Has the IMF renounced neoliberalism? Well, not really.

Sound the alarms! Could the International Monetary Fund be reconsidering neoliberalism? Sadly, no, once we actually read the short document “Neoliberalism: Oversold?

The title certainly does grab our attention, and on the very first page, there is this highlighted passage: “Instead of delivering growth, some neoliberal policies have increased inequality, in turn jeopardizing durable expansion.”

Ah, but disappointment quickly sets in while reading the first paragraph, which purports to hold up Pinochet-era Chile as model “widely emulated across the globe,” including a mention of Chicago School godfather Milton Friedman proclaiming Chile an “economic miracle” in 1982. The actual record is not mentioned, nor is the little matter of military dictator Augusto Pinochet’s wave of terror that killed, imprisoned, tortured and imprisoned tens of thousands mentioned. Details in the eyes of the IMF, we presume.

The institution of neoliberalism in Chile, 1973: La Moneda, the presidential palace, is bombed (photo by Biblioteca del Congreso Nacional de Chile)

The institution of neoliberalism in Chile, 1973: La Moneda, the presidential palace, is bombed (photo by Biblioteca del Congreso Nacional de Chile)

In reality, Chile’s poverty rate skyrocketed to 40 percent under Pinochet, while real wages had declined by a third and one-third of Chileans were unemployed during the last years of the dictatorship. Unemployment figures do not include the many urban Chileans who worked as “car minders” earning small tips from waving orange rags at motorists pulling into parking spaces and taking the motorists’ coins to insert into parking meters, which Pinochet’s planning minister, a Friedman disciple, declared to be “a good living.” Lavish subsidies were given to large corporations, public spending was slashed and the social security system was privatized. 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.

Let us not forget the humanity of those whose lives were crushed by Pinochet and Friedman.

Pinochet's soldiers show what they think of literature (photo from CIA Freedom of Information Act via Wikimedia Commons)

Pinochet’s soldiers show what they think of literature (photo from CIA Freedom of Information Act via Wikimedia Commons)

Back to the IMF paper, which defines neoliberalism blandly as “deregulation” and “a smaller role for the state.” A far better definition of neoliberalism is provided by Henry Giroux:

“As an ideology, it construes profit-making as the essence of democracy, consuming as the only operable form of citizenship, and an irrational belief in the market to solve all problems and serve as a model for structuring all social relations.”

The authors of the IMF paper gingerly work themselves up to some mild critiques, lamenting that “The benefits in terms of increased growth seem fairly difficult to establish when looking at a broad group of countries” and that “The costs in terms of increased inequality are prominent.” Furthermore, the odds of an economic crash are raised, among other problems:

“Austerity policies not only generate substantial welfare costs due to supply-side channels, they also hurt demand—and thus worsen employment and unemployment. … [I]n practice, episodes of fiscal consolidation have been followed, on average, by drops rather than by expansions in output. On average, a consolidation of 1 percent of [gross domestic product] increases the long-term unemployment rate by 0.6 percentage point and raises by 1.5 percent within five years the Gini measure of income inequality.”

Decades of stagnant wages, hollowing out of manufacturing bases and steadily increasing inequality, augmented by unsustainable stock-market bubbles and capped by eight years and counting of economic downturn and stagnation, and that is the best the IMF can do? The paper concludes with this passage: “Policymakers, and institutions like the IMF that advise them, must be guided not by faith, but by evidence of what has worked.”

The belief in neoliberalism and austerity, or supply-side economics, or Reaganism, or Thatcherism (whatever we want to call it) has always been based on faith, at least on the part of some of those who promote it. For many other financiers and industrialists, it surely is the case is they knew just what was going to happen and cheered it all the way because they were going to benefit handsomely. Economics may be the dismal science, but dismal though classical economics is, it is far more art than science, as in the art of fleecing.

Millions for the boss, cuts for you

More is never enough. By now we really don’t need yet another statement of inequality, but here goes anyway: The average ratio of chief executive pay to employee pay has reached 335-to-1 in the United States.

And some of the highest paid CEOs were at the companies that stash the most money in overseas tax havens. Among the giant corporations that comprise the Standard & Poor’s 500, the 25 at the companies with the most unrepatriated profits hauled in 79 percent more than other S&P 500 chief executive officers, reports the AFL-CIO union federation’s Paywatch 2016 report. Just 10 corporations — Apple, Pfizer, Microsoft, General Electric, IBM, Merck, Cisco Systems, Johnson & Johnson, Exxon Mobil, and Hewlett-Packard successor HP Inc.  — are believed to be holding about $948 billion in accounts outside the reach of tax authorities.

Being at the top of the corporate pyramid certainly pays — the average S&P 500 chief executive officer hauled in $12.4 million in 2015, while the average non-supervisory worker earned $36,875. That average worker would have to work 335 hours to earn what the CEO makes in one hour. For a worker earning the federal minimum wage, the pay ratio is 819-to-1.

CEO-to-worker ratioThe Paywatch 2016 report illustrated this stark inequality with the example of Mondelez International Inc., where Chief Executive Officer Irene Rosenfeld earned close to $20 million last year, or 534 times the average worker’s pay. At the same time, Mondelez asked workers at a Nabisco cookie and cracker plant in Chicago to take a permanent 60 percent cut in wages and benefits, or their jobs would be moved to Mexico. As nobody could agree to such conditions, hundreds of people were laid off. Ms. Rosenfeld, incidentally, received a $7 million raise for her troubles, likely comparable to the combined pay of the laid-off workers.

Lest we fret that Mondelez may be undergoing tough times, please don’t lose any sleep — the company reported net income of $7.3 billion in 2015 and $15 billion for the past five years. Nor should sleep be lost worrying about Mondelez’s tax “burden” as it paid all of $49 million in U.S. taxes in 2015. That’s a tax rate of less than one percent.

That company is not unique, of course. Workers at Verizon Communications Inc. have been on strike since April 13 as Verizon seeks to move call-center jobs overseas, outsource instillation work to low-wage, non-unionized contractors, and reduce benefits. Verizon wants to stick it to its workers despite racking up $45 billion in net income over the past five years, at the same time paid no taxes and has stashed $1.3 billion in offshore accounts.

Avoiding taxes has become an art form for U.S. corporations, especially those who operate as multi-nationals. Dodging taxes is simply another “capitalist innovation,” and so common that a single small building in the Cayman Islands (where the corporate tax rate is zero percent) is the registered address for almost 19,000 corporations. Tax dodging also means higher pay for top executives — yet another corporate subsidy.

tax burden chartThis goes beyond simple unfairness, although corporate tax collection in the U.S. has declined drastically, falling from about one-third of U.S. government tax receipts in the 1950s to 10 percent in 2015; it was as low as 6.6 percent in 2009. Nor is it simply that less taxes collected reduces the ability of governments to effectively provide an adequate social safety net. Higher taxes actually lead to more jobs. Countries that provide more subsidies toward services that are complementary to work — such as child care, elder care and transportation — have higher workforce participation rates. Yes, contrary to orthodox economics, higher rates of taxation lead to more employment.

Let’s not reduce all this to simply greed. The relentless competition endemic to capitalism mandates that corporations engage in an endless race to the bottom. “Grow or die” is an inescapable mandate — if you don’t grow, your competitor will and put you out of business.

That’s a war that working people can never win. Class warfare rages hotter than ever, but there is only one class that is waging it.

New right-wing government cedes Argentina’s sovereignty to Wall Street

Argentina’s new right-wing president, Mauricio Macri, pledged to put an end to the country’s sovereignty, and on that he has been true to his word. The capitalist principal that windfall profits for speculators is the raison d’état for the world’s governments has been upheld.

Or, to put it in a different way, the government of Argentina will again be allowed to borrow on international financial markets — so that it can borrow money for the sole purpose of paying billions of dollars to speculators.

Argentina had been one of the few countries that refused to bleed its population to pay off odious debt under the 12-year husband and wife rule of Néstor Kirchner and Cristina Fernández. Their left-wing populism has been overstated — they left capitalist relations untouched and at best merely tolerated the movement of recovered factories — but they did consistently put the interests of Argentine working people ahead of international financiers. The election of the right-wing President Macri has put an end to that, along with his introducing the repression that austerity requires.

Entre Rios province, Argentina (photo by Felipe Gonzalez)

Entre Rios province, Argentina (photo by Felipe Gonzalez)

Argentina’s difficulties have a long history. The fascistic military dictatorship of 1976 to 1983 laid waste to the Argentine economy while unleashing horrific human rights abuses, and subsequent civilian governments sold off state enterprises at fire-sale prices while imposing austerity until the economy crashed at the end of 2001. Upon assuming office, President Kirchner suspended debt payments that would have impoverished the country. He offered to negotiate with bond holders, 93 percent of whom ultimately agreed to accept 30 percent of their bonds’ face value.

There were holdouts, most notably two hedge funds that waged a 15-year battle to extract the full value of the bonds, even though they bought them from the original holders for a fraction of the price. These two funds leading the holdouts were NML Capital, a subsidiary of Paul Singer’s Elliot Capital Management, and another hedge fund, Aurelius Capital Management. Mr. Singer, the type of character for which the term “vulture capitalist” was coined, is notorious for his scorched-earth tactics. At different points, he had an Argentine naval training ship seized in Ghana and attempted to seize Argentina’s presidential plane. His dedication to extracting every possible dollar regardless of cost to others was nicely summarized in 2011 by investigative journalist Greg Palast:

“Singer’s modus operandi is to find some forgotten tiny debt owed by a very poor nation (Peru and Congo were on his menu). He waits for the United States and European taxpayers to forgive the poor nations’ debts, then waits a bit longer for offers of food aid, medicine and investment loans. Then Singer pounces, legally grabbing at every resource and all the money going to the desperate country. Trade stops, funds freeze and an entire economy is effectively held hostage.

Singer then demands aid-giving nations pay monstrous ransoms to let trade resume. … Singer demanded $400 million from the Congo for a debt he picked up for less than $10 million. If he doesn’t get his 4,000 percent profit, he can effectively starve the nation. I don’t mean that figuratively — I mean starve as in no food. In Congo-Brazzaville last year, one-fourth of all deaths of children under five were caused by malnutrition.”

Buy low, demand very high

He’ll make a windfall profit off Argentina as well. The “special master” who presided over negotiations between the holdouts and the Argentine government — a veteran corporate lawyer who specializes in representing financiers and banks opposed to regulation — announced that NML Capital, Aurelius Capital and two other big hedge funds will receive 75 percent of the full principal and interest demanded by the holdouts. How big of a profit will this be? Only the funds themselves know for certain, but the lowest public estimate is a profit of nearly 400 percent.

Even that lowest estimate likely understates the profit. Bloomberg News reports that Mr. Singer will be paid $2.3 billion, or close to four times the $617 million in principal his firm holds. But as he likely paid only a small fraction of that principal, his profit is likely far greater. A Columbia University researcher estimates that NML Capital will receive $620 million for a portion of bonds for which it paid $48 million in 2008. That’s nearly a 13-fold profit in six years! As former President Fernández remarked when refusing to pay anything more than the 30 percent to which the other bondholders agreed, “I don’t even think that in organized crime there is a return rate of 1,608 per cent in such a short time,” adding that Argentina would not “submit to such extortion.”

President Fernández was referring to the profit Mr. Singer would have reaped had she given in to his full demands. She was speaking in a national address following two U.S. Supreme Court decisions in 2014 that upheld U.S. District Judge Thomas Griesa’s ruling that Argentina is not allowed to continue to pay the bondholders who agreed to accept 30 percent (or “haircuts” in financial parlance) until it reached an agreement with the holdouts. The Supreme Court also ruled that federal courts in the U.S. can order sovereign countries to hand over information on their assets to speculators. In other words, U.S. law, wielded to generate windfall profits for the most greedy, was decreed to apply to other countries, as if they are not sovereign.

The Kirchner-Fernández governments refused to yield their country’s sovereignty, but President Macri took office promising to pay off the vulture capitalists. Not only was Argentina’s ability to determine its own policy at risk, but the very concept of debt relief has been put in danger. The bondholders who agreed to take 30 percent made the calculation that something is better than nothing, and it enabled Argentina to recover from a severe economic crisis. The Kirchner-Fernández governments consistently offered the same deal to the holdouts. But now that the holdouts extracted so much more, will those who accepted the earlier deal now demand the same 75 percent given to the holdout funds? If they do, will they seek to enforce that after-the-fact better deal in the courtroom of Judge Griesa, who consistently showed himself biased in favor of the vulture capitalists?

Consider the assessment of two United Nations officials, Juan Pablo Bohoslavsky, the U.N. independent expert on the effects of foreign debt on human rights, and Alfred de Zayas, the the independent expert on the promotion of a democratic and equitable international order:

“A settlement would validate the type of predatory litigation that has been on the increase during the last decade. Such deals will make it more difficult to solve debt crises in a fair, timely and efficient manner by emboldening and rewarding the behavior of those who refuse to participate in debt restructuring efforts. These are no good news for attempts to solve debt crises in a timely and human rights sensitive manner.”

Paying debt through taking on more debt

The Macri government has now committed itself to paying $6.4 billion to the holdouts. How will it pay for that? By borrowing. Argentina had been blocked from borrowing in international credit markets, and as part of the deal will be allowed to borrow in those markets again. Judge Griesa’s injunction against resuming payments to the 93 percent of bondholders is also to be lifted. (That was enforceable because Argentina paid its debts to those bondholders through the Bank of New York, which was prohibited by the judge to pass through those payments under pain of legal penalties. Alternative routes through non-U.S. banks are difficult to use because of U.S. control over the global financial system.)

The deal also requires that the Argentine parliament reverse a law that blocks the country from offering any deal to holdouts better than terms agreed to by others. President Macri’s Let’s Change bloc does not hold a majority in the Chamber of Deputies, but picked up votes from the Peronist opposition to effect the necessary legal reversal this week. The Senate must still vote, but the expectation has been that the bill would have an easier time there.

The Puerto Madero district of Buenos Aires. (Photo by Juan Ignacio Iglesias)

The Puerto Madero district of Buenos Aires. (Photo by Juan Ignacio Iglesias)

Why is President Macri ceding his country’s sovereignty? Right-wing ideology of course plays a significant role here, but it is also self-interest. While the military dictatorship was conducting a reign of terror against Argentines that ultimately led to hundreds of thousands murdered, “disappeared,” tortured, kidnapped, arrested or forced to flee into exile, Mauricio Macri and his family were adding to their wealth. (Remember that this régime had the approval of Henry Kissinger and was blessed by David Rockefeller, whose loans financed it, with his infamous statement that “I have the impression that Argentina has a regime which understands the private enterprise system.”)

The Macri Society, or Socma, the family business, had close ties to the dictatorship. TeleSUR English reports that Socma “directly benefited” from the dictatorship:

“In 1973, prior to the 1976 military coup that ousted the civilian Peronist government of President Maria Estela de Peron and installed a dictatorship, Socma owned seven companies. When the dictatorship ended 10 years later, in 1983, the Socma corporate empire had expanded to 46 companies. Among Socma’s dozens of companies were various businesses that benefited the Macri family economically by providing services to the dictatorship regime.”

The new president, a director of the family conglomerate from a young age, is opposed to an Argentine parliamentary decision to launch an investigation of people and businesses that participated in the military dictatorship’s crimes, TeleSUR reports. La Nacion, a conservative Buenos Aires newspaper that backed President Macri, the day after the election published an editorial calling for an end of efforts to seek justice for the dictatorship’s victims, denouncing the quest for justice as a “culture of revenge.” Perhaps to emphasize this, the president has appointed as the new secretary for religious affairs Santiago Manuel de Estrada, who served as secretary for social security during the military dictatorship, which presided over severe reductions in wages and living conditions to go along with its death squads and torture facilities.

A monopoly for press backers, repression for opponents

Argentina’s biggest media conglomerate, Clarín, also backs President Macri, and no wonder: He has already moved to eliminate Argentina’s anti-monopoly law, which restricts the number of TV, cable and radio licenses a company can hold at one time, so that a handful of corporations can completely control the mass media. Such laws have precedent; for example, U.S. communications law long restricted anyone from owning more than 14 radio stations and seven television stations until overturned during the Reagan era. The Macri government is moving swiftly to silence opposition — it has forced a popular radio broadcaster, Victor Morales, off the air. According to the Buenos Aires Herald:

“ ‘I’m being kicked out because this company needs government advertising … No radio in Argentina can survive without government ads. They can’t mess with Macri,’ said the journalist.”

Demonstrations against these developments have already taken place, as have a public-sector strike against massive layoffs, demonstrations against the new government’s anti-protest law and protests against the imprisonment of Indigenous leader Milagro Sala. A total of 25,000 public workers have been dismissed as part of the Macri government’s austerity policies, and a new “security protocol” enables indiscriminate arrests and restricts the press’ ability to cover such events, opponents say. A coalition organizing against these new repressive policies states:

“The new protocol implies that every protest is now a criminal offense, and empowers the Security Forces — the same forces that played an active role in Argentina’s last military dictatorship — to allow or forbid any protests. The criminalization of protests violates several judicial decisions that state the right to demonstrate supersedes any occasional traffic problems that may be caused.

This year, on the 40th anniversary of the military coup in Argentina, the Mauricio Macri government has begun a campaign to eliminate an essential human right — the fundamental right to protest and demonstrate. With this new protocol, the government will try to prevent workers from protesting against redundancies or demanding salary increases, or mobilize against power outages and mining projects. This protocol openly defies the constitutional rights of the Argentine people as well as international treaties on human rights.”

Ms. Sala, imprisoned for the past two months, was arrested after protesting the policies of a provincial governor aligned with the president. She was acting in support of an organization she heads that provides social services. Parliamentarians, civil organizations and human rights campaigners across South America have denounced her arrest as political, and the United Nations has called for an explanation of her continued detention. The Buenos Aires Provincial Commission for Memory has issued this statement:

“Organizing collective action does not mean ‘inciting crimes,’ a massive demonstration is not ‘public disturbance’ and to oppose a government decision is not ‘an act of sedition.’ They are all democratic freedoms.”

They should be. But not when a right-wing government is determined to impose the rule of capital, or, in the case of the Macri government, to be a willing subaltern of international capital. The logic of the rule of financiers can only lead to not only intensified austerity, but increased repression.

Belief in capitalism as a material force

Violence and coercion have driven the establishment and expansion of capitalism from its start, and continue to be an indispensable glue holding together what has become a world economic system. Yet no level of brutality can itself keep a system, or any ruling structure, in place for a long period of time, much less for centuries, unless there is some level of cooperation.

That cooperation must rest, at least partially, on belief. Why did so many people in the past believe that God picked one family to rule in perpetuity? Lack of education played no small part here but, whatever the reason, that peasants did believe helped keep monarchs on thrones. Today, with education so much more available, such a belief would be laughed at. Ideology accordingly must be much more sophisticated. There are no dynasties at the head of modern capitalist countries, nor even single political parties or groupings.

Black Lives Matter supporters inside Minneapolis City Hall on December 3, 2015, after an early morning raid and eviction of demonstrators occupying the space outside the Minneapolis Police Department's 4th Precinct, following the police shooting death of Jamar Clark. (photo by Tony Webster)

Black Lives Matter supporters inside Minneapolis City Hall on December 3, 2015, after an early morning raid and eviction of demonstrators occupying the space outside the Minneapolis Police Department’s 4th Precinct, following the police shooting death of Jamar Clark. (photo by Tony Webster)

But here we must distinguish between governing and ruling. Presidents, prime ministers and governors may govern for set periods of time, giving way to new officials, but these men and women do only that: govern. They manage the government on behalf of the dominant social forces within their borders, and those dominant social forces are in turn, depending where on the international capitalist pecking order the governed space lies, connected to and/or subordinate to more powerful social forces based elsewhere.

It is capitalists — industrialists and financiers — who actually rule. The more power capitalists can command, the more effectively they can bend government policy and legislation to their preferred outcomes. More aspects of human life are steadily put at the mercy of “market forces.” Those are not neutral, disinterested mechanisms sitting loftily above the clouds, as the corporate media incessantly promotes. Rather, market forces are nothing more than the aggregate interests of the most powerful industrialists and financiers. Thus capitalist fundamentalism is telling us that a handful of exceedingly powerful industrialists and financiers should decide social and economic matters; that wealth automatically confers on them the right to dominate society.

Is this so different from feudal beliefs in monarchs? Without significant numbers of people believing that the rule of capitalists is just and as natural as the tides of the ocean, capitalism would not endure. When people ceased to believe in monarchs, that system of rule crumbled. Feudalism was of human construction. Everything of human construction comes to an end.

Capitalism, another human construction, is no different. But as a global downturn stretches into its eighth year with no end in sight, as the period of stagnation, and associated cuts to wages and mounting inequality, is now measured in decades, belief in capitalism is becoming more difficult to sustain. Even that old bogey word, “socialism,” is losing its talismanic ability to stifle thinking about alternatives; among young adults in particular socialism is gaining attraction.

Counterposing new ideas for old beliefs

But let us not indulge in wishful thinking. Capitalism is as strong as ever today. Margaret Thatcher’s “there is no alternative” looms large in the popular psyche. For countless millions, capitalism is indistinguishable from society; being without it would be like a fish trying to live outside water. That a furious and never-ending propaganda barrage is necessary to maintain this is not in dispute. That it is still commonly believed is what matters here. Capitalism is what people know and belief that anything else would be worse widespread. Until that belief is broken down — through persuasion and, most likely in bigger portion, an economic breakdown serious enough to compel people to confront their deteriorating living conditions — capitalism will be nearly impossible to dislodge.

Thus belief is a material force, if a sufficient number of people hold that belief. I recently had my attention drawn to an interesting article published on the Waging Nonviolence web site (tip of the hat to regular commenter Alcuin) that discussed a couple of seemingly unrelated events in Uganda. The article’s title, “Did grandmothers kill a government minister, nonviolently?,” asks a provocative question. The incidents in question here center on a group of grandmothers who stripped naked while blocking a road to prevent two government ministers and their convoys from seizing communal lands on behalf of an “investor.”

One of the two ministers died in a plane crash soon afterward. Was this an accident? Was it caused by the minister’s rumored falling out of favor with Uganda’s strong-willed president? Or, as the Waging Nonviolence article discusses, was it because of those grandmothers’ form of protest? The article’s author, Phil Wilmot, wrote, “the idea of a cultural omen or curse killing someone was hard to conceive.” He recounts his discussion of the death of the first minister, General Aronda Nyakairima, with a group of local activists:

“In November, I was participating in a training of activists in Kampala, Uganda’s capital. One young man was present who had organized [the grandmothers] and their community on that April day. Our group dialogue deviated from its intended path, and we found ourselves discussing the incident and its alleged relationship to Aronda’s death.

‘How many of you believe that Aronda died because he was poisoned by the government?’ I asked. A few hands rose.

‘How many of you believe that Aronda died because the women of Amuru stripped naked?’

‘Phil, we are Africans. Of course we believe that’s why he died,’ interjected activist Hamidah Nassimbwa, speaking on behalf of the mostly well-educated group. The majority of the room raised their hands to concur that Aronda’s fatality originated in Amuru in April.”

Beliefs in omens or curses are found in virtually every culture. The point isn’t where these believers are from or what culture they live in, but that these beliefs can have a material effect. The sight of the protesting grandmothers was enough to induce enough fear that high representatives of a government who could have easily used lethal force against them instead fled, and that the protestors’ action had further consequences in many minds. (The other minister subsequently lost his seat in the next election.) These are beliefs that likely arose organically in the distant past, and have survived into a time when science rather than magic or religious belief explains natural phenomenons or social interactions.

The hegemony of ideas that serve elites

How more powerful are beliefs that are intentionally inculcated by elites to maintain themselves in a position of power? Tsars and kings proclaimed they were representatives of God, and fear of divine wrath surely played a significant role in monarchal longevity, no matter how much violence was inflicted on those who stepped out of line. Belief works in the same way today, even if for a different ruling structure.

Antonio Gramsci’s concept of “hegemony” is useful to understand this concept. A definition found on the Marxist Archives web site provides this summation:

“Hegemony is a class alliance by means of which one, leading [hegemonic] class assumes a position of leadership over other classes, in return guaranteeing them certain benefits, so as to be able to secure public political power over society as a whole. … The term was … popularised by Antonio Gramsci who demonstrated that every nation state requires that some class is able to establish a hegemony capable of unifying the nation and resolving its historical problems. Gramsci posed the problem of the working class in Italy in terms of the need for the Italian workers, especially in the industrialised North, to understand the problems of the Southern peasantry and make the demands and aspirations of the Southern peasants their own, while refusing any corporatist bloc with the Northern industrial bourgeoisie.”

Gramsci, in his Prison Notebooks, himself wrote:

“The capitalist entrepreneur creates alongside himself the industrial technician, the specialist in political economy, the organizer of a new culture, of a new legal system, etc. … If not all entrepreneurs, at least an elite amongst them must have the capacity to be an organizer of society in general, including all its complex organism of services, right up to the state organism, because of the need to create the conditions most favorable to the expansion of their own class; or at least they must possess the capacity to choose the deputies (specialized employees) to whom to entrust this activity of organizing the general system of relationships external to the business itself.”

A result of this “social hegemony” is:

“The ‘spontaneous’ consent given by the great masses of the population to the general direction imposed on social life by the dominant fundamental group; this consent is ‘historically’ caused by the prestige (and consequent confidence) which the dominant group enjoys because of its position and function in the world of production.”

Capitalist ‘freedom’ can only be a formal freedom

Because in advanced capitalist countries there is formal democracy rather than an open dictatorship, it is easy to lose sight of where power derives and therefore the limits of formal democracy. In a series of lectures collected in his book The Unfinished Revolution: Russia, 1917-1967, the great historian Isaac Deutscher said:

“[I]n bourgeois society [freedom] can be a formal freedom only. Prevailing property relations render it so, for the possessing classes exercise an almost monopolistic control over nearly all the means of opinion formation. The working classes and their intellectual mouthpieces manage to get hold of, at best, marginal facilities for social and political self-expression. Society, being itself controlled by property, cannot effectively control the State. All the more generously is it allowed to indulge in the illusion that it does so. … Capitalism could afford to enfranchise the working classes, for it could rely on its economic mechanism to keep them in subjection; the bourgeoisie maintains its social preponderance even when it exercises no [direct] political power.” [page 106]

Even allowing for the rise of the Internet, and the better ability for dissenting news and viewpoints to be circulated (Deutscher wrote those words a half-century ago), it is indisputable the corporate media remains dominant and allows only a narrow range of perspectives to be given a hearing. The very competitive nature of mass media ownership helps dominant ideologies prevail — if so many different outlets report the same news item in a nearly identical way, that “spin” can easily gain wide acceptance. Or if stories are reported differently by competing media outlets, but with the same dominant set of presumptions underlying them, those dominant presumptions, products of ideologies widely propagated by elite institutions, similarly serve as ideological reinforcement.

Anti-war demonstrators in London, September 2002 (photo by William M. Connolley)

Anti-war demonstrators in London, September 2002
(photo by William M. Connolley)

In a society where the state owns and controls the media, it is easy to disregard what is disseminated as all emanating from a single source, even when there is scope for differing opinions. In capitalist countries, the profusion of private ownership (even though increasingly concentrated into a few corporations) gives the appearance of competing multiple perspectives. Extremist, mad-dog outlets like Murdoch newspapers or Fox News do no more than provide reinforcement for maleducated holders of extremist viewpoints and conspiracy theories.

Public opinion is shaped by repetition, and not repetition in a handful of obviously biased publications or networks, but rather repetition of viewpoints, reporting angles and underlying themes and assumptions, across the entire corporate media.

An array of institutions to convey one basic message

There are a vast array of institutions, including corporations, “think tanks,” schools and armed forces, to suffice a society with the viewpoints of the dominant, which in a capitalist society are its industrialists and financiers. The admonishment that everything — including schools and especially government — should be “run like a business” is pervasive. This propaganda does not fall out of the sky; its seeming pervasiveness flows from the ability of capitalists to disseminate their viewpoints through a variety of institutions, those they directly set up and control, and those starved of funds that in an era of deepening austerity increasingly must accept corporate money to make up for the loss of state support.

Something as fundamental as who generates the wealth of society, and how wealth is generated, is obscured as part of this process of opinion formation. It can’t be otherwise, for this is the building block on which capitalist ideology rests. Incessant spin claims that profit is the result of the acumen of the capitalist and the capitalist’s magical ability to create profit out of thin air, when in actuality corporate profit comes from the difference between what an employee produces and what the employee is paid.

If the enterprise were a cooperative run by the workers, the product would be sold for the same price and thus the same profit would be achieved, but distributed equitably. Many people must be poor for one person to be rich, because the private profit of a few is taken from the underpayment of work to the many.

The modern working person has faced a lifetime of the most sophisticated propaganda, and the task of undoing it in ourselves and for others should not be under-estimated. Millions of people, nonetheless, have done it and more are doing it. The continuing stagnation, erosion of social protections, promise of more austerity and the looming environmental catastrophe of global warming are bound to open more eyes. Many more eyes will need to be opened, with a concomitant willingness to struggle and organize, if a better world is to be created. A “counter-hegemony” is necessary: We provide our own leaders or they won’t be provided at all.

Or, to put it another way, we have to believe that a better world is not only possible but can be created. Once a sufficient portion of society comes to believes in this, then belief in, or resignation to, capitalist exploitation goes the way of trembling at the feet of monarchs. A belief in ourselves, that cooperation rather than dog-eat-dog competition is the route to a stable economy with enough for all, becomes a new material force.

More unemployment and less security

The bad news is that the world’s number of unemployed workers and those with precarious employment is expected to rise during 2016 and 2017. The worse news is that the true number of those in these categories are probably significantly undercounted.

The International Labour Organization, a United Nations agency that just issued its “World Employment Social Outlook,” predicts that 200 million people will be unemployed in 2016, three million more than last year. This will be most acute in middle-income and poor countries, where unemployment is forecast by the ILO to increase by 2.4 million with a slight decrease in unemployment in the most developed countries. Brazil and China alone are expected to add 1.5 million to the unemployment rolls in the next two years.

(Mural by Ben Shahn)

(Mural by Ben Shahn)

Not that having employment is necessarily a marker of stability. The ILO report says that nearly half of the world’s workers — 1.5 billion people — hold “vulnerable employment.” This total includes subsistence and informal workers, and unpaid family workers. This vast cohort (the “reserve army of labor” although the ILO never uses such direct terminology) will not be getting smaller in the foreseeable future. All these factors add up to more inequality. Nor is it limited to any one part of the world, the ILO report says:

“The improvement in the labour market situation in developed economies is limited and uneven, and in some countries the middle class has been shrinking, according to various measures. Income inequality, as measured by the Gini index, has risen significantly in most advanced G20 countries. Since the start of the global crisis, top incomes have continued to increase while the poorest 40 per cent of households have tended to fall behind.” [page 4]

In one-third of the world’s countries, the “precariat” constitutes at least two-thirds of the total workforce. The percentages of those with precarious employment is much higher in developing countries than in the advanced capitalist countries, but in all parts of the world the labor force participation rate — that is, the percentage of those of working age who are employed — is slowly shrinking and is forecast by the ILO to continue to do so through the rest of the decade. Here it is the developed countries that have the lowest participation rate (60.5 percent in 2015), more than two percentage points lower than the global average.

The massive size of the precariat

A gloomy picture, indeed. A picture, however, that does not fully capture the bleakness of stagnation. The number of precarious workers is likely higher than what the ILO calculates. In their book The Endless Crisis, John Bellamy Foster and Robert W. McChesney estimate that the true size of the precariat is actually significantly larger than those with regular employment. They write:

“If we take the categories of the unemployed, the vulnerably employed, and the economically inactive population in prime working ages (25-54) and add them together, we come up with what might be called the maximum size of the global reserve army in 2011: some 2.4 billion people, compared to 1.4 billion in the active labor army. 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 the poorer countries.” [page 143]

Capitalism is unable to create sufficient employment, and thus considers such people to be “excess population.” Mass migrations from Latin America to the United States, or from Africa and the Middle East to Europe, are consequences. In the 19th century, industrializing European countries had a safety valve in massive emigration (not so good for Indigenous peoples in the target countries of course), but there are no longer large areas into which capitalism can expand. Professors Foster and McChesney put this in stark terms:

“While such mass emigration was a possibility for the early capitalist powers, which moved out to seize large parts of the planet, it is not possible for countries of the global South today. Consequently, the kind of reduction in peasant population currently pushed by the system points, if it were effected fully, to mass genocide. An unimaginable 7 percent annual rate of growth for fifty years across the entire global South, [economist Samir] Amin points out, could not absorb even a third of this vast surplus agricultural population. …

“Aside from the direct benefits of enormously high rates of exploitation, which feed the economic surplus flowing into the advanced capitalist counties, the introduction of low-cost imports from ‘feeder economies’ in Asia and other parts of the global South by multinational corporations has a deflationary effect. This protects the value of money, particularly the dollar as the hegemonic currency, and thus the financial assets of the capitalist class. The existence of an enormous global reserve army of labor thus forces income deflation on the world’s workers, beginning in the global South, but also affecting the workers of the global North, who are increasingly subject to neoliberal ‘labour market flexibility.’ ” [pages 147, 149]

These trends become more acute as high unemployment persists. The true level of unemployment is approximately double official numbers across North America, Europe and Australia. The reason for this is that all those countries do not include discouraged workers, those employed part time but not able to secure full-time work nor all persons marginally attached to the labor force (those who wish to work but have given up).

Less pay to go with less security

With all these factors working against them, wages for working people are stagnant while productivity continues to increase — the one percent is grabbing all the wealth created. This is a global phenomenon. Employees in the United States, Canada, Germany, France, Britain and Japan have seen their pay lag behind productivity gains and income inequality widen.

Thus it comes as no surprise that labor rights are under attack everywhere. How bad? In a 2014 study, the International Trade Union Confederation determined the degree to which five basic rights — fundamental civil liberties; the right to establish or join unions; trade union activities; the right to collective bargaining; and the right to strike — are upheld, and then assigned a numerical grade. Every country in the world had a ranking of below 50 percent. In other words, every country flunked when graded on respect for labor rights.

What to do about all this? The ILO offers these conclusions as part of its call for a “shift in economic and employment policies”:

“It is particularly important to strengthen labour market institutions and ensure that social protection systems are well designed, in order to prevent further increases in long-term unemployment, underemployment and working poverty. A rebalancing in reform efforts is also needed. In particular, financial reforms need to ensure that banks perform their role of channelling resources into the real economy and into investment for sustainable enterprise expansion and job creation.” [page 5]

We should be long past the time when it was possible to believe we could wag our fingers at bad policy-makers and expect they will see the light of day. The unceasing competition of capitalism, its relentless drive to enclose ever more human activity within its logic of profit at any cost, mandates the world we now live in. Drastic imbalances in power are inherent in capitalism; these can’t be legislated away. Thus the ILO’s prescriptions are meaningless. Reforms are possible with enough movement organization, but reforms are eventually taken back, as the past four decades has amply demonstrated.

Desires by industrialists and financiers to press their offensive against working people are behind “free trade” agreements that eliminate barriers to the movement of capital, encourage shifting of production to places with ever lower wages, and impose restrictions on the ability of governments to implement, or even maintain, laws safeguarding health, safety, labor rights and the environment. These are simply the expected outcomes under the logic of capitalism. No regulation can change that. Only a change of economic system can achieve that.

Québec fights back against austerity

We are supposed to accept austerity as being as natural as ocean tides. Or be demoralized by the power of the forces that continually press down on working people around the world. But there is an ongoing, organized fightback going on — in Québec.

A series of rolling strikes by public-sector employees and students throughout 2015 appear to be headed toward a provincial general strike in December. Haven’t heard of this? That is not because it is francophone workers and students are who are driving these actions but because there has been a near total blackout of this news in the North American corporate media.

It would be all too easy to assume that that the owners and managers of corporate-media outlets don’t wish you to know that such fightbacks are possible. That may be so in some cases; it is more likely that the activity of working people, as opposed to the proclamations of business elites, simply aren’t seen as “news.” Read through the business section of your local newspaper — you will find it chock full of hand-wringing on behalf of corporate interests, with neoliberal ideology presented as the only possible orientation.

Downtown Montréal from Mont-Royal (photo by Anna Kucsma)

Downtown Montréal from Mont-Royal (photo by Anna Kucsma)

There are other possibilities, and such alternatives are being loudly put forth in Québec. Although the outcome of the current struggles for a fair contract for public-sector workers and increased support for education are far from being settled — much less the larger social issues thrown up by the neoliberal project — victories have been won, going back to the Maple Spring of 2012.

The 2012 student strike was so successful that it caused the provincial government to fall. The Québec government, then controlled by the Liberal Party, intended to raise tuition by 75 percent over three years. Protests and strikes quickly blossomed, shutting down universities and leading to street battles as police repeatedly attacked near daily demonstrations that sometimes numbered more than 100,000 as students were joined in large numbers by older people. The Liberal government dug in its heels, not only refusing to negotiate seriously but passing a law making the demonstrations illegal.

After months of struggle, the government called an early election, which it lost, ushering in a Parti Québecois government that promptly rescinded the tuition increases, canceled the anti-demonstration laws and, in an environmental gesture, reversed the Liberal support for fracking. Unfortunately, this victory is also an exemplary lesson of how capitalist reforms are ephemeral: The Parti Québecois ultimately failed to live up to its promises, itself called an early election, and was handed a stinging defeat, bringing the Liberal Party back to power.

Back in office, back to attacking

Québec’s new Liberal Party government, now headed by Premier Philippe Couillard, resumed its neoliberal assault. (A lesson that ought be borne in mind by those celebrating last month’s national election of Justin Trudeau.) The Québec government seeks to impose a de facto wage cut (offering a three percent increase over five years, well below the rate of inflation), institute a two-tier wage scale, raise the retirement age and cut pensions. In education, Premier Couillard wants to add eight hours to the workweek, cut teacher staffing for special-education students by two-thirds and impose drastic cuts in funding. For health care, he wants to impose funding cuts, more forced overtime and greater number of patients per nurse.

The Québec government claims a lack of money is behind its austerity measures, yet it had no hesitation in handing Bombardier Inc., one of the province’s biggest corporations, a $1 billion subsidy this year. Bombardier did report a loss in 2014 and is in the red for this year, but only due to accounting tricks; it reported $2.8 billion in net income for the previous four years.

As always, there is plenty of money for corporate handouts. Ideology, then, is the real reason behind these attacks. This has not gone unnoticed, by either the students or the working people who are uniting to fight back. Camille Godbout, spokesperson for the student group Association pour une solidarité syndicale étudiante (ASSÉ), said:

“Often, we are asked why we, the students, are mobilizing ourselves against austerity measures. For us, the answer seems clear: the government is trying, through its repeated compressions, to place the entirety of our public services in permanent crisis. The final objective of this government is that we turn more towards the private sector and establish a ‘user-payer’ model in Québec. In rendering our services non-functional due to inadequate financing, the solution of Mr. Couillard and his minsters will be to raise individual fees.

We refuse this logic which reduces us simply to consumers who will need to pay for each use of our health, education, daycare and all other services necessary for the good functioning of a rich society.

As soon as we note that the six biggest banks in Canada had profits of over 34 billion in 2014 and that, despite everything, they are taxed less and less, we know that we have the means to do things differently. It would suffice to go find the money there where it can really be found rather than systematically making the population poorer. For example, the return of a 1% tax on capital gains for financial institutions would bring in more than 600 million for the state.”

Calls for unity

A November 8 communiqué issued by the Front Commun, an umbrella organization of 400,000 workers from three unions across Québec, also made clear its belief in unity:

“Our members will not agree to become impoverished to finance tax cuts for business and the rich. [The government] ignores the conditions that we asked, that no one should get poorer at the end of this restructuring and that the wage freeze was not acceptable. … 18,000 people would see their salary reduced overnight … and many young people would start their careers with lower salaries. We can not accept such parameters.”

More than 60,000 Québec students went on strike in March; dozens of May Day demonstrations were held; parents have formed human chains in front of their children’s schools to symbolize their intent to defend them against cuts on three separate autumn days; schools were shut down across Québec by teacher strikes on October 7; 150,000 demonstrated in Montréal on October 10; and a series of rolling two-day strikes in cities and regions across the province have taken place throughout November by health care workers, teachers, administrative officials and others.

This was to culminate in a three-day provincial general strike beginning December 1. But, for now, that general strike has been called off. The Front Commun announced on November 18 that because the government has finally made a counter-offer, although inadequate, it will continue to negotiate. It said that it “has no plans to cancel the strike days, or to suspend the movement” and said its postponement of the December strike will be “short-lived” in the absence of significant movement at the negotiating table.

Several organizations have been in the forefront of Québec’s fightback against austerity. In addition to the student union ASSÉ, which played a leading role in the 2012 Maple Spring, and the union federation Front Commun, parents have organized the Je protège mon école publique, more militant rank-and-file union members are organizing through Lutte Commune to maintain pressure on union leaderships, and the Red Hand Coalition brings together unions, community organizations and students.

Lutte Commune’s open letter urges union locals to reach out to the broader working class through convening local strike committees that would make the case that the unions are fighting for the services and living standards of everybody. The group also has vowed to campaign for a rejection if union leaders accept a concessionary deal.

Solidarity as the key to struggle

The Red Hand Coalition has called a November 28 demonstration in Montréal, demanding the provincial government obtain the money to meet worker and student demands by reinstating the tax on capital gains for banks; increasing the number of levels of taxation to ensure genuine progressive taxation and a greater contribution of the richest; and increasing taxes for large companies rather than decrease them again. The coalition, which is organizing a series of conferences in anticipation of united mobilizations, says:

“While millions of dollars in further cuts await us, how can we together stop the destruction of public services and social programs by the Couillard government? By solidarity!”

That is a lesson for all places. That there is a robust public sector to defend is a product of a united front in 1972 and a bitter strike that held because of solidarity. During the strike, the government passed draconian laws mandating workers return to work. Union leaders were slapped with year-long jail terms for not calling off the strike, but a province-wide general strike was victorious.

Three years ago, when the previous Liberal Party assault was pushed back by the Maple Spring, ideology and not finance were really what counted for the government. Students estimated that the provincial government spent C$200 million, citing police and related costs, the value of canceled classes, the costs of personnel maintaining empty buildings and the cost of making up a lost semester. Martine Desjardins, president of the Fédération étudiante universitaire du Québec, a student association with 125,000 members, said to The Montreal Gazette that those costs exceeded what would have been collected from the tuition increases:

“The tuition for seven years was supposed to bring in about $170 million. So you can see it’s not about economics, but about ideology. It just doesn’t make sense.”

In terms of common sense, it doesn’t. In terms of class warfare waged from above, alas, it makes much sense. Class warfare has been a one-sided affair since the dawn of capitalism. It is long past time we fought back.

Remembering the Marikana massacre on the third anniversary

Activists gathered across South Africa, and in London, New York and Oakland, to commemorate the third anniversary of the Marikana massacre, the deadliest South African massacre since Soweto.

A deadly massacre under an African National Congress government. And not the only shooting of workers, merely the worst under the harsh neoliberal assault overseen by the ANC.

South Africa’s apartheid system was overthrown in a negotiated process forced by a massive international popular movement backing the ANC, but the party has turned its back on popular forces. (This and the next two paragraphs based in part on The Shock Doctrine: The Rise of Disaster Capitalism by Naomi Klein.) During the long years of struggle by the ANC and pitiless repression by the National Party, the apartheid-era rulers in South Africa, the guiding document of the ANC was its “Freedom Charter.” The charter, adopted after democratic consultations in 1955, calls for the right to work; to decent housing; freedom of thought; nationalization of mines, banks and “monopoly industry”; and land distribution so that all South Africans can share in the wealth of their country.

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

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

Workers face attacks by management and unions

Mining is a critical component of the South African economy, and the foreign multi-national corporations that own South Africa’s mines mistreat local workers with impunity. (This and the next paragraphs are based on Southern Insurgency: The Coming of the Global Working Class by Immanuel Ness.) Workers are often housed in substandard housing that lacks water and electricity, and an increasing number of miners are hired as contingent workers. Not only do mine workers not receive support from the National Union of Mineworkers, the NUM actively joins with managements in oppressing its rank and file.

Nor do they receive support from the country’s largest labor federation, the Congress of South African Trade Unions (COSATU) — in February 2012, NUM and COSATU declared a strike by mineworkers illegal and actually took a harder line against the workers than the mine owner did! Mineworkers continued to bypass the union, or organize through an independent grassroots organization, Amcu, as mineworkers pressed to raise their monthly minimum wage from about US$400 to US$1,150. Two workers were shot by snipers on August 11, and the next day, fearful of returning to the mine, workers gathered on a nearby hill.

The management of the company that owned the mine, Lonmin PLC, called in the police. Lonmin sought to have the strike declared illegal and demanded workers surrender the crude weapons that had fashioned to defend themselves. NUM drove a vehicle equipped with a loudspeaker through the nearby settlements, declaring the strike illegal. Workers gathered on the hill again the morning of August 16 and were encircled by armed police. At 4 p.m., police opened fire, killing 16 workers as television cameras recorded and another 18 were executed off camera after fleeing the initial killings. Another 78 were injured.

An investigation headed by Judge Ian Farlam, appointed by President Jacob Zuma, found that police anticipated the killings hours earlier. Professor Ness, in Southern Insurgency (to be published by Pluto Books in October) provided this summary of the preparation:

“On the morning of August 16, more than eight hours in advance of the police shootings, aware the dozens of workers might be killed in a police assault, Colonels Klassen and Madoda of the [South African Police Service] ordered four mortuary vehicles to the scene from the health department, each with a capacity to carry eight bodies. The report also implicated senior government officials, including ANC and former NUM general secretary Cyril Ramaphosa, a shareholder and director of Lonmin as the events leading up to the Marikana massacre were unfolding. … [A]n email from Ramaphosa to Albert Jamieson, Lonmin’s chief commercial officer, written one day before the massacre and concluding the strike was not a labor dispute but a ‘criminal’ action that required ‘concomitant action.’: ‘The terrible events that have unfolded cannot be described as a labour dispute. They pare plainly dastardly criminal and must be characterised as such. There needs to be concomitant action to address this situation.’ ”

Nonetheless, the commission pinned the blame for the massacre on the workers:

“[T]he tragic events that occurred during the period 12 to 16 August 2012 originated from the decision and conduct of the strikers in embarking on an unprotected strike and in enforcing the strike by violence and intimidation, using dangerous weapons for the purpose.”

Pushing back against government whitewash

The Marikana Support Committee, in rejecting that conclusion, declares:

“This statement is offered as a fact that we have to accept. But it is an opinion. There is no evidence to back it up. The Marikana Support Campaign considers this finding as a gross defamation of the miners. At the same time, despite a run of evidence to the contrary, Farlam and his Commissioners exonerate Ramaphosa and other government ministers. Lonmin is substantially exonerated.”

The Support Committee is calling for a new probe, “a civil society-led inquiry based on the evidence.”

The National Union of Metalworkers of South African (NUMSA), a union expelled from the COSATU trade-union federation after challenging the federation to break with the ANC and the ANC’s neoliberal policies, also sided with the mineworkers. In a statement issued for the third anniversary of the Marikana massacre, the metalworkers union said:

“The Marikana Massacre in 2012 signified the degeneration of our country into a Police State, as evidenced by the continued usage of police and excessive force to undermine popular dissent from below. … The mining industry, like many other key sectors of our economy for many years have been heavily dependent on Black and African working class cheap labour, for its profit maximisation and wealth accumulation strategy. … It is our view that the Marikana Report that was released to the public by President Jacob Zuma was a spit on the face of Marikana’s widows and victims’ families, since it was a whitewash and was intended to make the fast fading ANC-government look caring in the eyes of the working class.”

After two decades of ANC governance, South Africa is the most unequal country on Earth. The country’s gini co-efficient, the most common measure of inequality, was the world’s highest at 0.65 in 2011, according to World Bank statistics, and that the number has not likely improved since. About 57 percent of South Africans live in poverty, and unemployment is 26.4 percent at the same time that only 80 percent of industrial capacity is being utilized.

It is not only divisions along racial, national and gender lines that divide us and block necessary solidarity, it is also the North-South division. An injury to one is an injury to all, regardless of where.