. … What worker cooperatives provide is a counter-narrative to the one that assumes that only owners and managers can provide leadership and function effectively in the world of production.” [pages 15-16]

It is indisputably true that counterposing living examples of working people’s successful self-management is a prerequisite to breaking down current capitalist cultural hegemony. But, in contrast to more traditional ideas that state ownership should be the alternative, Professor Ranis argues that it is the cooperative form, because workers there assume all management functions, that can build an alternative. His argument, however, is not pollyannaish by any means — cooperatives face serious challenges at the hands of capitalist governments not to mention the direct hostility of capitalists themselves.

No easy path for Argentine cooperatives

For all the success of Argentina’s cooperatives in providing a better standard of living and vastly superior working conditions to their members, the road has been a hard one — and those cooperatives still constitute a minuscule portion of the Argentine economy. Moreover, not all those in Argentina who formed cooperatives necessarily wished to do so — converting the recovered factories into state-owned enterprises with worker control was often the original goal and in some cases that is still the hoped-for outcome. (Although at the moment, given the harsh neoliberal policies of the new government of Mauricio Macri, that is off the table for now.)

Cooperatives Confront Capitalism does not hold back from discussing the difficulties. These cooperatives formed when the former capitalist owners decided to close down production and/or had not paid the workers for long periods, sometimes months. Forced to take matters into their own hands, workers occupied their workplaces and physically defended themselves, with the help of the surrounding communities. Argentine law was not on their side — bankruptcy codes heavily favor creditors, assets are quickly sold and judges have too much arbitrary power. Nor is there a national law facilitating this process; a patchwork of provincial and municipal laws, with varying terms, prevail. New coops face difficulty obtaining loans and credit, and are often forced to pay for supplies in cash.

The taken-over Zanón ceramics factory, now known as FaSinPat, or Factory Without a Boss (photo by Guglielmo Celata)

The taken-over Zanón ceramics factory, now known as FaSinPat, or Factory Without a Boss (photo by Guglielmo Celata)

The route to survival for coops has been involvement with local communities, making donations, becoming involved in others’ struggles and fostering the idea that cooperatives can’t survive on their own but must be part of a struggle for socialism. Leaders are rotated, positions of day-to-day management have set terms and all major strategic decisions are made collectively in meetings of all members. Coop salaries are higher than salaries in capitalist enterprises and working conditions are far safer. This sense of solidarity is a principal — Professor Ranis quotes a leader at the FaSinPat ceramics plant (the former Zánon factory) in this way:

“When we have to support another struggle, we stop production because it is a social investment, a sowing that we reap in the future.” [page 66]

Thus struggle does not stop at the factory gates. Professor Ranis elaborates:

“The Zánon workers see their factory as being at the service of the community and not the market, and that attitude has been translated into countless acts of solidarity, for which they have been compensated by the community in five attempts by the provincial police to take over the factory. … They argue that an effective state must take responsibility for creating jobs while allowing workers to control production and extend its surplus to the whole community.” [page 68]

An easier path in Cuba?

Cooperatives have become a steadily growing experiment in Cuba. There, cooperatives have a firmer footing because they are being formed with government support. This, however, is mostly a top-down process, with most coops being formed at government insistence by converting state-owned enterprises. Cooperatives Confront Capitalism does not shy away from critiques of this process, noting the top-down decision-making, that although there is considerable input from below it remain consultative, and that bureaucratic barriers impede the formation of coops created from scratch.

The self-employed sector remains larger than the cooperative sector, and most Cuban workers continue to work in the state sector as the coops are concentrated in services. Professor Ranis also points out that inequality is returning to Cuba. Only some have relatives elsewhere who can send home remittances, and the re-sale of goods bought in the U.S. is highly profitable, and thus another source of inequality. The author argues that a movement from below is necessary to re-establish egalitarianism, especially as ration books are likely to be phased out for all but the poorest.

Nonetheless, he argues Cuban coops are a positive step forward and have a much better chance at success than do coops in Argentina or the United States. They are one of the best ways to democratize and de-centralize Cuban society, and also provides a path for fallow agricultural land to be put back into productive use. Neither private capital nor the state sector can meet workers’ needs; a worker-centered approach can defend against capitalist and state socialist forms, he writes.

Professor Ranis, in the middle of the book, makes a case for a great increase in the use of the cooperative form in the United States, where coops remain rare. Although most readers will likely find at least some of his prescriptions controversial, he does make them effectively. Arguing that capital that relocates should pay penalties for a “broken contract” with the local community, he calls for the use of eminent domain to block such moves. In what could be seen as a partial misstep, he argues that the controversial U.S. Supreme Court decision Kelo v. New London provides a legal precedent that can be used for worker and community benefit.

The argument for using eminent domain to take over enterprises that would otherwise be moved by their capitalist owners certainly is intriguing, and merits the exploration that Cooperatives Confront Capitalism provides. But an expansion of the Kelo decision runs the risk of becoming pyrrhic. The Supreme Court found constitutionally legal a plan by the city of New London, Connecticut, to tear down a neighborhood to build a speculative complex intended to attract shoppers and tourists; a move that backfired when the pharmaceutical company Pfizer did not in fact expand there but instead moved from the area.

The author paints the Kelo decision in a more positive light than merited by asserting that the city government had a well thought out plan that would have benefited the displaced community when in fact it was to benefit corporate interests. He also, without being specific, mentions a Brooklyn eminent-domain case as an example of positive development. I do not know what example the author had in mind, but the most prominent example of this activity in Brooklyn is the destruction of a neighborhood to build an unneeded basketball arena (there were already four in the metropolitan area) and luxury housing too expensive for the people of the surrounding area to afford. That is not the sort of “development” any community needs.

The creative use of eminent domain in the U.S.

Thus eminent domain risks being a tool for corporate plunder rather than the hoped-for tool to save jobs. Professor Ranis argues that the Kelo decision provides a legal cover for the taking of property for “the public good,” but doesn’t mention that the judge who wrote the decision, John Paul Stevens, was clearly uncomfortable and took the unusual step of advising state governments in how to circumvent the ruling. On the other hand, that such a decision went against the personal preferences of the ruling judges does admittedly boost the author’s argument that Kelo provides a possible route to expropriating runaway capitalists. In this reading, Kelo provides the legal basis for a government to take over an enterprise that would otherwise be moved and turn it into a cooperative, and should even become the “default option” to combat a closure.

Notwithstanding issues we might have with specific examples, the author does advance his case well:

“We need to use eminent domain for development purposes much as we use the legislative rights to tax and spend, zone for economic purposes, and regulate for consumer and environmental protections. … When workers occupy factories and enterprises they are not really taking something. They are trying to keep something that is already theirs, through their work, through their production of important goods and services, through allowing capital to be invested, and supplying the community with their taxes, their consumption expenditures and their everyday involvement in the civic life of their community.” [page 109]

Regardless of the route to their formation, government support and early subsidies are necessary for the coop sector to flourish. Such support is not currently the case; as an example, New York City provided $3 million in subsidies for 44 cooperatives while the New York state government gave $70 million to one capitalist aluminum factory to keep it from relocating. Without government help and access to low-interest credit, the odds of success are not high, given the capitalist headwinds that are inevitable, although the author notes that, for one example, Canadian coops survive at a higher rate than traditional enterprises.

But those that do make it provide a sterling example, superseding the “simplistic idea” that private property belongs only to the owner — “workers cannot be separated from the capital they produce.” [page 116] The book concludes with a call for “human development”:

“Cooperatives are basic to human development because their success depends on the emancipation of the whole worker rather than what the erstwhile capitalist wanted of them and determined for them.” [page 155]

However we might quibble with this or that specific passage, Professor Ranis has provided a well-reasoned argument for cooperatives as a form that shatters the tired, self-serving shibboleths of capitalism, when advanced in tandem with militant social movements at community and national levels. Demonstrating to ourselves that we can run the enterprises we work in is indispensable, and his book is thus a strong step forward.

* Peter Ranis, Cooperatives Confront Capitalism: Challenging the Neoliberal Economy [Zed Books, London 2016]

A basic income is less than meets the eye

A basic income — the concept of everybody getting a regular check from the government regardless of circumstance — is one of those ideas that sound wonderful on the surface but proves to be much less so once we examine the details.

An idea that seems to have gained more traction recently, a basic income is a liberal utopia. It even has its proponents on the Right, including Chicago School godfather Milton Friedman. That alone ought to require us to pause for thought.

A basic income, also sometimes called a universal income, can be defined as a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirements, paid on a regular schedule. Everybody gets this money, on top of their regular earnings.

Northern lights in Suomussalmi region, Finland (photo by Damon Beckford)

Northern lights in Suomussalmi region, Finland (photo by Damon Beckford)

That sounds good, doesn’t it? The devil, of course, is in the details. And, as just noted, a basic income has support from Friedman and hard-line libertarian outfits like the Cato Institute. Friedman gave a talk on this topic (he called his version a “negative income tax”) in 1968, in which he said:

“The proposal for a negative income tax is a proposal to help poor people by giving them money, which is what they need. Rather than as now by requiring them to come before a governmental official, detail all their assets and their liabilities and be told that you may spend x dollars on rent, y dollars on food, etc., and then be given a handout.”

Conservative economists, and certainly Friedman, who remains an icon of the hard Right, are hardly known for wanting government to help anybody (except capitalists). So what is behind this? We are talking here about the economist who helped military dictator Augusto Pinochet implement “shock therapy” in Chile, the result of which was the poverty rate skyrocketing to 40 percent while real wages declined by a third. One-third of Chileans were unemployed during the last years of the dictatorship and the privatized social security system was so bad for Chilean working people that someone retiring in 2005 received less than half of what he or she would have received had they been in the old government system.

And let us not forget the extreme violence that was required to implement Friedman’s neoliberal dreams, with the total of those killed, jailed, “disappeared” or forced into exile totaling tens if not hundreds of thousands. Friedman claimed that he gave only “technical economic advice” and that Chile’s economic and political policies were totally separate, but also wrote that people who demonstrated in favor of human rights at his speeches were “fanatics.”

A back door to cutting services and wages

A basic income is popular among some right-wing economists because such an income would replace social services and provide a subsidy to employers who pay wages below a living level. The Marxist economist Michael Roberts puts this plainly:

“[P]aying each person a ‘basic’ income rather than wages and social benefits is seen as a way of ‘saving money,’ reducing the size of the state and public services — in other words lowering the value of labour power and raising the rate of surplus value (in Marxist terms). It would be a ‘wage subsidy’ to employers with those workers who get no top-up in income from social benefits under pressure to accept wages no higher than the ‘basic income’ which would be much lower than their average salary.”

Although it would likely be difficult for capitalists to force down wages on current employees remaining in their jobs in the short term, a basic income would enable bosses to cut pay to new hires. A prospective employer could easily offer reduced wages on the basis that the prospective employee already has financial support via the basic income. Few interviewers would likely say that so blatantly, but “market pressure” would cut the price of labor, which would remain a commodity in a fully capitalist economy. With starting wages offered to new employees reduced, eventually pressure would build on longer-term employees to accept wage cuts, too.

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

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

Already, low-wage employers like Wal-Mart receive massive subsidies that enable it both to rack up gigantic profits and pay its workers wages below subsistence levels. The spectacle of Wal-Mart workers holding food drives so they can eat might well be replicated on a much larger scale when the basic income proves to be worth less than the value of unemployment benefits and other social-welfare programs, combined with downward pressure on wages.

The Socialist Party of Great Britain notes that unions would not be able to counteract such downward pressure on wages:

“Unions do have some power, but it is limited to working with favourable labour market forces to get higher wages and better working conditions. When, however, labour market conditions are against them the most they can do is to slow down the worsening of wages and working conditions. If all workers got a basic income from the state of £5000, let alone £10,000, a year, this would change labour market conditions in favour of employers. In pay negotiations they would point to the state payment as evidence that they did not need to pay so much in wages or salaries to maintain their employees’ accustomed standard of living. The workers and their unions would realise this and the negotiations would be about what the reduction in wages and salaries should be.”

It won’t make capitalism kinder or gentler

Bargaining over wages in the best of times is no more than negotiating the terms of your exploitation. “Market forces” — which are nothing more than the aggregate interests of the largest industrialists and financiers — will operate just as pitilessly with a basic income because neither a basic income nor collective bargaining over wages touches in any way the social relations of capitalism. A capitalist’s profit derives from paying employees a fraction of the value of what they produce; the inequality that results from that (and the relentless competitive pressure on capitalists to expand on pain of dying) will exist as long as capitalism exists. A basic income would have no effect on this.

A basic income bears some resemblance to the concept of “block grants,” a particular obsession with right-wing politicians in the United States. Block grants are money that would be handed to lower levels of government by the federal government to be dispersed as local officials wish with no accountability as a substitution for money that is ear-marked for specific social programs. These are continually proposed as a back door to dismantling social programs. Similarly, a basic income would be a cash transfer for recipients to pay for whatever services or needs they might have in a private market system, assuming they have adequate total income to obtain it, rather than having services provided for free or at subsidized cost as a public service on the basis of need, as a civilized society ought to do.

The use of the “market” to determine social outcomes would only increase. In other words, more neoliberalism! More people being unable to meet their basic needs would result as wealth would become more of a determinant of results.

Demonstration for a basic income in Berlin, November 2010 (photo by "PD")

Demonstration for a basic income in Berlin, November 2010 (photo by “PD”)

It is also argued that a basic income could disproportionally affect women. The feminist economist Barbara Bergmann countered advocates of basic income who argue that such payments would enable parents to stay home with young children by pointing out that women disproportionally are the stay-at-home parents, to the detriment of their long-term earning potential. Thus a basic income would make women more dependent, not less, she wrote:

“Many if not most employers have come to see women as likely to be continuous labor force participants, not inevitably destined to leave the work force, and therefore as people worth training, worth putting into jobs leading to promotion, worth considering for promotion. This kind of progress would be reversed if a higher proportion of women withdrew from the labor force when their first child was born. For this reason, the full-blown implementation of Basic Income schemes in the near future should not appeal to those for whom gender equality is an important goal.”

Nor would the weakening of health care systems that would be a likely result of cutting social services do any better in fostering equality. Professor Bergmann wrote:

“Both the welfare state and Basic Income reduce inequality of condition. But the welfare state does so with greater efficiency, because it takes better account of inequalities due to differences in needs. If I need an expensive operation and you don’t, giving both of us a Basic Income grant will not go far to make our situations more equal. Only the provision of health services has the chance of doing that.”

Would governments really increase spending?

Those who advocate for a basic or universal income do so on the basis of affordability — there would not be a strain on the treasury, presumably because a spur to consumer spending would boost the economy. But is this so? A hard look at the numbers is not encouraging.

In all types of capitalist societies, from the neoliberalism of the United States to the social democracy of Sweden, the costs of a basic income would far outstrip current spending on social welfare programs.

In the U.S. an annual figure of $10,000 is often bandied about as the appropriate level for a basic income. If this sum were paid out to every U.S. adult, it would cost about $2.4 trillion. That total vastly outstrips current spending on social programs. A Wall Street Journal analysis (hostile to a basic income for the expected conservative reasons) suggests that scrapping income support for the poor, disabled and unemployed, and eliminating veterans’ benefits, Medicaid, Medicare and other health care subsidies would save a composite $1.5 trillion — and likely be quite unpopular.

It could be argued, as the Journal wouldn’t, that money for a basic income could come instead from other sources, such as eliminating massive corporate subsidies, drastically cutting the military budget and even printing money to go toward people instead of the trillions of dollars conjured out of thin air by central banks for “quantitative easing” programs that do little other than fuel stock-market bubbles and inflate speculators’ assets. But for that to happen an immense popular movement would be required, and the enormous effort that would be poured into such a movement would better direct its energies to much more thorough-going changes.

Thus, realistically, a basic income that could hardly be lived on (likely far less than $10,000 annually for United Statesians if it actually came into existence) would be paid for by an effective elimination of the remaining social safety net. Hardly a desirable outcome.

No better prospects where the safety net is stronger

This dynamic would hold in countries with better safety nets. In Canada, a basic income of $10,000 per person would cost 17 percent of Canadian gross domestic product, more than twice what all levels of government in Canada spend on social benefits. Toby Sanger, a Canadian economist who works with unions, argues that any basic income, due to its expense, would soon cease to be universal. He writes:

“Any fiscally sustainable basic income program with an adequate level of benefits would need to be income tested or subject to relatively high clawback or tax rates and so wouldn’t end up being universal and unconditional.  While such a program would be fiscally feasible, it would be subject to many of the same problems with the existing social assistance system that many basic income advocates want to escape.”

Simply instituting a basic income, even if it were fiscally possible, in itself doesn’t address the structural causes of poverty. Mr. Sanger writes:

“While lack of financial resources is of course a primary aspect of poverty, simply providing more money won’t eliminate poverty alone. Social exclusion, inadequate access to education, public goods, opportunities, networks, lack of political influence and many other factors contribute to a persistent of poverty. Systemic racial, gender, class, and ability-based discrimination have resulted in higher rates and a persistent of poverty among women, racialized Canadians, Aboriginal peoples, differentially abled and among those whose families were poor.”

Even a country with generous social-welfare programs like Sweden would find the institution of a basic income difficult. Professor Bergmann calculated that sending a basic-income check equal to a poverty-line income to all Swedes not already recipients of government programs would require about 15 percent of gross domestic product. Doing that, while retaining current benefits, would require higher taxes. As a result:

“[I]f an extra 15 percent of GDP were added to cash payments by government to households, those extra funds would have to be taxed away from households’ wage and property income now devoted to buying consumer goods, now 32 percent of GDP, leaving households just 17 percent of GDP as their net reward for their participation in the production of the entire GDP. That could hardly be tolerated.”

A previous experiment in Canada

Advocates of a basic income often point to the experiment conducted in Dauphin, Manitoba, in the 1970s. A University of Manitoba economist, Evelyn Forget, recently studied the results (a new Conservative government ended the program and the intended government study was never performed) and found positive results. Hospitalization rates declined, more adolescents stayed in school and workforce participation remained steady.

But the experiment in Dauphin, a town of about 12,000 people, wasn’t actually a basic income. There was an income eligibility rate, meaning that only about 30 percent of the town residents actually got a check. A family of four could receive $15,000 per year on top of whatever benefits were already in place. So this was a case of living in a lucky spot.

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

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

The province of Ontario, under a Liberal administration, announced this year that it would conduct an experiment in a basic income, to be conducted in selected towns to be determined. But the provincial government has hinted this may be intended as a way of reducing benefits. Its explanation in the budget for this proposal states: “The pilot would also test whether a basic income would provide a more efficient way of delivering income support, strengthen the attachment to the labour force, and achieve savings in other areas, such as health care and housing supports.”

Finland is going forward with its own experiment. The Finnish Ministry of Social Affairs and Health is soliciting input on a program that would provide €560 per month tax-free to 2,000 people in a mandatory test case that would run in 2017 and 2018. The ministry, in a press release, first states it seeks to determine if a basic income would “promote employment,” but then hints at a desire to cut benefits:

“The basic income experiment is one of the activities aiming to reform social security so that it corresponds better to the changes of working life, to overhaul social security to encourage participation and employment, to reduce bureaucracy, and to simplify the complicated benefits system in a sustainable way regarding public finances.”

We live under capitalism, and we don’t get something for nothing, regardless of advocates issuing statements calling for a basic income without any cuts to existing benefits. The measures of democracy and social welfare that have been obtained are a direct result of social movements and the work of activists. They are not gifts handed down to us.

Liberals and social democrats ought to be careful for what they wish. Our energies can better go toward the creation of a sustainable economy that provides for human needs with jobs for all who need them, rather than begging for extra crumbs (that might turn out to be fewer crumbs) from capitalists’ tables.

The crises of neoliberalism won’t be solved by more neoliberalism

We’re in a world of trouble if we are unable to conceive of alternative economic models. We need not linger on the details of rising inequality, political instability, tightening corporate control of governments, looming environmental crisis, increasingly precarious employment (if even available) and the inability to meet the basic needs of billions of people around the world to see that capitalism is failing humanity.

To put this in a nutshell, on a global basis, about 200 million people are unemployed among 2.4 billion who have no stable employment.

Neoliberalism is not a virus foisted on the world by some secret cabal; it is merely the latest phase of capitalism, one that, from the standpoint of capitalists, is the logical outgrowth of the breakdown of mid-20th century Keynesianism. We’re not going back to Keynesianism, because that was a brief period dependent 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 into which the capitalist system can expand.

What happens to rain forests when the market is allowed to decide. (Photo of Montane Rainforest in Ecuador by Gunnar Brehm)

What happens to rain forests when the market is allowed to decide. (Photo of Montane Rainforest in Ecuador by Gunnar Brehm)

So when I saw a paper titled “Industrial policy in the 21st century: merits, demerits and how can we make it work” in the latest issue of Real-World Economic Review, I was intrigued. As its title implies, Real-World Economic Review specializes in papers by economists who think far outside the orthodox box that serves industrial and financial elites very well; the very fact that a field requires a publication with such a title speaks for itself.

The disappointing prescriptions offered in the paper, however, might at best be described as “neoliberal lite.” The author of “Industrial policy in the 21st century,” Mohammad Muaz Jalil of the NGO Swiss Foundation for Technical Cooperation, is well-intentioned, but advocates the same export-oriented policies that have led to sweatshops and dangerous working conditions across the developing world. It also implies endless growth, a dangerous illusion.

More of the same hardly seems a likely escape, and that is before we contemplate the mathematical impossibility of every country exporting its way out of economic difficulty. For every country that achieves an trade surplus, some other country has to have a trade deficit.

What works for a few doesn’t work for all

Mr. Jalil begins by noting that East Asian countries used industrial policies, including protectionist policies, to build their economies, most notably Japan, South Korea, Taiwan and Singapore. He uses the Organisation for Economic Co-operation and Development (OECD) definition of industrial policy:

“Industrial Policy is any type of intervention or government policy that attempts to improve the business environment or to alter the structure of economic activity toward sectors, technologies or tasks that are expected to offer better prospects for economic growth or societal welfare than would occur in the absence of such intervention.”

The above East Asian countries used various mixes of export-oriented growth strategies and protection for young industries. Favored corporations received export subsidies, reduced interest rates and preferential allocation of foreign exchange with the goal of these enterprises becoming competitive globally. Manufacturing in these countries started at a low level but steadily moved up the “value chain” — that is, they were able to produce increasingly sophisticated products.

Mr. Jalil does acknowledge some criticisms of this type of policy, noting the difficulty in foreseeing who or what will be the winners in the future, the much stiffer international competition of today, that international supply chains have become dominant, and that today’s severe global trade regime restricts the ability of governments to intervene. Governments today nonetheless use industrial policies, albeit within the so-called “Washington consensus” (which is really the “Washington diktat”) that imposes neoliberal policies around the world through the World Trade Organization and international lending banks controlled by the United States and to a lesser degree the European Union.

When we get to specific examples, the paper’s prescriptions rapidly break down. Mr. Jalil presents Brazil and South Africa as examples. Brazil is one of the world’s most unequal societies, and one with severe economic problems not likely to improve in the wake of the Brazilian Right’s soft coup against former President Dilma Rousseff. A weak currency, lack of growth, continuing inflation, huge piles of debt owed in dollars and euros, and local corporations saddled with debt and low credit ratings seems not a rosy picture. Poverty is widespread, and activists who challenge land owners who clear-cut rain forests are not infrequently killed.

South Africa has the most inequality of any country in the world. The African National Congress threw away its moral authority to implement its “Freedom Charter” upon taking power by negotiating away its economic control. The ANC took office handcuffed, and having tied themselves to financial markets, those markets applied further “discipline” by attacking the South African economy at the first sign of anything that displeased them.

South African workers, especially miners, are subjected to violence at the hands of the ANC government, abetted by ANC-aligned unions. More than half of South Africans live in poverty and the unemployment rate is 26.6 percent. This is an example to emulate?

Sweatshop advocates don’t have to work in them

Next up, the author promotes the Bangladesh garment industry as a success story! Well, for Wal-Mart and other global retailers who rack up enormous profits on the backs of sweatshop workers being paid starvation wages this is undoubtedly a success. But as a development strategy beneficial to working people? Let’s look at the evidence.

Bangladeshi garment workers can work 14 to 16 hours a day, some seven days a week. The minimum wage is little more than half of the minimum required to provide a family with shelter, food and education, according to the activist group War on Want. The Institute for Global Labour and Human Rights estimates that a worker in Bangladesh would have to labor 15 1/2 hours to buy a gallon of milk. In 2014, the Wal-Mart chief executive officer earned 24,500 times more than a Bangladeshi sweatshop worker. Yet despite repeated accidents resulting in mass deaths, little has changed.

The shipbuilding industry is also promoted as a route to prosperity for Bangladeshis. A key component of this industry is “ship-breaking,” whereby ships are driven onto land to be disassembled. The Institute for Global Labour and Human Rights reports that ship-breakers work 12-hour shifts, seven days a week, and are paid 30 to 45 cents an hour to perform a job “in which it is common for workers to be maimed or killed.” The ship-breakers are reported to live in crowded hovels, sleeping on concrete floors.

Ship-breaking in Chittagong, Bangladesh (photo by Naquib Hossain)

Ship-breaking in Chittagong, Bangladesh (photo by Naquib Hossain)

Nobody would choose to do such things except under the most dire deprivation. That such work is a route to sustainable development is a common trope of neoliberal apologists, but defies common sense in any humanistic context.

The author points to the increasing number of developing-country corporations among the world’s biggest, but those numbers are nonetheless still minuscule. In fact, the corporations of the Global North remain overwhelmingly dominant. A study by Sean Starrs in New Left Review found that, when the world’s industries are grouped into 25 broad categories, U.S. firms led in 18 and in 10 of those U.S. corporations hauled in at least 40 percent of the aggregate profits. Germany and Japan hold the lead in two other sectors.

In support of these prescriptions, Mr. Jalil argues that as countries move up the value chain, the next country can “take over” “entry” industries and begin its own ascent. But there is only so much productive capacity that the world can absorb — the idea that every country can become a manufacturer of the same high-end electronics equipment, for example, defies reality. It also ignores, again, that every country can’t be a net exporter. It also sidesteps the fact that China’s growth threatens to “crowd out” other competitors due to its massive size.

Minqi Li, in his book The Rise of China and the Demise of the Capitalist World Economy, argues that the huge mass of low-wage Chinese workers will drag down wage levels globally; the increase of industrialization in developing countries will lead to exhaustion of energy sources; and that ecological limits will force a halt to growth, fatal to a system dependent on growth. Professor Li argues that an upward convergence of wages around the world in present-day low-wage havens would significantly reduce capitalists’ profits.

In this scenario, capitalists would seek to cut wages in core countries to make up the difference, which in turn would trigger reductions in demand. Reduced demand would spell trouble for any export-oriented economy, especially as the ultra-low wages suppress domestic consumption.

Nor can sufficient jobs be created for the expanding population of farmers and others dispossessed from the countryside — Samir Amin calculates that even with an increase of seven percent in gross domestic product for the next 50 years, no more than a third of this population could find regular work. No such growth has ever occurred for such sustained periods.

Where is the second Earth going to come from?

Finally, all this imagined explosion of industry is predicated on endless growth. We live on a finite planet, and thus infinite growth is impossible. Consumption is already growing beyond Earth’s carrying capacity and the anthropogenic changes to the atmosphere have us dangerously close to the point of no return in terms of global warming. Humanity is currently consuming the equivalent of 1.6 Earths, and at current rates of consumption trends, that will rise to two Earths by the 2030s.

Not a substitute for Earth (Image created by NASA via Hubble Space Telescope)

Not a substitute for Earth (Image created by NASA via Hubble Space Telescope)

Ramping up ever more production, even assuming that markets could be found for it, can not be a long-term solution for poverty. Managers of corporations are answerable to private owners and shareholders, not to society, and thus do all they can to externalize environmental and other costs onto society. Alas, renewable energy is not a short cut to reversing global warming. Renewable energy is not necessarily clean nor without contributions to climate change (the production of wind turbines and electric cars lead to plenty of pollution), and the limits that living on a finite planet with finite resources presents are all the more acute in an economic system that requires endless growth.

Finally, the belief that industrial policy can create prosperity is predicated on developing countries having the independence to implement protectionist measures. Mr. Jalil argues that the poorest countries have temporary reprieves from World Trade Organization rules until the end of this decade, but that they have room for maneuver is questionable at best. Not only WTO rules, but the bilateral and multilateral “free trade” agreements render such protections illegal. The Trans-Pacific Partnership, which includes several developing countries, would further restrict any ability to protect local industries — and the TPP is intended to be a model for other countries. (Although wounded, TPP is not dead yet because a two-year window has yet to expire.)

In a world where “free trade” agreements strongly constrict the ability of governments to enact laws and regulations, and which grant multi-national corporations the right to sue to eliminate any law they don’t like — in essence, a requirement that corporate profits trump any labor, safety, environmental or health measure — the road to becoming a net exporter will begin and end with sweatshops for most countries.

Low wages and a lack of enforceable regulations are precisely why multi-national capital is invested in developing countries like Bangladesh. The global “free trade” regime is nothing more than a mechanism for the most powerful industrialists and financiers of the Global North to accelerate a race to the bottom and increase their exploitation to the maximum humanly possible. That developing countries can win at this — or that the advanced capitalist countries will allow more competitors to arise — is fantasy. A neoliberal fantasy.

Mr. Jalil concludes with a call for private-sector funding able to “respond to diversity and dynamism inherent in markets.” Huh? Markets in the capitalist world are nothing more than the aggregate interests of the largest industrialists and financiers — allowing markets to make an ever wider range of social decisions is what has led the world to its impasse and ever harsher austerity for working people. Neoliberal capitalism may teach that people exist to serve markets, but we don’t have to accept that.

The belief that private funding — which, after all, is done to extract profit regardless of social or environmental cost — will make us live happily ever after should be left to the realm of fairy tales. As the saying goes, insanity is believing that doing the same thing over and over again will produce different results.

We better not wait to defend ourselves from Trump

I didn’t see it coming, either. And a nasty surprise it is, for like Britain’s vote to exit the European Union, the vote for Donald Trump was a huge step forward for the far Right despite whatever attempt there was to strike back against elites, however incoherently.

Perhaps we should never under-estimate the Democratic Party’s ability to snatch defeat from the jaws of victory. Before we dwell on the backlash, a quite possibly violent backlash, sure to come down on the heads of activists, there are two unanswerable questions to ask.

First, what would have happened if Bernie Sanders had been the Democratic standard-bearer instead of Hillary Clinton? Polling during the primary season consistently showed Senator Sanders doing much better than Secretary Clinton in theoretical head-to-head general-election match-ups. There are many who believe the former would have so slandered as a “socialist” that he’d have had no chance, but the power of that word to be a bogey is waning, particularly among younger voters. He described himself a “socialist” (even if he’s not) during the primaries as well.

A rally against Donald Trump in New York City on March 19, organized by the Cosmopolitan Antifascists

A rally against Donald Trump in New York City on March 19, organized by the Cosmopolitan Antifascists

Mr. Trump did not win with only White supremacists, tea partiers and the rest of the Republican base. He wouldn’t have won without the surge of support he received, particularly in the Midwest, from people who were just plain old pissed off and wanted a change, any change. Many of these voters would likely have gone to Senator Sanders as the vastly more rational and coherent candidate. Secretary Clinton was the embodiment of the establishment in a year when elites are in the cross-hairs. Misogyny surely played a significant role here as well, and perhaps that in itself was enough to make the difference.

Second, did Mr. Trump actually win? Let’s ask this question seriously. Many states use unaccountable electronic voting machines with no paper trail, and these are mostly supplied by a small number of manufacturers who closely guard the software code. Mark Crispin Miller, in his book Fooled Again: How the Right Stole the 2004 Election amassed a wealth of detail to argue that George W. Bush’s re-election was stolen via voting machines in multiple states. Some of those machines are still in use. Then there were the attempts across the country to suppress voter turnout, in North Carolina and elsewhere.

Could a couple of percentage points here and a few percentage points there have tipped the difference in enough states? We’ll never have a definitive answer, but it might be said that if the race hadn’t been close, there would have been no opportunity for any such cheating, if it happened. In 2008 and 2012, were there any such tampering, the result would have been no more than a reduction in Barack Obama’s margin of victory.

The egomaniac and the thugs who follow him

Regardless, Donald Trump is president. I never imagined writing or uttering such words. His first target may well be the Republican Party establishment, against whom he is likely to wreak revenge for not supporting him. That, however, would provide no more than a brief respite. For we know who his real targets are — he made it abundantly clear throughout his campaign. And remember the thugs who hang out with him — the likes of Rudy Giuliani and Chris Christie.

A criminalization of dissent is coming our way, and if I had to guess Black Lives Matter is a likely candidate to be the first target. There will be many more, ranging across the spectrum of Left activism, from Dreamers to abortion-rights activists to environmentalists to organizers fighting racism and police brutality.

Make no mistake: Those on the Left who blithely declared Secretary Clinton and Mr. Trump the same, and maybe the former even a little worse, are likely to find otherwise. Secretary Clinton is a war-mongering Wall Street-pandering technocrat who, rightly or wrongly, accrues some of the fallout from her husband’s presidency, when he proved to be the most effective Republican president we ever had, implementing policies Ronald Reagan and George H.W. Bush could have only dreamed of doing. Of course she is no choice. But had she won as expected, the room of grassroots activity would have been larger than it will be under a Trump White House.

Given the enormous number of areas where vigorous defensive actions will be necessary, and the heavy police-state repression that is sure to rain down on dissenters, there will be little if any opportunity to go on any offensives.

Consider this statement by Black Lives Matter co-founder Alicia Garza, who said of the election: “I am not voting for candidates. I am voting for terrain.” National Women’s Liberation said: “Under Clinton the terrain will be difficult for us, as well as the targets of her hawkish foreign policy. To get the things women need, we need a lot more than a woman president, we need a strong movement making bold demands, much bolder than anything in Hillary’s platform. But making bold demands under a Hillary Clinton administration will be a lot more likely to build into a powerful, effective force than it will if Donald Trump is elected.”

Let’s not sugar-coat this: The next four years are going to be very dark. Although I wouldn’t call the Trump campaign fascist, I do believe we can see it as constituting the seeds for a potential fascist movement. That is more than scary enough — and that retrograde movement will now have the power of the state behind it.

The breakdown of an economic consensus

As awful as Secretary Clinton is, a Trump White House will be something beyond the ordinary neoliberal prescriptions. The first election I ever voted in was Ronald Reagan’s 1980 victory, one also unexpected. That had been a dead heat going into the final weekend, in days when polling was nowhere near as obsessive as today. I still remember the chill of horror that went down my back as I emerged from an event to look up at a television announcer proclaiming a “tidal wave of red” spreading across the map. I had not thought United Statesians would really vote for him, but they did, lulled to sleep by his ability to tell people what they wanted to hear, no matter how at variance with reality.

Looking back across the decades, as immediately disastrous as the Reagan years were, we could not grasp the enormity of what had happened: His election, along with Margaret Thatcher in Britain the year before, inaugurated a whole new era, one that would later be coined “neoliberalism” as the post-World War II Keynesian consensus definitively was brought to an end and class war sharply intensified. The world’s capitalists brought about this change in response to their no longer reaping the profits they were accustomed to in the 1950s and 1960s. Reagan and Thatcher were the human material embodying a new era and dragging the political sphere into a tighter domination by industrial and financial elites; an era when the traditional balance between industrialists and financiers was upended and financial capital gained the upper hand among elites.

Neoliberalism is now breaking down. Rosa Luxemburg’s formula looms large for us today: socialism or barbarism. Or call it a better, more democratic world or barbarism if you prefer. As neoliberalism begins to break down, and working people around the world increasingly chafe at their conditions, they are seeking to punish elites with whatever limited means they have. This justifiable anger could be channelled into organized activity, in which social movements cohere and join together to effect the structural changes that are necessary and eventually push toward a wholly different system.

In the absence of such movements or a coherent Left, the Right fills the vacuum, lashing out at scapegoats and seeking saviors in demagogues, even a demagogue whose real estate career is based on screwing working people like those who voted for him and not paying taxes, again unlike those who vote for him but have so much less.

The Right has the money, control of the corporate mass media, institutional support and vast means of decisively influencing opinion-making. Mr. Trump received more than a year of favorable publicity by the corporate media, but nonetheless his ability to bamboozle so many is a monument to the lack of education and anti-intellectualism that is so prevalent in the United States. Given his own ignorance and lack of any program beyond enriching himself, coupled with his open racism, appalling misogyny, virulent nationalism, shallowness, lack of maturity, thin skin, inability to empathize with other people, encouragement of violence against opponents, eagerness to give carte blanche to the police, encouragement of nuclear-weapons proliferation and outright denial of global warming, it is no stretch to declare Donald Trump the biggest danger we’ve ever faced in the White House.

Barbarism has become less theoretical. The time to begin organizing is now, before he takes office and command of the world’s most deadly security apparatus. We either demonstrate strong resolve against authoritarian rule, sure to be led by some of the most vicious right-wing operatives around, or a Trump White House is going to unleash repression on a scale not seen in decades. There is no more room for indulging ultra-left phrase-mongering: We have a clear and present danger. Stand up for whoever is first in line, for eventually they may be coming for you.

Work harder so speculators can get more

Class warfare is poised to reach a new milestone as this year’s combined total of dividends and stock buybacks by 500 of the world’s largest corporations will exceed US$1 trillion.

So large is that figure that, for the second year in a row, the companies comprising the S&P 500 Index (a list of many of the world’s biggest corporations) will pay out more money in dividends and stock buybacks than the total of their profits. Yes, times are indeed good for speculators. Not so good for employees — you know, the people who do the actual work — whose pay is stagnant or declining so that those at the top can scoop up still more.

Although dividends, a quarterly payment to holders of stock, are steadily increasing, the increase in stock buybacks has been steeper. The total of these has tripled since 2009 as financiers and industrialists feverishly extract as much wealth as they can. This is part of why the “recovery” since the 2008 economic collapse has been a recovery only for those at the top.

Times have not changed as much as we think they have ("Baskaks" by Sergei Vasilyevich Ivanov)

Times have not changed as much as we think they have (“Baskaks” by Sergei Vasilyevich Ivanov)

In short, a buyback is when a corporation buys its own stock from its shareholders at a premium to the current price. Speculators love buybacks because it means extra profits for them. Corporate executives love them because, with fewer shares outstanding following a buyback program, their company’s “earnings per share” figure will rise for the same net income, making them look good in the eyes of Wall Street. Remaining shareholders love buybacks because the profits will now be shared among fewer shareholders.

Wall Street and corporate executives both win! Hurrah! Who could by hurt by this? Oh, yes, the employees. They’ll have to suffer through pay freezes, work speedups and layoffs because the money shoveled into executive pay and financial industry profits has to come from somewhere. This sort of activity helps buoy stock prices. So does the trillions of dollars the world’s central banks have printed to sustain their “quantitative easing” programs.

We’re not talking loose change here. The U.S. Federal Reserve pumped $4.1 trillion into its three rounds of quantitative easing; the Bank of England spent £375 billion; the European Central Bank has spent about €1.34 trillion; and the Bank of Japan has spent ¥220 trillion so far. That’s a total of US$8 trillion or €7.4 trillion. And the last two programs are ongoing.

Encouraging investment or inflating bubbles?

The supposed purpose of quantitative-easing programs is to stimulate the economy by encouraging investment. Under this theory, a reduction in long-term interest rates would encourage working people to buy or refinance homes; encourage businesses to invest because they could borrow cheaply; and push down the value of the currency, thereby boosting exports by making locally made products more competitive.

In actuality, quantitative-easing programs cause the interest rates on bonds to fall because a central bank buying bonds in bulk significantly increases demand for them, enabling bond sellers to offer lower interest rates. Seeking assets with a better potential payoff, speculators buy stock instead, driving up stock prices and inflating a stock-market bubble. Money not used in speculation ends up parked in bank coffers, boosting bank profits, or is borrowed by businesses to buy back more of their stock, another method of driving up stock prices without making any investments.

The practical effects of all this is to re-distribute income upward. That is the raison d’être of the financial industry.

What else could be done with the vast sums of money thrown at the financial industry? In the U.S. alone, home to a steadily crumbling infrastructure, the money needed to eliminate all student debt, fix all schools, rebuild aging water and sewer systems, clean up contaminated industrial sites and repair dams is estimated to be $3.4 trillion — in other words, $700 billion less than the Federal Reserve spent on its quantitative-easing program.

The British think tank Policy Exchange estimates Britain’s needs for investment in transportation, communication and water infrastructure to be a minimum of £170 billion, or less than half of what the Bank of England spent on its QE scheme.

Borrowing to give more to speculators

To return to the $1 trillion in dividends and buybacks, a research report by Barclays estimates that those payouts by S&P 500 corporations will total about $115 billion more than their combined net income. As a Zero Hedge analysis puts it:

“[C]ompanies will promptly send every single dollar in cash they create back to their shareholders, and then use up an additional $115 billion from cash on the balance sheet, sell equity or issue new debt, to fund the difference.”

Near-zero interest rates, another central bank policy that favors the financial industry, have enabled this accumulation of debt. Debt not for investment, but simply to shovel more money into the pockets of financiers and executives. But debt can’t increase forever, and someday, perhaps in the not too distant future, central banks will raise interest rates, making debt much less attractive. The Barclays report calculates that 2015 also saw buybacks and dividends total more than net income; the last time there was consecutive years in which this happened were 2007 and 2008.

payouts-of-divdends-and-buybacksIt would of course be too simplistic to interpret this metric as a signal that an economic collapse on the scale of 2008 is imminent, but is perhaps a sign that the latest stock market bubble may be close to bursting.

Another signal that trouble may be looming is that money is now being shoveled into bonds, a sign that confidence in the stock market is waning. A New York Times report suggests that European and Asian investors (the Times of course is much too genteel to use the word “speculator”) are pouring so much capital into U.S. bond markets that a bubble is being inflated there as well. These speculators are seeking higher returns from bonds floated by U.S. corporations than they can get at home. The Times reports:

“The surge in flows echoes a wave of investment in the years right before the financial crisis, when mostly European investors snapped up billions of dollars of mortgage-backed securities before the American housing market imploded.

The current numbers are also arresting. According to [former Treasury Department official Brad W.] Setser’s figures, about $750 billion of private money has poured into the United States in the last two years alone.”

Starved for investment

Setting aside the touch of xenophobia in it, the Times report does at least broach the subject of under-investment. And wealthy investors possessing far more money than can possibly be invested is hardly an unknown phenomenon. As an example, let us examine Wal-Mart, which racked up more than $16 billion in net income for 2015 and seems poised to better that this year.

The Walton family, heirs to founder Sam Walton, owns about half of Wal-Mart’s stock and receive a corresponding share of the billions of dollars in dividends the company pays yearly. It also spends billions more buying back stock annually, an indirect help to the Waltons. This is a company notorious for dodging taxes while paying its employees so little they require government assistance, and is the recipient of vast amounts of government handouts.

The Waltons make tens of thousands times what their ill-paid employees earn. They certainly don’t work tens of thousands harder — or even work at all, as the billions roll in just for being born into the right family. Wal-Mart is far from alone, but does provide an exemplary example of class warfare. An estimated $1 trillion a year goes to corporate profits that once went to wages, according to a PBS Newshour report.

The harder you work, the more the boss, and financiers, make. What sort of system is this?

International tribunal seeks to build case against Monsanto

Monsanto is going on trial! Not, alas, in an official legal proceeding but instead a “civil society initiative” that will provide moral judgment only.

The International Monsanto Tribunal will conduct hearings in The Hague this weekend, October 15 and 16, and although not having legal force, its organizers believe the opinions its international panel of judges will issue will provide victims and their legal counsel with arguments and legal grounds for further lawsuits in courts of law. The organizers also see the tribunal as raising awareness of Monsanto Company’s practices and the dangers of industrial and chemical agriculture. The tribunal web site’s “Practical Info” page summarizes:

“The aim of the Tribunal is to give a legal opinion on the environmental and health damage caused by the multinational Monsanto. This will add to the international debate to include the crime of Ecocide into international criminal law. It will also give people all over the world a well documented legal file to be used in lawsuits against Monsanto and similar chemical companies.”

There certainly is much material on Monsanto, a multi-national corporation that has long sought to control the world’s food and which is able to routinely bend governments to its will.

March Against Monsanto in Chile (photo by Mapuexpress Informativo Mapuche)

March Against Monsanto in Chile (photo by Mapuexpress Informativo Mapuche)

For example, there was the “Monsanto Protection Act,” quietly slipped into an appropriations bill in 2013 that had to be passed to avoid a U.S. government shutdown, requiring the Department of Agriculture to ignore any court order that would halt the planting of genetically engineered crops even if the department were still conducting a safety investigation, and rubber-stamp an okay. This past July, a piece of legislation known as the “DARK Act” was signed into law by U.S. President Barack Obama that, under the guise of setting national standards, nullified state laws that mandate labeling genetically modified organisms (GMOs) in food and substituted a standard that makes it almost impossible for any GMO food to be so labeled.

Its reach by no means limited to its home country, Monsanto has pushed to overturn safety standards across Europe, and among the goals of the Transatlantic Trade and Investment Partnership is to reverse EU laws mandating GMO labeling and eliminate laws banning GMOs in food.

A long-term goal of ending corporate impunity

Because it is not possible to bring criminal charges against Monsanto, tribunal organizers say, it is necessary to initiate civil actions. They write:

“Critics of Monsanto claim that the company has been able to ignore the human and environmental damage caused by its products and pursue its devastating activities through a systematic concealment strategy through lobbying regulators and government authorities, lying, corruption, commissioning bogus scientific studies, putting pressure on independent scientists, and manipulating the press. Our endeavor is based on the observation that only through civic action will we be able to achieve compensation for victims of the American multinational.”

The tribunal organizers also recognize that a company like Monsanto does not exist in a vacuum, but rather is part of a larger system that is imperiling the world’s environment:

“Monsanto’s history is a paradigm for the impunity of transnational corporations and their management, who contribute to climate change and the depletion of the biosphere and threaten the security of the planet.

Monsanto is not the only focus of our efforts. Monsanto will serve as an example for the entire agro-industrial system whereby putting on trial all multinationals and companies that employ entrepreneurial behavior that ignore the damage wrecked on health and the environment by their actions.”

Tribunal will follow customary international law

Lawyers and judges from five continents will be involved in hearing evidence; they expect to hand down their legal findings in April 2017. Customary international law will be followed in all proceedings, tribunal organizers say:

“The Tribunal will employ as its legal guidelines: the UN Guiding Principles on Business and Human Rights, adopted by the Council of the UN Human Rights June 2011; the Rome Statute establishing the International Criminal Court (ICC) giving it jurisdiction to try alleged perpetrators of genocide, crimes against humanity, war crimes and crimes of aggression.

The UN Guiding Principles on Business and Human Rights is the international authority on the responsibilities of business with regard to human rights. The guidelines state that companies must respect all human rights, including the right to life, the right to health and the right to a healthy environment. They define society’s expectations vis-à-vis businesses. They will serve as the basis on which plaintiffs will build their case for demanding compensation from Monsanto for damage caused by the company’s activities. The Court will consider whether Monsanto’s conduct could be considered criminal pursuant to existing international criminal law, or under the law of ecocide, which is gaining support for consideration as an offence.”

Using international treaties as a basis for adjudicating these questions, the tribunal will focus on six topics:

  • The right to a healthy environment.
  • The right to health.
  • The right to food.
  • Freedom of expression and academic research.
  • Complicity in war crimes.
  • The crime of ecocide.

Monsanto has been invited to present a defense and supporting documents against any evidence presented against it. The company has declined to participate, calling the tribunal a “publicity stunt” by people “not interested in dialogue,” and saying it is “is not against organic agriculture” in a statement issued last December. In announcing its latest financial results earlier this month, it predicted “continued strong penetration of key soybean traits, global corn germplasm upgrades and spend discipline” for 2017. So no change in its behavior should be expected.

Monsanto wants to tell you what to eat

Monsanto’s march toward control of the world’s food supply is focused on proprietary seeds and genetically modified organisms. Standard contracts with seed companies forbid farmers from saving seeds, requiring them to buy new genetically engineered seeds from the company every year and the herbicide to which the seed has been engineered to be resistant.

monsanto-government-pipelineThe U.S. environmental group Food & Water Watch, in its report “Monsanto: A Corporate Profile,” summarizes the corporation’s power:

“Monsanto is a global agricultural biotechnology company that specializes in genetically engineered (GE) seeds and herbicides, most notably Roundup herbicide and GE Roundup Ready seed. GE seeds have been altered with inserted genetic material to exhibit traits that repel pests or withstand the application of herbicides. In 2009, in the United States alone, nearly all (93 percent) of soybeans and four-fifths (80 percent) of corn were grown with seeds containing Monsanto-patented genetics. The company’s power and influence affects not only the U.S. agricultural industry, but also political campaigns, regulatory processes and the structure of agriculture systems all over the world. …

Because of Monsanto’s market dominance, its products are changing the face of farming, from the use of Monsanto’s pesticides and herbicides, to the genetic makeup of the food we eat. … Monsanto has a close relationship with the U.S. government, which helps it to find loopholes or simply create regulations that benefit its bottom line. Monsanto and other corporations have increasingly funded academic research from public universities, which they use to justify their latest products. Monsanto’s international power has grown at an alarming rate, much to the dismay of developing countries that have inadvertently been exposed to its relentless business strategy. For all of these reasons, Monsanto has become a company that farmers and consumers around the world should fear.”

India has no laws Monsanto is bound to respect

Vandana Shiva, a member of the International Monsanto Tribunal’s steering committee, last year provided a case study in Monsanto’s practices with an examination of how it forced its way into India. The introduction of corporate agriculture has been so catastrophic in India that more than 300,000 farmers have committed suicide since 1995, with Dr. Shiva reporting that 84 percent of farmer suicides have been attributed to Monsanto’s genetically engineered cotton.

Baskets of many different kind of Brinjal (aka "Eggplant") put out by protesters during the listening tour of India's environment minister relating to the introduction of BT Brinjal. Spring 2010 in Bangalore, India. (photo by Infoeco)

Baskets of many different kind of Brinjal (aka “Eggplant”) put out by protesters during the listening tour of India’s environment minister relating to the introduction of BT Brinjal. Spring 2010 in Bangalore, India. (photo by Infoeco)

She explains what she calls Monsanto’s “outright illegality” in India as based on Monsanto claiming patent rights to its products even though patents on life forms are illegal in India; that its collections of royalties on unpatenable products have led to a wave of bankruptcies by farmers who struggle to survive in the best of times; and its “smuggling” of unapproved genetically modified organisms into India that “pose grave risks” to health. Dr. Shiva writes:

“India’s laws do not permit patents on seeds and in agriculture. But that hasn’t stopped Monsanto from collecting close to USD 900 million from small farmers in India, pushing them into crushing debt. This is roughly the same amount of money Monsanto spent buying The Climate Corporation — a weather big data company — in a bid to control climate data access in the future. … [L]ocal seeds used to cost [a tiny fraction of the cost of Monsanto’s seeds] before Monsanto destroyed alternatives, including local hybrid seed supply, through licensing arrangements and acquisitions.”

Local pests developed resistance to Monsanto’s GMO cotton, which releases toxins, forcing farmers to use more pesticides — an extra expense and environmentally destructive. Although this is bad for farmers, consumers and the environment, it is highly profitable for Monsanto. Dr. Shiva writes:

“Genetic engineering has not been able to deliver on its promises – it is just a tool of ownership. [Monsanto’s genetically modified] Bt Cotton is not resistant to Bollworm, RoundUp Resistant varieties have only given rise to super weeds, and the new promises being made by biotech corporations of bio-fortification are laughable. There is no benefit to things like Golden Rice. By adding one new gene to the cell of a plant, corporations claimed they had invented and created the seed, the plant, and all future seeds, which were now their property. Monsanto does not care if your cotton field has Bollworm infestations, just so long as the crop can be identified as theirs and royalty payments keep flowing in. This is why the failure of Bt Cotton as a reflection of bad science does not bother them — the cash is still coming into St Louis. At its core, genetic modification is about ownership.”

Farmers become Monsanto’s hired hands

Seeds containing genes patented by Monsanto, the world’s largest seed company, account for more than 90 percent of soybeans grown in the U.S. and 80 percent of U.S.-grown corn, according to Food & Watch Watch. Standard contracts with seed companies forbid farmers from saving seeds, requiring them to buy new genetically engineered seeds from the company every year and the herbicide to which the seed has been engineered to be resistant. Farmers have become hired hands on their own farms under the control of Monsanto.

Worse, Monsanto has agreed to sell itself to Bayer A.G., the German chemical conglomerate with its own history of abuse. Should regulators allow these two corporations to merge, it would create the world’s largest supplier of seeds and pesticides. Bayer’s chief executive officer, Werner Baumann, enthused that the proposed deal would “deliver substantial value to shareholders, our customers, employees and society at large.” That “value” for “shareholders” was mentioned first is all you need to know that profits and control are what this deal is really about.

What better monopoly could a corporation achieve than a monopoly in food? That has long been Monsanto’s goal, and a merger with Bayer would only tighten its grip. This is not reducible, however, to simple greed or evilness. Grow or die is the ever-present mandate of capitalism and one result of that tendency is the drive toward monopolization — a small number of enterprises controlling an industry. Just because food is a necessity does not mean it is exempt from capitalism’s relentless competitive pressures.

When “markets” are allowed to dictate social outcomes, actions like those of Monsanto are inevitable. Capitalist markets are nothing more than the aggregate interests of the most powerful industrialists and financiers. And they have no interest in you knowing what is in your food, or even that it is safe.