Class war and drinking the Kool-Aid at Dow Jones

We all remember the worst job we ever had. Mine was as a re-write person on the lead financial wire service of Dow Jones in the mid-1990s. But it did give me a chance to see the workings of finance capital up close, and learn that my ideas on how it functioned really were true.

Those two unfortunate years at Dow Jones also gave me a better perspective when Rupert Murdoch swooped in a few years later to buy the company, not so much for its wire services rather for the cachet of owning The Wall Street Journal. An episode that nicely served as a humorous reminder of just what is meant by “integrity” by the idle rich — receiving the highest price.

It was difficult not to suppress a smile as the idle rich, absentee majority owners of the Journal, the Bancroft family, publicly wrestled with their bullet-proof “integrity” in the face of barbarian Murdoch. The newspapers published by Murdoch are distinguished by their mad-dog, mouth-frothing ultra-right diatribes. Not to be confused by the editorial pages of the Journal, distinguished by their mad-dog, mouth-frothing ultra-right diatribes.

There is one difference, and that is that the Journal’s mouth-frothing is done on behalf of Corporate America and is not shy about telling corporate readers what is good for them, such as its bizarre years-long campaign to return the dollar to the gold standard. The paper’s many readers who make a fortune by trading world currencies might beg to differ, but no matter. Murdoch’s papers, however, never challenge their readers’ biases and if those readers want several pages daily of celebrity gossip mixed in with the right-wing propaganda, then that is what the people will get.

You don't want to work here. (Photo by Stefan Schulze)

You don’t want to work here. (Photo by Stefan Schulze)

The Bancroft family’s celebrated “integrity,” arrayed against this hideous assault by a vulgarian, ended resoundingly when Murdoch arranged to sweeten the pot. Selling your integrity for maximum dollar — what could be more like Corporate America? And so the Journal provides us with another sound lesson in capitalist economics. The hidden Achilles heel in all this is that Murdoch paid much more for the Journal’s parent company, Dow Jones, than anybody else would, and that is for a simple reason — Dow Jones was a company remarkable for its inept management.

I know this from my personal experiences there. Just how many wire services Dow Jones actually published was not known, as nobody actually knew when I casually attempted to find out at one point, symptomatic of the place. Two spectacular failings during my two years nicely provide illustration. One of these two was the acquisition of a financial data company, Telerate, which was seen as very well run and profitable. Part of the Dow Jones egoism is that its managers are super-geniuses, and so Dow Jones replaced Telerate’s successful management with its own managers, who ran it into the ground so quickly that Dow Jones sold it seven years later for more than $1 billion less than what was paid for it. Many workers lost their jobs as well.

More adventures in management

A concurrent episode was the short-lived Dow Jones television station in New York City. The city government owned a public television station that the then mayor, Rudolph Giuliani, decided to give away at fire-sale prices. Dow Jones won it, intending to turn it into an all-business news television station, never mind that cable television already carried more than one of these. (One of which, CNBC, was blared continually in the wire service’s workplace; the horrible theme music gave me nightmares for a long time afterward although a female anchor’s on-camera tendencies to nearly break down in tears when a company’s profits went down and almost reach orgasm when profits went up did provide comic relief.)

Dow Jones management, however, wasn’t prepared for its new toy, and so upon taking over the television station, at first aired nothing but videotapes of “classic” sports games from 10 and 20 years earlier. Dow Jones hired television personnel from around the country; new hires sold their houses and moved thousands of miles to work in the new venture. Once started, it lasted four months before Dow Jones announced it was selling the station, putting all those new hires, who had so disrupted their lives, into the street. The magic of the market at work!

Episodes like this led to one of the Bancroft heirs, a thoroughly spoiled rich kid, to complain in public that her inheritance, worth tens of millions of dollars, might decline in value because the Dow Jones stock price was stuck in mud despite the 1990s stock-market bubble that was then in progress. This development, in turn, prompted that most unusual of actions at Dow Jones — a member of upper management would deign to talk to the lowly workers! Surely this was a sign of crisis.

One afternoon, we were pulled from our usual duty toiling on the electronic sweatshop to hear a pep talk in the cafeteria from none other than Chairman and Chief Executive Peter Kann. Kann would have needed an injection of personality to qualify as an empty suit, but in his own way is a sad story. Kann, at one time, was a reporter for the Journal famous for covering a war between Pakistan and India, during which he defied an order by his editor to leave the area by falsely saying there was too much static on the line for him to understand what the editor had just told him.

For him they feel sorry?

That Peter Kann was long gone. Dow Jones was distinguished by its remarkable rigidity — only those who fit an extremely narrow mold and are willing to drink the Kool-Aid if so ordered take so much as one step on the career ladder, never mind ascend to the executive ranks. And that’s in addition to the political lock-step required to survive the place. The sweatshop floor workers assembled, Kann preceded to deliver a rambling speech full of business cliches about the glorious future, but lacking any discussion of the company’s turmoil, the very reason for this unusual pep talk, as even the right-wing yuppie zombies, Dow Jones true believers who comprised most of the wire service’s workforce, understood.

None had the courage to ask a question on the topic, as I expected. It was up to me to say something — I was the shop steward for the union, disliked by management, and already trying to escape the place by becoming a freelance editor, so I had nothing to lose. Besides, I knew that most of my co-workers would be quietly counting on me to say something — virtually all conformed to the Dow Jones corporate culture of snapping your heels and running, not walking, to carry out your assignment, never allowing the slightest doubt to enter your innermost thoughts.

When Kann’s assistant asked for questions, I asked Kann what the company’s plan for stability was in light of the recent problems it had been having. I didn’t explicitly detail the serious gaffes Dow Jones had committed, but he and everyone in the room knew to what I was referring. To my genuine amazement, Kann, after a long pause, proceed to give a disjointed answer that touched on none of the issues; he was obviously seriously rattled, unable to speak coherently. After perhaps a minute of this, Kann’s assistant gently interrupted, deftly took the microphone and thanked all of us for attending, ending the meeting.

The odd coda to this was that some of the Dow Jones true believers then felt sorry for Kann, because there was pressure by shareholders to push him out of his posts due to the mismanagement. “Aw, he’ll be out soon, anyway,” one told me, genuinely feeling sorry for the dear leader. The joke was on the workforce, however, as Kann lasted another decade as head of Dow Jones, leaving it to Murdoch to satisfy his ego by overpaying for the company. The idle rich had already prospered because tens of millions of dollars per year had been funneled to them via family-only dividends and now they would cash out, by still doing nothing. Many jobs will be lost to pay for those payoffs.

A wonderful lesson in capitalist economics, and, see, there is nothing to fear from Murdoch when it comes to capitalist ethics. See you on the yacht, darling.

Fear takes root in Syriza

Fear is a powerful human emotion. Fear of the unknown surely played a significant part in Syriza’s humiliating climbdown and surrender of what national sovereignty had remained to Greece.

Fear is a powerful emotion if consenting to become a colony, agreeing to sell off your country and further immiserating millions is a preferable option to taking back your independence.

Perhaps the signal that was not given due consideration was Prime Minister Alexis Tsipras’ statement on July 10 that “we have no mandate to leave the euro.” The Syriza-led government also had no mandate for the continuation, much less the intensification, of austerity. Five and a half months into an administration that could have been used to prepare Greece for a different path instead marked time in futile negotiations, allowing the country’s economic crisis to develop to the point where the troika could dictate any terms it wanted.

And make no mistake: There is glee in corporate boardrooms, trading floors, banks and the government ministries that serve them that a Leftist government has committed itself to the harshest austerity terms.

Fira at Santorini Island, Greece (photo by Yoo Chung)

Fira at Santorini Island, Greece (photo by Yoo Chung)

A good example of this comes from the late 1990s, when dissident Kim Dae-jong won election as president of South Korea as the first candidate of the Left to win office, only to immediately impose an austerity program imposed by the International Monetary Fund. President Kim’s candidacy had been opposed by the U.S. government, which had supported a series of military dictators, but likely was pleased in the end that he won since it demoralized his supporters and provided a priceless propaganda prop for the idea that there is no alternative to neoliberalism.

Although the agreement imposed on Greece by the troika — the European Central Bank, the European Commission and the International Monetary Fund — is indeed a coup, as the instantly popular Twitter hashtag proclaims, it shouldn’t be looked at simplistically as a German diktat. That is not because smaller countries like Finland and Slovakia aligned themselves with Germany in the manner of schoolyard kids standing next to the playground bully so as to not be the next target, but because the German government is acting as the European enforcement wing of international capital.

The upside down world of money over people

It is a neoliberal world indeed when entire countries are bled dry to safeguard bankers’ profits and doing so is presented as the highest moral duty. The human face might have been German Finance Minister Wolfgang Schäuble in the role of Dr. Evil, but the minister is no more than a physical embodiment of powerful social and economic forces. Forces of human creation but not necessarily in human control.

So let us not over-simplify and place all blame at the feet of Syriza by declaring the party “opportunists” or whatever word of opprobrium one wishes. Nor should there be illusions that walking away from the euro, canceling the debt and the resulting cutoff from financial markets would be an easy road to take, even if, in the long term, it is the road that should have been traveled. Socialism in one country is not possible in one small country. Socialism in a single big country would be extremely difficult, if the entire might of the capitalist world were arrayed against it.

There are no Greek solutions for Greece, there are only European or international solutions.

Nonetheless, somebody has to go first. Finding allies is indispensable for any Greek turn from the eurozone to have a chance at success. It does not appear that Syriza looked beyond the European Union for allies. In an interview with the New Statesman, former Greek Finance Minister Yanis Varoufakis, when asked if the government attempted to work with the governments of other indebted eurozone countries, gave this answer:

“The answer is no, and the reason is very simple: from the very beginning those particular countries made it abundantly clear that they were the most energetic enemies of our government, from the very beginning. And the reason of course was their greatest nightmare was our success: were we to succeed in negotiating a better deal for Greece, that would of course obliterate them politically, they would have to answer to their own people why they didn’t negotiate like we were doing.”

Fear of offending the more powerful and internalizing the “moral” hectoring they deliver at every opportunity. Guaranteeing bank profits is somehow more “moral” than the health and well-being of entire countries. Social Democrats have absorbed this ideology as thoroughly as conservatives.

In the same interview, Mr. Varoufakis, recounting that his counterparts, the other eurozone financial ministers, refused to negotiate or even engage intellectually with him from the start, was asked why the government kept talking until the summer. His reply:

“Well one doesn’t have an alternative. Our government was elected with a mandate to negotiate. So our first mandate was to create the space and time to have a negotiation and reach another agreement. That was our mandate — our mandate was to negotiate, it was not to come to blows with our creditors. … The negotiations took ages, because the other side was refusing to negotiate. They insisted on a ‘comprehensive agreement,’ which meant they wanted to talk about everything. My interpretation is that when you want to talk about everything, you don’t want to talk about anything. But we went along with that.”

Eurozone membership or an end to austerity

Yes, Syriza was elected with a mandate to negotiate; that follows from Greek majority popular opinion that the country should remain within the eurozone. But there was also a mandate that austerity be brought to an end. Syriza proved unable to resolve this contradiction: Greece can end austerity or be in the eurozone, but not both at the same time.

What we do make of Prime Minister Tsipras declaration, “An end of the blackmail,” issued in late June at the time of his decision to call a referendum on austerity. In his statement, referencing the troika negotiators, he said:

“They asked the Greek government to accept a proposal that accumulates a new unsustainable burden on the Greek people and undermines the recovery of the Greek economy and society, a proposal that not only perpetuates the state of uncertainty but accentuates social inequalities even more.”

The vote went ahead, against direct orders by European governments, and Greeks voted 61 percent to 39 against the terms offered. A week later, the Tsipras government agreed to terms that were worse — the harshest austerity yet imposed. So much for democracy. And make no mistake, this deal is consistent with the “structural adjustment” that the IMF has imposed across the global South.

Prime Minister Tsipras’ final set of concessions in exchange for a fresh bailout was an undiluted structural adjustment. Included in the Greek “reform” package were:

  • Allowing greater wage inequality and a fall in wages as a percentage of gross domestic product through 2019.
  • Raising the pension age to 67 and increasing the health care contribution of pensioners by 50 percent.
  • Gutting labor laws through a “review [of] the whole range of existing labour market arrangements, taking into account best practices elsewhere in Europe.” In other words, loosening worker protections.
  • An “irreversible” privatization of the electricity provider.
  • Privatization of the country’s ports, airports and much else.

The nearly immediate answer was “No, still not enough.”

The prime minister said the popular referendum would strength his negotiating hand. So in the end, what concession did he extract? The fund that will supervise the fire sale of Greek assets, in which the rules will be set by the troika, will be managed from Greece instead of the tax haven Luxembourg.

Hurray.

The Greek government has committed itself to sell off state assets worth €50 billion, with half the total to be used to recapitalize Greek banks and the half to pay down Greek debts. Not one euro toward social welfare!

Resistance continues

Although the government appears to have the approval of Greece’s corporate parties, including New Democracy and Pasok, it does not have the support of all of Syriza. The latter’s Left Platform calls for a “radical reform” of the banking system, the complete halt of austerity policies, an exit from the euro and a writedown of most of Greece’s debt. Outside of Syriza, Antarsya calls for the nationalization of the banks and an exit from the eurozone. A general strike has been called for July 15. And there is no shortage of ideas on alternatives to austerity.

The online news site Greek Reporter summarizes the Left Platform’s expectations of the benefits should its program be adopted:

“An exit from the Eurozone would generate further benefits according to the proposal. Namely, the restoration of financial liquidity, a sustainable growth program based on private investment, the rebuilding of the internal economy to reduce dependence on imports, an increase in exports, independence from the European Central Bank, its policies and restrictions and finally the utilization of unused resources to create rapid growth so as to protect against the first difficult months following the Grexit. The document also concedes that an exit from the Eurozone should have been prepared by SYRIZA but was not.”

Instead, the prime minister says he is choosing a bad choice over a catastrophic choice. Those are the only two choices that the European Union, a project in which rule by finance replaces democracy, can offer.

As assuredly as with nature, politics hates a vacuum. If the Left is not going to offer an alternative to the tightening hegemony of the most powerful industrialists and financiers — the “market” is nothing more than their interests — then the gates to the authoritarian Right, even fascism, are thrown wide open. In a separate interview, Mr. Varoufakis gave this warning:

“In parliament I have to sit looking at the right hand side of the auditorium, where 10 Nazis sit, representing Golden Dawn. If our party, Syriza, that has cultivated so much hope in Greece … if we betray this hope and bow our heads to this new form of postmodern occupation, then I cannot see any other possible outcome than the further strengthening of Golden Dawn. They will inherit the mantle of the anti-austerity drive, tragically. The project of a European democracy, of a united European democratic union, has just suffered a major catastrophe.”

Europe’s capitalists, who established the European Union as a mechanism to tighten their control over the continent and force U.S.-style policies on their societies beyond popular control, won’t be ruffled by that conclusion. But will the world’s working people be?

G7 leaders fiddle while Earth burns

The G7 governments saying they will phase out fossil fuels by 2100 isn’t closing the barn door after the horse has left. It is declaring an intention to consider closing the barn door after waiting for the horse to disappear over the horizon. It is okay to be feel underwhelmed by this.

The Group of 7 summit held earlier this month in Germany, representing seven of the world’s largest economies, ended with a declaration that these governments would commit themselves to a 40 to 70 percent reduction in greenhouse-gas emissions and a complete phaseout in 2100, and an invitation for “all countries to join us in this endeavor.” A communiqué issued after the summit declared:

“We commit to doing our part to achieve a low-carbon global economy in the long-term including developing and deploying innovative technologies striving for a transformation of the energy sectors by 2050. … To this end we also commit to develop long-term national low-carbon strategies.” [page 17]

The G7 governments say they are acting under the impetus of last year’s Intergovernmental Panel on Climate Change report and in anticipation of next December’s Climate Change Conference in Paris. In the conception of the IPCC report, greenhouse-gas emissions should be 40 to 70 percent lower globally in 2050 than in 2010 and “near zero” in 2100 to achieve a goal of holding greenhouse-gas concentrations in the atmosphere to 450 parts per million in 2100. Even that level is a substantial increase above the current level of 404 parts per million, at which the Earth’s climate is already undergoing dramatic changes.

Retreating glacier in Greenland (photo by Bastique)

Retreating glacier in Greenland (photo by Bastique)

The IPCC report, prepared by scientists from around the world but apparently watered down by the world’s governments, promises that mitigating global warming will be virtually cost-free and require no fundamental change to the world’s economic structure. Alas, there are no free lunches — the IPCC report’s insistence that techno-fixes will magically take care of carbon buildup, allowing humanity to continue the path it has been on since the dawn of the Industrial Revolution, is dangerously unrealistic.

So what do the G7 governments have in mind? Their communiqué says they will increase the number of people in developing countries who have access to insurance, increase developing countries’ access to renewable energy and raise funds “from private investors, development finance institutions and multilateral development banks.” [pages 15-16] Try to contain your excitement when you read the G7 prescription for combating global warming:

“We will continue our efforts to provide and mobilize increased finance, from public and private sources. … We recognize the potential of multilateral development banks in delivering climate finance and helping countries transition to low carbon economies.” [page 15]

It may already be too late

Before we delve into the idea that the World Bank, funder of gigantic greenhouse-gas belching, polluting projects around the world, is the cure for global warming, and before we contemplate the idea that we can bind the policies of governments eight decades in the future, let us ask what actually needs to be done to prevent the climate from spiraling into a feedback loop that will accelerate species die-offs and dangerously disrupt agriculture and water supplies. The U.S. government’s climate agency, the National Oceanic and Atmospheric Administration, issued a study in 2009 that flatly concluded “there’s no going back.” The study, led by NOAA senior scientist Susan Solomon, found:

“[C]hanges in surface temperature, rainfall, and sea level are largely irreversible for more than 1,000 years after carbon dioxide (CO2) emissions are completely stopped. … ‘It has long been known that some of the carbon dioxide emitted by human activities stays in the atmosphere for thousands of years,” Solomon said. “But the new study advances the understanding of how this affects the climate system.’ ”

Carbon dioxide thrown into the air stays in the atmosphere for a long time, warming oceans will retain added heat and transfer that back to the atmosphere, and we have yet to experience the full effect of greenhouse gases that have already been emitted. Global sea-level rises and major disruption to rain patterns will effect billions of people. The NOAA study said:

“If CO2 is allowed to peak at 450-600 parts per million, the results would include persistent decreases in dry-season rainfall that are comparable to the 1930s North American Dust Bowl in zones including southern Europe, northern Africa, southwestern North America, southern Africa and western Australia.

The study notes that decreases in rainfall that last not just for a few decades but over centuries are expected to have a range of impacts that differ by region. Such regional impacts include decreasing human water supplies, increased fire frequency, ecosystem change and expanded deserts. Dry-season wheat and maize agriculture in regions of rain-fed farming, such as Africa, would also be affected.”

A Massachusetts Institute of Technology paper, lamenting the widespread conviction that global warming can be reversed quickly when and if it is decided to do so, notes such beliefs are in violation of basic physics. The paper’s abstract says:

“[W]ait-and-see policies erroneously presume climate change can be reversed quickly should harm become evident, underestimating substantial delays in the climate’s response to anthropogenic forcing. … [Greenhouse-gas] emissions are now about twice the rate of GHG removal from the atmosphere. GHG concentrations will therefore continue to rise even if emissions fall, stabilizing only when emissions equal removal. In contrast, results show most subjects [of an MIT study] believe atmospheric GHG concentrations can be stabilized while emissions into the atmosphere continuously exceed the removal of GHGs from it. These beliefs—analogous to arguing a bathtub filled faster than it drains will never overflow—support wait-and-see policies but violate conservation of matter.”

More heating even if we stopped today

A commentary published on RealClimate, a Web site published by working climate scientists, calculates that if greenhouse-gas concentrations were kept constant at today’s level, there would still be an increase in global temperatures of as much as 0.8 degrees Celsius — combined with the global warming already experienced, that is close to the 2-degree overall rise widely believed to be the outer limit to avoid catastrophic damage to Earth’s ecosystem. But to achieve even that equilibrium requires immediate, significant cuts to greenhouse-gas emissions. The commentary says:

“[C]onstant concentrations of CO2 imply a change in emissions — specifically an immediate cut of around 60 to 70% globally and continued further cuts over time.”

“Immediate” as in now, not decades in the future. The actual proposed cuts, in the near term, are far less than that range, and less than initially meets the eye. The baseline of measurement is being shifted, for example, so that the benchmark against which the reductions are measured are higher than previously set. Environmental Defence Canada calculates that the Harper government’s switch to using 2005 rather than 1990 as the baseline reduces the goal by more than half. In a report, the group writes:

“The U.N. Framework Convention on Climate Change (1992) and the Kyoto Protocol (1997) both used 1990 as the reference or base year. Most countries still use 1990 as the base year but some have started using more recent base years. Since the Copenhagen summit in 2009, Canada has been using 2005 as a base year. This makes comparison between targets more difficult. It also makes targets look stronger than they are since Canada’s carbon pollution increased significantly between 1990 and 2005. For example, the Canadian government’s pledge to reduce emissions by 30 per cent below 2005 by 2030 is actually less than half as strong … when expressed using 1990 as the base year.” [page 3]

Emissions from the Alberta tar sands have increased almost 80 percent since 2005 and the Harper government has every intention of boosting tar sands production as much as possible, including plans for multiple pipelines, while equating environmentalists with terrorists. Environmental Defence Canada notes that the Harper government has no intention of regulating tar sands oil and flatly declares Canada’s post-2020 target “the weakest in the G7 to date.”

The potential global warming just from the Alberta tar sands is so large that the U.S. environmental scientist James Hansen believes it will be impossible to stop runaway global warming should that oil be burned.

Assigning contributions isn’t straightforward

The point here isn’t to single out Canada. But its cumulative greenhouse-gas emissions since the dawn of the Industrial Revolution is the ninth highest in the world, a ranking likely to rise if plans of current oil and gas companies come to fruition. So the argument sometimes made that Canada isn’t a significant contributor to global warming because of its small population isn’t true. The United States, not surprisingly, is easily the biggest culprit, having emitted 29 percent of the world’s cumulative greenhouse gases, according to calculations by the World Resources Institute.

China ranks second, with nine percent of the world’s cumulative greenhouse-gas emissions, and the top 10 countries account for 72 percent. (Italy is the only G7 country not among the top 10.) But even here, it could be argued that China’s ranking deserves an asterisk. Western multi-national corporations have eagerly transferred production to China, particularly U.S. companies such as Wal-Mart and Apple. So much of those Chinese greenhouses gases are the responsibility of U.S. corporations. A paper led by Glen Peters of the Center for International Climate and Environmental Research in Oslo estimates that, in 2008 alone, the U.S. imported as much as 400 million tons of carbon dioxide in Chinese goods.

Regardless of source, global warming does not come without costs. The nonprofit organization DARA claims that global warming already causes 400,000 deaths per year, and that “the present carbon-intensive economy moreover is linked to 4.5 million deaths worldwide each year.”

Can the World Bank and International Monetary Fund realistically be part of the solution to global warming, as the G7 communiqué would have it? No! The World Bank has poured billions of dollars into dams, power plants and other projects that worsen global warming, and shows no sign of altering its indifference to environmental costs. The World Bank and IMF also promote neoliberalism and austerity programs around the world; immiserating people makes them more vulnerable, not less, to the stresses of global warming and pollution.

The amount of industrial carbon dioxide emissions thrown into the atmosphere from 1988 to 2014 is equal to all the emissions from 1751 to 1988, according to the Climate Accountability Institute. That continually rising rate of emissions is reflective of the ever more intensive pressures for growth capitalism imposes, and the continual movement of production to the places with the lowest wages and weakest environmental laws imposed by capitalist competition, stretching supply chains ever longer, is itself a contributor to global warming.

The G7 communiqué is nothing more than wishful thinking that no real change is necessary. There are no free lunches: The world has to drastically reduce its consumption. As this is an impossibility under capitalism, another world is not only possible, it is necessary in the long run for our descendants to even have a livable world.

Building workplace organizations anew

Workplace solidarity in the face of the neoliberal onslaught is as crucial as ever, yet present-day unions become ever more fearful. How do we build solidarity in an era when the tools of the past have lost their effectiveness?

New types of organizations are not only necessary, it is essential to look at past upsurges in union activity, particularly those of the 1930s, with clear eyes rather than romanticization, argues Staughton Lynd in Solidarity Unionism: Rebuilding the Labor Movement from Below.* A new re-issue and updating of a classic work, the book has lost none of its timeliness. Critical to understanding how unions lost their way, becoming too cozy with the corporate managements they are supposed to challenge, is the stifling of rank-and-file activity, particularly of militant tactics, by Congress of Industrial Organization (CIO) unions in the 1930s.

Self-activity from below in the mid-1930s catalyzed a big upsurge in union membership; solidarity through striking was a critical component. When the National Labor Relations Act, also known as the Wagner Act, was moving toward enactment in the 1930s, the American Civil Liberties Union and the Industrial Workers of the World (IWW) opposed it because they foresaw the National Labor Relations Board that would be formed to arbitrate disputes would hinder the right to strike. The board would inevitably aid capital, not labor, they believed.

Solidarity Unionism coverThe Wagner Act was passed, the board came to be, and although specific decisions have favored one side or the other at different times, those fears have come to pass. Mr. Lynd argues that the CIO opposed and suppressed rank-and-file and independent activity, opposed an independent labor political party and agreed to no-strike clauses that would be in force the entirely of contracts, thereby handing all power to company management. And although Mr. Lynd doesn’t discuss it, many of the gains that were achieved in the Wagner Act were taken back a decade later with the passage of the Taft-Hartley Act, which further restricted union activity, including prohibiting sympathy strikes, a serious blow to solidarity.

In U.S. labor mythology, the CIO is the “radical” union umbrella organization, infusing new life into Great Depression organizing after the slow pace of unionization under the guidance of American Federation of Labor (AFL) unions. But CIO contracts ceded decision-making to management in all aspects of operations from the start, while union leaders promoted themselves as guarantors of labor peace. Going back to the CIO of 1936 or 1945 is useless, Mr. Lynd argues, because it set out to suppress independent activity from the start.

Democracy is the essential ingredient

Interestingly, he also argues that the dues-checkoff system is another factor contributing to the undemocratic and collaborationist tendencies of unions, because it makes union leaderships unaccountable to the rank-and-file. New worker organizations must be democratic to have any chance of being effective. Building new labor organizations of a different kind, that demonstrate their usefulness in responding to problems, is the way forward. Mr. Lynd writes that democracy is the starting point:

“Trade unions are among the most undemocratic institutions in the United States. Far from prefiguring a new society, they are institutional dinosaurs, resembling nothing so much as the corporations we are striving to replace. … Democracy means, at a minimum, the freedom to criticize frankly and fully. Union bureaucrats have a tendency to view criticism as treason. But rank-and-file members must be able to criticize, not just the policies of incumbent union officers, but the structural shortcomings of the labor movement. For instance, CIO contracts have always contained no-strike and management-prerogative clauses, but if we think (as I do) that these clauses are wrong and should be abolished, we should be free to say so.” [page 21]

From such democracy arise the conditions to begin moving toward a better world, instead of the defensive retreats of recent decades.

“Working people believe in solidarity, not because they are better than other people, but because the power of the boss forces workers to reach out to each other for help. Because of the vision and practice of solidarity, the labor movement with all its shortcomings does prefigure a new kind of society within the shell of the old. And by building organizations based on solidarity, rather than on bureaucratic chain-of-command, we build organizations that by their very existence help to bring a new kind of society into being.” [page 24]

The author gives three local examples from the area around Youngstown, Ohio. One was a solidarity club consisting of workers from several unions that organized united actions in defense of strikers and other workers facing layoffs or other unfair labor practices; one was a group of retirees that defended pension benefits, especially since, as retirees, they were not allowed to vote on contract changes; and the third organized in defense of workers suffering health problems due to working with toxic chemicals.

Solidarity, not bureaucracy

Although each of these three groups won victories, the author acknowledges that they did not have far-reaching impacts. They did, however, demonstrate what is possible with different kinds of labor organizations that are democratic and based on direct action. Mr. Lynd writes:

“I want to suggest that trade unions as they now exist in the United States are structurally incapable of changing the corporate economy, so that simply electing new officers to head these organizations will not solve our problems. I argue that the internationalization of capital, far from proving that such centralized unions are needed more than ever, has, on the contrary, demonstrated their impotence and the need for something qualitatively new.” [page 47]

Putting life into the concept of “an injury to one is an injury to all” by striking on behalf of workers in other enterprises in one form of this necessary solidarity. Shop-floor committees that organize around grievances and problems rather than negotiating contracts and that use direct action, even in opposition to their union leaders, and “parallel central labor bodies” that organize workers in a geographic region, across industries, are two alternative forms the author advocates. As an example, he recounts a 1916 incident where the 2,000 workers of a factory walked out when an organizer was dismissed; within a couple of days, 36,000 workers across the region walked out in an organized show of strength.

Militancy is what is needed:

“The critical analytical error … of established unions about their current crisis is the assumption that labor and management have the same or mutually consistent interests. … It is the assumption that underlies business unionism, because it induces trade unions to leave investment decisions to management while directing their own attention to wages, hours, and working conditions, and to surrender the right to strike (for the duration of the collective bargaining agreements) in the belief that workers no longer need the strike to protect their day-to-day interests.” [page 78]

By ceding all decision-making to capitalists, negotiating over wages, hours and working conditions will always be defensive because unions are bargaining the extent of their members’ exploitation and can do nothing more. Staughton Lynd has given us a concise guide to thinking about workplace organization differently. (At barely a hundred pages in compact form, I was able to read Solidarity Unionism in a single evening.)

And once we realize we don’t need capitalists to make decisions for us, and learn to organize collective self-defense, getting rid of bosses and running enterprises ourselves enters our imagination.

* Staughton Lynd, Solidarity Unionism: Rebuilding the Labor Movement from Below [PM Press, Oakland, California, USA 2015]

Keynesianism will not save the world

Nostalgia for the supposed “golden age” of mid-20th century capitalism carries with it an assumption that we can simply go back to a Keynesian world. Yet this is not a matter of simply of switching horses for nobody decreed that we shall now have neoliberalism and nobody can decree we shall now have Keynesianism.

There are structural reasons for the neoliberal assault. It is the logical development of capitalism; “logical” in the sense that the relentless scramble to survive competition eventually closed the brief window when rising wages were tolerated and government investment encouraged. The Keynesian policies of that time was a product of a specific set of circumstances that no longer exist and can’t be replicated.

Mid-20th century Keynesianism depended on an industrial base and market expansion. A repeat of history isn’t possible because the industrial base of the advanced capitalist countries has been hollowed out, transferred to low-wage developing countries, and there is almost no place remaining to which to expand. Moreover, capitalists who are saved by Keynesian spending programs amass enough power to later impose their preferred neoliberal policies. A vicious circle arises: Persistent unemployment and depressed wages in developed countries and inadequate ability to consume on the part of underpaid workers in developing countries leads to continuing under-consumption, creating pressure for still lower wages by capitalists who can’t sell what they produce and seek to cut costs further because there is no incentive for them to invest in new production.

Counter-intuitively, the turn toward neoliberalism is a also a response to declines in profitability. The rising wages of the post-World War II era were tolerated by capitalists because profits and the potential for further expansion were both high. Pent-up demand across the global North and the massive destruction of capacity in Europe enabled U.S. manufacturers to gain an unprecedented, and unrepeatable, opportunity. Capitalists in Europe and East Asia used state investment to rebuild their economies and regain their competitiveness.

Workforce of the future?

Workforce of the future?

The Keynesian compromise was not necessarily what capitalists would have wanted; it was a pragmatic decision — profits could be maintained through expansion of markets and social peace bought. When markets could no longer be expanded at a rate sufficiently robust to maintain or increase profit margins, however, capitalists ceased tolerating paying increased wages.

Competition is now carried out on a global scale, and where in the past local monopolies tended to cohere within national or regional borders, corporate globalization has put the world well down the road of international monopolization. The same tendency toward a handful of corporations dominating a market is now being reproduced on a larger scale, a single global world system, replicating the processes that previously led to monopolizations within individual countries or regions.

This is part of the “grow or die” dynamic of capitalism. It’s not only grabbing market share, it’s a mad scramble to “innovate” to increase profitability. That can be new production techniques but it is especially cutting costs — in the first place, wage costs. Thus robotics and automation to reduce the number of workers needed, which also “deskill” work to make workers more expendable, putting downward pressure on wages. Work speedups are part of the extraction of more profits, or an attempt to stave off declines in profit rates. And when these are finally insufficient, the work begins to be moved to new locations with lower wage levels and weaker regulation. “Free trade” agreements negotiated in secret that bring corporate wish lists to life both accelerate this tendency and are a product of it.

The capitalist that cuts costs first gains an advantage, but competitors follow, eroding the advantage. So the next step, and the next step, is carried out, intensifying these processes. The personality of the capitalist does not matter; he or she is acting under the rigors of competition. There is no way to put a human face on this or to permanently reverse the logic of capitalist competition. The present era of austerity and neoliberalism is the product of capitalist development. Even if a massive movement becomes sufficiently strong to effect significant reforms, eventually they would be taken back just as the reforms of the mid-20th century have been taken back.

(Mural by Ben Shahn)

(Mural by Ben Shahn)

Not only does the scope for expansion that existed during the Keynesian era no longer exist, the environmental limits and global warming that the world did not then face can no longer be avoided. Humanity is consuming far beyond the world’s replenishment capacity and changing the climate at a faster rate than ever before known. We can’t turn back the clock (and the “golden age” of capitalism wasn’t so golden if you were a woman, a Person of Color or a working person in a developing country) nor is it environmentally sound to ramp up production and consumption on the scale that a global Keynesian initiative would require.

Alas, this is a variation on the theme of “green capitalism” — the idea that the same system that has brought the world to its present state of crisis, a system that requires infinite expansion on a finite planet, that has turned to financialization because speculation is more profitable than production, that treats pollution and waste as external costs to be ignored will somehow now save us. Tinkering with the machinery of capitalism — which is what Keynesian nostalgia amounts to — would ameliorate conditions somewhat for a while, but offer no solution.

The days when it was still possible to believe capitalism can be a progressive force are behind us; the neoliberal assault is the “new normal.” When capitalism has penetrated into every corner of the world, there is nowhere else to expand: The only route for capitalists is to reduce wages and benefits. The only route for the 99 percent is an entirely different world.

Marching on Monsanto and its government protectors

Controlling and knowing what we eat should be a fundamental human right beyond questioning. That it is not sent hundreds of thousands into the streets of cities around the world on May 23, the third annual March on Monsanto.

People on every continent save Antarctica participated in a March on Monsanto — demonstrations took place in 452 cites in 48 countries in opposition to Monsanto Company’s attempt to gain control over the world’s food. More than 200 U.S. cities, 47 Canadian cities, 22 French cities and 13 Argentine cities were among the places hosting organized marches.

One of the earliest rallies was in Sydney, where an organizer told the RT television network:

“This company has repeatedly committed, I would say, crimes against the Earth and what we are trying to show is accountability for corporations. Also we want to promote clean food. Food that’s free of pesticides, which our grandparents just called food.”

RT, in an online roundup of events around the world, also noted that protestors in Berlin, one of 10 German demonstrations, made connections among health concerns even though there is no commercial cultivation of food containing genetically engineered organisms in the country, and GMO bans exist in nine of Germany’s 16 states and in hundreds of municipalities. RT reported:

“Germany’s capital Berlin saw a big turnout even though Germany does not use Monsanto’s seeds. However, activists say local farmers still use Monsanto’s pesticides and herbicides, which end up leaving traces in breast milk of feeding mothers, the water supply and even urine of people who have not eaten GMO products.”

March Against Monsanto

March Against Monsanto

The struggle against dangerous pesticides received a boost earlier in the month in Germany when the country’s state consumer protection ministers called for a ban on glyphosate throughout the European Union. According to the online news publication EurActiv, E.U. approval of glyphosate expires at the end of 2015 and the E.U. bureaucratic arm, the European Commission, is conducting a safety review. Glyphosate is the active ingredient in Monsanto’s Roundup herbicide, a business worth an estimated $10 billion to Monsanto. The company not only sells lots of the herbicide but also agricultural products (soybeans, corn, sugar beets and other crops) that are genetically engineered to be resistant to Monsanto’s Roundup herbicide.

Farmers growing these crops with Monsanto seeds can thus spray more herbicides on their crops. Unfortunately, as more pesticides are sprayed, weeds and insects become more resistant, inducing farmers to spray still more and thereby introduce more poisons into the environment. The use of  glyphosate on U.S. farms increased from 11 million pounds in 1987 to almost 300 million pounds in 2013.

What you don’t know might hurt you

There is plenty of reason for concern. Earlier this year, the World Health Organization released a study, published in The Lancet, that found glyphosate to be a “probable” carcinogen. Other studies, including a 2013 paper in Food and Chemical Toxicology, have also reported health concerns. Further, a 2011 Earth Open Source paper, titled “Roundup and birth defects: Is the public being kept in the dark?” says that the European Union and the German Federal Office for Consumer Protection and Food Safety cites “unpublished industry studies to back its claim that glyphosate was safe,” while ignoring or dismissing independent studies that indicate glyphosate causes endocrine disruption, damage to DNA, reproductive and developmental toxicity, cancer and birth defects.

March Against Monsanto in Marseille

March Against Monsanto in Marseille

Then there are the dangers of GMO foods, an area unfortunately quite under-studied. GMO labeling is required by 64 countries, including Australia, Japan and all 28 E.U. countries. Such laws are fiercely opposed by Monsanto and other multi-national agribusinesses, and they thus far have succeeded in keeping labeling laws from being enacted in the U.S. These corporate efforts to undermine food safety are part of the agenda behind the secret Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP).

Marchers against Monsanto took to calling the TPP and TTIP the “Global Monsanto Protection Acts.” One of the goals of those two so-called “free trade” deals is to eliminate the ability of governments to ban or even effectively regulate GMOs, and to ban any labeling of them. Monsanto and other agribusinesses repeatedly claim that GMOs are safe and healthy, but if that is so, why do they put so much effort into hiding them? Biotechnology companies spent $27 million lobbying for GMOs in the U.S. in just the first six months of 2014.

Should the TPP and TTIP come into force, nobody in the 40 countries that encompass these two agreements will be able to know what is in the food they eat or to have effective protection against food that may not be safe to eat.

Already we being used as laboratory experiments, and this will accelerate if Monsanto gets its way.

Water down laws, then dilute some more

“Free trade” agreements have very little to do with trade, and much to do with eliminating regulations, lowering standards and eliminating health, safety and environmental laws in favor of maximizing corporate profits. The “harmonization” that is promoted in these agreements has meant reducing standards to the lowest possible level. Thus, European regulations on GMOs and food labeling will be targeted as “barriers” to trade under the TTIP because those standards are higher than U.S. rules.

Pesticide Action Network Europe notes that the process of European harmonization has already watered down regulations. In its position paper on the TTIP negotiations, PAN Europe says:

“Health standards already now do not sufficiently protect people and the environment and costs are already externalised massively to society in terms of health care (pesticide residues in food/water, contamination of rural citizens), soil deterioration (fertilizers), biodiversity decline (monocultures, pesticides), climate change (fertilizers and deforestation for soy/palm cultivation) and subsidies (taxpayers’ money). … Let’s take the example of pesticide residue food standards. They were harmonised at European level already in 2009 and indeed the least strictest food standards anywhere in Europe were chosen for harmonisation. Soon it was shown that this was a wrong approach. … Cumulative effects of residues are not calculated and the unscientific single-exposure approach maintained.”

Already, an E.U. paper that could have led to the banning of as many as 31 pesticides was not acted on because of heavy pressure from chemical companies on both sides of the Atlantic. A delegation of U.S. chemical-industry lobbyists and U.S. trade officials insisted that the E.U. drop proposals to ban the use of the pesticides despite health concerns.

Just as it is asked why Monsanto and other agribusinesses don’t want you to know what is in your food, we must ask why they don’t want us to know what is in the “free trade” agreements being negotiated on their behalf.

Legislators provide a backup plan

Perhaps as a backup in case the mounting public opposition to the TPP and TTIP succeeds in scuttling them, a Kansas Republican, Mike Pompeo, has cooked up a bill with the Orwellian name of “Safe and Accurate Food Labeling Act of 2015” (Bill H.R. 1599) in the House of Representatives. H.R. 1599 was introduced on March 25 and is a re-introduction of the previous Congress’ H.R. 4432, which failed to become law. The bill’s stated purpose is: “To amend the Federal Food, Drug, and Cosmetic Act with respect to food produced from, containing, or consisting of a bioengineered organism, the labeling of natural foods, and for other purposes.” Well, yes, but in what way?

The devil is indeed in the details here. Activists at Food Democracy Now sound the alarm this way:

“This plan is so devious that it radically speeds up the approval process for new GMO crops, limits the [U.S. Food and Drug Administration] and [Department of Agriculture]’s ability to extend premarket safety reviews, declares GMO foods ‘safe’ and redefines genetically engineered foods as ‘bioengineered’ in order to sanitize this deeply flawed technology to the American public.”

A Daily Kos analysis notes that the bill would create a federal law banning any state or locality from enacting a GMO labeling law. The bill would also prohibit organic natural foods from being marketed as safer or better than GMO counterparts. It would also make it nearly impossible for a farmer to achieve organic certification:

“But most sinister is what I will call the bill’s virtual protection racket. It works like this. As a small organic farmer, if I want to market my product as GMO-free, I must ensure that the entire path to market — from seed to harvest to processing to transportation to distribution — is certifiably GMO-free. If my product shares any infrastructure with known GMO foods, I cannot claim being a GMO-free. … The burden of proof therefore is prohibitively expensive for a typical small farmer, which is what Monsanto, Dow et al are counting on.”

Taking on Monsanto is already difficult. The Organic Seed Growers & Trade Association filed a suit against Monsanto, challenging the company’s patents on genetically engineered seeds, a suit that eventually represented 300,000 individuals and 4,500 farms. The organic plaintiffs sought a pre-emptive judgment against potentially being accused of patent infringement should their fields become contaminated by Monsanto’s genetically modified seed. Such suits are not unknown. Nonetheless, the courts ruled for Monsanto at the trial and appellate levels.

Sell first, ask questions later

A part of the problem is that, under the U.S. regulatory system — what it wishes to impose on Europe and elsewhere — new products are routinely put on the market with minimal testing (or the product’s manufacturer providing the only “research” and declaring it safe), and can’t be removed from sale until independent testing determines the product is unsafe. That can occur years after it began to be sold. But, charges Steven Druker in a new book, Altered Genes, Twisted Truth, not even scientific concerns necessarily stop approval in the U.S.:

“[T]he [U.S. Food and Drug Administration] had ushered these controversial products onto the market by evading standards of science, deliberately breaking the law, and seriously misrepresenting the facts — and that the American people were being regularly (and unknowingly) subjected to novel foods that were abnormally risky in the eyes of the agency’s own scientists.

This fraud has been the pivotal event in the commercialization of genetically engineered foods. Not only did it enable their marketing and acceptance in the United States, it set the stage for their sale in numerous other nations as well. If the FDA had not evaded the food safety laws, every GE food would have been required to undergo rigorous long-term testing; and if it had not covered up the concerns of its scientists and falsely reported the facts, the public would have been alerted to the risks. Consequently, the introduction of GE foods would at minimum have been delayed many years — and most likely would not have happened.”

Mr. Druker is a public-interest attorney who successfully sued to gain access to FDA files. So confident is he in his findings that he has publicly challenged Monsanto to refute anything in his book and said he will change anything that is proven to be incorrect. Speaking at the New York March on Monsanto, he reported that he had not received a response.

Monsanto is perhaps the corporation most determined to control the world’s food. The vast majority of U.S. soybean, cotton, corn and canola are now genetically engineered. 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.

We live under an economic system that reduces human interactions to nothing more than transactions, where an ever larger sphere of social decisions are made by “the market” and the quest for profits is promoted as the highest ideal. “The market” is not some neutral entity sitting high in the clouds, as pervasive propaganda would have us believe, but rather nothing more than the aggregate interests of the most powerful industrialists and financiers. A monopoly is the goal of capitalists, and the logical outcome of the relentless competition of capitalism. Just because food is among the most basic human necessities does not mean it is exempt. Don’t starve, organize!

Fossil fuel subsidies total trillions of dollars per year

Most of the cost of fossil fuels is hidden because environmental harms such as pollution and global warming are kept outside ordinary economic calculation. Energy companies externalize these costs (among others) — that is, they don’t pay them. The public does.

And we do, to a remarkable extent. When we think of corporate subsidies, we naturally think of taxes not paid, real estate giveaways and other ways of taking money from the public and shoveling it into corporate coffers. Then there are the environmental costs, something prominent if we are talking about fossil fuels. These, too, should be thought of as subsidies since these constitute costs paid by the public. A first attempt at seriously quantifying the magnitude of the totality of subsidies given to fossil fuels leads to a conclusion that the total for 2014 was US$5.6 trillion, a total expected to be matched in 2015.

Yes, you read that correctly: 5.6 trillion dollars. As in 5.6 million million. Or, to put it another way, more than seven percent of gross world product.

A lot of money.

These calculations are, interestingly, the product of an International Monetary Fund working paper, “How Large Are Global Energy Subsidies?” The paper, prepared by economists David Coady, Ian Parry, Louis Sears and Baoping Shang, sought to provide a fuller accounting of the costs of the environmental damages caused by fossil fuels, and found that those costs greatly exceed direct corporate subsidies and below-cost consumer pricing. The authors foresee huge benefits should all fossil-fuel subsidies be eliminated. They write:

“Eliminating post-tax subsidies in 2015 could raise government revenue by $2.9 trillion (3.6 percent of global GDP), cut global CO₂ emissions by more than 20 percent, and cut pre-mature air pollution deaths by more than half. After allowing for the higher energy costs faced by consumers, this action would raise global economic welfare by $1.8 trillion (2.2 percent of global GDP).” [page 7]

Grangemouth oil refinery at sunset (photo by Steve Garvie, Dunfermline, Fife, Scotland)

Grangemouth oil refinery at sunset (photo by Steve Garvie, Dunfermline, Fife, Scotland)

As dramatic as the preceding paragraph is, the International Monetary Fund is not suddenly questioning capitalism. The paper carries the caveat that it is “research in progress” and does not represent the views of the IMF. Nor does the paper devote so much as a single word questioning the economic system that has produced such astounding distortions, not to mention the hideous social effects of massive inequality and power imbalances. Nonetheless, it does present an implicit challenge to business as usual and helps conceptualize the massive costs of profligate energy usage. The paper lays out in plain language the environmental, fiscal, economic and social consequences of energy subsidies, stating that energy subsidies [page 5]:

  • Damage the environment, causing more premature deaths through local air pollution, exacerbating congestion and other adverse side effects of vehicle use, and increasing atmospheric greenhouse-gas concentrations.
  • Impose large fiscal costs, which need to be financed by some combination of higher public debt, higher tax burdens and crowding out potentially productive public spending (for example, on health, education and infrastructure).
  • Discourage needed investments in energy efficiency, renewables and energy infrastructure, and increase the vulnerability of countries to volatile international energy prices.
  • Are a highly inefficient way to provide support to low-income households since most of the benefits from energy subsidies are typically captured by rich households.

Paying for air pollution and global warming

The biggest subsidized cost is air pollution, which the paper’s authors estimate accounts for 46 percent of fossil fuel subsidies. Global warming is the next biggest subsidy, at 22 percent, with corporate and consumer subsidies, foregone taxes and other items accounting for smaller amounts. From this calculation, the authors argue that local benefits from ending subsidies are high enough that doing so should be done in the absence of action in other countries. They write:

“An important point, therefore, is that most (over three-fourths) of the underpricing of energy is due to domestic distortions — pre-tax subsidies and domestic externalities — rather than to global distortions (climate change). The crucial implication of this is that energy pricing reform is largely in countries’ own domestic interest and therefore is beneficial even in the absence of globally coordinated action.” [page 21]

When the costs are broken down by forms of energy, it is no surprise that coal is the most subsidized form. Coal subsidies alone total almost four percent of global GDP, according to the paper, with “no country … impos[ing] meaningful taxes on coal use from an environmental perspective.” Petroleum is also heavily subsidized.

If we could at a stroke eliminate all forms of fossil fuel subsidies, the gains would be significant. The authors believe that global revenue gains would be $2.9 trillion for 2015, a total less than the current cost of subsidies because it accounts for a reduction in energy usage from higher prices and an assumption that some tax money would be used for emission-control technologies. The authors also calculate a $1.8 trillion net gain in social welfare, a gain that could be increased were this gain used to invest in education, health and other public benefits.

So if so much good can come from rationalizing the fossil fuel industry, why does this sound like an impossible dream? Unfortunately, in real world of capitalism, there is very little to prevent corporations from externalizing their costs.

With increased corporate globalization, capital can pick up and move at will, inducing political office holders to hand out subsidies, waive taxes and refuse to enforce safety and environmental laws. They do this because the alternative is for corporations to move elsewhere in a never-ending search for the lowest wages and weakest regulations with an accompanying disappearance of jobs. And this globalization, fueled by “free trade” agreements that arise from relentless competition, aggravates global warming as components are shipped around the world for assembly into finished products that are shipped back, greatly adding to the environmental damage imposed by transportation.

Environment doesn’t count in orthodox economics

Not only is the environment an externality that corporations do not have to account for, thereby dumping the costs on to the public, but orthodox economics doesn’t account for the environment, other than as a source of resources to exploit. The same capitalist market that is nothing more than the aggregate interests of the largest and most powerful industrialists and financiers is supposed to “solve” environmental problems. A Monthly Review article by sociologists Richard York, Brett Clark and John Bellamy Foster, “Capitalism in Wonderland,” puts this contradiction in stark perspective:

“Mainstream economists are trained in the promotion of private profits as the singular ‘bottom line’ of society, even at the expense of larger issues of human welfare and the environment. The market rules over all, even nature. For Milton Friedman the environment was not a problem since the answer was simple and straightforward. As he put it: ‘ecological values can find their natural space in the market, like any other consumer demand.’ ” [May 2009, page 4]

From that perspective, it follows that present-day environmental damage is of minimal concern to capital and future damage of no concern. The industrialists and financiers who reap billions today won’t necessarily be around when the environmental price becomes too high to avoid. The “Capitalism in Wonderland” authors write:

“[T]he ideology embedded in orthodox neoclassical economics [is] a field which regularly presents itself as using objective, even naturalistic, methods for modeling the economy. However, past all of the equations and technical jargon, the dominant economic paradigm is built on a value system that prizes capital accumulation in the short-term, while de-valuing everything else in the present and everything altogether in the future. …

[H]uman life in effect is worth only what each person contributes to the economy as measured in monetary terms. So, if global warming increases mortality in Bangladesh, which it appears likely that it will, this is only reflected in economic models to the extent that the deaths of Bengalis hurt the economy. Since Bangladesh is very poor, [orthodox] economic models … would not estimate it to be worthwhile to prevent deaths there since these losses would show up as minuscule in the measurements. … [E]thical concerns about the intrinsic value of human life and of the lives of other creatures are completely invisible in standard economic models. Increasing human mortality and accelerating the rate of extinctions are to most economists only problems if they undermine the ‘bottom line.’ In other respects they are invisible: as is the natural world as a whole.” [pages 9-10]

Tinkering versus analyzing the structure

The International Monetary Fund paper does offer a brief discussion of social disruptions should fossil-fuel subsidies be removed, suggesting a need for “transitory” programs such as worker retraining and protection of vulnerable groups. [page 31] But their proposed program centers on environmental taxes as a way to align fossil fuels with their costs to make energy prices “efficient.” Certainly, polluters and causers of global warming should be required to absorb those costs. But given that market forces tilt overwhelmingly in favor of large polluters, the fact of massive imbalances in power, and that governments have handcuffed themselves in terms of confronting capital (a trend itself a product of market forces), it is unrealistic to believe such a program is currently politically feasible.

The disruptions to a capitalist economy with a forced large reduction in energy usage are also significant. It is not only that a capitalist economy can’t function without growing (and a growing economy uses more, not less, energy, especially because of ever more complex machinery and lengthening supply chains), but that a capitalist economy doesn’t offer millions of workers who lose their jobs new work in new industries. Every incentive under capitalism is for more energy usage; thus “the market” will object to dramatically higher energy prices, no matter how rational those higher prices.

Ultimately, the authors of the IMF paper are trapped in the same inability to imagine anything outside the present capitalist system, similar to those who claim that stopping global warming will be virtually cost-free. Their paper has done a necessary service by providing the first real quantification of the gigantic costs of fossil fuels and the massive subsidies they receive. Subsidies for renewable energy, in comparison, are minuscule. The massive subsidies for nuclear energy, which is a complete failure on any rational economic basis before we even get to the physical dangers, demonstrate that nuclear is no solution, either. These should also be eliminated.

The size of the social movement that would be necessary to eliminate all these subsidies would be enormous. Why should such a movement ask for mere reforms that fall well short of what is necessary, worthy as they would be. Energy is too important not to be put in public hands. The trillions of dollars of fossil fuel subsidies are the logical product of allowing private interests to control critical resources for private profit and leaving “the market” to dictate outcomes.

We can’t make what is unsustainable sustainable through a better tax policy. That the enormous scale of reform proposed by the IMF paper still falls far short of what is actually necessary to create a sustainable economy demonstrates the severity of the crises we are only beginning to face.